FBI Close Megaupload

FBI Close Megaupload

  Megaupload, file sharing sites are quite popular, has been ordered to close by the FBI and U.S. Justice Department. Charge is none other than piracy.

As reported by the LA Times, in addition to closed founder Megaupload is also charged with violating intellectual property rights law.

Kim Dotcom (formerly named Kim Schmitz) and Mathias Ortmann, the two founders Megaupload, rumored to have been arrested in New Zealand.

The U.S. Justice Department called the case as a case of copyright of the largest ever conducted by the U.S..

"The goal is to misuse the service provider of storage and public distribution to facilitate the violation of intellectual property rights," said their statement.

Megaupload accused of causing losses amounting to 500 million U.S. dollars. The site has more than 150 million registered users and 50 million visitors per day.

While Megaupload has submitted rebuttal of the allegations. They call, most of its traffic is legal.

"If the content industry will take advantage of our popularity, we will be happy to dialogue. We've got some interesting ideas," said an official statement Megaupload.


FBI shuts down Megaupload.com, charges seven with online piracy

THE FBI today shut down popular file-sharing website Megaupload.com and charged the site's founders and five others with running "an international organised criminal enterprise" responsible for "massive online piracy".

Megaupload Limited and sister company Vestor Limited generated "more than $175 million in criminal proceeds" and caused "more than half a billion dollars in harm to copyright owners" through the piracy of "numerous types of copyrighted works," the US Justice Department and FBI said in a joint statement.

Seven people have been charged with online piracy crimes in an indictment, dated January 5 and unsealed in northern Virginia. Four of those suspects are already in custody, authorities said.

Among those charged are site founders Kim Dotcom and Kim Tim Jim Vestor and Chief Marketing Officer Finn Batato.

Megaupload CEO Swizz Beatz, a rapper and producer and husband to pop star Alicia Keys, was not listed among those charged.



Dotcom, Batato and two others were arrested today in Auckland, New Zealand, by New Zealand authorities carrying out warrants on behalf of the US. Three suspects remain at large, the Justice Department said.

Megaupload.com is a content hosting site that allows users to upload content for others to then download.

But according to the indictment, "for more than five years the conspiracy has operated websites that unlawfully reproduce and distribute infringing copies of copyrighted works, including movies - often before their theatrical release - music, television programs, electronic books, and business and entertainment software on a massive scale."

As of this afternoon (local time), Megaupload.com had been shutdown.

The indictment charges the suspects with racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering and two counts of criminal copyright infringement.

If convicted, each individual faces up to 55 years in prison, the Justice Department said.

Investigators said there was no connection between arrests in their two-year investigation and the political firestorm that erupted this week over a pending vote on the Stop Online Piracy Act, according to The Wall Street Journal.

The charges came a day after Washington lawmakers were inundated with complaints about legislation designed to crack down on the online sharing of pirated copies of music, movies and other material.

Who is Kim Dotcom?

A computer hacker turned online file-sharing tycoon is the man at the centre of an FBI-led crackdown on online piracy that has spread to New Zealand.

Kim Dotcom (also known as Kim Schmitz) is a 39-year-old German who also holds Finnish citizenship, and has Hong Kong and New Zealand residency.

He lives in New Zealand's most expensive house - the $30 million former Chrisco mansion in Coatesville, north of Auckland - which was raided by police on Friday morning as they executed search warrants as part of a probe into the Schmitz-founded file-sharing website www.megaupload.com.

The FBI took the site offline on Friday morning after filing an indictment in a US court earlier this month alleging Schmitz and six others, dubbed the "Mega Conspiracy", engaged in racketeering, copyright infringement and money laundering.

Schmitz is no stranger to being on the wrong side of the law, with a list of convictions including insider trading, credit card fraud, hacking and embezzlement.

But despite his background, Schmitz was granted New Zealand residency, reportedly after investing $10 million in government bonds and making a generous donation to the Christchurch earthquake fund.

