In the beginning, the Megaupload Four were united - Bram van der Kolk, Kim Dotcom, Mathias Ortmann and Finn Batato. Dotcom alone faces extradition now after Batato's death and guilty pleas from Ortmann and van der Kolk. Photo / File
ANALYSIS
Tomorrow will see a momentous milestone in the marathon that is the Megaupload case.
Bram van der Kolk and Mathias Ortmann will be sentenced at the High Court at Auckland, having pleaded guilty to charges relating to Megaupload.
The role of one other New Zealand-accused, Finn Batato, ended with his untimely death from cancer almost exactly a year ago.
Kim Dotcom is now the only one left in New Zealand fighting the FBI over a website that died 11 years ago.
He is now isolated before the courts, living in a remote $15 million luxury home near Queenstown, filling Twitter with conspiracy theories on the Ukraine war, Covid-19, Donald Trump - and the Megaupload case.
With the prospect of decades in a US prison, the prolonged extradition fight in New Zealand might seem no bad thing. Dotcom tweeted this week: “I’m quite happy in New Zealand.”
In what perhaps forecasts a repeat of his 2014 political efforts, he added: “(New Zealand is) a US vassal now but that may soon change.”
Dotcom has used his social media channels to portray his version of reality since the case began. It has always pitched him as the rebel genius versus a vast conspiracy involving the United States and New Zealand governments and its copyright-holding, deep-pocketed friends.
The long, drawn out case has plenty of examples of foolishness, incompetence, vested interest and a selective determination to take Megaupload down - but actual evidence of “conspiracy” has never been established.
Dotcom has forecast how he expects tomorrow’s sentencing to go. He says prosecutors “will have massaged the bad optics” of a sentence to made it look tough but “in reality they will arrive at a reduced sentence of two years’ house arrest”.
It may well be. Or it may be more serious. It is understood van der Kolk and Ortmann are justifiably nervous about prison. They have spoken of how unpleasant it was to be locked up before bail was granted in 2012.
Of the seven charged, there was already one other who has pleaded guilty. In 2015, programmer Andrus Nomm took a plea deal and spent a year in prison. He was the least well-paid of the seven, earning about US$100,000 a year. He was not a shareholder.
The pair facing sentencing are of a different magnitude. Ortmann was listed as earning US$9m in 2010 from Megaupload and owned 25 per cent of the company. Van der Kolk earned $2m in 2010 and owned 2.5 per cent of Megaupload.
It is likely prosecutors will draw the judge’s attention to this and also to evidence which posits Ortmann and van der Kolk in Dotcom’s close orbit. It was van der Kolk quoted in the FBI indictment: “We have a funny business … modern day pirates ;)”, and Ortman who replied; “We’re not pirates, we’re just providing shipping services to pirates :)”.
In close orbit, yes, but Dotcom was always an unstoppable force. Ortmann told the Herald in 2021: “I think it’s correct to say that Dotcom was presiding over Megaupload with an iron fist. He was absolutely calling the shots with regards to policy decisions.
“What he wanted would happen, with very few exceptions. There was no way to call for moderation and expect to be heard in any way, shape or form.”
Ortmann and van der Kolk have not spoken with Dotcom since 2014. At the time, they were immersing themselves in Mega and Dotcom was embarking on his ill-fated adventure in politics.
They needed distance, said Van der Kolk in that 2021 interview, from the “fremdscham” - “vicarious embarrassment” - of the Dotcom show.
This week, Dotcom (68 per cent shareholding, $42m income in 2010) took a break from tweeting pro-Kremlin claims about the Russian invasion of Ukraine to announce that one of the two outstanding Megaupload accused had been arrested in the Czech Republic.
According to Dotcom, graphic designer Julius Bencko - who held 2.5 per cent of Megaupload shares - was arrested in Prague. If true, that leaves Sven Echternach (1 per cent shareholding) of Germany as the only one yet to be snared in a trap set by the FBI 11 years ago.
Bencko had been in Slovakia. That he was arrested in Prague is a fascinating illustration of how Echternach can never really afford to leave Germany, from which he cannot be extradited. If, by some small chance, Dotcom manages to avoid extradition, he will forever be trapped in New Zealand.
Bencko is facing a similar situation to that which Nomm faced before he took the plea deal. He is trapped in a country not his own with limited resources, facing extradition. It pushed Nomm to cut a deal. Bencko’s plight is ripe ground for another deal to be done.
The benefit of these guilty pleas to the prosecutors is that they are effectively testimony against Dotcom, who was always the Mr Big of Megaupload.
In the case of Nomm, he agreed to a “statement of facts” which he signed as a “knowing and voluntary confession”.
In effect, the guilty pleas from van der Kolk and Ortmann serve as the same. In the police summary of facts, they offered a different origin story for Megaupload to that from Dotcom.
Dotcom always said Megaupload came out of his desire to send cool car videos across the internet at a time when bandwidth was choked and expensive.
In contrast, van der Kolk and Ortmann testified they had agreed with Dotcom in 2005 to develop a service - Megaupload - that would compete with Rapidshare which launched in 2002, making money out of “large-scale copyright infringement”.
When van der Kolk and Ortmann appear for sentencing, they will point to Mega as evidence of their commitment to New Zealand. They coded the cloud storage service in the year after the Megaupload raid, devising end-to-end encryption on the fly years before it became industry standard.
Dotcom sold his shares in the business soon after it launched. Van der Kolk and Ortmann stayed the course and have built the business into a vibrant New Zealand tech success story.
Van der Kolk has become an involved part of the community. With wife Asia Agcaoili, they have raised their son - who was born here - to embrace all the opportunities New Zealand has to offer. Ortmann was always the quieter of the two but he, too, has put down roots.
A source close to the pair said they had “recognised their wrongdoing” and hoped the court would appreciate how much they had changed and contributed to New Zealand when considering a custodial sentence.
The Herald also understands they also hope to lean on Mega’s reputation inside government circles as a good corporate citizen. Of all businesses of its type, Mega has worked hard to safeguard users’ privacy while greeting enforcement agencies and regulators with an open hand and open door.
Should Dotcom ever find himself facing sentencing, he will present quite differently. Unrepentant, he sits in South and lobs Twitter grenades around the world, resisting the rising tide of testimony that argues Megaupload was always a criminal enterprise.
If that day ever comes, it is still distant. The current status of the extradition proceedings is that the Supreme Court has given a green light for Minister of Justice Kiri Allan to sign the extradition warrant.
Process and court precedent says Allan must do so only after considering all available arguments and facts. Given the court process and evidence produced, it seems highly likely she would eventually do so.
Dotcom would then be expected to seek a judicial review of that decision at the High Court. And then more years will pass.
Allan - the sixth Minister of Justice since the 2012 raid - said this week: “I have received detailed submissions from Mr Dotcom. In due course I will receive further advice on those matters before making any decision.
“Unfortunately I cannot say how long that will take.”
David Fisher is based in Northland and has worked as a journalist for more than 30 years, winning multiple journalism awards including being twice named Reporter of the Year and being selected as one of a small number of Wolfson Press Fellows to Wolfson College, Cambridge. He first joined the Herald in 2004, and has been following the Megaupload case from the beginning.
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