Dotcom: We've hit the jackpot

By David Fisher

A fresh legal bid to throw out the case against Kim Dotcom in the United States is being made after claims of an FBI double-cross.

Evidence has emerged showing the Department of Homeland Security served a search warrant on Mr Dotcom's file-sharing company Megaupload in 2010 which he claims forced it to preserve pirated movies found in an unrelated piracy investigation.

The 39 files were identified during an investigation into the NinjaVideo website, which had used Megaupload's cloud storage to store pirated movies.

When the FBI applied to seize the Megaupload site in 2012, it said the company had failed to delete pirated content and cited the earlier search warrant against the continued existence of 36 of the same 39 files.

The details emerged after the US District Court in East Virginia allowed partial access to the FBI application which led to the shutdown of the Mega family of websites.

Other information from the case to emerge this week includes a collection of photographs from the day of the raid at Mr Dotcom's Coatesville property on January 20 this year.

The High Court released the material after applications from the Herald.

Mr Dotcom said Megaupload co-operated with the US Government investigation into copyright pirates NinjaVideo and was legally unable to delete the 39 movies identified in the search warrant.

Mr Dotcom said: "We were informed by (the US Government) we were not to interfere with the investigation. We completely co-operated.

"Then the FBI used the fact the files were still in the account of the ... user to get the warrant to seize our own domains. This is outrageous."

He said the revelation was the first insight into the FBI's case against Megaupload and it showed bad faith on the part of the US Government. "Immediately we hit the jackpot - the first little piece of paper is this super-jackpot."

New Zealand's district court has ordered the FBI to provide documents relating to its investigation through an order for discovery. It was currently being appealed.

"I understand why the US is working so hard to appeal the discovery decision."

Mr Dotcom said the warrant obliged Megaupload to keep the files. It was among a string of legal requests from law enforcement agencies around the world.

"We have always co-operated. We have responded to takedown requests, we have been a good corporate citizen."

The FBI application to seize the sites said the "Mega Conspiracy" members were told by "criminal search warrant" in June 2010 "that 39 infringing copies of copyrighted motion pictures were present on their leased servers". The application was approved to allow the seizure of the domain names.

However, the application to seize the domain names, made on January 13, 2012, did not state the earlier search warrant was not issued against Megaupload.

Instead, the Department of Homeland Security application sought the help of Megaupload to track down files of interest in its investigation of NinjaVideo. The warrant application was by Special Agent William Engel and stated that the data storage company Carpathia "will work with its customer Megaupload to access content to provide in response to the search warrant".

The investigation was a success and saw its central figure Hana Amal "Queen Phara" Beshara sentenced to prison for 22 months and ordered to pay $256,000 of her illegally gained money to the Motion Picture Association of America - the same Hollywood lobby group blamed for pitting the FBI against Megaupload.

The access was granted after a bid by the Electronic Frontier Foundation on behalf of a Megaupload customer whose business files were lost when the cloud storage site was shut down.

Mr Dotcom's US-based lawyer Ira Rothken said he would ask the US court to return the Megaupload websites.

He said the discovery of the FBI's evidence of wrongdoing was part of a "trail of misconduct" stretching from the US to New Zealand which would ultimately lead to asking for the FBI charges to be dismissed.

"What we have uncovered, in our view, is misleading conduct. It looks like the Government wants the confidentiality because they would be concerned their conduct would be scrutinised."

The 39 files were not only used by NinjaVideo, according to the FBI affidavit. The Megaupload system identified files which were already on the system and kept only one copy of each. Unique weblinks were produced for each user providing multiple paths to the same file. The FBI indictment cited an email by Mr Dotcom's co-accused Mathias Ortman in which he said more than 2000 users had uploaded the 39 files.

A month after Homeland Security sought MegaUpload's help, NinjaVideo and a range of other sites were shutdown without warning. Coverage of the action led to Mr Dotcom emailing staff about the domain seizures, saying the manner of the US action posed "a serious threat to our business". He asked: "Should we move our domain to another country (Canada or even HK?)." The company, which has maintained it operated inside the law, stayed in the US.