LIMITED, FINN BATATO, JULIUS BENCKO, SVEN ECHTERNACH, MATHIAS ORTMANN, ANDRUS NOMM, and BRAM VAN DER KOLK, the defendants, and others known and unknown to the Grand Jury,were members of the "Mega Conspiracy," a worldwide criminal organization whose members engaged in criminal copyright infringement and money laundering on a massive scale with estimatedharmto copyrightholderswellin excess of $500,000,000andreportedincomein excess of $175,000,000. 2.<br><br> Megaupload.comis a commercialwebsiteand service operatedby the Mega Conspiracythat reproduces and distributes copies ofpopular copyrighted content over the Internet without authorization. Since at least September 2005, Megaupload.com has been used by the defendants andothermembersandassociates of the Mega Conspiracyto willfully reproduceand distributemanymillionsof infringing copies of copyrightedworks,including motion pictures, television programs, musical recordings, electronic books, images, video games, and othercomputer software. Over the more than five years of its existence, the Mega Conspiracyhas aggressively expanded its operationsinto a large number of related Internet businesses, which are connected directly to, or at leastfinancially dependent upon, the criminal conduct associated with Megaupload.com.<br><br> 3. Megaupload.com was at one point in its history estimated to be the 13th most frequently visited website on the entire Internet. The site claims to have had more than one billion visitors in its history, more than 180,000,000 registered users to date, an average of Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 2 of 90 PageID# 247 50 million daily visits, and to account for approximately four percent of the total traffic on the Internet.<br><br> As of January 19,2012, there were actually approximately 66.6 million users registered in the Mega Conspiracy's internal database records; of these registered users, the records furthershowthat, at most, only 5.86millionusershad ever uploadeda singlefile to either Megaupload.com or Megavideo.com. 4. Megaupload.com's incomecomesprimarilyfrom two sources:premium subscriptions andonlineadvertising.<br><br> Premiumsubscriptions for Megaupload.com havebeen availablefor onlinepurchasefor as littleasa few dollarsper day or as muchas approximately $260 for a lifetime. In exchange for payment, the Mega Conspiracy provides the fast reproductionanddistributionofinfringingcopiesofcopyrightedworksfromits computer servers locatedaround the world. Premium users of the site, a small percentage of the overall user base, are able to download and upload files with few, if any, limitations.<br><br> Subscriptionfees collected during the existence of the Mega Conspiracy from premium users are estimated to be more than $150 million. Online advertising on Megaupload.com and its associated websites, which is heavily dependent on the popularity of copyright infringing content to attract website visits, has furtherobtainedmorethan $25 million forthe Mega Conspiracy. 5.<br><br> The financial proceeds of Megaupload.comhave been primarily directed to four sources. First, theConspiracy hasdirected the bulkofitsrevenues tothedefendants, corporate entitiestheycontrol, otherco-conspirators, andemployees fortheir commercial advantage and privatefinancial gain. Second, theMegaConspiracy hasspentmillionsof dollars developing and promoting Megaupload.com and complementary Internet sites and services, such as Megavideo.com, Megaclick.com, Megaporn.com, anda host of others (collectivelythe "Mega Sites").<br><br> Third, for much of its operation, the Mega Conspiracy has offered an "Uploader Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 3 of 90 PageID# 248 Rewards" Program, which promised premium subscribers transfers of cash and other financial incentives to upload popular works, including copyrighted works, to computer servers under the Mega Conspiracy's direct control and for the Conspiracy's ultimate financial benefit. The more popular content that was present on Mega Conspiracy servers would increase the number of visitorsandpremiumusersthatthe Conspiracy couldmonetize. Intotal,the MegaConspiracy directlypaid uploadersmillionsofdollarsthroughonlinepayments.<br><br> Fourth,theMega Conspiracyspendsmillions of dollarspermonthonthe infrastructuresupportingtheir businesses, including the leasing of computers, hosting charges, and Internet bandwidth. In contrast to legitimate Internet distributors of copyrighted content, Megaupload.com does not make any significantpayments to the copyrightowners of the many thousands of works that are willfully reproduced and distributed on the Mega Sites each and every day. 6.<br><br> Any Internetuser who goesto the Megaupload.comwebsite canuploada computerfile. Oncethatuserhas selecteda fileontheircomputerand clicksthe"upload" button, Megaupload.comreproduces the file on at least one computer server it controls and provides the uploading user with a unique Uniform Resource Locator ("URL") link that allows anyone with the link to download the file. For example, a link distributed on December 3,2006 bydefendant DOTCOM (www.megaupload.com/?d=BYl 5XE3 V) linksto a musical recording byU.S.recording artist"50 Cent." A singleclickonthe linkaccessesa Megaupload.com downloadpagethat allowsanyInternetuserto downloada copy of the file froma computer server that is controlled by the Mega Conspiracy.<br><br> 7. Megaupload.com advertises itselfas a "cyberlocker," which is a private data storage provider. However, as part of the design of the service, the vast majority of Megaupload.com users do not have significant capabilities to store private content long-term.<br><br> 4 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 4 of 90 PageID# 249 Unregistered anonymous users (referred to as "Non-Members" by the Conspiracy) are allowed to upload and download content files, but any Non-Member-uploaded content that is not downloaded within 21 days is permanently deleted. Similarly, registered free users (or "Members") are allowedto upload and download content files, but each uploaded file must be downloaded every 90 days in order to remain on the system. Only premium users have a realistic chance of having anyprivate long-term storage, since their files are not regularly deleted due to non-use.