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MegaUpload's DotCom gets a peek at government spy records

A New Zealand court orders its government to release records on the illegal surveillance and raid of DotCom's mansion, which may help the MegaUpload founder's case against U.S. extradition.

Kim DotCom (at right) shortly after being arrested in January for alleged copyright violations and fraud. Screenshot by CNET

In what looks like another blow in the U.S. case against MegaUpload founder Kim DotCom, New Zealand's spy agency is forced to turn over records of its illegal surveillance and raid of DotCom's home.

According to Reuters, New Zealand's high court ordered the agency to reveal the records to DotCom, which could possibly aid him in his battle to fight U.S. extradition. The court also ruled that DotCom and his company managers could seek damages from the government because of the agency's unlawful actions.

DotCom's saga has played out over the past year after he was arrested in January on allegations of criminal copyright violation, conspiracy, money laundering, and wire fraud. U.S. federal officials accused DotCom of pocketing millions of dollars in illegal profits from criminal file sharing and downloading that has reportedly cost the film industry more than $600 million in damages.

During his arrest, 100 officers armed to the teeth raided his $30 million home arriving in helicopters and seizing 18 vehicles, alleged digital evidence, and $42 million in suspected illegal proceeds.

In June, the high court ruled that the search warrants issued in January for the raid were invalid. And in July, the judge ruled that DotCom's extradition hearing that proposed his transfer from New Zealand to the U.S. be postponed until 2013 over questions about the legality of evidence seized with the search warrants.

As the legal proceedings have progressed the last few months, the raids have continued to come under scrutiny by New Zealand's high court. In September, New Zealand's prime minister officially requested an inquiry into the lawfulness of DotCom's surveillance and the raid of his home. Then, after it was determined that the government did illegally spy on DotCom, the prime minister issued a formal apology.

As of now, the extradition hearing to determine whether DotCom and his company managers can be extradited to the U.S. will be delayed until at least July 2013.