Kim Dotcom

Media reaction

The mistakes by authorities attracted widespread media coverage and Key's handling of the affair was criticised by opposition parties in Parliament. Political commentator Bryce Edwards criticised the GCSB's involvement and described the prosecution of Dotcom as "the stuff of farce". The Sunday Star-Times commentator Richard Boock compared the Dotcom saga to Watergate and suggested it might eventually 'bring down' John Key. The story made headlines overseas, including in The Wall Street Journal, The New York Times, The Guardian and the Hollywood Reporter which specialises in legal and entertainment issues.

Thailand

Dotcom moved to Thailand to avoid investigation, but was arrested there at the request of the German embassy. In response, he allegedly pretended to kill himself online and declared through his website that he wished to be known as "His Royal Highness King Kimble the First, Ruler of the Kimpire". He was deported back to Germany where he pleaded guilty to embezzlement in November 2003 and, after five months in jail awaiting trial, again received a suspended sentence, this time of 20 months. After avoiding a prison sentence for a second time, he left Germany and moved to Hong Kong in late 2003.

Hong Kong

Dotcom registered Kimpire Limited in December 2003, soon after moving there. He set up a network of interlinked companies, including Trendax, which he said was an artificial intelligence-driven hedge fund. However, Trendax was never registered with Hong Kong's Securities and Futures Commission and the company was not legally allowed to accept investments or to conduct trades. After moving to New Zealand, Dotcom did not disclose his investment activity to the Securities and Futures Commission and was fined HK$8,000.

Megaupload arrest and extradition proceedings

In February 2003, Dotcom set up Data Protect Limited, but changed the name to Megaupload in 2005. He was the chief executive officer. Megaupload was an online file-hosting and sharing service in which users could share links to files for viewing or editing, much of it pirated. Eventually it had over 150 employees, US$175 million revenues, and 50 million daily visitors. At its peak Megaupload was estimated to be the 13th-most popular site on the Internet and responsible for 4% of all Internet traffic.

On 5 January 2012, indictments were filed in Virginia in the United States against Dotcom and other company executives with crimes including racketeering, conspiring to commit copyright infringement, and conspiring to commit money laundering. Two weeks later on 20 January, Dotcom, Finn Batato, Mathias Ortmann and Bram van der Kolk were arrested in Coatesville, New Zealand by the New Zealand Police, in an armed raid on Dotcom's house involving 76 officers and two helicopters. Seized assets included eighteen luxury cars, large TVs, works of art and US$175 million in cash. Dotcom's bank accounts were frozen, denying him access to 64 bank accounts world-wide, including BNZ and Kiwibank accounts in New Zealand, government bonds and money from numerous PayPal accounts.

Dotcom was remanded to Mt Eden Prison and alleged poor treatment by the authorities. On 22 February, North Shore District Court Judge Nevin Dawson overturned previous rulings and released Dotcom on bail, reasoning that Dotcom had neither the ability nor desire to flee the country.

High Court

On 28 June 2012, High Court of New Zealand Justice Helen Winkelmann found that the warrants used to seize Dotcom's property were illegal because they were too broad. The Crown later admitted that it was aware that it was using the wrong order while the raid was in progress and that Dotcom should have been given the chance to challenge the seizure. It also admitted to giving seized hard drives to the FBI, who made copies of them in New Zealand and then sent them back to the US. Justice Winkelmann ruled that the handing of hard drives seized by New Zealand police in the raid to the FBI, and the copying of data on them by the FBI, was illegal.

As a result of those rulings, Justice Judith Potter allowed Dotcom to withdraw approximately NZ$6 million (US$4.8 million) on 28 August 2012 of his seized assets, and to sell nine of his cars. The amount released was to cover $2.6 million in existing legal bills, $1 million in future costs, and another $1 million in rent on his New Zealand mansion.

