Just a day after the SOPA protests, the FBI have used existing copyright laws to charge seven individuals and two corporations with running an international organised criminal enterprise allegedly responsible for massive worldwide online piracy of ‘numerous types of copyrighted works’ through Megaupload.com and other related sites, generating more than $175 million in criminal proceeds and ‘causing more than half a billion dollars in harm to copyright owners’.
The action is among the largest criminal copyright cases ever brought by the United States. The individuals and two corporations — Megaupload Limited and Vestor Limited — have been 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’.
If found guilty and the ‘conspirators’ could face severe sentences if they’re awarded the maximum penalties: 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. That’s a possible 50 years in total.
The indictment alleges that the criminal enterprise is led by Kim Dotcom, who is also known as Kim Schmitz and Kim Tim Jim Vestor, 37, who is a resident of both Hong Kong and New Zealand. Dotcom founded Megaupload Limited and is the director and sole shareholder of Vestor Limited, which has been used to hold his ownership interests in the Mega-affiliated sites.
In addition, the following alleged members of the what the FBI have described as the ‘Mega conspiracy’ (Kim Dotcom and the Mega Conspiracy – perhaps someone at the FBI has their eye on a movie deal of their own?) were charged in the indictment:
Finn Batato, 38, a citizen and resident of Germany, who is the chief marketing officer;
Julius Bencko, 35, a citizen and resident of Slovakia, who is the graphic designer;
Sven Echternach, 39, a citizen and resident of Germany, who is the head of business development;
Mathias Ortmann, 40, a citizen of Germany and resident of both Germany and Hong Kong, who is the chief technical officer, co-founder and director;
Andrus Nomm, 32, a citizen of Estonia and resident of both Turkey and Estonia, who is a software programmer and head of the development software division;
Bram van der Kolk, aka Bramos, 29, a Dutch citizen and resident of both the Netherlands and New Zealand, who oversees programming and the underlying network structure for the Mega conspiracy websites.
Lock Up Your DVDs
The FBI say that not all members of the conspiracy have been arrested:
Dotcom, Batato, Ortmann, and van der Kolk were arrested yesterday in Auckland, New Zealand, by New Zealand authorities, who executed provisional arrest warrants requested by the United States. Bencko, Echternach, and Nomm remain at large. Today, law enforcement also executed more than 20 search warrants in the United States and eight countries, seized approximately $50 million in assets, and targeted sites where Megaupload has servers in Ashburn, Va., Washington, D.C., the Netherlands, and Canada. In addition, the U.S. District Court in Alexandria, Va., ordered the seizure of 18 domain names associated with the alleged Mega conspiracy.
Megaupload.com has more than 150 million registered users, 50 million daily visitors, and accounts for no less than four percent of the total traffic on the Internet. The FBI estimate that Megavideo have cost copyright holders ‘well in excess of $500 million’, while Megavideo allegedly earned more than $175 million in through advertising revenue and selling premium memberships.
The Mega Conspiracy Business Model
The indictment says that Megavideo’s business model was ‘expressly designed to promote uploading of the most popular copyrighted works for many millions of users to download’, and that the site was structured to discourage the vast majority of its users from using Megaupload for long-term or personal storage by automatically deleting content that was not regularly downloaded.
Third Party Links
Megavideo allegedly ran an affiliate-style program to encourage people to upload popular content and drive web traffic to the site through linking sites, and that they paid users whom they ‘specifically knew uploaded infringing content and publicised their links’.
Megavideo would allegedly only ‘selectively’ comply with their legal obligations to remove copyrighted materials. For example, the FBI say that when notified by a rights holder that a file contained infringing content, Megavideo would disable only a single link to the file, leaving the infringing content in place to make it through any one of the many duplicate links available for that file.
Digital egg-throwers Anonymous have responded by launching denial of service attacks on the FBI, the US Justice Department, Universal Music and a few others. At the time of writing, the Justice Department and FBI sites are back up, while Universal Music’s site is ‘down for maintenance’.