x Abu Dhabi, UAEMonday 22 January 2018

Kim Dotcom: a mega player with problems

There's no denying that the FBI's most wanted and larger-than-life internet entrepreneur has nerve on a scale to match his lavish lifestyle.

Kim Dotcom. Illustration by Kagan Mcleod
Kim Dotcom. Illustration by Kagan Mcleod

Kim Schmitz, Kim Kimble, Tim Jim Vestor, Kim Dotcom - whichever alias you care to pick, Dotcom's the name on all the warrants - there's no denying that the FBI's most wanted and larger-than-life internet entrepreneur has chutzpah on a scale to match his lavish lifestyle and substantial physical presence.

In January last year, New Zealand police, acting in concert with the FBI, and in parallel with raids in Hong Kong, raided the luxury house north-west of Auckland that the German national had rented since he had been granted residency in the country in 2010.

To arrest Dotcom, police had to cut their way into the Dh92 million mansion's panic room, in which the 1.82-metre, 136-kilogram millionaire founder of Megaupload.com, accused of copyright infringement on a grand scale, had taken refuge.

Among the possessions hauled away, along with Dotcom, who spent a month in custody, were a fleet of 20 ostentatious cars, including a Rolls-Royce Phantom and a pink Cadillac boasting personalised number-plates: Hacker, Guilty and Stoned.

For the past year, Dotcom - the "former computer hacker, criminal and aspiring venture capitalist", as he was described by The New York Times in 2000 - has been on bail, fighting extradition to the US over charges relating to Megaupload, a site that accounted for 1 per cent of all North American internet traffic before it was shut down by the US Department of Justice last January.

One might have expected the flamboyant father of five to lie low until the fuss had died down. But on Saturday, a year after the raid and two days before his 39th birthday, the indicted Dotcom launched Mega, a new website, in apparent defiance of a February 2012 affidavit in which he promised not to set up "a similar internet-based business" until extradition proceedings were resolved.

The now defunct Megaupload, which was set up in 2005, allowed users to post and download video and music files with blatant disregard for copyright. According to the FBI, at its peak, the site had 150 million registered users and was the 13th most visited site on the internet. It earned US$175m (Dh642.7m) in subscription and advertising revenue, deprived copyright holders of $500m and, in 2010 alone, helped Dotcom himself pocket $40m.

Visitors to the site today are greeted by a notice posted by the FBI declaring that several individuals linked to the site have been indicted by a US federal grand jury on charges including conspiracy to commit copyright infringement, racketeering and money laundering.

For a man with a reputation as an enormous self-publicist, Dotcom has revealed little about himself beyond infantile photographs and videos showing him posing with guns, girls and expensive boats and cars.

He was born Kim Schmitz in Kiel, Germany, in 1974. He would later claim that his father was an alcoholic who had beat him and his mother and abandoned the family when Kim was 8 years old.

He also claims to have taught himself programming at the age of 9 and, according to an interview he gave to the New York Times in 2001, began hacking at 17, claiming scalps including Citibank, Nasa and the US Defense Department.

At 18, he added, he went to university but left after two weeks because there was "absolutely nothing they could teach me".

In December 2011, Dotcom offered more tantalising glimpses of his life in an article he wrote for TorrentFreak (a website frequented by the file-sharing community "where breaking news, BitTorrent and copyright collide"). He admitted that as a juvenile in Germany, he had been "active in the hacker scene ... got busted in 1997" and was sentenced to probation.

Although he has bragged extensively about his hacking exploits, suggesting a public-spirited agenda - reinforced by a Twitter picture portraying him as some kind of latter-day Che Guevara of free speech - his arrest by German police was for the rather more mundane crime of dealing in stolen phone-card numbers.

In 1998 he was convicted of several counts of computer fraud and received a fine and a suspended sentence, rather than jail time, because he had been underage when he committed the crimes. Then, according to Dotcom, he became "a successful entrepreneur in the new economy, selling data security solutions to Fortune 1000 companies".

It didn't last. He says he was "turned into the scapegoat when the German new economy bubble popped in 2000".

In January 2000, the Munich-based Schmitz, as he still was known, launched Kimvestor.com, a "start-up factory" named after his former hacker name, which was a tribute to Richard Kimble, the character from the television show and film The Fugitive - an appropriate moniker given his current situation.

