New Zealand Court Finds Megaupload Search Warrants Illegal

Jun 28, 2012 06:45 AM EDT

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Search warrants used when 70 New Zealand police raided the mansion of the suspected kingpin of an Internet piracy ring were illegal, a New Zealand court ruled on Thursday, dealing a blow to the FBI's highest profile global copyright theft case.

German national Kim Dotcom, also known as Kim Schmitz, was one of four men arrested in January as part of an investigation of his Megaupload.com website led by the U.S. Federal Bureau of Investigation (FBI).

Prosecutors say Dotcom was the ringleader of a group that had 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.

On Thursday, High Court Judge Justice Helen Winkelmann found the warrants used in the seizure of property from Dotcom's mansion near Auckland were illegal and that moves by the FBI to copy data from Dotcom's computer and take it offshore were also unlawful.

"The warrants did not adequately describe the offences to which they related," Winkelmann said in her ruling. "Indeed they fell well short of that. They were general warrants, and as such, are invalid."

In response, New Zealand's police said in a statement they were considering the judgment and were in discussions with Crown Law "to determine what further action might be required".

Police said no further comment would be made until that process was complete.

FIGHTING EXTRADITION

Dotcom is on bail in New Zealand, fighting attempts by U.S. authorities who are seeking to extradite him on charges of copyright theft and money laundering. An extradition hearing is set for August.

Dotcom and his lawyers did not immediately respond to requests for comment.

Television New Zealand quoted a spokesman for Dotcom as saying he was "pleased" but he would not be making any further comment on the court decision as appeals were likely.

Lawyers representing the U.S. government said the ruling had come as "no surprise" and that their legal team would be discussing options, including whether an appeal will be lodged, TVNZ reported.

Armed officers, backed by helicopters, cut Dotcom out of a safe room he had barricaded himself in within the sprawling country estate, reputedly New Zealand's most expensive home. Millions of dollars in assets were seized or frozen including almost 20 luxury vehicles, dozens of computers and art works.

Before it was shut down in January, Megaupload was one of the world's most popular websites, where millions of users stored data, either for free or by paying for premium service. Authorities say megaupload.com and related sites cheated copyright holders out of more than $500 million.

U.S. lawyers for Megaupload have also argued that U.S. federal authorities cannot charge the company with criminal behavior because it is Hong Kong based, and also that no papers have ever been formally served.