The Enormous Cost of Battling Kim Dotcom

The New Zealand prosecutor's office has spent almost 10,000 hours battling Kim Dotcom in New Zealand, either on behalf of the U.S. or defending against NZ's actions in providing assistance to the FBI.

The latest figures show 9688 hours worked on the case since July 15, 2011 - the date the Crown Law Office opened its file on the American request. The estimate of $2 million is based on rates usually paid for counsel hired to work for the Crown. In this case, additional legal work for the Crown had been done by Christine Gordon QC, Kirsty McDonald QC and Mike Ruffin, adding about 200 hours.

...Some of that work is on behalf of the United States but most has been damage control around the mess which came with helping the FBI shut down Mr Dotcom's Megaupload.

It's not just a drain of money. It's also a drain on prosecutorial and court resources that could be better spent on other matters, such as crime in New Zealand.

As to why you should care, it's because the same waste of money and resources is occurring with DOJ's prosecution of Kim Dotcom and Megaupload in Virginia.[More....]

Dotcom's extradition hearing, originally set for April, 2012, has now been continued until 2014. If Dotcom loses, there will be another year of appeals, at least. That means there will be three years of U.S. resources spent on the case.

How much of the Justice Department budget, especially in FBI and U.S. Attorney hours, has gone to extraditing and prosecuting Dotcom and Megaupload in Virginia? I doubt we will ever know. We do know from DOJ's 2014 budget request, for the criminal division alone, it has requested an additional $3.5 million and 11 positions, including 7 attorneys, to fight intellectual property crimes. It wants $2.6 million more for 25 positions, including 9 attorneys, to fight cybercrime. It wants $5 million extra for 28 positions, including 16 attorneys, for mortgage fraud. If the agents and DOJ lawyers working on Kim Dotcom's case were reassigned to work on other intellectual property, cybercrime or mortgage fraud cases, would these increases be necessary?

Why is there no check on how DOJ decides to spend its money or prosecutorial charging decisions? The courts can't tell DOJ who to prosecute, or not prosecute. It can only assign lawyers to defend those DOJ chooses, in its sole discretion, to charge with a crime.

In light of sequester cuts which so disproportionately affect defender services, why does DOJ get to add more agents and lawyers? Defender offices are being forced to close and lay off investigators and lawyers. U.S. Attorneys aren't having their paychecks delayed. Why should indigent defense counsel have their payments deferred, for work they've already performed?

The only thing Kim Dotcom and Megaupload did in the U.S. was lease servers which allowed people to upload material for storage and retrieval. That some people misused Megaupload by storing and sharing copyrighted material is hardly justification for expending the kind of resources used on terrorists or global drug kingpins.

Dotcom never stepped foot in the U.S. to commit a criminal act. The company's offices weren't in the U.S. There was more harm done to the American public --the millions of Megaupload users who lost the material they lawfully uploaded -- than to Hollywood and copyright holders. Hollywood and copyright holders who felt their works had been infringed had an adequate remedy in civil law: file a lawsuit for damages. Megaupload users have no recourse for their destroyed material.

The entire premise behind Dotcom's prosecution is dubious and untested. The Government's case rests on a theory of secondary copyright infringement which exists in civil statutes, not criminal statutes. Dotcom's lawyers explain in this whitepaper.The court in Virginia, or the 4th Circuit, or the U.S. Supreme Court, may well determine secondary infringement cannot give rise to criminal liability and reject DOJ's novel, untested theory. What then? Will Megaupload, Kim Dotcom and lawful users be entitled to damages from the unlawful seizure of the company, its assets and the servers? That will just be another expense.

DOJ doesn't get to define crimes. Federal crimes exist by statute. It is for Congress, not for the courts or prosecutors to state what is and what is not a crime. The Copyright Act does not provide that a person can be criminally liable for infringement committed by others. It's doubtful Congress ever intended to impose criminal liability for secondary copyright infringement.

