Bail denied again for MegaUpload's Kim DotCom

The founder of the cyberlocker service will remain in jail at least until his extradition hearing is held on Feb. 22.

Greg Sandoval Former Staff writer
Greg Sandoval covers media and digital entertainment for CNET News. Based in New York, Sandoval is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at @sandoCNET.
Greg Sandoval
3 min read
Kim DotCom takes an oath to tell the truth prior to testifying at a bail hearing. The MegaUpload founder accused of piracy and money laundering denied being a flight risk. Click on photo to watch video. 1News (Tvnz.co.nz)

Kim DotCom, the colorful and controversial founder of cyberlocker service MegaUpload, must remain in police custody for at least three more weeks, a New Zealand court decided today.

DotCom, 38, and a half dozen of MegaUpload's managers are accused in the United States of criminal copyright violations, money laundering, and racketeering. According to the indictment filed against them in Virginia, the government alleges that MegaUpload was a criminal enterprise that banked more than $175 million by helping the masses pirate films, music, software, and videogames.

At the request of the FBI, DotCom and three other MegaUpload employees were arrested at his home near Auckland last month. An extradition hearing is scheduled for February 22. DotCom and the other defendants say they have broken no laws.

A lower court last week had denied DotCom's request to be freed on bail and he appealed. The district court that heard the appeal agreed with the earlier decision that there was little to tie DotCom to New Zealand.

The court cited his history of fleeing Germany when he was accused of insider trading nearly 10 years ago (he was later found guilty but given probation). New Zealand police also assert that he resisted arrest. When officers raided his home, DotCom allegedly locked himself in a safe room and refused to come out even after they identified themselves as police. In addition, DotCom was found with a semi-automatic shotgun that was sawed-off, and gun experts in that country say that is an illegal firearm. He was also in possession of passports and credit cards in other names.

The judge in the case noted that if allowed out on bail, it is possible that DotCom still possesses the resources to make it back to Germany and avoid prosecution. Germany doesn't have an extradition treaty with the United States.

DotCom, who was born Kim Schmitz, took the stand in his own defense and denied he had the ability or motivation to leave the country. He said the police have frozen all his assets but more importantly, he wants to fight the charges, clear himself, and get his money back.

After the decision was announced, DotCom's U.S. lawyer, Ira Rothken, called the ruling a "big injustice" in a Twitter post. He has called the government's accusations against MegaUpload "flimsy."

DotCom, a former hacker and street racer, has been a well-known personality on the Internet for a decade. He was convicted for hacking and later insider trading in his native Germany. He once offered a massive reward for any information on the whereabouts of Osama bin Laden.

Paul Davison, Kim DotCom's lawyer, told reporters outside the courthouse that his client is disappointed with the court's decision to deny him bail. Click on photo to watch video of the interview. TVNZ.co.nz

He was photographed partying on yachts with topless women and celebrities. Nothing, however, added to his fame more than MegaUpload, the service that enabled users to store electronic files but was often used to pirate copyrighted films and other media.

For a while, the company's traffic was in the same league with YouTube's and was among the top 25 most visited sites. The government alleges that DotCom built a massive following by offering free, pirated movies while dressing up the service as legitimate.

During his testimony, DotCom said he was beaten by police during his arrest and that he was contacted while he was in custody by someone who claimed to be a prosecutor. The man told him for a fee, he could guarantee DotCom's release.

Following the judge's decision, Paul Davison, DotCom's lawyer in New Zealand, said that DotCom would have to stay in jail until the extradition hearing unless he decides to appeal again or new information surfaces.