LEAD: US shuts down file-sharing site Megaupload; four arrested

Jan 20, 2012, 2:11 GMT

San Francisco - Megaupload, one of the world's largest file-sharing websites, was shut down for alleged copyright infringements by US authorities, who charged seven people, including the founder, who goes by the name of Kim Dotcom.

Dotcom, whose real name is Kim Schmitz, was among seven of the accused arrested Friday in New Zealand.

In response to the arrests, the hacker collective known as Anonymous said it had taken down the websites of the US Justice Department, the Motion Picture Association of America and the Recording Industry Association of America. All three sites were inaccessible by Thursday afternoon in the United States.

Federal prosecutors said Thursday that the site's operators earned 175 million dollars while costing copyright holders more than 500 million dollars in lost revenue.

The site claims it serves legitimate users by allowing them to upload files that are too large to be transferred via email and can be streamed or downloaded by others. The site allegedly paid users to upload popular movies and other content and charged other users for accessing the content via fast download speeds.

'This action is among the largest criminal copyright cases ever brought by the United States and directly targets the misuse of a public content storage and distribution site to commit and facilitate intellectual property crime,' the Justice Department said.

The announcement came a day after prominent websites such as Google and Wikipedia took part in an online blackout to protest proposed US anti-piracy bills that they said would severely curtail internet freedom.

Megaupload is based in Hong Kong, but it has servers in the United States, giving US authorities jurisdiction in the case.

Those arrested outside Auckland are to appear in court later Friday.

US authorities identified them as Dotcom, 37, a resident of New Zealand and Hong Kong; chief marketing officer Finn Batato, 38, of Germany; chief technical officer Mathias Ortmann, 40, also of Germany; and Bram van der Kolk, 29, of the Netherlands, who oversees programming.

The other people charged and who remained at large are a German, Slovakian and Estonian.

They were charged with conspiracy to commit racketeering, conspiring to commit copyright infringement and conspiring to commit money laundering. They each face a maximum of 55 years in jail.

About 50 million dollars in Megaupload assets were seized, US authorities said. In New Zealand, they included a Rolls Royce Phantom Drophead Coupe.

Detective Inspector Grant Wormald said in New Zealand that the arrests were the result of several months of coordination with the US Federal Bureau of Investigation and Justice Department.