Kim Dotcom beats US bid to get him thrown back in jail

Kim Dotcom has successfully fended off an American government bid to put in him back in a New Zealand jail for allegedly violating his bail.

"That was a good win today, but also another attempt by the US government to get my liberty removed—it’s unbelievable," Dotcom told Ars by phone late Sunday night.

It’s been nearly three years since New Zealand authorities raided Kim Dotcom’s mansion, complete with two helicopters, as part of the American-led global shutdown of his Hong Kong-based file sharing company, Megaupload. Dotcom still faces American criminal charges of copyright infringement, online piracy, and money laundering charges, a civil case brought in April 2014 by the Motion Picture Association of America (MPAA), and more recently, a July 2014 civil forfeiture case. Dotcom and his lawyers have relentlessly fought back in multiple jurisdictions.

The Department of Justice did not immediately respond to Ars’ request for comment.

Auckland District Court Judge Nevin Dawson restored the prior conditions of Dotcom’s "free on bail" status, which requires him to check in with local police twice per week. But the judge also imposed new restrictions on Dotcom’s movements: he cannot travel by air or boat charter, only by commercial or public transit.

Last week, New Zealand authorities, working on behalf of American prosecutors pushing Dotcom’s criminal copyright case, claimed that the Megaupload founder "has breached bail conditions by having indirect contact with one of his accused; that he is a flight risk because he has the money to skip the country; and that he has been dishonest about his finances by trying to sell a NZ$500,000 Rolls Royce in London."

According to Radio New Zealand, Judge Dawson ruled from the bench on Monday (Sunday in the United States) that "the court did not accept Mr. Dotcom had hidden money and it would be inappropriate to revoke bail."

Ira Rothken, Dotcom’s California-based attorney, told Ars via text message that he was "pleased" with the result.

"This is what happens when prosecutors just want to win rather than do justice," he wrote. "We expect a similar result at the extradition hearing when the Court learns that the prosecutors made up the law of criminal secondary copyright infringement."

Dotcom told Ars that he has been perfect for over two years in meeting his bail conditions by reporting to a local police office twice per week, about a 10 minute drive away.

"I have not missed one date—I’m not even driving my own cars to make sure I'm not speeding," he said. "I’ve been exemplary for fulfilling my bail conditions. [The officers at that station] are all my friends over there. I know them all by name. They pull out a report card. I sign with my signature and I wish them a good week and then I drive back home. It takes five minutes and that’s it."

The never-ending story

Dotcom has had some intermediate victories in the last 2.5 years. Since 2012, a New Zealand judge had ruled that the initial warrants to search his home were illegal, which was then overturned in February 2014 on appeal—that issue is now pending before the New Zealand Supreme Court.

New Zealand’s Government Communications Security Bureau (GCSB), analogous to the National Security Agency in the United States, was also found to have spied on Dotcom (a German national with permanent residency status in New Zealand) before the January 2012 raid on his mansion.

As we reported in 2012, because Dotcom had obtained permanent resident status, he did not qualify as a foreigner under a version of the GCSB law at the time, and therefore should not have been subjected to GCSB surveillance. But the agency evidently misunderstood the law or failed to verify Dotcom's immigration status.

US authorities attempted to seize Dotcom’s assets under civil forfeiture back in July 2014—Dotcom’s lawyers attempted to have that case (which is separate from the criminal case) stayed until the criminal case is resolved. The judge in the civil forfeiture case has yet to rule on the motion to stay the case. Rothken argues that because Dotcom has never been to the US, he can’t possibly be a fugitive.

The extensive list of seized assets includes millions of dollars in various seized bank accounts in Hong Kong and New Zealand, multiple cars, four jet skis, the Coatesville mansion, several cars, two 180-inch TVs, three 82-inch TVs, a $10,000 watch, and a photograph by Olaf Mueller worth over $100,000.

Since then, Dotcom has been vociferously fighting being sent to the United States—his oft-delayed extradition hearing has been postponed yet again, until June 2015.

