Megaupload Takes U.S. Government's Asset Seizures to Appeals Court

A brief to the 4th Circuit argues the judge erred in asserting jurisdiction and interpreting whether Kim Dotcom was a fugitive.

On Wednesday, Megaupload founder Kim Dotcom and his cohorts requested a federal appeals court review a Virginia federal judge's decisions pertaining to criminal charges.

The case has been pending since early 2012 when the U.S. Department of Justice caused the shutdown of the once-popular file-storage website and accused Dotcom and others of aiding and abetting massive copyright infringement and violating racketeering laws.

Since then, Dotcom has been fighting extradition from New Zealand, but the case in Virginia has made headway anyway. In particular, the U.S. government was allowed to seize an estimated $67 million in assets tied to Megaupload on the basis that he's a "fugitive."

In allowing this to happen, U.S. District Judge Liam O'Grady made determinations about jurisdiction and the fugitive disentitlement statute that form the basis of an appeal by Megaupload to the 4th U.S. Circuit Court of Appeals.

"If affirmed, that decision would hand the government unprecedented power," states Megaupload's brief. "By stacking allegations of fugitive status on top of allegations of forfeitability, the government would obtain a roving worldwide license to indict residents of foreign countries who have never lived or worked in the United States and to take their foreign property — all without proving any wrongdoing. That is not how our justice system works."

The brief (see below) argues that Dotcom's property is located outside the Virginia judge's control and jurisdiction, and that minimum contacts exist between the property and Virginia. The judge is also said to have erred by interpreting the failure of Dotcom and co-defendants to show up as a desire to evade prosecution. And if the government was to disentitle the defendants, the brief argues that the government should have to prove its case in an adversarial proceeding.

Adding there's been due process violations, Megaupload's appeal touches on certain constitutionality aspects of civil forfeitures. Plus, the 4th Circuit is being asked to address the claims to Megaupload assets made by Dotcom's wife. The appellants are represented by Michael Elkin, Steffen Johnson and Robb Adkins at Winston & Strawn.

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