Megaupload's Kim Dotcom: Inside the Wild Life and Dramatic Fall of the Nerd Who Burned Hollywood
Kim Dotcom was born Kim Schmitz to a Finnish mother and an alcoholic German father and spent his childhood in Kiel, Germany, about 60 miles north of Hamburg. Dotcom, who speaks English with a German accent, told file-sharing blog TorrentFreak in December that his father routinely beat him and his mother, sending them to the hospital. Dotcom said he has not seen the man since he was 8 years old.
The young Schmitz received his first computer at 9, according to a January Sunday Business Post story, and earned money by copying computer games for friends. He later moved to Berlin and fell in with the Chaos Computer Club, a hacking group founded in 1981. Schmitz began using the sobriquet Kimble, a tribute to The Fugitive lead character Richard Kimble, who is falsely convicted of murdering his wife and must spend his life on the run. Schmitz's use of this nom de guerre presaged a lifetime of shape-shifting and identifying with antiheroes and the misunderstood.
It's unclear whether he went to college or received any formal computer training, but a 19-year-old Schmitz was described in a 1992 Forbes story about the nascent hacker movement as "one of the most celebrated hackers in his country." Around this time, Schmitz tried to parlay his knowledge of computer systems into security consulting work, and in 1994, he started DataProtect, a security company meant to leverage his skill and knowledge as a hacker. In 2000, Schmitz sold 80 percent of DataProtect to German conglomerate TUV Rheinland for an undisclosed but presumably hefty sum.
By then, Schmitz already had experienced his share of legal troubles. In 1998, a Munich court convicted the hacker and an associate of computer fraud and trafficking in stolen phone cards. In 2001, Schmitz bought about $330,000 worth of shares in beleaguered online shopping club LetsBuyIt.com and announced his intention to pump about $45 million into the company. This caused shares in LetsBuyIt.com to skyrocket, and he sold them shortly thereafter for a profit of about $1.34 million without ever having made a significant investment in the firm, according to news reports. In January 2002, Schmitz was arrested in Bangkok and extradited to Germany, where he spent five months in jail while awaiting trial and was ultimately found guilty of insider trading. He was given a probationary sentence of one year and eight months and paid a fine. In November 2003, another of Schmitz's ventures blew up in his face when he pleaded guilty to embezzling money from Monkey AG, an e-payment business he had started a few years earlier with German private-equity company BMP. Schmitz took about $300,000 from Monkey in the form of a loan; he was sentenced to two more years' probation.
As he fought legal troubles, Schmitz was attracting media attention for provocative and outlandish statements. Shortly after the 9/11 terrorist attacks, he offered $10 million for information leading to the arrest of Osama bin Laden. Newspapers and magazines breathlessly covered his reward offer, but some reporters checked into his past and turned up former associates who labeled him a braggart who took credit for others' accomplishments. Indeed, he claims to have once reduced former German Chancellor Helmut Kohl's credit rating to zero and has bragged of hacking into Pentagon computers and watching satellite imagery of Saddam Hussein's palaces during the Gulf War. Many of his boasts have been unsubstantiated, but enough of his activities have been corroborated to suggest that some of the tales could be true. An October 2001 story in the U.K.'s Guardian quoted a detractor on a hacker message board: "The only things Herr Schmitz needs to land the role as the next James Bond villain are an eye patch, a wheelchair and a cat."
During this time, Schmitz, flush with cash, already was displaying a penchant for fast cars and a wild lifestyle. In 1999, for example, he created the Megacar, a modified Mercedes-Benz S-Class sedan outfitted with a computer and high-speed Internet access -- technology that wouldn't hit the mainstream for more than a decade. He intended to sell the aftermarket vehicles, but the business appears to have not received the blessing of Mercedes, and it is unclear whether anything ever came of the venture.
In 2001, the hacker won the Gumball 3000 road race, a quasi-legal 3,000-mile-long trek across continents that is a favorite of playboys who have money to spend and women to impress. "It is race all day and party all night," says Matt Hardigree, editor of automotive blog Jalopnik.
The race that Schmitz won in a $450,000 modified Mercedes began in London and went through St. Petersburg, Helsinki, Stockholm and Copenhagen, and then back to London. (This year's race takes place in the U.S. and Canada and culminates May 31 in Hollywood.) A YouTube video about the 2004 race shows Schmitz discussing a bribe of Moroccan police to detain a competitor piloting a Porsche 911. In one video from the race, Schmitz appears to use his Mercedes sedan to bump from behind a Porsche 911. In another video, he rockets past a police car and smiles into the camera, saying,"Dr. Evil is always getting away with it."
Gumball 3000 founder and CEO Maximillion Cooper says in an e-mail interview that Schmitz once had a private jet loaded with mechanics to follow his Mercedes in case a quick repair was necessary. He owned at least 18 exotic cars, including a $400,000-plus Rolls-Royce Phantom convertible and three $250,000 Mercedes-Benz CLK DTMs, a supercar of which there are less than 200 in the world. (In a slick 11-minute video uploaded to YouTube on April 21, Dotcom and professional race-car driver Kimi Raikkonen are shown circling Germany's famed Nurburgring track in CLK DTMs. The clip is set to a Euro pop song that features Dotcom rapping the lyrics, "Here we go now, going crazy, going faster, motherf--er." He boasts that the video was shot with a crew of more than 100 people and required 30 cameras, two helicopters and one fixed-wing aircraft.)
