Megaupload founder refused bail in New Zealand

AUCKLAND Tue Jan 24, 2012 9:00pm EST

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AUCKLAND (Reuters) - A New Zealand judge ordered the founder of online file-sharing site Megaupload.com to be held in custody for another month Wednesday, saying the suspected Internet pirate posed a significant flight risk.

Kim Dotcom, a German national also known as Kim Schmitz and Kim Tim Jim Vestor, was remanded in custody until Feb 22 ahead of a hearing of an extradition application by the United States.

Prosecutors say Dotcom was the ringleader of a group that netted $175 million since 2005 by copying and distributing music, movies and other copyrighted content without authorization. Dotcom's lawyers say the company simply offered online storage and that he will fight extradition.

The judge said there was a significant risk Dotcom, who had passports and bulging bank accounts in three names, could try to

flee the country.

"With sufficient determination and financial resources, flight risk remains a real and significant possibility which I cannot discount and bail is declined," Judge David McNaughton said.

Dotcom, 38, and three others, were arrested Friday after 70 New Zealand police raided his country estate at the request of the U.S. Federal Bureau of Investigation.

Officers cut Dotcom out of a safe room he had barricaded himself in within the sprawling mansion, reputedly New Zealand's most expensive home.

LONG BATTLE LOOMS

Dotcom, dressed in the same black trousers and track suit top he was arrested in, showed no emotion when the decision was read out, but his lawyer said he was "very disappointed" and would appeal immediately.

"The judge has agreed with much of what we have submitted but he has taken a different view on the issue of flight risk," Paul Davison told reporters.

The judge said the finding of unlicensed and illegal guns in the mansion, northwest of Auckland, pointed to possible criminal connections, which could make it easier to escape to Germany, where Dotcom would be safe from extradition.

Dotcom's lawyers said he emphatically denied the charges. They also said he was suffering from diabetes and hypertension as well as receiving treatment for a slipped disc.

He now faces four weeks behind bars in Auckland's main remand prison.

Megaupload and its related sites were among the Internet's most popular, allowing users to upload and share all kinds of content.

The site boasted having a billion users and as much as 4 percent of all Internet traffic. Prosecutors say Dotcom personally made $115,000 a day from the business in 2010.

The judge said he could not assess whether the United States had a strong enough case against Dotcom or whether he had a good defense.

"All I can says is that there appears to be an arguable defense at least in respect of the breach of copyright charges," McNaughton wrote.

McNaughton said he did not know how long a hearing would take, nor could it be heard "for some months." Legal experts said the extradition process could drag on for an extended period, as with efforts to extradite WikiLeaks founder Julian Assange to Sweden from Britain.

A group of Dotcom's supporters left the court dejected and refused to talk to media.

Three other men charged with Dotcom were also remanded in custody and applied to the judge for separate hearings to make individual bail applications.

(Writing by Gyles Beckford; Editing by Lincoln Feast and Nick Macfie)

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