Kim Dotcom in 1996
21 January 1974
Kiel, West Germany
|Other names||Kimble, Kim Tim Jim Vestor|
|Education||secondary modern school / junior high school|
|Organization||Megaupload Ltd.; Mega|
|Known for||Founder of Megaupload.com, Mega.co.nz and sister websites|
|Home town||Kiel, Germany|
|Spouse(s)||Mona Verga Dotcom|
Kim Dotcom (born Kim Schmitz; 21 January 1974 in Kiel, Germany), also known as Kimble, and Kim Tim Jim Vestor is a German-Finnish Internet entrepreneur, businessman, and hacker, currently residing in New Zealand. He is the founder of Megaupload and its associated websites, as well as Megaupload's successor site, Mega.
He rose to fame in Germany in the 1990s as an alleged hacker and internet entrepreneur. He was convicted of several crimes, and received a suspended prison sentence in 1994 for computer fraud and data espionage, and another suspended prison sentence in 2003 for insider trading and embezzlement.
In January 2012, the New Zealand Police placed him in custody in response to US charges of criminal copyright infringement in relation to his Megaupload website. Dotcom was accused of costing the entertainment industry $500 million through pirated content uploaded to his file-sharing site, which had 150 million registered users. Dotcom has vigorously denied the charges, and is fighting the attempt to extradite him to the United States. Despite legal action still pending over Megaupload, Dotcom launched a new project/website named "Mega" in January 2013, opened to the public exactly one year after Megaupload was shut down. It is a cloud storage service that uses encryption to protect users from government or third party "spies" from invading users' privacy.
- 1 Personal life
- 2 Criminal investigations
- 3 New Zealand's decision to grant residency
- 4 The involvement of Auckland mayor John Banks
- 5 Dotcom's arrest in New Zealand
- 6 Developments in extradition case
- 7 Political fallout from Dotcom's arrest
- 8 Dotcom's perspective
- 9 Other activities
- 10 See also
- 11 References
- 12 External links
Dotcom was born as Kim Schmitz in Kiel, West Germany. He is a large-framed man, 2 metres (6 ft 7 in) tall, and weighs more than 130 kilograms (290 lb). He has been called one of the world's "largest tech entrepreneurs." He changed his surname to Dotcom in 2005, apparently in homage to the technology that made him a millionaire.
Prior to his arrest in New Zealand, he enjoyed a luxurious lifestyle. In 2001, his main source of income was a company called Kimvestor, which he valued at 200 million euros. He is known for spending his money on expensive cars and boats. On one occasion he spent $1 million chartering a 240-foot luxury yacht and moored it in Monte Carlo harbour during the 2000 Monaco Formula One Grand Prix and threw lavish parties for guests including Prince Rainier of Monaco. According to U.S. officials, he owned at least 18 luxury cars – including a 1959 pink Cadillac and three cars with vanity license plates that read HACKER, MAFIA, and STONED. He has taken part in the Gumball 3000 international road rally: in 2001 in his Mercedes Brabus SV12 Megacar, and in 2004. In an interview on Belgian Television, he claimed that in Morocco a car was blocking him and he "had to bump him off the road. Nothing happened to him". He claims he subsequently found out it was the Chief of Police in a civilian car.
Schmitz changed his name to Dotcom in 2005 while living in Hong Kong where he set up Megaupload. He was granted permanent residence in New Zealand on 29 November 2010. At the time his residency application was being considered, Dotcom had made charitable contributions in New Zealand and was planning a huge fireworks show for the city of Auckland at a cost of NZ$600,000. He leased a NZ$30M mansion at Coatesville, in the electorate of John Key near Auckland, owned by Richard and Ruth Bradley, the British founders of Chrisco, and considered the most expensive house in the country. He wanted to buy the mansion when the lease expired.
Dotcom is married. He and his wife, Mona, have five children. He became the father of twin girls (his fourth and fifth children) when his wife gave birth in Auckland a month after he was released on bail from Mt Eden prison.
