While the shutdown of Megaupload has brought out a variety of responses from people on the Web, the bizarre account of the arrest of Megaupload's founder seems similar to a a Hollywood-style action movie.
Since the closure of file-sharing site Megaupload and the following Anonymous attack on federal and music industry sites, details regarding the arrest of Megaupload founder Kim “Dotcom” Schmitz have been made public. German national, 38-year-old Schmitz was spending the day in his country mansion hideaway when dozens of police officers with helicopters swarmed the home. Schmitz then engaged several electronic locks throughout the household and refused to allow police entry into the $23 million mansion in Coatesville, New Zealand. As police officers forced their way into the home, Schmitz barricaded himself in the mansion’s safe room. After police sliced through the safe room door, they found him next to a sawed-off shotgun.
Schmitz was taken into custody without any further incident while police officers continued to search the property. Within New Zealand, police seized approximately 18 luxury vehicles worth 4.8 million dollars including several Mercedes Benz automobiles, a 2012 Maserati, a 2008 Rolls-Royce Phantom Drophead Coupe and a 1959 pink Cadillac. License plates on the cars included words such as “GOD”, “MAFIA”, “STONED”, “CEO”,”GOOD” & “EVIL”, “HACKER” and “KIM COM.” Police also seized artwork and electronic equipment as well as approximately eight million dollars from his bank accounts located within New Zealand. On a global scale, twenty search warrants were executed by various countries including the United States and approximately $50 million in assets have been seized so far.
In addition to leasing the most expensive home in New Zealand, Schmitz was known for extravagant spending within the country. In 2011, he spent approximately half a million dollars on a New Year’s Eve fireworks display to celebrate his family’s residency. According to Internet security expert Jeffrey Carr, Schmitz and his family settled down in the country because “New Zealand is under the radar, away from Interpol and a better lifestyle than Eastern Europe.”
Schmitz currently faces up to twenty years in prison on charges including conspiracy to commit copyright infringement, criminal copyright infringement, conspiracy to commit money laundering and racketeering. Schmitz and other Megaupload employees arrested in the case have also been denied bail. However, this hasn’t been Schmitz’s first encounter with police and federal authorities. In 1994, Schmitz spent three months in a Munich jail for accessing Pentagon computers to view real-time satellite photos of Saddam Hussein’s palaces in Iraq. During 1998, Schmitz received a two-year suspended prison sentence for hacking charges related to theft of trade secrets as well as tens of thousands of pounds ripped off from banks and security company using stolen phone card numbers.
Following that prosecution, Schmitz founded a computer security company called Data Protect and sold his ownership in the company for millions before the dot-com bubble burst in 2000. He took that money and invested in a failing shopping site called Letsbuyit.com. He also publicly announced a heavy investment in the firm, but that claim was designed to inflate the stock’s value. He ended up selling his stock shortly after the announcement for a profit of over a million dollars. After extraditing Schmitz from Bangkok, Thailand, German authorities prosecuted Schmitz again in 2002 for insider trading related to Letsbuyit.com, but he received another suspended prison sentence after spending five months in jail waiting for his trial.
In 2005, Schmitz founded Megaupload and watched it grow to garner 150 million registered users and approximately 50 million visitors a day. The site allowed users to upload video and music and create links to download those files. There’s no search function included in the site, this Schmitz relied on users to publish the links. While Schmitz often flaunted his extravagant taste on YouTube with videos racing expensive cars or lounging with bikini-clad models on yachts, German newspapers didn’t bring more attention to his lifestyle and link to Megaupload until last year.
The three other men arrested in the New Zealand raid include 38-year-old, German citizen Finn Batato, 40-year-old, German citizen Mathias Ortmann and 29-year-old, Dutch citizen Bram van der Kolk. On Monday, extradition proceedings will continue in New Zealand.
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