Megaupload’s Kim Dotcom denied bail in New Zealand

AUCKLAND, New Zealand – Megaupload boss Kim Dotcom will stay behind bars awaiting possible extradition to the United States after a New Zealand judge Wednesday said the Internet millionaire poses a serious flight risk.

Denying an application for bail, Auckland Judge David McNaughton said the German had the money and shady connections to slip out of New Zealand if he so wished, following days of media revelations about his playboy lifestyle.

The founder of the file-sharing website Megaupload.com has been in detention since police raided his vast “Dotcom Mansion” in Auckland on Friday, spending his 38th birthday on Saturday in a remand centre, as part of a major US probe.

The Internet tycoon appeared upbeat as he was ordered to remain in custody until a US extradition application is formally launched on February 22, winking at supporters in the court with his hands on his hips.

But his lawyer Paul Davison said Dotcom was disappointed with the bail decision and would appeal as soon as possible.

“All of his assets have been frozen, all of his resources have been taken, seized. He’s living here with his wife and family. He has no intention whatsoever of endeavouring to leave New Zealand,” Davison told reporters.

McNaughton said he was concerned Dotcom, who US authorities allege received $42 million from his Internet empire in 2010 alone, had passports and bank accounts in different names and would flee the country if released on bail.

The judge noted that Dotcom was accused of the largest Internet copyright piracy case in US history, and that prosecutors had vowed to seek maximum penalties of 20 years on racketeering and money-laundering charges.

He said there was a possibility Dotcom, who legally changed his name from Kim Schmitz, could flee to Germany, which would provide a safe haven as it refuses to extradite its citizens to the United States.

He said prosecutors argued this had already occurred with one of Dotcom’s co-accused, Sven Echternach, another German national who travelled to his homeland from the Philippines after arrest warrants were issued in the case.

Dotcom and six others were accused by the US Justice Department and FBI last week of “massive worldwide online piracy”.

The indictment alleges they generated more than $175 million in criminal proceeds and cost copyright owners more than $500 million by offering pirated copies of movies, TV programmes and other content.

McNaughton said that, given Dotcom’s vast wealth, there was no guarantee he did not have funds hidden away which could be used to flee.

“With sufficient determination and financial resources, flight risk remains a real and serious possibility which I cannot discount and bail is declined,” he said.

The judge was also concerned that a sawn-off shotgun was found in a “panic room” to which Dotcom retreated when police swooped on his home, in a raid which also netted a 1959 pink Cadillac, artworks and other valuables.

“It suggests a level of criminality which to my mind could easily extend to exploiting criminal connections to obtain false travel documents and leave the country undetected,” he said.

McNaughton, who reserved a decision on bail for three of Dotcom’s co-accused until Thursday, said extradition proceedings were likely to take “some months”.

Auckland lawyer Rick Shera said that under New Zealand law, US authorities could request extradition for an alleged offence that was also regarded as a crime in New Zealand and attracted a jail term of 12 months or more.

But he said defense lawyers were likely to argue that Dotcom’s Megaupload was a legitimate file-sharing site, not a criminal enterprise.

“It’s the first copyright extradition case of this type in New Zealand and there are going to be appeals whichever way the decision goes,” he told Agence France-Presse.

“Given the resources available to him (Dotcom), it’s not going to be resolved anytime soon.”