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In 2009, Forbes magazine wrote that little-known Carpathia Hosting had increased its business 100-fold almost overnight, and was suddenly generating 0.6 percent of all online traffic, at the time twice the bandwidth consumed by Facebook. It was because the hosting site had some new clients:,,,

“Forbes readers probably haven’t heard of them,” Craig Labovitz of Arbor Networks, the Internet security provider, told the magazine. “Almost every teenager has.”

The sites, Forbes said, were open to anyone with little or no money to download songs, TV shows or movies.

His notoriety again on the rise, Dotcom nevertheless managed to secure New Zealand residency in 2010, under a scheme to attract wealthy investors to the country. He invested 10 million New Zealand dollars ($8.4 million) in government bonds and sponsored a fireworks show in Auckland, the main city, to the delight of many including the mayor.

He leased one of the country’s plushest mansions, worth $24 million. He also appeared to be settling down, having married Mona, a Filipina, and had three children with her.

In early 2011, U.S. porn site Perfect 10 sued Dotcom and Megaupload, claiming he was running a pirate site engaged in massive copyright infringement. Megaupload responded that it operated a virtual locker service, and had no control over what its users uploaded. The company added that it routinely removed any offending content whenever it received a notice of infringement.

The case was settled out of court. But Dotcom’s problems were not over.

Kevin Suh, the senior vice president of content protection at the Motion Picture Association of America, said the association filed a detailed complaint against Megaupload in 2010, which triggered a federal investigation. Prosecutors claim the “mega conspiracy” netted Dotcom and others $175 million in illicit advertising revenue and download fees.

“He is the biggest copyright infringer in the world,” Suh said to the AP.

Megaupload’s lawyer, Ira Rothken, said the claims are without merit and will be fought vigorously.

He called the case an unwarranted show of force by authorities desperate to prove they are serious about battling copyright fraud. If federal authorities had a problem with Megaupload, Rothken said, they should have sued first in civil court rather than having people thrown in jail.

Dotcom now faces a series of charges in the U.S., including copyright fraud and money laundering. The racketeering charges alone carry a maximum sentence of 20 years.

In New Zealand last month, 10 years after threatening to kill himself on his 28th birthday, Dotcom planned a big celebration for his 38th. After all, those youthful fantasies of wealth and notoriety had come true.

But police were ready. On Jan. 20, the day before his birthday, they swooped down in helicopters onto the grounds of his mansion and cut their way into a safe room where they found Dotcom hiding. They also arrested three of his colleagues.

The party is on hold.

Story Continues →