<br><br> In contrast, when any type of user on Megaupload.com uploads a copy of a popularfilethat isrepeatedly downloaded, includinginfringingcopies of copyrighted works availablefor download,that file remainson Mega Conspiracy-controlledcomputersand is available for distribution by anyone who can locate an active link to the file. 8. Furthermore,in order to mass distribute copies of the works on the systems it controls,the MegaConspiracy has createda computersystemarchitecturethatkeepsits most frequently downloadedfilesinmemory(ratherthan in storage)on a number of dedicatedhigh- end computer serversthat are located at two facilities that belong to one of the leading broadband providers inthe world.<br><br> Thevastmajority ofthe filesonthesecomputers areinfringing copies of copyrightedworks,andthe MegaConspiracy haspurposefullymadetheir rapidandrepeated distribution a primary focus of their infrastructure. 9. Oncea user clickson a Megaupload.comdownload link, the user is generally brought to a downloadpage for the file.<br><br> The download page contains online advertisements providedby the Conspiracy, whichmeansthat everydownloadon Megaupload.com provides a financial gain to the Conspiracythat is directly tied to the download. The more popular the content,such as copies of well-knowncopyrightedworks, the more users that findtheir way to a Megaupload.comdownloadpage;the access of these additionalusers, in turn, makesthe Mega Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 5 of 90 PageID# 250 Conspiracymoremoney. Becauseapproximately onepercent of Megaupload.com userspayfor their useofthesystems,MegaConspiracy'sbusinessstrategyfor advertisingrequires maximizingthe number of online downloads (i.e., distributions of content),which is also inconsistent with the concept of private storage.<br><br> 10. In additionto displaying onlineadvertisements, the downloadpageson Megaupload.com aredesignedto increase premiumsubscriptions. All non-premium usersare encouraged to buy a premium subscription to decrease wait and download times, which can be at leastanhourforpopularcontent(and,forsomeperiods of time,theseusershavebeenineligible to download filesovera certain size).<br><br> Asaresult, non-premium usersarerepeatedly asked by the Conspiracy to pay for more and faster access to content on Megaupload.com. Users are also promptedto viewvideosuploaded to Megaupload.com directlyona proprietary playerdesigned by the Conspiracy and offered through the Megavideo.com website and service. Users have also beenaskediftheywantto generate a newlinkto thedownloading fileandimportitto theirown Megaupload.comaccounts,whichfacilitatesdistributionthat is again inconsistentwith private storage.<br><br> 11. ThecontentavailablefromMegaupload.com is not searchableonthe website, which allows the Mega Conspiracy to conceal the scope ofits infringement. Instead of hosting a search function onitsownsite,theMega Conspiracy business modelpurposefully relieson thousands of third party "linking" sites,whichcontainuser-generatedpostings of linkscreated by Megaupload.com (as wellasthosecreatedby otherMega Sites,includingMegavideo.com and Megaporn.com).<br><br> WhiletheConspiracy maynotoperatethesethirdpartysites,theMega Conspiracy didprovide financial incentives forpremium usersto postlinksonlinking sites through the "Uploader Rewards" program, which ensured widespread distribution of Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 6 of 90 PageID# 251 Megaupload.com linksthroughoutthe Internetand an inventory of popular contentonthe Mega Conspiracy's computer servers. Theselinkingsites, whichare usually wellorganizedand easy to use,promoteand direct users to MegaConspiracydownload pages that allow the reproduction and distribution of infringing copies of copyrighted works. 12.<br><br> Popular linking sites that contained Mega Conspiracy-generated links include: niniavideo.net, megaupload.net, megarelease.net, kino.to, alluc.org, peliculasvonkis.com. seriesvonkis.com, surfthechannel.com, taringa.net, thepiratecitv.org, and mulinks.com. While several of these websites exclusively offer Megaupload.com links, all maintained an index of URL linksto identified copies of copyrighted contentthat were stored on serversdirectly controlled by the Mega Conspiracy.<br><br> 13. TheMegaConspiracy closely monitors the trafficfromlinkingsitestotheMega Sitesand services. TheConspiracy is awarethatlinkingsitesgeneratea veryhighpercentage of the millions of visitsto its websites and services each week and provide the Conspiracydirect financial benefits throughadvertising revenue andopportunities fornewpremiumsubscriptions.<br><br> 14. Members of the Mega Conspiracy have knowingly interacted with users of linkingsitesandvisitedthe sites(andassociated onlineforums)themselves. Specifically, some of the defendantshave instructed individualusers how to locate links to infringingcontent on the Mega Sites (including recommending specific linking websites).<br><br> Several of the defendants have alsosharedwitheachothercommentsfromMegaSiteusers demonstratingthattheyhaveused or are attempting to use the Mega Sites to get infringing copies of copyrighted content. 15. In contrast to the public who is required to significantly rely on third party indexes, members of the Conspiracy have full access to the listings of actual files that are stored on their servers(as well as the Megaupload.com-and Megavideo.com- and Megaporn.com- Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 7 of 90 PageID# 252 generated links to those files).<br><br> Conspirators have searched the internal database for their associates and themselves so that they may directly access copyright-infringing content on servers controlled by the Mega Conspiracy. 16. Though the public-facing Megaupload.com website itselfdoes not allow searches, it does list its "Top 100files", which includes motion picture trailers and software trials that are freely available on the Internet.<br><br> The Top 100list, however, does not actually portray the most popular downloads on Megaupload.com, which makes the website appear more legitimate and hides the popular copyright-infringing content that drives its revenue. 17. If a useruploadsa videofileto Megaupload.com.<br><br> the usercan utilizethe provided URL link to redirect others to another Mega Conspiracy-controlled website, Megavideo.com. where they can view the file using a "Flash" video player. Alternatively, a user who hosts a personal or commercial website can embed the Megavideo.com player into their own website to displaythevideofile(andprovideadvertising contentfromthe MegaConspiracy).