Seven people and two companies have been charged in Alexandria federal district court for allegedly running one of the largest global online piracy rings that distributed movies, books, music and software and more, the U.S. Justice Department announced today.
DOJ officials said alleged members of the conspiracy, which operated Megaupload.com, generated more than $175 million in revenue and cost copyright holders $500 million.
The seven people and two companies, Megaupload Limited and Vestor Limited, were charged earlier this month in U.S. District Court for the Eastern District of Virginia. The allegations, unsealed today, include copyright infringement and conspiracy to commit money laundering.
Authorities in New Zealand today arrested four of the defendants, including the alleged founder of Megaupload, Kim Dotcom. Officials said Dotcom is also known as Kim Schmitz and Kim Tim Jim Vestor. The 37-year-old defendant is a resident of both Hong Kong and New Zealand. Click here for the indictment.
Federal investigators executed more than 20 search warrants across the United States, targeting sites where Megaupload has servers, including in the District and in Ashburn, Virginia. Agents seized $50 million in assets.
The indictment says the government intends to forfeit property that includes computers and luxury vehicles, including a Maserati, several Mercedes-Benz cars and a 2008 Rolls-Royce Phantom Drophead Coupe with a license plate that says “GOD.” (The license plate on another vehicle the authorities want to take says “GUILTY.”)
Prosecutors said Megaupload.com billed itself as having more than one billion online visitors and having more than 150 million registered users. Megaupload earned revenue, according to charging documents, through premium subscriptions and online advertising.
The indictment alleges that members of the Megaupload conspiracy failed to terminate accounts that featured known copyrighted material. Prosecutors said the company selectively complied with its obligation to remove protected material.
The charges come amid debate on Capitol Hill about crafting new tools to combat intellectual property theft. Hundreds of Web sites yesterday temporarily shut down in protest of pending legislation that critics contend would infringe on free speech rights.
One proponent of the legislation, Senate Judiciary Chairman Patrick Leahy (D-Vt.), this afternoon issued a statement applauding the Justice Department prosecution of Megaupload.
“Unfortunately, there are no tools in the arsenal to protect that same American intellectual property from theft by websites hosted and operated overseas,” Leahy said in the statement. “Why should we give greater protections to criminals engaging in the same conduct overseas?”