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Summary:

You can’t make this stuff up: The indictment of the popular file hosting site MegaUpload reveals a hugely profitable business run by people whose Mercedes novelty license plates included “GUILTY” and “MAFIA.” Also included are numerous juicy internal emails between MegaUpload employees and executives.

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The FBI moved Thursday to shut down MegaUpload.com and arrest four of its executives, including its founder Kim Schmitz. The feds are alleging criminal copyright infringement and racketeering, and the full indictment has already been posted online. Here are the most important and juicy details about the network of companies behind MegaUpload, as alleged by the Justice Department:

  • MegaUpload was primarily hosted in Virginia by a web hosting provider called Carpathia Hosting. Carpathia leased more than 1000 servers with a total of 25 petabytes of storage to MegaUpload.
  • MegaUpload had its second big data center in the Netherlands, where web host Leaseweb rented and hosted close to 700 servers for the company.
  • MegaUpoad users paid more than $110 million to the company via PayPal.
  • The MegaUpload imperium employed more than 30 people in 9 different countries.
  • The FBI and foreign authorities seized close to 60 bank accounts as well as various PayPal accounts.
  • Authorities also seized around 30 cars and motorcycles, including a number of Mercedes-Benz cars with novelty license plates like “STONED”, “GUILTY” and “MAFIA.”
  • MegaUpload founder Kim Schmitz allegedly owns 68 percent of Megaupload as well as its image hosting site Megapix.com and the affiliate site Megaclick.com. He owns 100 percent of Megavideo.com, Megaporn.com and Megapay.com. He made $42 million in 2010.
  • Mathias Ortmann, a long-time collaborator with Schmitz who was arrested on Thursday as well, owns 25 percent of the Mega empire. He co-founded MegaUpload and has been serving as the company’s CTO. Ortmann made $5 million in 2010.
  • The MegaUpload crew kick-started its Megavideo hosting site by copying videos from YouTube, and the indictment quotes from internal emails stating: Do we have a server available to continue downloading of the Youtube’s vids? … Kim just mentioned again that this has really priority.” Another email stated: “Kim really wants to copy Youtube one to one.”
  • Other emails show how executives discussed cash rewards for uploaders who had provided specific DVDs and other copyrighted works.
  • Further emails show how some of the executives scoured their own service to download copies of The Sopranos  and various music albums.
  • The indictment even includes chat logs with conversations between company executives, which include statements like: “we have a funny business . . . modern days pirates :)”
  • A MegaUpload programmer who was charged as part of the indictment uploaded multiple DVDs to the site.
  • Some of the emails show that MegaUpload had an interesting policy on when to follow take-down requests. When asked by Warner to take down files, the site’s CTO wrote in an internal email: “We should comply with their request — we can afford to be cooperative at current growth levels.”
  1. This article is amazing. All facts. No spin.

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    1. Agreed, Ray. But it is all facts.. the author is summarizing key points directly from the indictment :-)

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    2. Thing is: All facts. Are they true?

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      1. @hector – nope, they are allegations. Thanks!

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      2. Jim Satterfield Friday, January 20, 2012

        Well, they do have to produce it in court along with providing copies to the defense attorneys. If it isn’t true their case will go down the toilet.

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    3. Yep– one of the best summaries I’ve found, focusing on critical details not vagueries. Probably saves me from reading the whole indictment.

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  2. This sounds way too sensationalist. Care to give actual facts?

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  3. Agreed. Thank you for actually reporting.

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  4. Sure are a lot of typos in this.

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    1. Copy editor running behind today. Sorry about that.

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  5. Join us in the facebook group to support Megaupload, here:
    http://www.facebook.com/groups/255325934540626/

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    1. You are sick. Supporting a criminal that violates law.

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      1. Kissing Bandit Friday, January 20, 2012

        I’m not necessarily jumping to MegaUpload’s defense here, however, there’s nothing wrong with supporting theme because it hasn’t yet been proven in a court of law that what they’ve done is unlawful. As an earlier commentator mentioned, these are all still just allegations.

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      2. Stephen Gillie Monday, January 30, 2012

        No, we are civil disobediants, defying laws we believe should not exist.

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  6. Hi,

    So how comes when Youtube was alleged to have broken Viacom’s copyrights, which most people who were following YT from its very earliest days would accept to at least a degree, Viacom had to sue Youtube individually and directly, yet in this case, it’s the American Govt. acting as agent for these media companies – couldn’t be who pays the piper, could it?

    Yours kindly,

    Shakir Razak

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    1. Alexander Edbom Friday, January 20, 2012

      Google got lawyers, good lawyers and much more money than Megaupload.

      Google also has a search engine everyone is using, it would hurt to take it down.

      Another and the most important thing, GOOGLE IS An US COMPANY! Megaupload was not. It’s all about money baby.. US doesn’t lose anything if other countries earn less.

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    2. Jim Satterfield Friday, January 20, 2012

      YouTube could reasonably claim that they were complying with takedown requests as best as they could. It doesn’t seem the same was true of Megaupload. Also, if the indictment is accurate you had executives and employees of the company actively and knowingly violating the law.

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      1. Christopher Kidwell Thursday, March 22, 2012

        Actually, it does seem the same way with Megaupload, to disagree on that point.

        MegaUpload removed links that they were told were infringing. Sure, they didn’t remove ALL links to a file or the file itself because ONE link to a file was infringing and did one file for multiple links if they were the same file.