<br><br> Megavideo.comhas been estimated to be aspopular as the 52nd most frequently visited website on the entire Internet. 18. A non-premiumuser is limitedto watching72 minutes of any givenvideo on Megavideo.com ata time, which, since nearly allcommercial motionpictures exceedthat length, provides a significant incentivefor users who are seeking infringing copies of motion pictures to paytheMega Conspiracy a feefor premium access.<br><br> Somepremium usersare,therefore, paying the Mega Conspiracydirectly for access to infringing copies of copyrighted works. 19. Before any video can be viewed on Megavideo.com.<br><br> the user must view an advertisement. Originally, the Mega Conspiracy had contracted with companies such as adBrite, Inc., Google AdSense, and PartyGaming pic for advertising. Currently, the 8 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 8 of 90 PageID# 253 Conspiracy's own advertising website, Megaclick.com.<br><br> is used to set up advertising campaigns on all the Mega Sites. The high traffic volume on the Conspiracy websites allows the Conspiracy to chargeadvertisersup-frontandat a higherrate thanwouldbe achievedby the percentage-per-click methodologyusedby otherpopularInternetadvertisingcompanies. The popularity of the infringing content on the Mega Sites has generated more than $25 million in online advertising revenues for the Conspiracy.<br><br> 20. LikeMegaupload.com,Megavideo.comconceals many of the infringing copies of popular copyrighted videos that are available on and distributed by the site and the associated service. Megavideo.comdoes purport to provide both browse and search functions, but any user's search on Megavideo.com for a full length copyrighted video (which can be downloaded from a Mega Conspiracy-controlled server somewhere in the world) will not produce any results.<br><br> Similarly, browsingthe front page of Megavideo.com does not show any obviously infringing copies of any copyrighted works; instead, the page contains videos of news stories, user- generated videos, and general Internet videos in a manner substantially similar to Youtube.com. Browsing the most-viewed videos in the Entertainment category on Megavideo.com. however, has at times revealed a number of infringing copies of copyrighted works that are available from Mega Conspiracy-controlled servers and are amongst the most viewed materials being offered.<br><br> 21. Members ofthe Conspiracyhavepubliclystatedthatthey operatetheMega Sites in compliance with the notice and takedown provisions of the Digital Millennium Copyright Act ("DMCA"), codified at Title 17, United States Code, Section 512, despite the fact that they are violating its provisions. Internet providers gain a safe harbor under the DMCA from civil copyright infringement suits in the United States if they meet certain criteria.<br><br> The members of Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 9 of 90 PageID# 254 Mega Conspiracy do not meet these criteria1 because they are willfully infringing copyrights themselves on these systems; haveactual knowledge thatthematerials ontheir systems are infringing (oralternatively know facts or circumstances thatwould make infringing material apparent); receive a financial benefit directly attributable to copyright-infringing activity where the provider can controlthat activity; and have not removed, or disabled access to, known copyright infringing material from servers they control. 22. Members of the Mega Conspiracy negotiated the use of an "Abuse Tool" with somemajorU.S.copyright holders topurportedly remove copyright-infringing material from Mega Conspiracy-controlled servers.<br><br> The AbuseTool allowedcopyrightholdersto enter specific URL links to copyright infringing content of which they were aware, andthey were told by the Conspiracy thattheMegaConspiracy's systemswouldthenremove,or disable access to,the material from computer servers the Conspiracy controls. The Mega Conspiracy's AbuseTooldidnotactually function as a DMCA compliance toolasthecopyright owners were led to believe. 23.<br><br> When a file is being uploaded to Megaupload.com. theConspiracy's automated system calculates a unique identifier for the file (called a "MD5 hash") that is generated using a mathematical algorithm. If, after the MD5 hash calculation, the system determinesthat the uploading filealready existsona servercontrolled bythe MegaConspiracy, Megaupload.com does not reproduce a second copy ofthe file on that server.<br><br> Instead, the system provides anew and unique URL linktothenewuserthatis pointed tothe original file already present onthe 1 Furthermore, the safe harbor requires that an eligible provider have an agent designated with the U.S.Copyright Officeto receiveinfringement notices; despitehavingmillions ofusersinthe United States since at least the beginning ofthe Conspiracy, the Conspiracy didnot designate such an agentuntilOctober 15,2009,years after Megaupload.comandmany of its associated sites had been operating and the DMCA had gone into effect. 10 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 10 of 90 PageID# 255 server. If there ismorethanoneURLlinkto afile,then any attemptby thecopyrightholder to terminate access to thefileusingtheAbuseToolor otherDMCAtakedownrequest willfail because the additional access links will continue to be available.<br><br> 24. The infringing copy of the copyrighted work, therefore, remains on the Conspiracy's systems (and accessible toat least one member ofthe public) as long asasingle linkremainsunknownto thecopyrightholder. The Conspiracy's internalreference database tracks the links thathavebeen generated bythe system, butduplicative links toinfringing materialsare neitherdisclosedto copyright holders,nor are they automaticallydeletedwhen a copyrightholder either uses the Abuse Tool or makes a standard DMCA copyright infringement takedownrequest.<br><br> Duringthe course of the Conspiracy, the MegaConspiracyhasreceived many millions of requests (through the Abuse Tool and otherwise) to remove infringing copies ofcopyrighted works andyettheConspiracy has,atbest,onlydeletedtheparticular URL of which the copyright holder complained, and purposefully leftthe actual infringing copy ofthe copyrighted work onthe Mega Conspiracy-controlled server and allowed access totheinfringing work to continue. 