Before his arrest in New Zealand, he was the world's number one-ranked Modern Warfare 3 player out of more than 15 million online players. On 23 January 2012 he lost the position and dropped to number two.
As a teenager, Schmitz acquired a reputation in his native Germany after having claimed to have bypassed the security of NASA, the Pentagon and Citibank under the name of Kimble – based on the character of Dr Richard Kimble in the long-running television programme The Fugitive. He also claimed to have hacked corporate PBX systems in the United States and said he was selling the access codes at $200 a pop, bragging that "every PBX is an open door to me."
In 1994, he was arrested by German police for trafficking in stolen phone calling card numbers. He was held in custody for a month, released and arrested again on additional hacking charges shortly afterwards. He was eventually convicted of 11 counts of computer fraud, 10 counts of data espionage, and an assortment of other charges. He received a two-year suspended sentence – because he was under age at the time the crimes were committed. The judge in the case said the court viewed his actions as "youthful foolishness."
In 2001, Schmitz bought €375,000 worth of shares of the nearly bankrupt company Letsbuyit.com (de) and subsequently announced his intention to invest €50 million in the company. The announcement caused the share value of Letsbuyit.com to jump and Schmitz cashed out, making a profit of €1.5 million. One commentator suggested that Schmitz may have been ignorant of the legal ramifications of what he had done, since insider trading was not made a crime in Germany until 1995, and until 2002 prosecutors also had to prove the accused had criminal intent.
Schmitz moved to Thailand to avoid investigation where he was subsequently arrested on behalf of German authorities. In response, he allegedly pretended to kill himself online, posting a message on his website that from now on he wished to be known as "His Royal Highness King Kimble the First, Ruler of the Kimpire". He was deported back to Germany where he pleaded guilty to embezzlement in November 2003 and, after five months in jail awaiting trial, again received a suspended sentence (of 20 months). After avoiding a prison sentence for a second time, he left Germany and moved to Hong Kong in late 2003.
Schmitz found Hong Kong to his liking and registered Kimpire Limited in December 2003, soon after moving there. He set up a network of interlinked companies, including Trendax which was claimed to be an artificial intelligence-driven hedge fund delivering an annual return of at least 25%. However, Trendax was never registered with Hong Kong’s Securities and Futures Commission and the company was legally not allowed to accept investments or to conduct trades. Dotcom was subsequently convicted for failing to disclose his shareholding to the Securities and Futures Commission, and was fined 8000 Hong Kong dollars.
New Zealand's decision to grant residency
While living in Hong Kong, Dotcom visited New Zealand for 10 days in December 2008 and again for two months from August 2009. On his 2009 visit, he bought 12 cars, valued at $3.2 million, and leased a helicopter on a stand-by basis. He applied for residency, which was granted in November 2010. The decision was made by the New Zealand Immigration Department despite his foreign convictions and despite being persona non grata in Thailand, after officials used a special direction to waive "good character" requirements. Warwick Tuck, head of New Zealand Immigration, said Dotcom was granted residency under the investor plus category, which allows people to gain residency if they invest $10 million in New Zealand. It was anticipated that Dotcom would contribute to New Zealand through investment, consumption and philanthropic activities – he had already given $50,000 to the mayoral fund following the Christchurch earthquake, another $50,000 to a rugby player who was left in a wheelchair after an on-field injury and funded a $600,000 fireworks display in Auckland harbour. Mr Tuck says Dotcom disclosed his previous convictions and these had been considered; they occurred more than 16 years earlier and did not involve harming anyone. Dotcom also told Immigration NZ his convictions had been "erased" from his record under Germany's clean slate legislation.
Despite granting him residency, Immigration was concerned their decision would attract criticism that they had allowed Dotcom to buy his way into the country and officials tried to keep it a secret. His application was red-flagged by officials: "We are requesting that this application be kept as confidential as possible to avoid further media speculation or attention." Dotcom's residency status subsequently became the subject of intense media speculation when it came to light that the mayor of Auckland, John Banks, became involved and New Zealand's intelligence services had spied on him (see below) – which they were not allowed to do because he had residency.
