The U.S. government can seize millions of dollars from Internet mogul Kim Dotcom, a federal appeals court ruled Friday.
Dotcom, who founded the file-sharing website Megaupload, has since 2012 been fighting extradition from New Zealand to the United States on piracy charges. Prosecutors say that Megaupload produced at least $175 million in illegal assets from fees and ads for its owners and executives from its creation in 2005 to its demise in 2012. What’s left, they say, is the $75 million being kept in Hong Kong and New Zealand.
While both countries put restraining orders on funds held there, both have allowed Dotcom and his associates to withdraw millions for legal and living expenses. Additionally, the New Zealand restraining order could only last three years. So in 2014 the U.S. moved to seize Dotcom’s assets, along with those of his associates, in both countries.
They won a default judgment in Virginia federal court last year. But Dotcom and his co-defendants argued that they were unconstitutionally deprived of the right to defend themselves in that civil forfeiture case.
A three-judge panel of the Fourth Circuit Court of Appeals was unpersuaded, ruling that by refusing to face trial in the U.S. on criminal charges, Dotcom and the rest of the Megaupload team gave up their right to contest any civil proceedings. Chief Judge Roger L. Gregory wrote that the defendants’ stated reasons for staying outside the U.S. were “utterly unpersuasive,” because “the claimants’ argument that they have legitimate reason to remain where they are, such as jobs, businesses, and families does not disprove that avoiding prosecution is the reason they refuse to come to the United States,” he wrote.
One of the three judges dissented. Judge Henry F. Floyd argued that the court could not control what foreign governments do and thus any ruling would only be advisory. The majority held that, based on the cooperation of Hong Kong and New Zealand so far, that wasn’t an issue.
Dotcom can now ask for a ruling from the entire Fourth Circuit. If that fails, he can appeal to the Supreme Court. Meanwhile, the highest court in New Zealand is set to hear Dotcom’s extradition case this month.
At its peak, officials say, Megaupload was the 13th most popular site on the Internet. Dotcom's lawyers have argued that the site was essentially no different from other online storage providers and couldn't be held liable for users uploading pirated material.