25. Inadditiontocopyrighted files, othertypesofillicitcontent have beenuploaded ontotheMegaupload.com servers,includingpornographyandterrorismpropaganda videos.<br><br> Members ofthe Conspiracy have indicated toeachotherthattheycan automatically identify and delete such materials on all of their servers by calculating MD5 hash values of known child pornography or other illicit content, searching the system for these values, and eliminating them; in fact, such files withmatching hashvalues havebeendeletedfromthe MegaConspiracy's 11 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 11 of 90 PageID# 256 servers. Members of the Mega Conspiracyhave failed to implement a similar programto actually delete or terminate access to copyright infringing content. 26.<br><br> On or about June 24, 2010, members of the Mega Conspiracy were informed, pursuant to a criminal search warrant from the U.S. District Court for the Eastern District of Virginia, thatthirty-nineinfringingcopiesofcopyrightedmotionpictureswerepresentontheir leasedserversat CarpathiaHosting, a hosting company headquartered in the EasternDistrict of Virginia. A member of the Mega Conspiracyinformed several of his co-conspirators at that time that he located the named files using internal searches of their systems.<br><br> As of November 18, 2011, more than a year later, thirty-six of the thirty-nine infringing motion pictures were still being stored on the servers controlled by the Mega Conspiracy. 27. At all times relevant to this Indictment, the defendants and other members of the Mega Conspiracy knew that they did not have license, permission, authorization, or other authority fromowners of hundreds of thousands of copyrighted works to reproduce and distributethoseworks,includingmakingthemavailableoverthe Internet.<br><br> Members of the Mega Conspiracy are aware of the way that their sites are actually used by others; have themselves usedthe systemsto upload,as well as reproduceanddistribute, infringing copies ofcopyrighted content; and are aware that they have financially benefitted directly from the infringement of copyrighted works that they are in a position to control. 28. In addition to Megaupload.com, Megavideo.com, and Megaclick.com.<br><br> the other websites created and domains owned by the Mega Conspiracy include: Megaworld.com: Megalive.com; Megapix.com; Megacar.com; Megafund.com; Megakev.com; Megaking.com: Megahelp.com;Megagogo.com:Megamovie.com: Megaporn.com; Megabackup.com; Internal records of the Mega Conspiracy suggest, as of January 19, 2012, however, that only 221 unique actual files have been deleted in this manner. 12 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 12 of 90 PageID# 257 Megapav.com; Megabox.com; and Megabest.com. Several of these additional sites have also hosted infringing copies of copyrighted works.<br><br> The websites and services, as well as the domainsthemselves, havebeenfacilitated andpromotedbyillicit proceedsfromthe operations of Megaupload.com, Megavideo.com, and Megaclick.com. 29. In additionto MEGAUPLOAD LIMITED, VESTOR LIMITED, Megamedia Limited, Megavideo Limited, Megarotic Limited, Megapix Limited, Kingdom International Ventures Limited, Netplus International Limited LLC, Basemax International Limited, and Mindpoint International Limited LLC, the following companies and entities have facilitated and promotedthe MegaConspiracy's operations: KimvestorLimited;TrendaxLimited;Monkey Limited;KimpireLimited;A Limited; Nl Limited;RNK Media Company;MegapayLimited; MegamusicLimited;FinnBatatoKommunikation;Mega ServicesEurope Ltd.;Megateam Limited; MegastuffLimited; Megacard Inc.; Megasite Inc.; Seventures Limited; SECtravel; and Bramos B.V.<br><br> In addition, the creation and operation of these companies and entities has been facilitatedandpromotedby illicitproceedsfromthe operations of the Mega Conspiracy. THE DEFENDANTS 30. KIM DOTCOM, who has also been known as KIM SCHMITZ and KIM TIM JIM VESTOR, is a resident of both Hong Kong and New Zealand, and a dual citizen of Finland and Germany.<br><br> DOTCOM is the founder of MEGAUPLOAD LIMITED ("MUL") and Megamedia Limited ("MMG"). Until on or about August 14,2011, DOTCOM was the Chief Executive Officer for MUL, and he is currently MUL's Chief Innovation Officer. As the head of the Mega Conspiracy, DOTCOM employs more than 30 people residing in approximately nine countries.<br><br> From the onset of the Mega Conspiracy through to the present, DOTCOM has supervisedthe development of the websites and companies utilized in the Mega Conspiracy. 13 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 13 of 90 PageID# 258 DOTCOMdirectedthecreation of the networkinfrastructure behindthe MegaConspiracy websites, negotiated contracts with Internet Service Providers and advertisers, administered the domain names used by the Mega Conspiracy, and exercises ultimate control over all decisions in theMega Conspiracy. DOTCOM hasarranged millions ofdollars inpayments forthecomputer servers utilized by the MUL and MMG properties around the world, and has also distributed proceeds of the Conspiracy to his co-conspirators.<br><br> DOTCOM is the director and sole shareholder of both VESTOR LIMITED and Kingdom International Ventures Limited, which have beenusedto holdhis ownership interestsin MUL-and MMG-relatedproperties; for example, DOTCOM owns approximately 68% of Megaupload.com, Megaclick.com. and Megapix.com. and 100% of the registered companies behind Megavideo.com.<br><br> Megapom.com. and Megapav.com, through VESTOR LIMITED. DOTCOM has personally distributed a link to a copyofa copyrighted workon,andhas receivedat leastoneinfringingcopy of acopyrighted work from, the Mega Sites.<br><br> Additionally, on numerous instances, DOTCOM received DMCA copyright infringementtakedown notices from third-party companies. In calendar year 2010 alone, DOTCOMreceived more than $42 million from the Mega Conspiracy. 31.<br><br> MEGAUPLOAD LIMITED is the registered owner ofMegaupload.com. the primary website operated by the Mega Conspiracy, and Megaclick.com. a site that offers advertising associated withMegaConspiracy properties.