Dotcom partners feared legal trouble, court told

6:40 pm on 25 September 2015

A court has heard Kim Dotcom's business partners privately expressed fears he would take the money and flee if their business ended up in legal trouble.

Kim Dotcom arrives at court for his extradition hearing

Kim Dotcom arrives at the court in Auckland for a preliminary hearing on Monday. Photo: RNZ/Kim Baker Wilson

The United States is attempting to extradite Mr Dotcom, Mathias Ortmann, Bram van der Kolk and Finn Batato on copyright violation and money-laundering charges related to their file-sharing website, Megaupload.

The main extradition hearing started yesterday in Auckland after a preliminary hearing earlier in the week.

In court today, Crown lawyer Christine Gordon read out conversations Mr Ortmann and Mr van der Kolk had online, worrying that the website was vulnerable to legal action.

In 2007, they discussed their concerns about what Mr Dotcom would do if that happened.

"What if the s*** really hits the fan," Mr van der Kolk asked Mr Ortmann in a Skype message. "Would he grab the last little bit of money and take off?"

The pair also repeatedly referred to themselves as "modern-day pirates" in online conversations, Ms Gordon said.

In another conversation, they speculated the reason Megaupload had not been able to find a buyer was because the business was not completely legitimate.

"If we were a 100 percent clean site with that growth and profit, we would have sold for a nine-figure sum already," Mr Ortmann wrote to Mr van der Kolk.

In reply, Mr van der Kolk said: "We have to think of a work-around for that, otherwise we'll never cash in and we'll just end up with legal problems in a few years ... This cannot last forever, I think."

Messages to Megauploaders 'enough for extradition'

The Crown argued communication between Megaupload and its users was enough evidence to make Mr Dotcom and his co-accused eligible for extradition.

Ms Gordon told the hearing Mr Dotcom, Mr Ortmann and Mr van der Kolk personally communicated with some users of the site, who repeatedly uploaded infringing material, and paid them rewards.

She said those communications alone were enough evidence to show there was a case against the men that would meet the threshold for extradition.

The way the men interacted with some of their users showed they knew their business was largely based on infringing files, Ms Gordon said.

Megaupload paid rewards to uploaders whose files proved popular among other users - which tended to be movie, television and other copyrighted content.

That was the "big flaw" in the rewards system, Mr van der Kolk told Mr Ortmann in an email. "We are making profit off more than 90 percent infringing files."

Despite that, Megaupload continued to routinely pay uploaders who were repeat infringers, Ms Gordon said.

Judge Nevin Dawson hears a submission from Christine Gordon, who is acting for the Crown on behalf of the United States (24 September 2015, Auckland).

Judge Nevin Dawson hears a submission from Christine Gordon, who is acting for the Crown on behalf of the US. Photo: RNZ / Kim Baker Wilson

Ms Gordon also said Megaupload defrauded copyright holders.

It allowed them to either directly delete any links they came across that led to copyright-infringing files or notify the website of infringing material, she said.

The website then sent the copyright holders a notification informing them the infringing material had been removed.

However, Megaupload only deleted the individual link, not the underlying file nor any other links that led to the same file, Ms Gordon said.

In some cases, there were dozens of links that led to the same file, leaving the illegal file intact and still easily accessible.