U.S. Government Fears End of Megaupload Case

The U.S. Government has just submitted its objections to Megaupload’s motion to dismiss the case against the company. Megaupload’s lawyers have pointed out that the Department of Justice is trying to change the law to legitimize the destruction of Megaupload. However, the Government refutes this assertion and asks the court to deny Megaupload’s motion, fearing that otherwise the entire case may fall apart.

Several months ago Megaupload filed a request to dismiss the indictment against it, until the U.S. Government finds a way to properly serve the company.

Megaupload based its request on “Rule 4” of criminal procedure, which requires the authorities to serve a company at an address in the United States. However, since Megaupload is a Hong Kong company, this was and is impossible.

The defense argued that the court can only protect Megaupload’s due process rights by dismissing the case. However, the Government disagreed and asked the court to deny Megaupload’s motion. Among other things the Government claimed that federal rules shouldn’t be interpreted so narrowly.

Two weeks ago Megaupload renewed its request and the defunct file-hosting company noted that the Government was trying to change the law in its favor. The lawyers cited a letter to the Advisory Committee on the Criminal Rules where the DoJ made suggestions that would directly influence the Megaupload case.

Among other things the letter suggested an amendment to the law so that it would no longer be a requirement to serve a foreign company in the United States. Megaupload’s lawyers used the letter to point out to the court that the Government knew very well that it was not playing by the rules.

This week the U.S. Government replied to the motion, stating that Megaupload misrepresents the facts.

The Government explains that the DoJ’s letter begins with “a bedrock principle of criminal law, one that applies equally to both organizations and natural persons,” citing the following passage:

“When a person located abroad violates the laws of the United States, that person may be held criminally liable despite the fact that the person has never set foot in the United States.”

In other words, every person and company in the world should comply with U.S. law. The Government explains that some companies including Megaupload are exploiting “Rule 4” to remain unaccountable. However, the Government tells the court that the suggestion to improve the law doesn’t mean that Megaupload can’t be prosecuted.

“The Department never concedes, as Megaupload wrongly claims, that a proper interpretation of Rule 4 would bar the company’s prosecution,” the Government tells the court in its most recent filing.

In addition to this clarification the Government further references an additional legal precedent which shows that foreign companies without an address in the United States can be criminally prosecuted.

The Government’s response ends with a “warning” that dismissing the indictment against Megaupload, even temporarily, may mean the end of the case.

“Such dismissal, even without prejudice, would harm (perhaps fatally) the government’s ability to fully prosecute serious criminal conduct of the corporate defendant Megaupload, the ability of victims to obtain justice, and the public’s interest in resolving this case efficiently,” the Government writes.

With the sentence above the Government suggests that the entire case against Megaupload could collapse, putting a lot of weight on the decision of District Court Judge Liam O’Grady, and perhaps not unintentionally.

Under this pressure the Judge now has to decide whether or not Megaupload should be dismissed from the indictment. If that’s the case, Megaupload plans to give users access to the files that were seized, and it will also free up funds for a proper defense.