<br><br> MULis a registered companyin Hong Kongwitha registrynumberof 0835149. MUL has a number of bank accountsinHongKong that have been used to facilitate the operations of the Mega Conspiracy. DOTCOM, in addition to holding the title of ChiefExecutive Officer of MUL until as recently as August 2011, owns, through VESTOR LIMITED, approximately 68% of the shares of MUL; MATHIAS ORTMANN, through Netplus International Limited LLC, owns an additional 25%; JULIUS 14 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 14 of 90 PageID# 259 BENCKO, through Basemax International Limited, owns 2.5%; BRAM VAN DER KOLK utilizes Mindpoint International Limited LLC to hold 2.5% of the shares of MUL; SVEN ECHTERNACH owns approximately 1%; and the remaining 1% is owned by an investor in Hong Kong.<br><br> 32. VESTOR LIMITED is a registered company in Hong Kong with a registry number of 0994358. VESTOR LIMITED has a DBS Bank account in Hong Kong that has been used to facilitate the operations of the Mega Conspiracy.<br><br> DOTCOM (under the alias KIM TIM JIM VESTOR) is the sole director and shareholder of VESTOR LIMITED, and thus is effectively the sole director and 68% owner of MUL, Megaupload.com. Megaclick.com. and Megapix.com.<br><br> DOTCOM is the sole director of, and VESTOR LIMITED is the sole shareholder of, MMG,which is the parent company and sole shareholder of the following companies: Megavideo Limited (which is the registered owner of Megavideo.com). Megarotic Limited(which is the registered owner of Megaporn.com). and Megapay Limited.<br><br> VESTOR LIMITED is also the sole owner of Megaworld.com. 33. FINN BATATO is both a citizen and resident of Germany.<br><br> BATATO is the Chief Marketingand SalesOfficerfor Megaupload.comand otherMega Conspiracyproperties. Specifically,BATATOis in charge of sellingadvertisingspace,primarilythrough Megaclick.com. BATATO supervises a team of approximatelyten sales people around the world.<br><br> The purpose of the sales team is to increase the advertising revenue in localized markets by targetingcertainadvertisementsin certaincountries. BATATOhandlesadvertising customers on the Megaclick.com website and approves advertising campaigns for Megaupload.com, Megavideo.com, and Megaporn.com. BATATO has personally distributed a link to at least one infringing copy of a copyrighted work to a Mega Site.<br><br> Additionally, on 15 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 15 of 90 PageID# 260 numerous instances, BATATO received DMCA copyright infringement takedown notices from third-party companies. In calendar year 2010, BATATO received more than $400,000 from the Mega Conspiracy. 34.<br><br> JULIUS BENCKO is both a citizen and resident of Slovakia. BENCKO is the Graphic Director for MUL and MMG. BENCKO, as the director and sole shareholder of Basemax International Limited, is effectively a 2.5% shareholder of MUL.<br><br> From the onset of the Conspiracythrough to the present, BENCKO has been the lead graphic designer of the Megaupload.com and other Mega Conspiracy websites. He has designed the Megaupload.com logos, the layouts of advertisement space, and the integration of the Flash video player. BENCKOhas requested and received at least one infringing copy of a copyrighted work as part of the Mega Conspiracy.<br><br> In calendar year 2010, BENCKO received more than $1 million from the Mega Conspiracy. 35. SVEN ECHTERNACH is both a citizen and resident of Germany.<br><br> ECHTERNACH is the Head of Business Development for MMG and MUL. ECHTERNACH is a 1% shareholder in MUL. ECHTERNACH leads the Mega Team company, registered in the Philippines, which is tasked with removing illegalor abusive content from the Mega Conspiracy websites, reviewing advertising campaigns for inappropriate content, and responding to customer support e-mails.<br><br> Additionally, ECHTERNACH handles the Mega Conspiracy's relationships with electronic payment processors, accounting firms, and law firms. His activities include traveling and approaching companies for new business ventures and services. Additionally, on numerous instances, ECHTERNACH received DMCA copyright infringement takedown notices from third-party companies.<br><br> In calendar year 2010, ECHTERNACH received more than $500,000 from the Mega Conspiracy. 16 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 16 of 90 PageID# 261 36. MATHIAS ORTMANNis a citizen of Germanyand a resident of both Germany and Hong Kong.<br><br> ORTMANN is the Chief Technical Officer, co-founder, and a director of MUL. ORTMANN, as the director and sole shareholder of Netplus International Limited LLC, effectivelyowns25% of the shares of MUL. From the onset of the Conspiracythrough to the present, ORTMANN has overseensoftwareprogrammers that developedthe MegaConspiracy's websites,andhashandledtechnicalissueswiththe ISPs.<br><br> His particularareasof responsibility include setting up new servers,sending and responding to equipment service requests, and problemsolvingconnectivityproblemswith the Mega Conspiracywebsites. Additionally,on numerous occasions, ORTMANN received DMCA copyright infringement takedown notices from other conspiratorsand third-party companies. ORTMANN also had authority to distribute funds from one of the Conspiracy's main financial accounts.<br><br> ORTMANN has received a link to a copy of a copyrightedwork associated with the Mega Conspiracy. In calendar year 2010 alone, ORTMANN receivedmorethan $9 millionfromthe Mega Conspiracy. 37.<br><br> ANDRUSNOMM is a citizen of Estonia and a resident of both Turkey and Estonia. NOMM is a software programmer and Head of the Development Software Division for MUL. NOMMisresponsible forthetechnical aspectsofMegaclick.com.<br><br> NOMMdevelops newprojects,testscode,andprovidesroutinemaintenance for the site. Additionally, NOMM provides web coding assistance to various projects on other Mega Conspiracy websites. Such projects have includedtesting high definition video on Megavideo.com.<br><br> installing the thumbnail screencapturesforuploadedvideos,andtransferring still imagesacrossthe variousMega Conspiracy website platforms. NOMM has accessed at least one infringing copy of a copyrightedwork from a computer associated with the Mega Conspiracy. In calendar year 2010, NOMM received more than $100,000 from the Mega Conspiracy.<br><br> 17 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 17 of 90 PageID# 262 38. BRAM VAN DER KOLK, who has also been known as BRAMOS, is a resident of both the Netherlands and New Zealand. VAN DER KOLK is a Dutch citizen.<br><br> VAN DER KOLK is the "Programmer-in-Charge" for MUL and MMG. VAN DER KOLK, as the director and sole shareholder of Mindpoint International Limited LLC, effectively owns 2.5% of the shares of MUL. From the onset of the Conspiracy through to the present, VAN DER KOLK has overseenprogramming on the Mega Conspiracy websites, as well as the underlying network infrastructure.