Megaupload.com founder Kim Dotcom (aka Kim Schmitz) and three others are due to appear in the North Shore District Court this afternoon following their arrest in Auckland today at the request of United States officials.
A US Department of Justice indictment accuses Mr Dotcom's music and movie file sharing site of causing estimated harm to copyright holders in excess of $US500 million and the conspirators earned more than $US175 million in illegal profits through advertising revenue and premium memberships.
New Zealand Police said they executed ten search warrants at residential and business addresses across Auckland this morning as part of their actions against Megaupload.
Arrests were made in Coatesville, north of Auckland, and the Auckland waterfront suburb of Orakei.
The raids were organised in cooperation with the FBI, police said. Four FBI agents are in NZ.
Mr Dotcom - accused of infringement, racketeering and money laundering by the FBI - has been living in the Chrisco mansion in Coatesville.
Auckland lawyer Rick Shera, who drove past the $30 million, 120-acre property this morning, told NBR that the properties multiple entrances were all blocked by police cars this morning. Neighbours told Mr Shera that the police helicopter had also been circling.
When an NBR reporter arrived on the scene around 11am, it was still swarming with police.
In a statement the Police said $6 million of assets were seized, including a Rolls Royce Phantom Drophead Coupe valued at more than $500,000.
Police said more than $10 million has also been seized from NZ financial institutions. The money has been secured by New Zealand's Official Assignee pending the outcome of legal proceedings.
Megaupload.com is currently unavailable.
Detective Inspector Grant Wormald of OFCANZ says today's arrests were the result of several months coordination with the FBI and US Department of Justice.
"The FBI contacted New Zealand Police in early 2011 with a request to assist with their investigation into the Mega Conspiracy." said Mr Wormald.
"We were happy to provide this assistance. Staff from OFCANZ and New Zealand Police have worked with the US authorities over recent months to effect today's successful operation.
"All the accused have been indicted in the United States. We will continue to work with the US authorities to assist with the extradition proceedings." said Mr Wormald.
The other three arrested
The FBI said the three arrested were the company's chief marketing officer, Finn Batato, chief technical officer, co-founder and director Mathias Ortmann and Bram van der Kolk who oversaw website programming and network structure overseer, the Federal Bureau of Investigation (FBI) said on its website (see the FBI's full statement here).
The FBI said the seven individuals and two corporations, Megaupload and Vestor, were indicted on January 5, charged with engaging in a racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering and two substantive counts of criminal copyright infringement.
The indictment called the outfit an "international organized criminal enterprise allegedly responsible for massive worldwide online piracy of numerous types of copyrighted works through Megaupload.com and other related sites."
Along with the arrest, the FBI said more than 20 search warrants were executed today in the US and eight countries, seizing approximately $US50 million in assets and targeted sites where Megaupload has servers including in Ashburn, Washington DC, the Netherlands and Canada.
The indictment claimed the enterprise was led by Kim Dotcom and Kim Tim Jim Vestor, the FBI said.
The indictment said the enterprise had operated websites which illegally reproduced and distributed infringing copies of copyrighted works, including movies and music, the FBI said.
The indictment alleges the estimated harm caused was in excess of $US500 million and the conspirators earned more than $US175 million in illegal profits through advertising revenue and premium memberships.
Among the organizations that provided "substantial and critical assistance" were the New Zealand Police, the Organised and Financial Crime Agency of New Zealand (OFCANZ), the Crown Law Office of New Zealand,and the Office of the Solicitor General for New Zealand, the FBI said.
This morning Twitter was abuzz with the news, with many commenting on the recent anti-infringement legislation SOPA and PIPA.
The Wall Street Journal reported that investigators said there was no link between the recent protests against this legislation.
Anonymous takes down US Department of Justice and Universal Music sites
The hacker collective Anonymous has shut down the websites of both the United States Department of Justice and Universal Music, according to media. The Justice website has been up and down.
News website RT reported that the group shut down both websites in retaliation for the action against Megaupload.
“It was in retaliation for Megaupload, as was the concurrent attack on Justice.gov,” An Anonymous operative, Barret Brown, told RT.
Mr Brown reportedly said that more such action was coming.
A Twitter account affiliated with the group, @YourAnonNews, took responsiblity for the attacks, saying it was Anonymous' largest attack ever, with 10 sites down in 20 minutes. These included mpaa.org and riaa.org.
The site www.downforeveryoneorjustme.org said the DoJ site, riaa.org and universalmusic.com were down, but mpaa.org was up at time of writing.
The German-born multi-millionaire’s bid to buy the Chrisco mansion in Coatesville, north of Auckland, was knocked back by the Overseas Investment Office (OIO) last year, as reported by NBR.
Mr Dotcom’s application to buy the homestead he rents at 186 Mahoenui Valley Rd in Coatesville, north of Auckland - one of the priciest homes in the country - was declined on the basis of new section 16 additions to the Overseas Investment Act. This includes criteria for relevant business experience, financial commitment and good character.
Mr Dotcom and his family were granted residency last year. Information provided to the OIO indicated the Dotcom’s do not intend to reside here indefinitely.
They have been renting the Coatesville mansion built by Chrisco founders Richard and Ruth Bradley.
Mr Dotcom is the sole shareholder of Megastuff, which has two directors Andrew Bowden and Peter Brooke
A third director, Wayne Tempero (a bodyguard who formerly worked for Brad Butterworth and Russell Coutts) resigned in August.