Dotcom accused of paying users to increase traffic to Megaupload

Kim Dotcom, founder of the nowclosed internet portal Megaupload, was accused Monday of paying its most prolific users to attract more traffic to his website despite knowing their content infringed copyright.

Dotcom and former Megaupload executives, Bram van der Kolk, Mathias Ortmann and Finn Batato, are facing trial to extradite them from New Zealand to the U.S. where they are wanted for alleged internet piracy, organized crime and money laundering.

Crown lawyer Christine Gordon, who is also representing the U.S. government, said 77 percent of Megaupload members received at least one takedown notice by copyright holders, and 56 percent received at least 10 or more warnings but Megaupload executives did not take any measures.

During the hearing the Crown said, one user, who went by the name ‘TH’, had links generating 1.2 million downloads and was paid $50,000 by Megaupload between 2006 and 2011, according to local NZME agency.

Gordon said TH received 1,200 takedown requests for copyright infringement all of them allegedly processed by Van der Kolk and instead of restricting his activity Megaupload increased his server space to 2.5 terabytes to store 30,000 files.

According to the Crown, TH emailed Megaupload saying he had not been well remunerated for his “work,” to which Dotcom allegedly responded, “We’re thankful of your support of Megaupload in the past and I think we have been fair to you.”

Dotcom ended the reward program in July 2011 and distanced himself from websites that continued the practice.

He even wrote to Paypal, through which he had made his payments to members, to report “criminal activities.”

“They describe the payments as illegal but Megaupload had done that for six years,” Gordon said, describing Dotcom’s words as hypocritical.

The U.S. says Megaupload, which had 50 million users and represented four percent of global Internet traffic, caused losses of more than $500 million to the film and music industry through internet piracy, and generated illegal profits to the tune of $175 million.

The extradition trial has been postponed ten times since Dotcom and his associates were arrested in January 2012 from their rented mansion in the outskirts of Auckland, after which Megaupload was shut down, their accounts frozen and their property confiscated.

The operation was part of an extensive international operation led by the FBI.

Until now, of the seven members of Megaupload, its programmer Andrus Nomm is the only one to have been prosecuted.

He was sentenced to little over a year in prison in the U.S. after he pleaded guilty to copyright infringement.