Two months after he was granted residency, Dotcom was convicted in Hong Kong on several counts of failing to disclose his shareholding levels and fined 8000 Hong Kong dollars. New Zealand immigration authorities judged the convictions too minor to consider deporting him.
The involvement of Auckland mayor John Banks
John Banks met Dotcom when he was Mayor of Auckland. He asked Dotcom for help putting on a fireworks display in the city's harbour. Banks later attended a New Year's Eve party thrown by Dotcom at the city centre apartment of now bankrupt property developer David Henderson. He said it provided a great view of the fireworks display detonated over the Waitemata Harbour. Banks said he offered advice to the millionaire on how to apply for Overseas Investment Commission permission to buy the Coatesville mansion Dotcom had been renting since coming to New Zealand.
On 28 April 2012 Dotcom revealed he also donated $50,000 to John Banks' mayoralty campaign in 2010 and claims Banks asked him to split the donation in two – so that each amount was below the maximum donation allowed and was made 'anonymously'. Dotcom said Banks later rang him up and thanked him for the contribution. This revelation was a major embarrassment for Banks, for New Zealand Prime Minister, John Key, and for the National Party who were relying on Banks' support in Parliament to remain in power. The police were asked to investigate whether Banks had broken electoral laws. Initially no charges were laid, but the police file was made public and concluded that Banks had filed a false declaration of donations, but "had not done so deliberately because he claims to have signed the declaration without reading it". Dotcom subsequently recorded a song titled Amnesia, which mocks John Banks' inability to remember the $50,000 donation. In 2013 a private prosecution on the same charge was filed, Dotcom gave evidence and a judge decided Banks had a case to answer, and will stand trial.
A poll in October 2012 found the New Zealand public had a more favourable view of Kim Dotcom than Banks.
Dotcom's arrest in New Zealand
In February 2003, at the same time he registered Trendax, Dotcom set up another company called Data Protect Limited, but changed the name to Megaupload in 2005. Megaupload was a file hosting and sharing online service in which users could share links to files for viewing or editing. In 10 Facts about the Megaupload Scandal, Dotcom describes the company like this: "Megaupload is a provider of cloud storage services. The company’s primary website, Megaupload.com, offered a popular Internet-based storage platform for customers, who ranged from large businesses to individuals. This storage platform allowed its users to store files in the Internet “cloud” and to use, if needed, online storage space and bandwidth." The company was successful. However, millions of people from across the globe used Megaupload to store and access copies of TV shows, feature films, songs, porn, and software. Eventually it had over 150 employees, US$175 million revenues, and 50 million daily visitors. At its peak Megaupload was estimated to be the 13th most popular site on the internet and responsible for 4% of all internet traffic.
On 5 January 2012, indictments were filed in Virginia in the United States against Dotcom and other company executives with crimes related to online piracy, including racketeering, conspiring to commit copyright infringement, and conspiring to commit money laundering. Two weeks later (20 January), Kim Dotcom, Finn Batato, Mathias Ortmann and Bram van der Kolk were arrested in Coatesville, Auckland, New Zealand, by New Zealand Police, in an armed raid on Dotcom's house involving 76 officers and two helicopters. Assets worth $17 million were seized including eighteen luxury cars, giant screen TVs and works of art. Dotcom's bank accounts were frozen denying him access to US$175m (NZ$218m) in cash, the contents of 64 bank accounts world-wide, including BNZ and Kiwibank accounts in New Zealand, Government bonds and money from numerous PayPal accounts.
Dotcom was remanded to Mt Eden prison. He subsequently reported: "The first night I didn't have a blanket, soap, toothpaste or toilet paper. They didn't provide us with the basic things... Every two hours, they would wake me up. I was deprived of sleep. I wrote a complaint. I said, 'This is torture, this is sleep deprivation'." He said he was treated like a convicted criminal and was "stunned to be locked up in prison over claims of criminal copyright infringements when accused murderers were bailed to await trial". On 22 February, North Shore District Court Judge Nevin Dawson overturned previous rulings and released Dotcom on bail. The judge considered there was no longer a significant risk that Dotcom would flee the country as all of his assets had been seized by this time, no new assets or bank accounts had been identified, and he had “every reason to stay to be with his family and fight to keep his assets.”
