Megaupload sentencing: Judge asked to consider home detention but Crown wants prison

Bram van der Kolk and Mathias Ortmann arrive at the High Court in Auckland for sentencing today. Photo / David Fisher

Wildly different cases have been made for the sentencing of the two Megaupload coders in the High Court, with their lawyer making a case for home detention while the Crown is seeking years in prison.

Grant Illingworth QC told Justice Sally Fitzgerald there were strong reasons to choose a sentence of home detention for Bram van der Kolk and Mathias Ortmann.

The maximum home detention sentence in New Zealand is 12 months.

Illingworth said the remorse shown and rehabilitative steps taken by the men were extensive, as was their assistance to authorities seeking to bring the remaining Megaupload accused to justice.

“To apply a heavily punitive penalty would send the wrong message. Others should be encouraged to follow the example they have set over the last decade of their lives.”

Earlier, the Crown’s David Boldt told the court a proper starting point for sentencing was 12 years and six months, with discounts for a range of reasons reaching no more than 60 per cent.

Illingworth, though, presented his clients as a pair who - for a range of reasons - had made a poor decision to become involved in Megaupload when it launched in 2005 and who had worked to make good since their arrest in 2012.

He said an expression of remorse and of rehabilitation could be seen in their new business Mega, a cloud storage business they created in the year after their arrest and which they continued to lead.

Illingworth said the pair had “worked tirelessly” to establish Mega as a business that was fully compliant with the law and a “good corporate citizen”, with 200 employees and more than 280 million users.

He said it had the potential to compete with some of the world’s biggest tech companies, that both coders played a vital role in the business and a prolonged absence could create a period of jeopardy for the company and those employed there.

In the beginning, the Megaupload Four were united - Bram van der Kolk (left), Kim Dotcom, Mathias Ortmann and Finn Batato.

Illingworth also took issue with the way the Crown had constructed the charges and said a more appropriate presentation of the law saw a maximum starting point of up to 10 years.

He said a fair starting point was seven years for Ortmann and five years for van der Kolk. He said the difference represented the more senior role Ortmann held in Megaupload and the relative youth of van der Kolk, who was a new graduate aged 21 at the time.

That starting point was subject to a range of factors and should accommodate the unusually high discount of 80 per cent, he said.

Illingworth said the pair had offered “exceptional” assistance to authorities “including the giving of evidence in a US trial if required”. He said the Crown had acknowledged the pair had done or offered to do everything that could be done.

Both men had provided the court with what Illingworth described as “glowing references” that included one from Rick Barker, former Labour Party minister.

Former Megaupload coders Bram van der Kolk and Mathias Ortmann in 2019.

Illingworth said sentencing should take account of Ortmann’s diagnosis of autism and van der Kolk’s ADHD, which made each accused more susceptible to being drawn into criminal offending through copyright infringement.

He said there was also the context of the internet at the time in which downloading content was a new feature, with little understanding among those doing so as to whether it was criminal activity.

A medical report said Ortmann’s autistic worldview and limited social contact would have made it harder to see the “invisible victims” and more likely to follow his extroverted colleagues.

The legal process through the Supreme Court had helped him understand what he had done that led to the charges.

Illingworth said doctors had found Ortmann did not intuitively understand social boundaries and needed to actively learn boundaries.

He said Ortmann’s condition led to “tunnel vision” relating to the coding of the website and not taking in the wider implications of his actions.

He said Ortmann had no understanding he was “harming people” and damaging their livelihoods. “He’s here today to face the music.”

Illingworth said Ortmann and van der Kolk were left with no assets and would surrender money held in overseas accounts. Both men had families and had each suffered hardship as a result of their offending, he said.

Illingworth took issue with the Crown using the police summary of the case - to which his clients had pleaded guilty - as a springboard for accusations in sentencing that had no basis in evidence.

As an example, he said the claim about “billions of dollars” was not quantified and didn’t appear in any evidence.

He also took aim at victim impact statements from copyright holders - which included large Hollywood studios - as they had civil cases under way.

Illingworth said it should be recognised that at the time Megaupload started, the internet was “fizzing” with uncertainty around issues that were now settled, including the seriousness of copyright breaches.

“They were in fact naive and ignorant of the fact they were getting into hot water when they got involved in this enterprise.”

Earlier, Boldt - for the Crown - said a starting point of 12 years and six months was appropriate for van der Kolk and Ortmann.

Bram Van der Kolk and Mathias Ortmann in 2012, eight months after the raid on Kim Dotcom's Coatesville mansion.

Flashback to 2012 - bodyguard Wayne Tempero (left), Kim Dotcom's former wife Mona Dotcom, coders Bram van der Kolk and Mathias Ortmann and Megaupload marketing manager Finn Batato.

He said an appropriate discount for eventual guilty pleas and assistance to United States authorities was at best 50 per cent, with another potential 10 per cent discount for personal reasons.

Boldt said van der Kolk and Ortmann were central to the operation of the copyright-infringing organised crime group that launched as Megaupload in 2005, masquerading as a genuine business.

“This quickly became an extraordinarily lucrative operation.”

On the surface, Megaupload presented itself to the world as a site containing a mix of content including that apparently uploaded by users.

In reality, he said at least 90 per cent was copyright content, from movies and television shows to video games and other computer software.

Boldt said the worldwide reach of the criminal conspiracy, the money it made, the losses it caused and how long it went on “puts this in the category of the most serious conspiracy … it is possible to imagine”.

“This fraud dwarfs anything seen in New Zealand before. Even the illicit revenues Megaupload generated amounted to around $300 million.”