        However, that is just how a smart filehost would do it.

        Secondly, on the ‘actively violating the law’…. I don’t see any of that. I see nothing that would anywhere near speak to that.

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  7. Should they close down and prosecute the postal service because people can send stolen goods to each other?

    Ron

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    1. No, but what if it is the postmen who do the stealing?

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      1. you prosecute the postman not the service.

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    2. Jim Satterfield Friday, January 20, 2012

      Read again. If accurate and they can prove it in court there were high level executives of the company knowingly violating the law. There is even a quote about taking files from YouTube being a high priority of the CEO.

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  8. Apparently, Carpathia is part owned by Kim Dotcom too.

    Having servers in Virginia has to be the dumbest move ever.

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    1. Carpathia is owned by Spire Capital, not Kim Dotcom.

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  9. Hmmm… who stands to gain from taking down MegaUpload?

    “The MegaUpload crew kick-started its Megavideo hosting site by copying videos from YouTube, and the indictment quotes from internal emails stating: Do we have a server available to continue downloading of the Youtube’s vids? … Kim just mentioned again that this has really priority.” Another email stated: “Kim really wants to copy Youtube one to one.””

    Well, Google owns Youtube, and is a leading force in SOPA-like behavior, (while allegedly standing against SOPA) such as closing user accounts and removing users’ videos for baseless, incorrect, copyright “infringements”.

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  10. I find it very hard to believe that the CTO and or other employees were uploading DVDs to their own servers.
    They get 50 million visits a day, surely they can let the visitors do the dirty work for them.

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    1. Alexander Edbom Friday, January 20, 2012

      MAFIIA/RIIA probably had some one to do the inside job, or even worse faked proof.

      Every idiot knows that megaupload files were uploaded by members to 99.9999999999999999%. Sure, maybe some of the people working there uploaded a movie or two but that was not their main business tactic or earning lol..

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  11. So we have a case then against all gun manufacturers/producer, they should all be charged with murders and homicide, right?

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    1. Alexander Edbom Friday, January 20, 2012

      Yes they should…

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  12. Austin Hoffman Friday, January 20, 2012

    I can’t believe they went and arrested him in ANOTHER country!!!

    p.s. LOL @list of the owner’s seized cars: (i call dibz on the royce!)
    http://www.peeje.com/positivity/5666-megaupload-sued-defendants-property-lol

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  13. What about Vkontakte.ru, there are thousands of copyrighted material. Can FBI arrest someone in Russia?

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    1. Alexander Edbom Friday, January 20, 2012

      Vkontakte is a 100% russian site, not english version or anything.

      I don’t think Hollywood cares. Besides, do you know that Russian cinema prices are like 100 times cheaper compared to the US/EU prices? Even games are cheaper there.

      Piracy in Russia won’t go away in a very long time, if ever.

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  14. When is the FBI going to raid the bakers and financial industry that made millions off of the tax payer bailouts?

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  15. Why did the government wait so long? Everyone knows that copying movies is illegal. A lot of users should be facing charges too. It is important to shut down pirates, so that we can have internet freedom in fact and news based media, and not overreaction that is late and over reaching as in SOPA and PIPA.

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    1. Alexander Edbom Friday, January 20, 2012

      If you would know something about the Internet, you would know. 99.9% of the material on Megaupload was uploaded by the members, not Megaupload itself. And I do belive they removed a lot of files after reports, but MAFIIA/RIIA will lie.

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  16. So there is much money to be made with a good price. Hollywood, how long does it take until you aknowledge that?

    No reason to crush ouer basic human rights with SOPA, PIPA, ACTA and all the other stuff.

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  17. Agreed, handsome reporting :)

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  18. Alexander Edbom Friday, January 20, 2012

    Why is every american newspaper writing about their money and cars? They had 4% of the INternet Traffic, only an idiout wouldn’t earn any money from that.

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  19. That “modern day pirates” “statement” is taken out of context and is now misleading as the email continues with – in my mind – another fundamentally relevant “statement”. It would be nice if the admin of this site provided the whole extraxt of the email appearing in the indictment – it is not that long.

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  20. So how was Megaupload different from Rapidshare or all the other Filehosting Sites?

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    1. They actively encouraged piracy and rewarded users with money.

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  21. Stephen Gillie Monday, January 30, 2012

    ATTENTION WORLD: Violating US law will get you arrested and imported to stand trial, regardless of your physical location, citizenship, or country of origin.

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    1. Can you imagine that happening in reverse? e.g., China trying to arrest a US citizen who resides in the US? Would never happen. Long live Team America, World Police.

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  22. I notice that if I want to download the indictment I have to be a member of facebook (or sign up). Maybe they could have put the indictment on Megaupload? Ah, darn it.

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  23. After reading the first 50 pages of the indictment, if it’s all valid, then it’s pretty clear these guys were shifty.

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  24. Gopango Networks Saturday, February 25, 2012

    Hi! We have made the first parody game about Megaupload, it’s name is “Megaup, upload if you can” and it is free for a limited period of time for IOS. If you are interested, you can download it on http://itunes.apple.com/us/app/megaup-upload…-if-you-can!/id497917073?mt=8 ore have more information about it on http://www.gopango.com/blog/megaup-free-for-a-limited-period-of-time-so-kim-dotcom-can-play-it-after-paying-his-bail.html.

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