Ortmann, van der Kolk and Dotcom have shared many courtrooms from 2014 but haven't shared a single word since. Video / Mike Scott
A detailed account has emerged of the criminal acts to which Megaupload coders Bram van der Kolk and Mathias Ortmann pleaded guilty today.
The prosecution's "summary of facts" to which they pleaded guilty includes an admission from the pair the file-sharing site Megaupload was operated solely for making money from copyright violation.
The prosecution's case was largely an echo of accusations levelled at Megaupload in 2012 when simultaneous raids around the world by the FBI saw the website shut down and the arrest of founder Kim Dotcom here in New Zealand.
Dotcom and the others arrested - van der Kolk, Ortmann and Finn Batato - have denied for years that Megaupload was a criminal enterprise.
Bran van der Kolk and Mathias Ortmann early in the Megaupload saga. Photo / File
With the guilty pleas today and Batato's death of cancer this month, Dotcom is now the sole focus of United States' extradition efforts - and there are now three former Megaupload staff who have admitted guilt in a criminal conspiracy they say he led.
In the beginning, the Megaupload Four were united - Bram van der Kolk, Kim Dotcom, Mathias Ortmann and Finn Batato, Photo / File
Andrus Nomm of Estonia pleaded guilty in 2015 after travelling to the US from the Netherlands where he had resisted extradition. He spent a year in prison.
The summary of facts presented to the court by the prosecution described Megaupload as "an online platform that enabled users to gain near-unlimited access to digital content". That included, it said, movies, music, television shows, video games and other software.
It said the "overwhelming majority" of Megaupload traffic was copyrighted material. One FBI analysis of computer servers used by Megaupload which found "at least 90 per cent of the files infringed copyright" and 43 per cent were subject to a copyright takedown notice.
Ortmann was said to have gained US$25m from Megaupload while van der Kolk's gained about US$3m.
The prosecution case said Megaupload "would not have been possible" without van der Kolk and Ortmann because Dotcom couldn't have coded the website.
"Mr Dotcom ultimately determined matters of policy and direction but lacked the practical expertise to carry his wishes into effect. He relied on the defendants to set up and run the technical infrastructure of Megaupload."
The summary of facts offered an alternate origin story for Megaupload which Dotcom had always said grew out of his desire to share car-related videos at a time when bandwidth was expensive and slow.
Instead, the case to which van der Kolk and Ortmann pleaded said they agreed with Dotcom in 2005 to develop a service that would compete with Rapidshare, a file-sharing website that launched in 2002.
"They knew that Rapidshare made money from large-scale copyright infringement. They intended to emulate Rapidshare in this respect."
They went on to upload copyrighted material, disguise the volume of it and frustrate copyright holders' efforts to remove it, the summary of facts said. Megaupload sold advertising off the most sought-after content.
It also developed a scheme that rewarded users who uploaded popular content, knowing it was copyrighted works that brought the traffic.
"The defendants knew that their actions caused the rights of copyright owners to be breached on a mass scale," said the summary of facts.
Throughout the operation of Megaupload, the summary of facts said, it was intended it would "present an appearance of legitimacy and compliance with copyright legislation while making money from deliberate and systematic infringements of copyright".
It said Megaupload had claimed 50m daily users and 180m registered users. Google Analytics showed one billion visits in three months November 2010 and February 2011 that "illustrates the magnitude of the traffic" to Megaupload and its sister site Megavideo.
The summary of facts said it was also expected that Megaupload would attract legal action. It quoted an email from van der Kolk to Ortmann that said: "If copyright holders would really know how big our business is they would surely try to do something against it." In another email, he said; "They have no idea that we're making millions in profit every month."
Bran van der Kolk and Mathias Ortmann early in the Megaupload saga. Photo / File
The summary of facts claimed the loss sustained by copyright holders was at least US$500m and cited one computer software developer in New Zealand "deprived of commercial success" after his software was uploaded to Megaupload and then shared.
The developer found more than 10 links to versions of the software on Megaupload and submitted takedown notices. Where the links were deleted and the underlying software remained, the developer described the process for defending his work as "hopeless because he had no capacity to sue Megaupload".
The guilty pleas sparked a visceral response from Kim Dotcom who attacked the pair on Twitter calling them "shady guys who just made a deal with the US and NZ Govt to get out of the US extradition case by falsely accusing me".
Dotcom then sent a tweet highlighting news of a security flaw in Mega, the successful cloud storage company van der Kolk and Ortmann coded and developed. Mega released a security update and stated "very few" could have exploited the vulnerability.
