Megaupload founder Kim Dotcom and three other people connected with the file-sharing site were arrested in Auckland as the website was shut down by US federal authorities.
Megaupload.com is a "cyberlocker" website which allows users to upload and store large files. The US Department of Justice (DoJ) alleges the site was the hub of an "international organised criminal enterprise" that was responsible for "massive worldwide online piracy of numerous types of copyrighted works."
Megaupload.com and other related sites have generated more than $175 million in criminal proceeds and causing more than half a billion dollars in harm to copyright owners, claimed the DoJ.
According to a statement on the FBI website, Dotcom, along with chief marketing officer Finn Batato, Mathias Ortmann, chief technical officer, Ortmann and Bram van der Kolk, programmer, were arrested "by New Zealand authorities, who executed provisional arrest warrants requested by the United States Department of Justice."
IT lawyer Rick Shera, a partner at Auckland law firm Lowndes Jordan happened to be passing Dotcom's Coatesville mansion after the arrests.
"NZ Police stationed at all entrances to #megaupload founder's mansion (just drove past)," he tweeted.
The DoJ says seven individuals and two companies - Megaupload Limited and Vestor Limited - were indicted by a grand jury in Virginia on January 5, 2012, and charged with engaging in a racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering and two substantive counts of criminal copyright infringement.
"The individuals each face a maximum penalty of 20 years in prison on the charge of conspiracy to commit racketeering, five years in prison on the charge of conspiracy to commit copyright infringement, 20 years in prison on the charge of conspiracy to commit money laundering and five years in prison on each of the substantive charges of criminal copyright infringement," says the DOJ.
Here's the full text of the indictment.
In response to the Megaupload prosecutions and arrests, Anonymous have taken down websites for RIAA, BMI, FBI, US Dept of Justice, and Universal Music and others. Anonymous have posted a video about the attacks on Youtube, stating it is the beginning of what they call Operation Blackout.
The NZ Police released a statement on January 20 about the arrests:
"The four arrests in the Auckland area today are part of an operation led by the US Department of Justice targeting large scale criminal copyright infringement and money laundering around the world.
The arrests, carried out by the Organised & Financial Crime Agency New Zealand (OFCANZ) and New Zealand Police, follow a mutual legal assistance request from the United States to arrest of individuals for the purpose of extradition.
The Federal Bureau of Investigation is investigating a group of people who are alleged to be engaged in and facilitating criminal copyright infringement and money laundering on a massive scale.
The group, known as the "Mega Conspiracy" allegedly operates Megaupload.com, an internet website that offers file hosting and distribution services. This site has been accused by the US Department of Justice of reproducing and distributing infringing copies of all types of copyrighted works, including movies, television programmes, music, software and books.
The estimated harm to copyright holders is believed to be more than $500 million.
The four people were arrested at addresses in Coatsville and Orakei. A total of 10 search warrants were executed at residential and business addresses across Auckland.
Those arrested have German, Dutch and Finnish citizenship. Some are resident in New Zealand.
All will appear in the North Shore District Court this afternoon.
Assets have been seized including luxury cars with an estimated total value of up to NZ$6m. These include a Rolls Royce Phantom Drophead Coupe valued at over NZ$500,000. Over NZ$10m has also been seized from NZ financial institutions. These have been secured by New Zealand's Official Assignee pending the outcome of legal proceedings."
Detective Inspector Grant Wormald of OFCANZ says today's arrests were the result of several months coordination with the FBI and US Department of Justice:
"The FBI contacted New Zealand Police in early 2011 with a request to assist with their investigation into the Mega Conspiracy." said Mr Wormald.
"We were happy to provide this assistance. Staff from OFCANZ and New Zealand Police have worked with the US authorities over recent months to effect today's successful operation.
"All the accused have been indicted in the United States. We will continue to work with the US authorities to assist with the extradition proceedings." said Mr Wormald."