<br><br> VAN DER KOLK is also responsible for responding to DMCA copyright infringementtakedown notices sent to Mega Conspiracy sites. Lastly, VAN DER KOLK oversaw the selection of featured videos that were posted onto Megavideo.com. and he was previously in charge of the rewards program.<br><br> VAN DER KOLK has personally uploaded multiple infringing copies of copyrighted works to Internet sites associated with the Mega Conspiracy and has searched servers controlled by the Mega Conspiracy for infringing copies of copyrighted works at the request of other co-conspirators, including several of the defendants. In calendar year 2010, VAN DER KOLK received more than $2 million from the Mega Conspiracy. THIRD-PARTIES 39.<br><br> CarpathiaHosting rCarpathia.com)is an Internet hosting provider that is headquartered in Dulles, Virginia, which is in the Eastern District of Virginia. Carpathia Hosting has access to datacenters in Ashburn, Virginia; Harrisonburg, Virginia; Phoenix, Arizona; Los Angeles, California; and Toronto, Canada. The Mega Conspiracy leases approximately 25 petabytes of data storage from Carpathia to store content associated with the Mega Sites.<br><br> More than 1,000computer servers in North America are owned and operated by Carpathia A petabyte is more than 1,000 terabytes, or one million gigabytes. 18 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 18 of 90 PageID# 263 Hosting for the benefit of the Mega Conspiracy; more than 525 of these computer servers are currently locatedinAshburn, Virginia, which is inthe Eastern District of Virginia. Carpathia Hosting continuedto provide the Mega Conspiracy with leased computers, Internet hosting, and support services as of January 19,2012.<br><br> 40. CogentCommunications (Cogentco.com)is a multinational Internet hosting and bandwidth provider that is headquartered in Washington, D.C., but also has offices and facilities intheEasternDistrict ofVirginia. Asoneofthe topfiveglobalInternetserviceproviders, Cogent Communicationsowns and operates43 datacentersaround the world.<br><br> The Mega Conspiracy leases approximately thirty-six computer servers in Washington, D.C. and France from Cogent Communications that are used for the Mega Sites. Cogent Communications continuedto providethe Mega Conspiracywith leasedcomputers,Internetbandwidth,hosting, and support services as of January 19, 2012.<br><br> 41. Leaseweb(Leaseweb.com) is a multinational Internet hosting provider that is headquarteredinthe Netherlands. Leaseweb has eightdatacenters in the Netherlands, Belgium, Germany, and the United States, including in the Eastern District of Virginia.<br><br> More than 630 computer servers in the Netherlands are owned and hosted by Leaseweb for the benefit of the Mega Conspiracy, and an additional sixty servers hosted at Leaseweb were purchased by the MegaConspiracyin October2011. Leasewebcontinuedto provide the MegaConspiracywith leased computers, Internet hosting, and support services as of January 19,2012. 42.<br><br> PayPal,Inc. (PavPal.com)isa U.S.-basedglobal e-commercebusinessallowing payments and money transfers over the Internet; in fact, PayPal Inc. indicates that it is involved in approximately 15% of global e-commerce.<br><br> The Mega Conspiracy's PayPal, Inc. account has been utilized to receive payments from the Eastern District of Virginia and elsewhere for 19 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 19 of 90 PageID# 264 premiumMegaupload.com subscriptions,whichhave includedfees of $9.99 for monthly subscriptions, $59.99 foryearly subscriptions, and $199.99for lifetimesubscriptions. Thesame PayPal, Inc.<br><br> accounthas been used by the Conspiracy to pay Carpathia Hosting in the United States and Leaseweb in the Netherlands as well as other operating expenses (including, but not limited to, direct financial rewards to uploaders of popular content in the Eastern District of Virginia and elsewhere). From on or about November 25,2006, through on or about July 2011, the PayPal, Inc. account for the Mega Conspiracy has received in excess of $110,000,000 from subscribers and other persons associated with Mega Conspiracy.<br><br> 43. Moneybookers Limited (Monevbookers.com) is an United Kingdom-based global e-commerce business allowing payments and money transfers over the Internet. The Mega Conspiracyhas chargedvarious ratesthroughMoneybookersLimitedfor premiumsubscriptions on its websites,including¬9.99 for monthlysubscriptions,¬59.99 for yearly subscriptions,or ¬199.99 for lifetime subscriptions.<br><br> Between August 1, 2010 and July 31, 2011, the Moneybookers Limited accounts for the Mega Conspiracy have collected in excess of $5 million from subscribers of Mega Sites and transferred that money to an account in Hong Kong associated with the Mega Conspiracy. 44. AdBrite, Inc.<br><br> (AdBrite.com) is an online advertising network based in San Francisco, California. AdBrite, Inc. provides advertisements for over 100,000 Internet sites and is believed to be amongst the top ten advertising networks on the Internet.<br><br> From on or about September2,2005 untilonor aboutMay24,2008, AdBritepaid at least$840,000to the Mega Conspiracy for advertising. 45. PartyGamingpic is a company based in the United Kingdom that has operated PartvPoker.com since 2001.<br><br> PartvPoker.com has more than 3 million visitors annually and is 20 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 20 of 90 PageID# 265 one of the largest online poker rooms. PartyGaimng's advertising contract with the members of the MegaConspiracywas initiatedon or aboutNovember 12,2009 and has resulted in payments of morethan$3,000,000 to theConspiracy. This contractwas still activeas recentlyas on or aboutMarchl8,2011.<br><br> 21 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 21 of 90 PageID# 266 COUNT ONE (18 U.S.C. § 1962(d) - Conspiracy to Commit Racketeering) THE GRAND JURY CHARGES THAT: 46. Paragraphs 1through 45 are re-alleged and incorporated as if set forth here in their entirety.