"[He] doesn't do anything halfheartedly," says Cooper, who met Schmitz in 1999. "That outlook is an amazing asset, and he certainly lives life to the full, but sometimes he'll do anything to achieve those big goals and on more than one occasion is prepared to overstep the mark."
Cooper traveled the world and partied with Schmitz/Dotcom for more than a decade. He recalls a memorable 2001 trip to the south of France on the 264-foot Golden Odyssey, which features a mosaic-tiled swimming pool, gym and coral-reef aquarium that spans two decks. For lunch, Cooper, Schmitz and a "huge entourage" that included what Cooper describes as "Aryan" bodyguards all took speedboats to the shore for lobster and champagne. All the while, Cooper says, Schmitz's "helicopter hovered above us with his personal film crew and additional security to take photos." Cooper claims the lunch cost upward of $100,000 and was paid for with "suitcases of cash arriving by boat."
A 30-minute German video produced by Schmitz's now-defunct website Kimble.org titled Kimble Goes Monaco appears to depict some of the events Cooper describes. The film features an introduction set to a version of the Dallas theme song and shows the hacker tooling around a seaside city in France with a fleet of Ferraris, doing doughnuts in a black Mercedes next to a helicopter and partying aboard the Golden Odyssey. He also takes in the Monaco Grand Prix and purports to hack the vehicle of race-car driver Michael Schumacher so that it becomes inoperable during the Grand Prix. Laughing, Schmitz then makes an obscene gesture to the camera.
Despite this, Cooper describes his friend as "quite quiet and reserved. Even when hosting a party, he's far more comfortable sat [sic] watching it from afar in a control room than being the life and soul of it."
Schmitz, who until the early 2000s still resided in Germany, appears to have realized that there have been consequences to his penchant for extravagance and braggadocio. "I think my lifestyle is one of the main reasons I've been so under attack. In the U.S., with my lifestyle, I'd be one of many," he said in 2001 on German talk show The Harald Schmidt Show. "But here in Germany, people condemn this very public way I enjoy my success. It's clear it's a source of a lot of envy and of many of my problems."
After this string of messy legal entanglements, Schmitz decamped to Hong Kong for a fresh start. In December 2002, he set up a company there called Kimpire Ltd. and began promoting a supposed invention called Trendax, which was marketed as a hedge fund that could use artificial intelligence to generate untold returns for investors. Again, the success of the venture is unknown. Soon, Schmitz would legally adopt Dotcom as his surname, in a nod to his online ventures (his aliases include King Kimble and Kim Tim Jim Vestor). It appears the change occurred around the time he launched his most ambitious venture yet.
In 2005, Dotcom quietly started Megaupload from an apartment in Hong Kong. He said in the March 1 Campbell Live interview that it was simply "a solution to a problem that still exists today." Dotcom said in the interview that he had been trying to send a file to a friend via e-mail, but he received an error message explaining that it was too large to transfer. "I thought: What can I come up with? What can I do to solve that?" he said. Thus, the idea for the cyber-locker service was born. The site offered partial access for free but gave users unlimited use for about $13 a month, $78 a year or $262 for a lifetime subscription, according to the indictment. Over the next few years, Dotcom added racy file-sharing service Megaporn, Ustream competitor Megalive and a YouTube streaming competitor Megavideo, among others. Megaupload Ltd. grew to employ a purported 155 people and to store an astounding 25 million gigabytes of data on more than 1,000 leased servers in Virginia -- the location of which provided the legal grounds for the Justice Department to pursue action against the company and its owner.
Despite the popularity of the sites, Dotcom disappeared from the public eye until his move to New Zealand in early 2010. By then, the father of three young children was calling himself a family man, laying relatively low and hoping for a fresh start. (At the time of the New Zealand raid, Dotcom's Manila-born wife, reportedly a former model, was pregnant with twins; she gave birth to two girls in March. The New Zealand Herald reported that Dotcom told the hospital to send the placenta "to the FBI for forensic analysis so they can verify there is no pirate DNA.") But laying low by Dotcom's standards involved christening his rented home in the country town of Coatesville with a sign that read "Dotcom Mansion," and decorating the grounds with large sculptures of giraffes. In an effort to curry favor with New Zealanders, he lavished Auckland with a $500,000 New Year's Eve fireworks display (which he flew a helicopter through), donated to Christchurch earthquake relief and purchased government bonds. But the New Zealand government was concerned about Dotcom's past criminal activity. According to a March story by the Associated Press, the country's immigration officials granted him residency only after weighing the money he could bring to the country against his past.
"I am here because of my family; we have little kids," Dotcom told Campbell Live. "Hong Kong is a concrete jungle, there is no fresh grass, there are no trees. … I wanted to give my kids an environment of happiness, nature and peace." But Dotcom appears to have not completely abandoned his pleasure-seeking exploits: Megaupload and another related company spent nearly $8 million on yacht rentals in the Mediterranean Sea from April to June 2011, according to the indictment.
In a now-infamous April 2010 e-mail to worried neighbors and the landlord of his rented mansion, Dotcom tried to minimize his troubled past, though he still joked that his neighbors should come for a visit and bring cocaine. "Fifteen years ago, I was a hacker, and 10 years ago, I was convicted for insider trading. Hardly the kind of crimes you need to start a witch hunt for," Dotcom wrote, according to news reports. "Since then, I have been a good boy, my criminal records have been cleared, and I created a successful Internet company that employs 100+ people." But about 18 months after he settled into his new home, the Department of Justice and the FBI's years-long effort to track and build a case against Dotcom would culminate at the doorstep of his countryside idyll.