That same year he told The New York Times: "I want to be one of the world's 10 richest businessmen within 10 years - that's about $100 billion."

That plan was temporarily derailed in 2001, thanks to another of the many legal misunderstandings that seem to have dogged Dotcom. He had invested a relatively small amount of money in LetsBuyIt.com, an internet firm on its last legs. After he announced that he would be ploughing in a further US$100m, the company's shares spiked at which point he quickly sold his investment for a tidy profit. He was, he conceded on TorrentFreak in 2011, "convicted for insider trading" in 2003 and received another suspended sentence - though not before he tried fleeing to Thailand, from where he was deported back to Germany.

He claims he was innocent, but took the deal so he could move on with his life. "You can't imagine," he wrote, "the rape party the German media had with me."

In 2003 he left Germany for Hong Kong, saying the former British colony was "an awesome place to do business and to host my new phantom persona". There, he said, people "leave you alone and they are happy for your success".

Not entirely, as later events would demonstrate.

It was in Hong Kong, in 2005, that Schmitz changed his name to Dotcom. He also registered several new companies, including one that claimed to use artificial intelligence to manage a hedge fund with returns of 25 per cent.

In 2010, Dotcom unexpectedly moved to New Zealand with his petite wife, Mona, whom some reports suggest he met while on a holiday in the Philippines in 2007, when she was 19. They married two years later.

Perhaps the move to New Zealand had nothing to do with the fact that just two months after he was granted residency in November 2010, he was, according to an investigation by the Sydney Morning Herald, "convicted in Hong Kong on several counts of failing to disclose his shareholding levels to the Securities and Futures Commission and was fined 8,000 Hong Kong dollars".

Perhaps it really was because, as he later told Television New Zealand, it was a better place to bring up children. The Dotcoms had three when they arrived in New Zealand - Kimmo, Kaylo and Kobi - and added two more, twin girls, in March last year

According to documents seen by the Herald, New Zealand immigration officials granted Dotcom residency "after deciding the money he could bring to the country outweighed concern about criminal convictions in his native Germany for computer fraud and stock-price manipulation".

Unsurprisingly, for one whose lifestyle appears to be modelled on the fantasies of an adolescent boy, Dotcom is an online gaming enthusiast. After the raid and his arrest in January last year, it emerged that he had been toppled from his online throne as the world's number one player in the popular game Modern Warfare 3.

Dotcom sees himself as innocent and unfairly targeted by greedy corporations. Megaupload.com, he told New Zealand's 3News in March last year, had been created solely to allow people to transfer large files to one another, not as "a piracy haven".

"I'm an easy target," he said. "My flamboyance, my history as a hacker, you know ... I have funny number plates on my cars."

But the big man with "a big kid inside me" remains a moving target. According to Dotcom, within a few days of its launch this week, Mega.co.nz has attracted more than half a million subscribers, paying anywhere from $9.99 a month for 500 gigabytes of encrypted storage to $29.99 for four terabytes.

Mega is, basically, Megaupload with "state-of-the-art browser-based encryption technology, where you, not us, control the keys" - which Dotcom seems to think will absolve his company from any legal responsibility for individual breaches of copyright.

From now on, he said at the unveiling of Mega on Saturday, his mission was to "help the internet progress uninterrupted and help innovation to take off without all these restrictions that are now being put on ... by governments around the world".

The entertainment industry is not convinced, perhaps because of his subsequent observation that music labels "are run by arrogant and outdated dinosaurs who have been in business for 1,000 years ... They are in denial ... They don't understand that the rip-off days are over".

The question of who has been ripping off whom will be settled if the US wins its bid to extradite Dotcom. In the meantime, the Motion Picture Association of America told Sky News in a statement: "We are still reviewing how this new project will operate, but we do know that Kim Dotcom has built his career and his fortune on stealing creative works."

Sometimes, says Dotcom, "good things come out of terrible events ... if it wasn't for that iceberg, we wouldn't have a great Titanic movie which makes me cry every time I see it. And if it wasn't for the raid, we wouldn't have Mega."

And he wouldn't be facing the possibility of 55 years in at a US jail. One good thing could come out of that: he'd have plenty of time to reclaim his Modern Warfare 3 crown.