Court of Appeal

In May 2012, a district court judge ruled that the FBI should hand over all its evidence against Dotcom relating to the extradition bid. The Crown appealed, but the ruling was upheld by the High Court. The Crown appealed again and in March 2013, the Court of Appeal quashed the previous court decisions. Crown lawyer John Pike, on behalf of the US Government, argued that the district court had no power to make disclosure decisions in an extradition case and that "disclosure was extensive and could involve billions of emails". The Court of Appeal agreed stating that extradition hearings were not trials and the full protections and procedures for criminal trials did not apply. Dotcom's lawyer, Paul Davison, QC, appealed to the Supreme Court. In May 2013, the Supreme Court agreed to hear the case, so it will make the final decision on whether Dotcom should receive all the FBI investigation files before the extradition hearing.

A series of subsequent court decisions delayed every attempt to hold a hearing focused on extradition. In March 2013, Dotcom won a Court of Appeal ruling allowing him to sue the New Zealand Government Communications Security Bureau (GCSB), rejecting the attorney's-general appeal against a ruling in December 2012. A month later, Dotcom appeared in court again, seeking compensation from police over the raid on his house, which earlier had been deemed illegal.

Confidential settlement with police

In November 2017, Dotcom and his former wife Mona accepted a confidential settlement from the police over the raid. The settlement came after a damages claim was filed with the High Court over the "unreasonable" use of force when the anti-terrorism Special Tactics Group raided his mansion in January 2012. Settlements have already been reached between police and Bram van der Kolk and Mathias Ortmann, who were also arrested. The New Zealand Herald reported that their settlements were six-figure sums and "it is likely Dotcom would seek more as the main target in the raid". Commenting on the settlement, Dotcom said: "We were shocked at the uncharacteristic handling of my arrest for a non-violent Internet copyright infringement charge brought by the United States, which is not even a crime in New Zealand".

Supreme Court

In February 2014, the New Zealand Court of Appeal deemed the raids on Kim Dotcom to be legal but not the FBI's taking of information. Dotcom appealed this decision to the Supreme Court. In December four of the five judges agreed with the Court of Appeal that the raid was legal and ordered Dotcom to pay $35,000 costs. Chief Justice Sian Elias dissented, saying there had been a miscarriage of justice as the search warrant was too broad.

A month before the Supreme Court decision, Dotcom's legal team quit after he had spent $10 million on his defence, financed the Internet Party, then run out of money. When the US tried to have his bail revoked, a new lawyer, Ron Mansfield, helped keep him out of prison. In December 2014, events took another turn when the High Court in Hong Kong ruled that the United States "did not have a clear path to serve a legal summons on Dotcom's filesharing company" and he could take a case to get back $60 million seized by authorities there. In making this decision, Judge Tallentire said, "No one can say when that process of extradition will be completed given the appeal paths open to the various accused. Indeed, no one can say if it will ever be completed".

On US involvement in his arrest

Dotcom claimed to be a legitimate businessman who has been persecuted by the United States government and industry trade groups such as the RIAA and Motion Picture Association of America (MPAA). He blames former US President Barack Obama for colluding with Hollywood to orchestrate his arrest and has spoken out against his negative portrayal in the media. In regard to the illegal spying conducted by GCSB, Dotcom said they were not spying to find out where he was. In May 2013, Dotcom released a 39-page white paper alleging that the US government persecuted him at the behest of Hollywood, in exchange for support for Obama.

Speculation about Hollywood's role in Dotcom's arrest grew when, in September 2012, Key made a four-day visit to meet top studio executives. Key said the trip was intended to promote New Zealand as a good country to produce films, but he was planning to meet with the MPAA, which had described Dotcom as "a career criminal".

In November 2013, The New Zealand Herald journalist David Fisher published The Secret Life of Kim Dotcom: Spies, Lies and the War for the Internet.

District court

After three years' legal wrangling, involving two Supreme Court cases and ten separate delays, extradition proceedings finally got underway in an Auckland court on 21 September 2015.

The wrangling continued at the hearing with Dotcom and his colleagues saying that they were unable to present a proper defence because the US had threatened to seize any funds they try to spend on international experts in Internet copyright issues. Dotcom's American lawyer, Ira Rothken, said they would need about US$500,000 to get evidence from the appropriate experts. Harvard Law professor Lawrence Lessig, an international expert in copyright and fair use, provided his written opinion for free. He said there were no legal grounds to extradite Dotcom and the allegations and evidence made public by the US Department of Justice "do not meet the requirements necessary to support a prima facie case that would be recognised by United States federal law".