He told Campbell Live in 2010 his convictions had been wiped clean under a German "clean slate" law.

"Officially I am as clean as it gets," he said.

"I am not a bad person with a bad character."

Schmitz founded the Hong Kong-based Megaupload website in 2005, which distributed a myriad of copyrighted works including movies, television programmes, music, software and books.

Megaupload also offered financial incentives for users to upload popular content and drive web traffic to the site.

Schmitz made $US42 million ($NZ52 million) from Megaupload and other associated websites in 2010, according to the FBI's indictment filed in a Virginia court.

Despite opposition to the site's operations from record labels and other copyright holders, many celebrities and artists backed its work - with chart-toppers Kanye West, Will.I.Am and P Diddy starring in a support video last year.

Schmitz is due to appear in North Shore District Court on Friday along with three other men arrested in the probe.

US Internet piracy case brings New Zealand arrests

With 150 million registered users, about 50 million hits daily and endorsements from music superstars, Megaupload.com was among the world's biggest file-sharing sites. Big enough, according to a U.S. indictment, that it earned founder Kim Dotcom $42 million last year alone.

The movie industry howled that the site was making money off pirated material. Though the company is based in Hong Kong and Dotcom was living in New Zealand, some of the alleged pirated content was hosted on leased servers in Virginia, and that was enough for U.S. prosecutors to act.

The site was shut down Thursday, and Dotcom and three Megaupload employees were arrested in New Zealand on U.S. accusations that they facilitated millions of illegal downloads of films, music and other content, costing copyright holders at least $500 million in lost revenue.

New Zealand Police also seized guns, artwork, more than $8 million in cash and luxury cars valued at nearly $5 million after serving 10 search warrants at several businesses and homes around the city of Auckland.

News of the shutdown seemed to bring retaliation from hackers who claimed credit for attacking the Justice Department's website. Federal officials confirmed it was down for hours Thursday evening and that the disruption was being "treated as a malicious act."

A loose affiliation of hackers known as "Anonymous" claimed credit for the attack. Also hacked was the site for the Motion Picture Association of America.

On Friday, New Zealand's Fairfax Media reported that the four defendants stood together in an Auckland courtroom in the first step of extradition proceedings that could last a year or more.
Dotcom's lawyer raised objections to a media request to take photographs and video, but then Dotcom spoke out from the dock, saying he didn't mind photos or video "because we have nothing to hide." The judge granted the media access, and ruled that the four would remain in custody until a second hearing Monday.

Dotcom, Megaupload's former CEO and current chief innovation officer, is a resident of Hong Kong and New Zealand and a dual citizen of Finland and Germany who had his name legally changed. The 37-year-old was previously known as Kim Schmitz and Kim Tim Jim Vestor.

Two other German citizens and one Dutch citizen also were arrested and three other defendants - another German, a Slovakian and an Estonian - remain at large.

The Electronic Frontier Foundation, which defends free speech and digital rights online, said in a statement that the arrests set "a terrifying precedent. If the United States can seize a Dutch citizen in New Zealand over a copyright claim, what is next?"
The indictment was unsealed one day after websites including Wikipedia and Craigslist shut down in protest of two congressional proposals intended to make it easier for authorities to go after sites with pirated material, especially those with overseas headquarters and servers.

Before Megaupload was taken down, the company posted a statement saying allegations that it facilitated massive breaches of copyright laws were "grotesquely overblown."
"The fact is that the vast majority of Mega's Internet traffic is legitimate, and we are here to stay. If the content industry would like to take advantage of our popularity, we are happy to enter into a dialogue. We have some good ideas. Please get in touch," the statement said.

Several sister sites were also shut down, including one dedicated to sharing pornography files.

The $8 million in cash seized had been invested in various New Zealand financial institutions, and has been placed in a trust pending the outcome of the cases.