<br><br> A. THE ENTERPRISE 47. Beginning in at least September 2005 and continuing until at least January 19, 2012, in the Eastern District of Virginia and elsewhere, the defendants, KIM DOTCOM, MEGAUPLOAD LIMITED, VESTOR LIMITED, FINN BATATO, JULIUS BENCKO, SVEN ECHTERNACH, MATHIAS ORTMANN, ANDRUS NOMM, and BRAM VAN DER KOLK andothersknownandunknownto the GrandJury, constitutedan "enterprise," as defined by Title 18,United States Code,Section1961(4) (hereinafter the"Enterprise"), thatis,a groupof individuals and entities associated in fact.<br><br> The Enterprise further included all associated corporations, affiliates, subsidiaries, and entities, including, but not limited to, those indicated in paragraph 29. The Enterprise constituted an ongoing organization whose members functioned as 22 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 22 of 90 PageID# 267 a continuing unitfor the common purpose of achievingthe objectives of the Enterprise. This Enterprise was engagedin, and its activities affected, interstate and foreign commerce.<br><br> B. THE RACKETEERING VIOLATION 48. Beginningin at least September 2005 and continuing until January 19,2012, in the Eastern District of Virginia and elsewhere, the defendants, KIM DOTCOM, MEGAUPLOAD LIMITED, VESTOR LIMITED, FINN BATATO, JULIUS BENCKO, SVEN ECHTERNACH, MATHIAS ORTMANN, ANDRUS NOMM, and BRAM VAN DER KOLK beingpersonsemployed byandassociated withtheEnterprise, whichEnterprise engagedin, and theactivities ofwhichaffected interstate and foreign commerce, didknowingly, willfully, and intentionally combine,conspire, confederate, and agreetogether and with each other, and with otherpersonsknownandunknownto the GrandJury,to violate 18U.S.C.<br><br> § 1962(c) (hereinafter the"Racketeering Violation"), thatis,to conductandparticipate, directlyandindirectly, in the conduct of theaffairsofthat Enterprise througha patternofracketeering activity, asthatterm is defined in Title 18,United States Code, Section 1961(1)and (5), involving multiple acts indictable under: 23 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 23 of 90 PageID# 268 a. 18U.S.C. §§ 2319(b)(1) & 2319(d)(2); 17 U.S.C.<br><br> §§ 506(a)(1)(A) & 506(a)(1)(C) (criminal copyright infringement); b. 18U.S.C. §§ 1956(a)(l)(A)(i), 1956(a)(2)(A), 1956(h), 1956(f),and 1957 (money laundering); and c.<br><br> 18 U.S.C. § 1343 (fraud by wire). C.<br><br> PURPOSES OF THE ENTERPRISE 49. The purposes of the Enterprise included the following: a. Enrichingthe membersandassociates of the Enterprisethrough,among other things, copyright infringement, money laundering, and wire fraud.<br><br> b. Promoting, enlarging, and enhancing the Enterprise and its members' and associates' activities. D.<br><br> MEANS AND METHODS OF THE ENTERPRISE 50. Among the means and methods by which the defendants and their associates conductedandparticipatedin the conduct of the affairsofthe Enterprisewere the following: a. Members of the Enterpriseandtheir associatescriminallyinfringed copyrights,aidedand abettedcopyrightinfringement,and conspiredto infringe copyrights, which affected interstate and foreign commerce; b.<br><br> Members of the Enterprise and their associates committed money laundering,attemptedto commitmoneylaundering,and conspiredto commitmoney launderingto facilitateand expand the Enterprise's criminal operations, which affected interstate and foreign commerce; and c. Members of the Enterprise and their associates devised a scheme to defraud, committed wire fraud, aided and abetted wire fraud, and 24 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 24 of 90 PageID# 269 attempted to commit wire fraud,which affected interstate and foreign commerce. (All in violation of Title 18,United States Code, Section 1962(d)) 25 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 25 of 90 PageID# 270 COUNT TWO (18 U.S.C.<br><br> § 371 - Conspiracyto Commit Copyright Infringement) THE GRAND JURY CHARGES THAT: 51. The factual allegations contained in Paragraphs 1through 45 are re-alleged and incorporated as if set forth here in their entirety. 52.<br><br> Beginningin at leastSeptember2005andcontinuinguntilat leastJanuary 19, 2012, in the Eastern District of Virginia and elsewhere, the defendants, KIM DOTCOM, MEGAUPLOAD LIMITED, VESTOR LIMITED, FINN BATATO, JULIUS BENCKO, SVEN ECHTERNACH, MATHIAS ORTMANN, ANDRUS NOMM, and BRAM VAN DER KOLK each knowinglyand intentionally combined,conspired, and agreed together and with each other, andwithotherpersons knownand unknown to theGrandJury,to: (1)willfullyinfringe, for purposesofcommercial advantageandprivate financialgain,at leastten copies and phonorecords of one or more copyrighted works with a total retail value of more than $2,500 withina 180-dayperiod,in violationofTitle 17,UnitedStatesCode,Section506(a)(1)(A) and Title 18,UnitedStatesCode,Section2319(b)(1); and(2)willfullyinfringe,forpurposesof commercial advantage and privatefinancial gain,a copyrightby the distribution of a workbeing 26 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 26 of 90 PageID# 271 prepared for commercial distribution, by making it available on a computer network accessible to members of the public, when the defendants knew and should have known that the work was intended for commercial distribution, in violation of Title 17, United States Code, Section 506(a)(1)(C) and Title 18, United States Code, Section 2319(d)(2). Ways, Manner, and Means of the Conspiracy In furtherance of the Conspiracy, defendants and others known and unknown to the Grand Jury employed, among others, the following manner and means: 53. It waspart of the Conspiracythat the defendantsand their co-conspirators operated a number of Internet sites and associated services, including Megaupload.com.<br><br> Megavideo.com, and Megaclick.com. 54. Itwasfurtherpart of the Conspiracy thatmembers of the Conspiracyhadthe abilityto searchfilesthatwereon the computersystemstheycontrolled.<br><br> Therecordskeptby the Conspiracy included,but were not limitedto, the identity of the user who uploaded the content, the dateit wasuploaded, the MD5 hashvalue forthe file,the MegaConspiracy-createdlinks that pointedto thecontent, thesizeofthefile,thenamethe userprovidedforthefile,theapparent numberoftimesthefilehadbeen downloaded (untilAugust31,2010),and whethera copyright infringement notice had been received for any link associated with the content file. 55. It was further part of the Conspiracy that the content available on Megaupload.com and Megavideo.com was provided by known and unknown members of the MegaConspiracy, includingseveral of the defendants,who uploadedinfringing copies of copyrighted works onto computer servers leased by the Mega Conspiracy in North America to further thereproduction anddistribution ofcopyrighted works; inparticular, copyright infringing content was reproduced and distributed by the Conspiracy using various servers in Toronto, 27 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 27 of 90 PageID# 272 Canada; Los Angeles, California; and Ashburn, Virginia (the last of which is in the Eastern District of Virginia).