Developments in extradition case
On 28 June 2012, Dotcom had another victory in the High Court of New Zealand when Justice Helen Winkelmann found that the warrants used to seize Dotcom's property were invalid because they were too broad. "These categories of items were defined in such a way that they would inevitably capture within them both relevant and irrelevant material. The police acted on this authorization. The warrants could not authorise seizure of irrelevant material, and are therefore invalid." News emerged later that the Crown knew it was using the wrong order while the raid was in progress and Dotcom should have been given the chance to challenge the seizure. The Crown also revealed that police had handed seized hard drives to FBI staff who copied them at the police crime lab in South Auckland and sent the copies back to the US. Justice Winkelmann ruled that handing the hard drives seized in the raid to the FBI was in breach of extradition legislation and the FBI’s cloning of the hard-drives was also invalid.
Declaring the search warrants to be invalid was a significant victory for Dotcom because he was struggling to pay his mounting legal bills. At a hearing in the High Court on 28 August 2012, Justice Judith Potter allowed Dotcom to withdraw approximately NZ$6 million (US$4.8 million) from his seized funds. He was also allowed to sell nine of his cars. The amount released was to cover $2.6 million in existing legal bills, $1 million in future costs, and another $1 million in rent on his New Zealand mansion.
In May 2012 a district court judge ruled that the FBI should hand over all its evidence against Dotcom relating to the extradition bid. The Crown appealed, but the ruling was upheld by the High Court. The Crown appealed again and in March 2013, the Court of Appeal quashed the previous court decisions. Crown lawyer John Pike, on behalf of the US Government, argued that the district court had no power to make disclosure decisions in an extradition case and that "disclosure was extensive and could involve billions of emails". The Court of Appeal agreed stating that extradition hearings were not trials and the full protections and procedures for criminal trials did not apply. Dotcom's lawyer, Paul Davison, QC, appealed to the Supreme Court. In May 2013 the Supreme Court agreed to hear the case so it will make the final decision on whether Dotcom should receive all the FBI investigation files before the extradition hearing.
In March 2013, Dotcom won a Court of Appeal ruling allowing him to sue the GCSB, rejecting the attorney-general's appeal against a ruling in December, 2012. A month later, Dotcom appeared in court, seeking compensation from police over the raid on his house which had earlier been deemed illegal.
In May 2013, Dotcom released a 39 page "White Paper" which links his prosecution to Hollywood studios; Dotcom claims that the US government prosecuted him in return for contributions from the studios for President Obama. The Paper was released to coincide with the visit to New Zealand of United States Attorney General, Eric Holder, head of the US Justice Department which oversees the FBI.
Political fallout from Dotcom's arrest
On 24 September 2012 Prime Minister John Key revealed that, at the request of the police, the New Zealand Government Communications Security Bureau (GCSB) had spied on Dotcom, illegally helping police to locate him and monitor his communications in the weeks prior to the raid on his house. The GCSB is not allowed to spy on New Zealand citizens or permanent residents; Dotcom, though not a citizen, had been granted permanent residency. Three days later, the Prime Minister John Key apologized for the illegal spying. "I apologize to Mr Dotcom. I apologize to New Zealanders because every New Zealander…is entitled to be protected from the law when it comes to the GCSB Government Communications Security Bureau, and we failed to provide that appropriate protection for him." In December 2012, Chief High Court judge Helen Winkelman ordered the GCSB to "confirm all entities" to which it gave information sourced through its illegal spying. This opened the door for Dotcom to sue for damages – against the spy agency and the police. The Crown appealed but in March 2013, the Court of Appeal upheld the High Court's decision.