Police spokesman Grant Ogilvie said the seized cars include a Rolls Royce Phantom Drophead Coupe worth more than $400,000. Two short-barreled shotguns and a number of valuable artworks were also confiscated, he added.

According to the indictment, Megaupload was estimated at one point to be the 13th most frequently visited website on the Internet. Current estimates by companies that monitor Web traffic place it in the top 100.

Megaupload is considered a "cyberlocker," in which users can upload and transfer files that are too large to send by email. Such sites can have perfectly legitimate uses. But the Motion Picture Association of America, which has campaigned for a crackdown on piracy, estimated that the vast majority of content being shared on Megaupload was in violation of copyright laws.
The website allowed users to download some content for free, but made money by charging subscriptions to people who wanted access to faster download speeds or extra content. The website also sold advertising.

Megaupload was unique not only because of its massive size and the volume of downloaded content, but also because it had high-profile support from celebrities, musicians and other content producers who are most often the victims of copyright infringement and piracy. Before the website was taken down, it contained endorsements from Kim Kardashian, Alicia Keys and Kanye West, among others.

The company listed Swizz Beatz, a musician who married Keys in 2010, as its CEO. He was not named in the indictment and declined to comment through a representative.

The five-count indictment, which alleges copyright infringement as well as conspiracy to commit money laundering and racketeering, described a site designed specifically to reward users who uploaded pirated content for sharing, and turned a blind eye to requests from copyright holders to remove copyright-protected files.

For instance, users received cash bonuses if they uploaded content popular enough to generate massive numbers of downloads, according to the indictment. Such content was almost always copyright protected, the indictment said.
The Justice Department said it was illegal for anyone to download pirated content, but their investigation focused on the leaders of the company, not end users who may have downloaded a few movies for personal viewing.

A lawyer who represented the company in a lawsuit last year declined to comment Thursday. Efforts to reach an attorney representing Dotcom were unsuccessful.

Although Megaupload is based in Hong Kong, the size of its operation in the southern Chinese city was unclear. The administrative contact listed in its domain registration, Bonnie Lam, did not respond immediately for a request for comment sent to a fax number and email address listed.

The indictment was returned in the Eastern District of Virginia, which claimed jurisdiction in part because some of the alleged pirated materials were hosted on leased servers in Ashburn, Va. Prosecutors there have pursued multiple piracy investigations.

The Justice Department also was investigating the "significant increase in activity" that disrupted its website. It said in a statement that it was working to "investigate the origins of this activity, which is being treated as a malicious act until we can fully identify the root cause."

The site appeared to be working again late Thursday. A spokesman for the Motion Picture Association of America said in an emailed statement that the group's site also had been hacked, but it too appeared to be working later in the evening.
"The motion picture and television industry has always been a strong supporter of free speech," the spokesman said. "We strongly condemn any attempts to silence any groups or individuals."

Anonymous hacks U.S. govt. sites after Megaupload shutdown

The hacker group Anonymous said it launched its largest-ever online attack in retaliation for the U.S. government’s shutdown of one of the world’s largest file-sharing websites, Megaupload, for alleged copyright infringements.

More than 5,000 of its members had collaborated to bring down the websites of the Justice Department, the Motion Picture Association of America and the Recording Industry Association of America, the hacker collective said on Thursday. All three sites were inaccessible on Thursday.

The group said in a message on its Twitter account @YourAnonNews that 5,635 people were using denial-of-service attacks to target the websites, including those of the Federal Bureau of Investigation and the White House, although both those sites appeared to be working.

The action came after federal prosecutors unsealed an indictment against seven people connected with Megaupload, which they said earned $175 million while costing copyright holders more than $500 million in lost revenue.

Megaupload founder Kim Dotcom, whose real name is Kim Schmitz, was among four of the accused arrested on Friday in New Zealand.

Keywords: Megaupload shutdown, Anonymous attack, hacker collective, denial of service