MegaUpload Shut Down By Feds

    January 19, 2012

MegaUpload, one of the world’s most popular file sharing sites, has been shut down by the federal government.

Washington has released a press release today saying that they have shut down MegaUpload and Vestor Limited. They have also charged seven individuals with for “running an international organized criminal enterprise allegedly responsible for massive worldwide online piracy of numerous types of copyrighted works.” The Justice Department and the FBI announced that they also believe the Web sites generated more than $175 million in “criminal proceeds” and more than half a billion dollars in harm to copyright owners.

They claim that this action is among the largest “criminal copyright cases ever brought by the United States and directly targets misuse of a public content storage and distribute site to commit and facilitate intellectual property crime.”

The individuals and two companies were indicted by a grand jury in the Eastern District of Virginia on January 5. They were charged with racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering and two substantive counts of criminal copyright infringement.

For all the crimes listed, the individuals charged face a maximum penalty of 55 years in prison if they are found guilty of all of them.

The indictment alleges that the criminal enterprise is led by Kim Dotcom, 37, a resident of both Hong Kong and New Zealand. He is the founder of MegaUpload and Vestor Limited.

The others charged in the case are Finn Batato, chief marketing officer; Julius Bencko, graphic designer; Sven Echternach, head of business development; Mathias Ortmann, chief technical officer and co-founder; Andrus Nomm, software programmer and head of the software development; and Bram van der Kolk, who oversees programming and the underlying network structure of the Mega Web sites.

Dotcom, Batato, Ortmann and van der Kolk were arrested today in New Zealand, under provisional arrest warrants requested by the United States. Bencko, Echternach and Nomm remain at large. Law enforcement executed 20 search warrants in the United States and eight countries. They also seized $50 million in assets and targeted sites where MegaUpload had servers.

The indictment states that MegaUpload and the other Mega sites (i.e. MegaVideo) have “unlawfully” reproduced and distributed infringing copies of copyrighted works on a “massive scale.”

The indictment states that MegaUpload’s sole business model was expressly designed to promote uploading of the most popular copyrighted works. The indictment also alleges that the site was structured to discourage its users from using MegaUpload for long-term personal storage by automatically deleting content that was not regularly downloaded. They also allege that MegaUpload used financial incentives to encourage users to upload popular content to drive traffic to their site. More damning is that they allege MegaUpload paid users to specifically upload popular works and publicize the links around the world.

This all comes full circle with the allegation that MegaUpload didn’t allow people to search for files on their service because of their “conspiracy” to not publicize such content on their Web site.

The case is being prosecuted by the U.S. Attorney’s Office for the Eastern District of Virginia and the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division. The Criminal Division’s Office of International Affairs, Organized Crime and Gang Section and Asset Forfeiture and Money Laundering Section also assisted with the case.

This is being presented as one more effort being taken by the Department of Justice Task Force on Intellectual Property to stop the theft of IP.

Of course, all this comes the day after the SOPA/PIPA protest blackout. Way to stay classy, Justice Department.