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If Department of Justice officials were hoping that extraditing the leaders of Megaupload from New Zealand to the United States would involve little more than a judge rubber-stamping their request, they were wrong.
Four of the defendants in the Megaupload case--founder Kim Dotcom, along with Mathias Ortmann, Bram Van Der Kolk, and Finn Batato--had filed a motion requesting access to the evidence that prosecutors were using to make their case. The men argued that their inability to access that information made it impossible for them to contest the charges, and by extension the U.S. extradition request.
New Zealand Judge David J. Harvey, in a ruling issued Tuesday, largely agreed, emphasizing "the need not only for a fair hearing but a fair hearing properly informed." His ruling is a setback for U.S. authorities, who must now prove in a New Zealand courtroom many of the charges they leveled against Dotcom and the other Megaupload defendants.
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"It's interesting, because I'm not sure the U.S. government authorities anticipated any interference on that level," said Jeff Ifrah, an attorney who co-chairs the American Bar Association's criminal justice section and committee on white collar crime, via phone. "In the U.K., the extradition treaty was amended recently and actually prevents a judge from reviewing the basis for extradition--you basically have to ship them off, and can't argue the facts in the U.K." But while New Zealand is a member of the Commonwealth, evidently its approach to extradition differs.
Prosecutors' strategy in the Megaupload case suggests that they expected the extradition request to sail through. Notably, they argued that the information requested by the defense team didn't need to be provided, and that the indictment and related summary--or record of the case (ROC)--should be accepted at face value, or what's known as prima facie, which in legal terms means there's sufficient evidence to prosecute a case.
But Dotcom's lawyer, Paul Davison, argued that "there is a need for a properly and fully informed judicial determination on the available evidence of whether or not there is a prima facie case ..." He emphasized that the process must be more than a mere rubber stamp. In particular, Davison requested access to any evidence that Dotcom had willfully broken copyright laws.
The judge agreed with many of Davison's information requests, noting that the manner in which investigators seized evidence prevented Dotcom from using it to argue his innocence. "As I understand it, all of his information and records were contained on computers or on servers which were removed from his premises or his control as the result of the actions of the New Zealand Police and the United States [and] authorities in other countries in January 2012," wrote the judge. "He simply does not have access to information which may assist him in preparation for trial."
He also said that prosecutors would have to share any evidence relating to exactly how copyrights had been infringed. "It is fundamental in any case involving copyright infringement that the element of the copyright and who is entitled to it be established," he wrote. Since Megaupload is also accused of creating a system that rewarded copyright offenders, as well as disregarding DMCA takedown notices, the judge told prosecutors to hand over "the direct delete access provided by Megaupload to any such copyright owners, and any communications between the copyright owners and Megaupload and/or its staff regarding take-down notices."
The judge's ruling may be more than a temporary setback for the Department of Justice, which had indicted Dotcom on wire fraud, money laundering, and racketeering charges. Legal watchers said the charges were pragmatic, because copyright violations in New Zealand--a civil, not a criminal crime in the country--carry a maximum penalty of only four years, which is below the five-year threshold required for extradition in New Zealand.
Making the other charges stick, however, hinges on prosecutors being able to first prove that Dotcom and Megaupload willfully infringed copyrights. Under the legal concept of dual criminality, someone can't be extradited for a crime that isn't a crime in the country in which they're being held.
"In the United States, there are a series of 20 laws where if you violate any one of them, it will automatically trigger a money laundering violation," Ifrah explained. For example, if Megaupload willfully violated copyright laws, then any profits it received would become illegal--fraudulent--proceeds, and any money it paid to suppliers would be illegal wire transfers.
"The reason the government likes to do that is because when you go into these foreign proceedings, everyone knows that fraud is fraud, so it's always easier in an extradition proceeding," Ifrah said. "So what a good defense lawyer will do when challenging this is to say that this is simply an attempt at an end-run around the dual criminality requirement. You can't dress up a fraud charge that's essentially a copyright issue as money laundering."
The Megaupload extradition hearing has been scheduled for August 6, 2012.
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