Why File Share Site Megaupload Was Shut Down

Justice Department Turns Off  Web Sites Having 50 Million Daily Visitors

The U.S. Justice Department and FBI acted this week to shut down and charge Megaupload.com with organized crime charges. The company is incorporated in Hong Kong, although it did not operate there.

Law enforcement executed more than 20 search warrants in the United States and eight countries, seizing 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 has been reported as among the top three websites for "digital piracy." They reportedly held about four percent of the world's daily internet traffic.

The Department has charged seven individuals and two corporations with running an international organized criminal enterprise saying they are responsible for "massive worldwide online piracy of numerous types of copyrighted works," generating more than $175 million in proceeds from advertising and selling memberships and causing more than half a billion dollars in harm to copyright owners.

As a result, the protest group of internet activist group "Anonymous" shut down for a time the Justice Department and FBI web sites, along with recording and motion picture industry web sites. Users of the sites found them either inaccessible or slow to retrieve pages on Thursday. 

The sites had been previously been blocked in Hong Kong, China, Saudi Arabia, India, and Malaysia.

In a controversy last month involving Megaupload and well known pop performers, a Wikipedia article says, " On December 9, 2011, Megaupload published a music video titled: "The Mega Song", showing artists including Kanye West, Snoop Dogg, Alicia Keys and will.i.am endorsing the company. 

The music video was also uploaded to YouTube, but was removed following a takedown request by the record company Universal Music Group. Megaupload said that the video contained no infringing content, commenting: "we have signed agreements with every featured artist for this campaign".  The video was later put back on the video site.

Megaupload is accused of allowing public storage and facilitating distribution of intellectual property and copyrighted material, including video and software. The government's action is among the largest copyright cases brought by the United States.

Megaupload Limited and Vestor Limited were indicted by a grand jury in the Eastern District of Virginia on Jan. 5, 2012, and charged with engaging in a racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering and two counts of criminal copyright infringement.

The companies are operated by Kim Dotcom, aka Kim Schmitz and Kim Tim Jim Vestor, 37, a resident of both Hong Kong and New Zealand, says the indictment.

Also charged: 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 websites.

Dotcom, Batato, Ortmann and van der Kolk were arrested Thursday 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.

The indictment says the companies reproduce and distribute infringing copies of copyrighted works, including movies – often before their theatrical release – music, television programs, electronic books, and business and entertainment software on a massive scale. 

Megaupload.com, is advertised as having more than one billion visits to the site, more than 150 million registered users, 50 million daily visitors and accounting for four percent of the total traffic on the Internet.

The sites used third-party linking sites to publicize content so the conspirators did not need to publicize such content on the Megaupload site, thus keeping a low profile. The indictment says they manipulated the perception of content available on their servers by not providing a public search function on the Megaupload site and by not including popular infringing content on the publicly available lists of top content downloaded by its users.

The investigation was initiated and led by the FBI at the National Intellectual Property Rights Coordination Center (IPR Center), from efforts begun by Attorney General Eric Holder's IP Task Force. 

The FBI had assistance from the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. 

Assistance was provided by the New Zealand Police, the Organised and Financial Crime Agency of New Zealand (OFCANZ), the Crown Law Office of New Zealand and the Office of the Solicitor General for New Zealand; Hong Kong Customs and the Hong Kong Department of Justice; the Netherlands Police Agency and the Public Prosecutor’s Office for Serious Fraud and Environmental Crime in Rotterdam; London’s Metropolitan Police Service; Germany’s Bundeskriminalamt and the German Public Prosecutors; and the Royal Canadian Mounted Police – Greater Toronto Area (GTA) Federal Enforcement Section and the Integrated Technological Crime Unit and the Canadian Department of Justice’s International Assistance Group. 

Authorities in the United Kingdom, Australia and the Philippines also provided assistance.

UPDATE: The website for the Justice Department was not operating on Friday afternoon when last tested, and links to news via it's news websites were not working.