Jailed Megaupload founder seeks bail at New Zealand court hearing

Megaupload.com founder Kim Dotcom must remain in a New Zealand jail until a judge determines whether the alleged leader of a $175-million criminal conspiracy to pirate copyrighted material is eligible for bail.

The German-born Dotcom, who legally changed his name from Schmitz, is scheduled to return to court Wednesday to learn whether the judge will set bail and allow him to return to his mansion, where police seized luxury cars, guns and art in a raid Friday.

Dotcom and three other men appeared in court Monday in Albany, a suburb of Auckland, on U.S. criminal charges of copyright infringement and money laundering. Three others remain at large, the U.S. Justice Department said.

New Zealand police used helicopters in the raid on the eve of Dotcom’s 38th birthday. Megaupload was advertised as having more than 1 billion visitors, more than 150 million users and 50 million daily visitors, and was said to account for 4% of Internet traffic, prosecutors said.

“It was definitely not as simple as knocking at the front door,” Det. Inspector Grant Wormald said of the raid.

When police arrived at Dotcom’s leased Auckland home, he entered his house and activated electronic locks, New Zealand police said in the statement. They neutralized locks and cut their way into a safe room, where Dotcom was found with what looked like a sawed-off shotgun, according to the statement.

New Zealand police said they carried out 10 search warrants and seized 18 luxury vehicles, including a Rolls-Royce Phantom Drophead Coupe and a 1959 pink Cadillac. The vehicles are valued at more than $4.8 million. Police said as much as $8.87 million in cash was restrained in various accounts.

Altogether, investigators executed more than 20 search warrants in the U.S. and eight other countries and seized about $50 million in assets, the U.S. Justice Department said.

Dotcom denied any wrongdoing at Monday’s hearing, according to the Stuff.co.nz website. Prosecutor Anne Toohey urged the judge to deny Dotcom’s request for bail, saying he was a flight risk.

The seven accused in the scheme have run websites that have unlawfully copied works including films, music and television programs for more than five years, the U.S. said.

The arrests occurred as the U.S. Congress considered anti-piracy legislation supported by the movie and music industries, but that effort prompted a backlash from thousands of Internet companies, including such heavyweights as Google Inc. and the nonprofit Wikimedia Foundation Inc., and from millions of Web users.

Opponents said the two measures, the Stop Online Piracy Act in the House and the Protect Intellectual Property Act in the Senate, would promote censorship, disrupt the Web’s architecture and harm their ability to innovate. Votes on the bills were postponed after several legislators withdrew support in the wake of the online protests.

Megaupload was led by Dotcom, a resident of Hong Kong and New Zealand and a dual citizen of Finland and Germany, according to the indictment. Police also arrested a Dutch citizen who lives in New Zealand and two German nationals.