In November 2014, the case against Dotcom and his co-defendants heated up as United States federal prosecutors asked a court to transfer ownership of his seized assets (which remain in New Zealand government custody) to the United States government on "doctrine of fugitive disentitlement." If the court agrees, and Dotcom and the others are declared fugitives, then they can have no claim on the assets that have already been seized.

American authorities want the US federal court in Virginia to move quickly. As they recently told the court in a filing:

In addition, a delay in this case could jeopardize forfeiture of the assets if foreign governments proceed to release the currently restrained assets despite the United States’ requests to continue restraint. For assets located in New Zealand, at least, the restraint sought based upon the order of this Court cannot, by statute, be extended beyond April 18, 2015. The initial hearing for the New Zealand defendants’ extradition eligibility is now scheduled for June 2, 2015, which is long after those restraints will have been lifted.

Dotcom told Ars that about 18 months ago he was offered an "unofficial" plea deal through the solicitor general of New Zealand.

"The suggestion was made that this could all go away if I was willing to accept a New Zealand-based copyright charge," he added. "That if I admit some liability, that was the proposal—at that time we were winning in court, the unlawful search, and found out that the government was spying on me illegally, and I didn’t feel that I wanted to accept any liability because I haven’t done anything criminal and I told them to go away. I said I’m not interested."

“They know they will lose”

In an hour-long phone call with Ars, Dotcom claimed that American authorities were trying to essentially bleed him dry financially so that he could not mount a proper legal defense, and he again denied criminal wrongdoing.

"The US has been gaming the system from Day 1, trying to make sure that I’m running out of steam and out of funds, and they’re working with the [Recording Industry Association of America] and the MPAA," he said.

He said that his offer to come to the US to defend himself if his seized assets were unfrozen just so he could pay legal fees still stands.

"The lawyers of the MPAA have taken control of [my Mega shares]," he said, referring to the new cloud storage company he founded in the wake of the shattering of Megaupload. Dotcom has reportedly made $40 million through selling shares of two companies that he founded: Mega and Baboom, a music site. (Dotcom cut ties with Baboom in October 2014.)

He recently transferred remaining shares to a trust controlled by his estranged wife and five children as a way to shield them from being frozen or seized by the MPAA. But that had a secondary effect, which made it much harder for him to sell those shares, which provided a necessary source of income to pay his New Zealand legal team.

"That has led to my New Zealand legal team resigning [in November 2014]," he added. "They didn’t see a quick route for that to be returned—the moment that happened that was when the US moved in for the kill [and asked the court restore my bail conditions]. They are not interested in a fair extradition, or the merits of the case, because they know they will lose. Copyright is not extraditable under New Zealand law. They can only extradite under racketeering. They have nothing of these communications [to show] that there was any conspiracy to commit copyright infringement, and they allege that Megaupload was used only for the purpose for copyright infringement. They want to run me out of money."

Dotcom said that already he has paid "over $10 million in legal fees around the world, with the majority of that in New Zealand." His chief global counsel, Ira Rothken, who is based in California and flies to New Zealand every six weeks, has yet to be paid.

"There are some lawyers that are owed large sums of money, and the only way I was able to pay was to share Mega shares to interested buyers and using what the trust gained with that and now they have been restrained so that route is not available anymore," Dotcom continued.

"Now [the MPAA is] forcing me to go back to the High Court in New Zealand and to the courts in Hong Kong and let them know that the legitimate new assets that I have created are now restrained, and therefore I have to ask the courts to release funds from the assets that were seized in 2012, and that’s what's going to happen in the next few weeks. They have basically taken any chance from me to have any liquidity to have the Mega and Baboom shares. That’s their strategy. They wanted to make sure that I don’t have liquidity and that I don’t have lawyers."

Still, in the coming weeks, Dotcom and his Hong Kong-based legal team expect a judicial ruling to determine whether the shuttering of Megaupload in Hong Kong was improper. If so, then Dotcom could sue local authorities for millions in damages.