The mistakes by authorities have attracted widespread media coverage and John Key's handling of the affair has come in for some stinging criticism from Opposition parties in Parliament. Political commentator Bryce Edwards said the GCSB's involvement and the botched search warrants have "turned the pursuit of (Dotcom) and the operations of our law-enforcement agencies into the stuff of farce". A Waikato Times' editorial said that the announcement of the illegal spying has "heightened suspicions that this country's relationship with the United States has become one of servility rather than friendship... It is preposterous to suggest Mr Dotcom threatens our national security. The Government's unquestioning readiness to co-operate with American authorities seriously corrodes our claims to be an independent state." Sunday Star Times commentator Richard Boock compared the Dotcom saga to Watergate and suggested it may eventually 'bring down' John Key. The story has also made headlines overseas including in the Wall Street Journal, New York Times, The Guardian and the Hollywood Reporter which specialises in legal and entertainment issues.
John Key added to speculation about Hollywood's role in October 2012 when it was announced he was going on a four-day visit to meet top studio executives. Key said the trip was intended to promote New Zealand as a good country to produce movies, but he will have dinner with former US Democratic senator Chris Dodd who now heads Hollywood’s lobby group, the Motion Picture Association of America (MPAA) – which has described Dotcom as "a career criminal". Using Twitter, Dotcom said that Dodd was "responsible for the destruction of Megaupload & the abuse of my family".
By November 2012, the restrictions placed on Dotcom's ability to travel had an unexpected side effect. Since he has been (held) in New Zealand for more than 12 months, he is now able to buy the Coatesville property he has rented since moving to New Zealand without having to go through the Overseas Investment Office, which had denied his earlier attempts to buy it. However, because his assets are frozen, he may no longer be able to afford it.
In a lengthy article on TorrentFreak, Dotcom claims he was not guilty of insider trading in Germany. He said the judge and prosecutor offered him a suspended sentence if he pleaded guilty. "I took the deal and moved on with my life instead of spending the next few years in court rooms defending my innocence." Commenting on his business activities in Hong Kong, he said: "Hong Kong, what an awesome place to do business and to host my new phantom persona. I should write a book about doing business in Hong Kong, that’s how good it is."
Dotcom also wrote: "I made mistakes when I was young and I paid the price. Steve Jobs was a hacker and Martha Stuart [sic] is doing well after her insider trading case. I think over a decade after all of this happened it should NOT be the dominating topic. I am 37 years old now, I am married, I have three adorable children with two more on the way (twin girls – yeah) and I know that I am not a bad person. I have grown and I have learned. Making this into an issue about my past is unfair to everyone else working at Mega. Our business is legitimate." "We have spent millions of dollars on legal advice over the last few years and our legal advisers have always told us that we are secure and that we are protected by the DMCA which is a law in the US that is protecting online service providers of liability for the actions of their users."
In regard to Megaupload, Dotcom believes the company had actively tried to prevent copyright infringement – its terms of service forced users to agree they would not post copyrighted material to the website. Companies or individuals with concerns that their copyright material was being posted on Megaupload were given direct access to the website to delete infringing links. Megaupload also employed 20 staff dedicated to taking down material which might infringe copyright. Dotcom also explained that Megaupload was responsible for the transfer of 800 files every second and that it would be impossible to police all that traffic. In addition, US privacy laws, such as Electronic Communication Privacy Act, prohibit the administrators from looking into the accounts of the users.
On 1 March 2012 Dotcom gave his first interview to New Zealand media after his arrest to John Campbell of Campbell Live. He said the services offered by his Megaupload site were not significantly different from comparable services using cloud technology such as Rapidshare or YouTube, and he has just been used as a scapegoat because of his involvement with hacking activities in the past. He explained the close ties of his case to that of Viacom vs YouTube in which the Digital Millennium Copyright Act (DMCA) shielded YouTube from the infringement of its users and described his surprise when he was arrested without trial or a hearing.
