Megaupload Arrests Trigger Retaliation Hacks

Four suspected Internet pirates wanted in the United States appeared in a New Zealand court on Friday, as police seized a treasure trove of luxury cars, artworks and cash from the founder of popular file-sharing site Megaupload.com.

The FBI and Department of Justice websites crashed following the announcement of the indictment. The hacktivist group Anonymous mounted what it called its "largest attack ever" Thursday, claiming credit for a coordinated takedown of websites managed by the Department of Justice and organizations supporting controversial antipiracy legislation.

The two government sites were up and running again early Friday after being shut down for several hours in the attack claimed by Anonymous, which also briefly disabled music and recording industry websites in retaliation for their support of the proposed antipiracy bill in Congress, known as SOPA and PIPA.

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Megaupload.com's 37-year-old German founder "Kim Dotcom" and three other men were denied bail by the district court in Auckland and will appear for another hearing on Monday, after raids on 10 premises across the New Zealand city.

Armed New Zealand police liaising with U.S. authorities said they arrested Dotcom, also known as Kim Schmitz, and seized a sawed-off shotgun after he tried to hide inside his mansion behind an elaborate network of electronic defenses.

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The dramatic raids came after Megaupload went offline as U.S. officials and the Federal Bureau of Investigation detailed what they described as "among the largest criminal copyright cases ever brought by the United States."

Washington wants to extradite the Auckland quartet to face prosecution for online piracy, on charges of racketeering and money-laundering that could carry jail time of up to 20 years.

The Justice Department and FBI indicted a total of seven people who they said were "responsible for massive worldwide online piracy of numerous types of copyrighted works, through Megaupload.com and other related sites."

The accused generated more than $175 million in criminal proceeds and caused more than $500 million in harm to copyright owners by offering pirated copies of movies, TV programs and other content, according to a statement.

The indicted seven, all European, include the four arrested in New Zealand. The other three remain at large.

Megaupload itself is registered in Hong Kong, but checks by AFP appeared to show only a shell company with a post office box address in the Chinese city.

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In a statement, New Zealand police said they seized cars worth NZ$6.0 million ($4.8 million), including a 1959 pink Cadillac and a Rolls Royce Phantom at the "Dotcom Mansion" in Auckland along with valuable artworks.

In addition, NZ$11 million in cash held in New Zealand financial accounts was frozen pending the outcome of legal proceedings, after the suspects were alleged to have made illicit millions from subscriptions and advertising.

According to New Zealand reports, Dotcom's lawyer initially objected to media requests to take photographs and video inside the Auckland courtroom. But the accused said he did not mind "because we have nothing to hide."

The announcement of the US indictment on Thursday came one day after Wikipedia, Google and other websites staged a protest against congressional legislation intended to crack down on online piracy.

Megaupload is popular with Hollywood celebrities and has been endorsed by music stars such as Kanye West. It was also reported Thursday that Swizz Beatz, a music producer married to the singer Alicia Keys, was its chief executive.

Beatz, whose real name is Kasseem Dean, was not named in the indictment.

Megaupload Ltd. and another company, Vestor Ltd., were indicted by a grand jury in Virginia and charged with racketeering conspiracy, copyright infringement and conspiring to commit money laundering.