US govt can seize millions from Dotcom - court

Kim Dotcom. Photo / File .

The US government can seize millions of dollars from Internet mogul Kim Dotcom, a federal appeals court ruled Friday.

Since 2012, Dotcom, who founded the file-sharing website Megaupload, has been fighting extradition from New Zealand to the United States on piracy charges. Prosecutors say that Megaupload produced at least US$175 million ($243m) 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 US$75m 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 last only three years. So in 2014, the United States 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 US Court of Appeals for the 4th Circuit was not persuaded, ruling that by refusing to face trial in the United States 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 remaining outside the United States 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."

One of the three judges dissented. Judge Henry Floyd argued that the court could not control what foreign governments do, so 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 4th Circuit. If that fails, he can appeal to the US 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 attorneys 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.