Dotcom claims to be a legitimate businessman who has been unfairly demonized by United States authorities and industry trade groups such as the RIAA and MPAA. He blames US President Barack Obama for colluding with Hollywood to orchestrate his arrest and has spoken out against his negative portrayal in the media. In regard to the illegal spying conducted by GCSB, Dotcom said they were not spying to find out where he was. "The GCSB was utilised to surveil all my communication in order to give the U.S. Government full access to all my communication, without the requirement of a warrant," he said.
In November, 2013 Herald senior journalist David Fisher published The Secret Life of Kim Dotcom: Spies, Lies and the War for the Internet. The book covers aspects of Dotcom's personal life and reveals that he fears for his life. He is quoted telling a friend "Don't just let it go", if he is killed as part of US allegations of copyright breaches associated with Megaupload.
Following the 11 September 2001 attacks in the United States, Dotcom launched a group called Young Intelligent Hackers Against Terrorism (YIHAT). He claimed to have hacked Sudanese bank accounts belonging to Osama Bin Laden and offered a $10 million reward for information leading to Osama’s capture on his now-defunct kimble.org site.
Dotcom participated in a mock funeral procession for public broadcaster TVNZ 7 in downtown Auckland, on the day of its final broadcast. He had warmed to one of its more notable shows, Media7, for its championing of Internet freedom, and had been interviewed on the show at least once.
In August 2012, Dotcom released a music album titled Party Amplifier. Dotcom was already in the process of recording the album with friend and producer Printz Board (who wrote Yes We Can for Barack Obama's 2008 election campaign) when he was arrested. Printz and Dotcom recorded more than 20 songs at Neil Finn's Roundhead Studios in Newton, Auckland – one of which is called Mr President – an electronica protest against Barack Obama, who Dotcom believes was involved in shutting down Megaupload.
In June 2012, Dotcom announced on Twitter the launch of Megabox, a new music streaming service to rival Spotify. He announced in October 2012 that Megabox would launch on 19 January 2013, the first anniversary of the closure of Megaupload and the raid on his Auckland property. However, later said that Megabox would be launched a few months after Mega.
On 2 November Dotcom announced a new file storage service similar to Megaupload which used the domain name me.ga. It was to be launched 19 January 2013 but the African state of Gabon, which controls the .ga domain, cancelled the me.ga name on 6 November 2012. The site has since registered the names mega.co.nz and mega.net.nz. The new file hosting service offers file encryption to enhance user privacy and security. As a result of this encryption, Dotcom and mega.co.nz will not know of the content of the uploaded data, allowing for the claim of plausible deniability to be made should new charges arise. In January 2013, Dotcom offered a $13,500 reward to anyone able to defeat the site's security system.
Dotcom has been involved in the local community in Auckland. In December 2012, he announced that he would be playing the part of Santa Claus in the play MegaChristmas, run by Auckland's Basement Theatre. In a local ceremony on the first of that month, he turned on the Franklin Road Christmas lights and delivered a speech before the display.
In September 2013 Dotcom revealed he aspires to enter into New Zealand politics. On September 4, 2013, Kim Dotcom stepped down as director of Mega, and announced he was working on a music streaming service called Baboom. Dotcom says it will be more advanced than Megabox.
On September 10 Dotcom announced that he would play 100 people in Call of Duty: Modern Warfare 3 at New Zealand's first Digital Entertainment Expo, DIGITAL NATIONZ. The former world number one would play a mix of challengers from the audience who could win prizes for beating him, as well as play against celebrities for charities Y for Youth and Starship Hospital.
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- CEOWORLD magazine (4 September 2013). "Kim Dotcom Has Stepped Down As Director Of Mega File-Storage Startup". Retrieved 4 September 2013.
- "Kim Dotcom reveals music service 'Baboom', 3 News NZ". 3news.co.nz. Retrieved 2013-12-05.
- "Torrentfreak, Kim Dotcom Teases New Music Service... BABOOM". Torrentfreak.com. 2013-09-07. Retrieved 2013-12-05.
- "Kim Dotcom vs 100 at DIGITAL NATIONZ - Gameplanet New Zealand". Gameplanet.co.nz. 2013-09-20. Retrieved 2013-12-05.
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