Feds nab seven in Megaupload piracy bust

US federal authorities announced they have smashed a pirate ring that allegedly hauled in $175 million.

Seven individuals and two companies were charged with multiple counts of racketeering, copyright infringement, and money laundering, the US Department of Justice (DoJ) said in a statement.

The two companies – Megaupload Ltd and Vestor Ltd – operated sites under the Megaupload name, including Megaupload.com from servers located in the US, Canada and the Netherlands.

According to federal officials, the gang generated $175 million in revenue from advertising sales and premium memberships, and caused more than $500 million in damages to the legitimate copyright holders.

Among the pirated content the Megaupload sites distributed were movies, television programmes, music, e-books and business and entertainment software.

"This action is among the largest criminal copyright cases ever brought by the United States," the DoJ said in a statement Thursday. Prosecutors also called the Megaupload group "an international organised criminal enterprise allegedly responsible for massive worldwide online piracy."

Of the seven men indicted by a Virginia grand jury earlier this month, four were arrested this week in New Zealand by local authorities. The three others – who live in Estonia, Germany and Slovakia – remain at large.

Alongside the arrests, the FBI also seized $50 million in Megaupload assets, and served 20 search warrants in the US and elsewhere to grab the servers used by the websites.

A US district court also ordered the seizure of 18 domain names belonging to Megaupload.

According to the grand jury’s indictment, Megaupload.com was seeing 50 million visitors daily and accounted for 4% of all Internet traffic.

The Alexa site ranking service currently lists the site as the 72nd largest in the world. Over the last three months, the site’s visitors averaged 1.4% of all Internet users.

The seven men each face a maximum of 55 years in prison if convicted on all counts.

The arrests against a backdrop of protest against the Stop Online PIracy Act and Protect IP Act that seek to protect rightholders against copyright infringement but, opponsents say, threaten free speech and stifle innovation.

IDG News Service

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