Megaupload CEO asks bail, loses US lawyer, sees more arrests

January 23, 2012 | Filed under: News | Posted by: Sam Turker

Megaupload saw its troubles expand on Sunday in multiple directions. The file upload service’s founder Kim Dotcom pressed for bail in a New Zealand court. In a Reuters account, his attorney argued both that he had done nothing wrong and that he wouldn’t be a flight risk. He added that he wouldn’t try to restart Megaupload if let out of jail.

Prosecutors had argued that Dotcom’s wealth, which gave him over $41 million in income just in the last year, made it easy for him to flee. Convictions for insider trading also underscored an unethical background, the prosecutors said, and had led to him initially being turned down from buying a $30 million NZ ($24.2 million US) before he took advantage of a German rule that wiped his record clean.

In the meantime, a leak from the same outlet had Megaupload’s US attorney, Robert Bennett, withdraw out of a conflict of interest with another unnamed client of his law firm, Hogan Lovells. Bennett had worked with Megaupload from before the arrests last week. Another attorney, Ira Rothken, said that the final roster of lawyers hadn’t been settled.

Problems worsened the same day after word that two more involved with the company, Estonia’s Andrus Nomm and Germany’s Sven Echternach, had been arrested. They had warrants issued by the US but hadn’t been caught until Sunday.

Echternach was arrested in Germany and may create problems for the US, since as a German citizen he can’t legally be extradited. Nomm was arrested in the Netherlands and doesn’t face the same restrictions.

One more suspect, Julius Bencko of Slovakia, is still being looked for.

Regardless of the party, Megaupload has contended that its service is legal and that it has responded to takedown requests when asked. The FBI has disagreed and said that staff even rooted through file bundles uploaded by Megaupload’s more frequent users to find bootleg content they liked, which if true would mean they knew of and did nothing to stop some piracy.

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