Megaupload Shut Down; Four Arrested for Alleged Copyright Infringement, Other Crimes

And so it begins. According to a press release issued by the Federal Bureau of Investigation (FBI) on Jan. 19, 2012, four people have been arrested and charged as participants in an international organized crime ring. On the list of their alleged crimes is copyright infringement; it is one of the biggest criminal copyright cases ever brought by the United States.

Kim Schmitz (aka Kim Dotcom and Kim Tim Jim Vestor), 37, the founder of Megaupload.com, and three of his cohorts — chief marketing officer Finn Batato, 38; chief technical officer Mathias Ortmann, 40; and programmer Bram van der Kolk (aka Bramos), 29 — were arrested in Auckland, New Zealand, at the request of the FBI and the United States Department of Justice. Three others, graphic designer, Julius Bencko, 35; software programmer Andrus Nomm, 32; and head of business development Sven Echternach, 39 are still free. In addition to arresting the conspirators, the Auckland police seized more than $12 million in cash and assets.

The group is alleged to have not only facilitated online piracy but encouraged it by offering incentives for uploading pirated content, including movies (prior to their theatrical releases), electronic books, music and other popular copyrighted works. Specifically, they allegedly paid people whom they knew uploaded pirated content. When the copyright holders informed them that they had pirated content on their websites, they only went through the motions of removing it. The FBI estimates that the group’s activities cost copyright holders $500 million in potential earnings while generating $175 million in profits for themselves through the sale of advertising and premium memberships.

The maximum penalty for conspiracy to commit copyright infringement is five years in prison. The maximum penalties for the other charges, conspiracy to commit racketeering and conspiracy to commit money laundering, are 20 years each. So, Schmitz et al are looking at a maximum of 45 years in prison if found guilty on all counts.

The announcement of these arrests came just one day after Wikipedia, Reddit and other sites “went dark” to protest the Stop Online Piracy Act (SOPA) and Protect Intellectual Property Act (PIPA), which legislators are considering passing into laws. The case is part of the Department of Justices’ IP Task Force, which seeks to “combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work.”

According to Ry Crozier in his article for IT News, the hacker group Anonymous shut down the Department of Justice’s website as well as the websites of the Motion Picture Association of America, Record Industry of America and Universal Music in response to the FBI’s shutting down of Megaupload.com and its affiliate Megavideo.com.

The case against Kim Schmitz and alleged his co-conspirators will be 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.

Anyone who visits either of those sites will see the following:

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