Once the hearing finally got under way, Crown prosecutor Christine Gordon, on behalf of the US Government, called it a "simple scheme of fraud". Defence lawyer Ron Mansfield's 300-page submission began with the argument that the case should be thrown out because the United States Supreme Court ruled in a parallel case in 1982 that copyright infringement was a civil matter and could not be prosecuted as criminal fraud.

The Crown also made numerous references to intercepted Skype conversations between Dotcom and his co-defendants. Gordon said one message written by Dotcom, when translated from German, read: "At some point a judge will be convinced about how evil we are and then we are in trouble." Mansfield said this sentence was used repeatedly by Gordon during her submission "with the knowledge that it would make international media headlines". Mansfield had the passage translated by three independent academics who said it had a very different meaning and should read: "At some stage a judge will be talked into how bad we allegedly are and then it will be a mess."

On 23 December 2015, North Shore District Court Judge Nevin Dawson announced that Dotcom and the three other Megaupload co-founders were eligible for extradition. He said the US had a "large body of evidence" which supported a prima facie case. An immediate appeal was lodged by Dotcom's lawyer.

High Court

In February 2017, the New Zealand High Court upheld the earlier decision of the district court that Dotcom and his three co-accused could be extradited to the United States. However, Justice Murray Gilbert accepted the argument made by Dotcom's legal team that he and his former Megaupload colleagues cannot be extradited because of copyright infringement. The judge said he made this decision because "online communication of copyright protected works to the public is not a criminal offence in New Zealand". However, Justice Gilbert said there were "general criminal law fraud provisions" in New Zealand law which covered the actions of the accused and they could be extradited on that basis.

Dotcom saw this decision as a major victory saying: "The major part of this litigation has been won by this judgement—that copyright is not extraditable." The ruling opened the door to further appeals because the warrant which was served on him when he was arrested on 20 January 2012, stated he was being charged specifically with "copyright" offences. Both sides are expected to challenge aspects of the ruling before the New Zealand Court of Appeal and eventually the Supreme Court.

Court of Appeal

On 5 July 2018, the New Zealand Court of Appeal upheld the High Court's decision that Dotcom and the three co-accused could be extradited to the United States. In particular, the Court, disagreeing with Justice Gilbert, found that, even during the time of Megaupload's operations, it was a criminal offence in New Zealand to possess digital copyrighted works with an intention to disseminate them. Accordingly, Dotcom and his co-accused could be extradited on the basis of copyright infringement to stand trial in the United States. Dotcom's lawyer said that he would appeal the ruling to the Supreme Court. In June 2019, Dotcom began "a final appeal to halt his extradition from New Zealand to the US".

In July 2026, The New Zealand Court of Appeal dismissed Dotcom's judicial review against police advice that he should not be charged in New Zealand, and against the Minister of Justice's decision to surrender him.

Supreme Court

On 4 November 2020, the Supreme Court of New Zealand ruled that Dotcom could be extradited to the United States to face 12 criminal copyright-related charges. However, the Supreme Court also ruled that he and three other co-defendants could challenge the decision through judicial review. In addition, the Supreme Court ruled that the High Court and Court of Appeal had been wrong not to consider their application for judicial review of the original district court decision in 2015 that had first ruled in favour of extradition. Dotcom's lawyer Ron Mansfield described the judgment as a "mixed bag", stating that the Supreme Court had accepted there were "serious procedural issues" while warning that the Court's rejection of Megaupload's "safe harbour" defence would have "an immediate and chilling impact" on the Internet.

The two executives charged for operating Megaupload along with Dotcom, namely Mathias Ortmann and Bram van der Kolk, agreed to a plea bargain with New Zealand and US prosecutors that June, and were sentenced to two years seven months and two years six months in a New Zealand prison respectively on 15 June 2023, leaving Dotcom as the only party still defending his innocence in the case.

On 15 August 2024, the Minister of Justice, Paul Goldsmith signed Dotcom's extradition order. Barrister Clive Elliott KC commented that Dotcom cannot appeal the decision, but can seek judicial review of the process.