Megaupload founder Dotcom likely to get bail

Megaupload founder Kim Dotcom, right, attends court in Auckland, New Zealand, on January 25.

Story highlights

  • Kim Dotcom was arrested last month in New Zealand
  • Judge finds no "just cause" to consider him a flight risk
  • Three Megaupload co-workers were arrested with him
  • They face charges relating to racketeering and copyright infringement
A New Zealand judge cleared the way Wednesday for the release on bail of Kim Dotcom, the millionaire founder of the file-sharing website Megaupload.
"In my view, after taking all matters now known to this court into account, the factors relating to flight risk are not now of such concern that there remains just cause to continue to remand Mr. Dotcom in custody once satisfactory bail conditions are imposed to alleviate the remaining concerns about his possible flight," wrote District Judge N.R. Dawson.
In his 13-page decision, Dawson cited "fresh and new" information that has emerged since Dotcom's first application for bail was denied last month and upheld early this month, including:
-- Megaupload's chief financial officer has filed an affidavit supporting Dotcom's contention that he has no money to flee;
-- He has only two passports (one Finnish and one German), not three, as previously asserted;
-- The United States has extradition treaties with Germany and Finland;
-- No steps have been taken to re-establish the shuttered business;
-- No new evidence has been uncovered;
-- An extradition hearing likely will not occur before July, an "effectively punitive" period of time, despite the fact that no criminal conduct has been established.
Dotcom, whose birth name is Kim Schmitz, and three co-workers were arrested last month in New Zealand at the request of the U.S. government. They face charges that include conspiracy to commit racketeering, conspiracy to commit copyright infringement, conspiracy to commit money laundering and criminal copyright infringement.
The German citizen is a resident of New Zealand and Hong Kong.
The U.S. government has accused him of having been the mastermind of a huge online fraud operation with multiple identities and a history of breaking the law and evading arrest.
Megaupload's lawyers have denied the charges, and online activists have rallied to the site's defense.
The arrests and the closure of Megaupload prompted an angry reaction from the activist hacking collective Anonymous. After the prosecution was announced, the group took credit for temporarily crippling the U.S. Department of Justice, FBI and entertainment company websites. U.S. authorities say Megaupload generated more than $175 million in illegal profits through advertising revenue and the sale of premium memberships.
Dotcom holds a German passport and two Finnish passports, under the names of Kim Tim Jim Vestor and Kim Dotcom. Prosecutors had said that the multiple passports, as well as bank accounts and credit cards from various countries linked to different names, showed that he presented a flight risk.
But Dawson was unswayed.
Dotcom "legally changed his name on two occasions and each passport was obtained in his legal name at that time," the judge wrote. "It is the applicant's understanding that the first Finnish passport in the name of Vestor would have been canceled when he applied for a new passport from Finland in the name of Dotcom. Suprisingly, no inquiries have been made of the Finnish authorities to confirm this."
In addition, Dotcom "is entitled to hold both his German passport and his Dotcom Finnish passport," he said.
Dawson said Dotcom, at the time of his arrest, had 59 credit or bank cards under 13 names in his possession, 21 of them still valid. But the judge said Dotcom's possession of so many expired cards could indicate no more than "a degree of muddlement" in his financial affairs.
The 38-year-old businessman has prior convictions related to computer hacking and insider trading. But Dawson notes that they are "historical," with some of them dating to his teenage years.
Dotcom is a resident of New Zealand, where he employs more than 50 staff, and Hong Kong, where he has a suite at the Grand Hyatt Hotel.
He is married to a Filipina woman with whom he has three children, and his wife is pregnant with twins.
"The factors against him being a flight risk include that he would live his life as a fugitive, he would be abandoning his expectant wife and three children and he would effectively lose all the considerable assets and bank accounts in a number of countries that have been seized or frozen," Dawson wrote. "It is submitted that he has a good defense to the charges and that he has every reason to stay and fight for his family's future and his seized assets."
Dotcom's lawyer, Paul Davison, argued the facts demonstrate his commitment to staying in New Zealand, where he obtained residency status in December 2009.