New Zealand police cut way into mansion in Internet fraud case

Reuters News
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Posted: Jan 21, 2012 1:13 AM
New Zealand police cut way into mansion in Internet fraud case

By Mantik Kusjanto

WELLINGTON (Reuters) - New Zealand police broke through electronic locks and cut their way into a mansion safe room to arrest the alleged kingpin of an international Internet copyright theft case and seize millions of dollars worth of cars, artwork and other goods.

German national Kim Dotcom, also known as Kim Schmitz, was one of four men arrested on Friday in an investigation of the Megaupload.com website led by the U.S. Federal Bureau of Investigation.

The group was accused of engaging in a scheme that took more than $500 million away from copyright holders and generated over $175 million in proceeds from subscriptions and advertising.

A police official said on Saturday that dozens of officers, backed by helicopters, forced their way into the mansion, nestled in lush farmland, after Dotcom refused them entry.

"Despite our staff clearly identifying themselves, Mr Dotcom retreated into the house and activated a number of electronic-locking mechanisms," said Detective Inspector Grant Wormald from the Organised & Financial Crime Agency New Zealand.

Officers broke the locks and Dotcom barricaded himself into a safe room which officers had to cut their way into, he said.

"Once they gained entry into this room, they found Mr Dotcom near a firearm which had the appearance of a shortened shotgun," he said. "It was definitely not as simple as knocking at the front door."

PINK CADILLAC

Two firearms were seized and a 55-year-old New Zealand man had been charged with illegal possession of a pistol. Computers and documents were also retrieved and more than NZ$10 million ($8 million) was seized from financial institutions.

Television footage showed vehicles, including a pink Cadillac and a Rolls-Royce Phantom Drophead Coupe, being removed from the property north of Auckland, New Zealand's largest city.

The arrests were made as the debate over online piracy reaches fever pitch in Washington where Congress is trying to craft tougher legislation.

Lawmakers stopped anti-piracy legislation on Friday, postponing a critical vote in a victory for Internet companies that staged a mass online protest against the fast-moving bills.

The movie and music industries want Congress to crack down on Internet piracy and content theft, but major Internet companies like Google and Facebook have complained that current drafts of the legislation would lead to censorship.

"Our focus now is on completing all the documentation required by crown law ahead of the next court appearance on Monday," Wormald said of the Auckland arrests.

"The team of four FBI staff will also remain working with us for the next few days."

Kim, who turns 38 on Saturday, and the other men made a brief court appearance on Friday will appear again on Monday. They face extradition and a trial in the United States.

On Friday, in a show of support, hackers attacked and temporarily disabled a number of government and entertainment company websites, including the U.S. Justice Department's website.

U.S. Justice Department officials have said that the estimate of $500 million in economic harm to copyright holders cited in a U.S. indictment was at the low end and could be significantly more.

The allegations included copyright infringement as well as conspiracy to commit copyright infringement, conspiracy to commit money laundering and conspiracy to commit racketeering. Two of the offences carry a maximum penalty of 20 years.

The companies charged, Megaupload Ltd and Vestor Ltd, were both registered in Hong Kong and owned either in large part or solely by Dotcom.

Megaupload has boasted of having more than 150 million registered users and 50 million daily visitors, according to the indictment. At one point, it was estimated to be the 13th most frequently visited website on the Internet.

Users could upload material to the company's sites which then would create a link that could be distributed. The sites, which included video, music and pornography, did not provide search capabilities but rather relied on others to publish the links, the U.S. indictment said.

(Editing by Lincoln Feast and Ron Popeski)