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MegaUpload asks courts for access to seized funds

By | Published on Tuesday 10 April 2012


Lawyers for MegaUpload formally complained to the American courts on Friday about the US government’s refusal to give the accused company access to its seized assets in order to fund a defence against the copyright infringement, money laundering and racketeering charges that have been made against the firm.

Although the Hong Kong courts allowed some of the company’s assets held there to be unfrozen to make good on unpaid salaries, and the New Zealand courts have allowed some funds to be handed over to Mega founder Kim ‘Dotcom’ Schmitz to pay for his living and legal costs, the bulk of the assets seized by the States when its authorities raided and shut down the Mega operation in January remain off limits.

But reps for Mega say the company needs access to more cash to ensure the firm and its executives get a fair trial, if and when they are extradited to the US. First, they need to be able to pay legal fees (and they’ve just engaged star attorney Andrew Schapiro, who won’t be cheap), and second they want to buy the servers on which their websites were stored, so they can use them as evidence in court.

As previously reported, the off limits Mega servers have become a contentious issue, as the company which leased the rogue file-transfer firm server space agonises over what to do about the huge amounts of data still clogging up its hardware, now that the Mega empire is unable to pay its bills. The US government says it has all it needs from the servers, so much so they can be wiped, but the Mega defence team want access to the data too, as does the Motion Picture Association Of America, which is planning a civil case against the Mega execs.

Plus, of course, there is the matter of any legitimate files (ie those that don’t infringe copyright) stored by former Mega customers on the servers. One former customer has asked the courts to help him get his content back. If Mega was able to buy the servers, its lawyers say they would pull off the evidence they need, and then let former customers reclaim any legitimate data.

But the US government says it won’t free up the funds to allow that to happen (former customers should have read the small print of Mega’s terms and conditions, the US Attorney overseeing the case said last week, which urged them to keep local back ups too). And the MPAA is concerned that if Mega gets ownership of its former servers, the company might relocate them outside the US and relaunch the service.

But, in a court filing on Friday, Mega’s lawyers said that the US government’s refusal to let their client access some of its frozen funds to pay for legal fees and to secure ownership of vital evidence amounted to “undue prejudice”.

The court papers said: “In essence, the government has taken what it wants from the scene of the alleged crime and is content that the remaining evidence, even if it is exculpatory or otherwise relevant to the defence, be destroyed. And by refusing to permit MegaUpload to use its assets to mount a defence, the government is effectively making sure that MegaUpload has no practical way to preserve the evidence itself”.

They continued: “Such a course of proceeding by the government would be troubling in any circumstance. But this is, of course, a criminal case. It is, in fact, what the government has called the largest such case it has ever brought in the history of alleged copyright infringement. If the government’s position now wins the day, the integrity of what ensues will be lost – the Mega servers will have been wiped and potentially exculpatory or relevant evidence will have been spoliated, en masse, before being properly surveyed by the parties, not to mention the court”.

Now that Team Mega’s complaints – which they have been expressing informally for a while – are with the courts, it remains to be seen how the judge responds. A hearing on the matter is expected later this week.