Kim Dotcom

Kim Dotcom going to court to unfreeze his assets

The Megaupload mogul has sought in court to set aside the restraining order freezing his assets

PUBLISHED : Sunday, 27 April, 2014, 6:33am
UPDATED : Sunday, 27 April, 2014, 5:52pm

Lawyers for internet entrepreneur Kim Dotcom are seeking to retrieve HK$330 million worth of assets seized by Hong Kong customs officers in 2012 at homes and offices linked to his Megaupload website.

Dotcom's legal team in Hong Kong submitted an application to the High Court here on Wednesday on behalf of Megaupload, a Hong Kong-registered company, to set aside the restraining order that keeps the assets frozen.

Dotcom's lawyers argue that more than two years after the raids, the US has yet to charge Megaupload and its founders including Dotcom, a former Hong Kong resident now under house arrest in New Zealand.

"Over two years later, the US Department of Justice has yet to serve Megaupload or initiate substantive criminal proceedings against it, trapping Megaupload in a state of criminal limbo," said Ira Rothken, Dotcom's US lawyer. The now-defunct Megaupload used to be one of the world's biggest online file-sharing platforms, where people could share music, movies and documents.

US prosecutors claim that Megaupload and its founders engaged in mass copyright fraud for more than five years, earning more than US$175 million. The Hong Kong legal action was part of a global move to free up the frozen assets, which includes personal files and photos of Megaupload users, Rothken said.

He said the freeze "has prevented Megaupload from conducting business or paying bandwidth expenses needed to return cloud storage data to users."

Hong Kong customs started working with the FBI in late 2010 as part of the transnational operation and spent more than a year investigating allegations of copyright infringement.

On January 20, 2012, 100 customs officers raided four locations and confiscated computers and servers as well as about HK$300 million in bank savings and investments.

The seizures were based on a restraint order on Megaupload assets that the US Department of Justice had lodged with its counterpart in Hong Kong.

The customs officers raided Dotcom's home at the Grand Hyatt penthouse in Wan Chai, as well as homes and offices linked to German nationals Finn Batato and Mathias Ortmann, and Bram van der Kolk of the Netherlands.

Sources close to Dotcom's team said that, in a closed hearing last Wednesday morning, Deputy High Court Judge Mr Justice Garry Tallentire ordered the Department of Justice to respond to the request to set aside the restraining order. Earlier this month, Dotcom won a small reprieve when the High Court of New Zealand rejected a police request to extend a restraint order.

If government prosecutors do not appeal, then cars, cash and property seized in New Zealand may be returned to Dotcom as soon as this week.

On the same day that Dotcom's Hong Kong home was searched in 2012, police in New Zealand conducted a dramatic dawn raid at the mansion where he was living at the time. New Zealand Prime Minister John Key later apologised to Dotcom after it was revealed that the country's spies had illegally monitored his communications.