While the Dotcom Indictment includes four or five instances where Megaupload principals knew of or caused infringing material to be uploaded to the servers, those few instances, even if proven, hardly justify the expenditure of millions of dollars and years of prosecutorial resources. They also don't justify the wholesale seizure of assets of a company without first providing the company an opportunity to respond and defend against the seizure.

DOJ is acting like Hollywood's handmaiden, when it should have told Hollywood to go file a civil lawsuit. This isn't a matter of national or even public concern.

The U.S. is already losing the battle to appropriate Dotcom's assets for restitution to "victims." So far NZ courts have freed $3.7 in assets to pay Dotcom's lawyers just in New Zealand.

A High Court decision in August freed up $2.7 million from seized funds to pay existing legal bills and a further $1 million to meet future costs.

By the time this case is over, the only people getting Kim Dotcom's and Megaupload's money are likely to be his lawyers. DOJ doesn't get to recoup the amount it spent on prosecuting the case from seized funds. There will be little left for restitution even if DOJ wins here in the U.S.

Congress needs to say no to DOJ and its ever increasing budget requests. It should consider its wasteful use of resources on prosecutions like Kim Dotcom and Megaupload, and decide the money is better spent complying with the constitutional obligation to provide adequate resources for the federal courts and defense of those DOJ chooses to prosecute.

Only if there's money left over after allotting constitutionally mandated resources, should Congress consider giving DOJ more money. In times like these, when there's not enough money to go around, someone needs to tell DOJ it's already had its cake, it doesn't get ice cream too.

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  • Display: Sort:
    i suspect, in both NZ and the US, (5.00 / 2) (#1)
    by cpinva on Mon Jul 29, 2013 at 02:41:45 AM EST
    the prosecuting agencies are so vested in this case, in terms of staff hours and funds, they feel compelled to continue to the bitter end. otherwise, someone is going to have to explain why all those staff hours and funds were spent on this case. they've both dug themselves holes not easily gotten out of.

    Its more than dollars (5.00 / 1) (#6)
    by Mikado Cat on Wed Jul 31, 2013 at 12:59:34 AM EST
    the USA spent a lot of diplomatic capital to coerce foreign governments to go along with its plans. No telling the extent of the quid pro quo to get the Ukraine to shut down and seize Demonoid (a torrent tracker).

    The same tools used to shut down pirates are those used to shut down anyone attempting free speech in a country like China or Russia.

    comment deleted for (none / 0) (#2)
    by Jeralyn on Mon Jul 29, 2013 at 01:37:15 PM EST
    profanity. Please read our commenting rules.

    Congress is Not Going... (none / 0) (#3)
    by ScottW714 on Mon Jul 29, 2013 at 01:48:29 PM EST
    ...to tell it's paymasters that it doesn't have the funds to prosecute the people the paymasters want hung from the gallows.  Especially after they failed to pass SOPA and PIPA, which would have made prosecuting kim.com a snap.

    Some NZ court news today/yesterday (none / 0) (#4)
    by EL seattle on Tue Jul 30, 2013 at 08:46:27 PM EST
    about the matter of granting Dotcom and his legal team access to US evidence while he's still in New Zealand.

    From the TVNZ story:

    Acting ultimately on behalf of the US Federal government, Solicitor-General Mike Heron told a full Supreme Court bench no other appellant court across common law has upheld a disclosure request in the pre-trial stages, and doing so would leave New Zealand as an outlier in the international community.


    One way or another, I think this case seems to be moving towards a final resolution, at least in NZ.

    there are several other cases (none / 0) (#5)
    by Jeralyn on Tue Jul 30, 2013 at 09:52:04 PM EST
    in New Zealand yet to be decided (article I linked to in post):

    [Search warrant issues:] The court is still working on remedies for Crown over-reach. The warrants were found to be unlawful.

    Damages against police: A lawsuit seeking compensation for the illegal search and seizure of the mansion has been filed.

    Damages against GCSB: A lawsuit seeking compensation for the illegal spying on Dotcom and Bram van der Kolk has been filed.