<br><br> 56. It was further part of the Conspiracy that content was also reproduced on and distributed from computer servers leased or owned by the Mega Conspiracy in France and the Netherlands. 57.<br><br> It was further part of the Conspiracythat the Conspiracy made no significant effort to identify and block users who were using the Mega Sites or services to infringe copyrights, to preventthe uploading of infringingcopies of copyrightedmaterials, or to identify infringingcopies of copyrighted works locatedon computer servers controlled by the Conspiracy. 58. It was further part of the Conspiracy,from at least September 2005 until July 2011,thatthe Conspiracy provided financialincentivesfor usersto uploadinfringingcopies of popular copyrighted works.<br><br> The Conspiracy made payments to uploaders who were known to have uploaded infringing copies of copyrighted works, as well as repeat infringers. 59. It was further part of the Conspiracythat it designed its computer systems to automatically reproduceadditional copies of someworks that had originallybeen uploadedby individualusers and distributed these additionalcopies to multiple computer servers under the control of the Conspiracy aroundthe world,includingto computerserversthat were specifically designed to rapidly mass distribute files.<br><br> 60. It wasfurther part of the Conspiracy that members of the Conspiracymonitored the public actions of law enforcement regarding large-scale copyright infringement and took active steps to conceal the copyright-infringing activities taking place on the Mega Sites. 28 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 28 of 90 PageID# 273 61.<br><br> It was further part of the Conspiracy that the members of the Conspiracy misrepresented to the Conspiracy's users and the public the nature of the files that were contained on the computer servers it controlled and of the amount of their network bandwidth associated with known or obvious infringement. 62. It was further part of the Conspiracythat members of the Conspiracypurposefully didnot provide full and accurate search resultsto the public, or, in the case of Megaupload.com.<br><br> chosenot to provide any search functionalityat all in order to conceal the fact that the primary purpose of the website and service was to reproduce and distribute infringing copies of copyrighted works for commercial advantage and private financial gain. 63. It was further part of the Conspiracythat members of the Conspiracy reproduced copyrighted works directly from third-party websites, including from YouTube.com.<br><br> to make them available for reproduction and distribution on Megavideo.com.. and to create the false impressionthat Megavideo.comhostedprimarilyusergeneratedcontent instead of copyright- infringing content. 64.<br><br> It was further part of the Conspiracythat members of the Conspiracy generally did not terminate the user accounts of known copyright infringing users, when it had the right and ability under its Terms of Service to do so. 65. It was furtherpart of the Conspiracy that members of the Conspiracygenerally didnot deleteinfringing copies of copyrightedworks from computer servers that they controlled, even when they were aware of the infringing material or the removal of that content was specifically requested by the copyright holder.<br><br> 66. It was further part of the Conspiracythat members of the Conspiracy responded on a selective basis to requests to remove infringing content (or access thereto) from the 29 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 29 of 90 PageID# 274 computer serversthey controlled, and sometimes deliberatelydid not remove copyrighted works (or even links thereto) when it would result in a loss of revenue. 67.<br><br> Itwasfurtherpart of the Conspiracy thatmembers of the Conspiracytold copyrightholdersandtheir representativesthatit wouldremove infringingcontentthe holders and their representativesidentified from the serversthe Conspiracy controlled, when the members ofthe Conspiracy knewtheywouldnot. Inparticular, members of theConspiracy deliberately misrepresented tocopyright holders thattheyhadremoved copyright infringing content from their servers, while, in fact, they only removed certain links to the content file (whichcouldstillbe illegallydownloadedthroughnumerousredundantlinks). Redundantlinks were sometimes even created by members of the Conspiracy.<br><br> 68. Itwasfurtherpart of the Conspiracy thatmembers of the Conspiracy told complaining rights holders andtheirrepresentatives thatthemembers oftheConspiracy had deleted or blocked theuseraccounts of known andrepeat copyright infringing users, whenthey had not. 69.<br><br> Itwasfurther part of the Conspiracy thatthecomputer systems operated by members ofthe Conspiracy allowed the uploading of many hundreds ofthousands ofinfringing copiesofcopyrighted filesfromanonymous usersandtheConspiracy hasfinancially profited from the distribution of these files. 70. Itwasfurtherpart of theConspiracy thatthecomputersystemsoperated by members of the Conspiracy have been used to distribute many hundreds of thousands of infringing copiesofcopyrighted worksto anonymous usersand the Conspiracy hasfinancially profited from those distributions.<br><br> 30 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 30 of 90 PageID# 275 71. It wasfurtherpart of the Conspiracythat infringingcopies of manythousands of copyrighted works on Megaupload.com and Megavideo.com were made available to tens of millions of visitors each day. 72.<br><br> It was further part of the Conspiracy that the Conspiracy derived a direct financial benefitfrominfringement throughthe advertising that wasplacedontheMegaSites and from"premium" subscriptioncharges. BetweenSeptember2005and January 5,2012, the defendants collectively havereceivedmorethan$175millionfromadvertisingand subscriptions. Overt Acts 73.<br><br> It was further part of the Conspiracy that the following acts in furtherance of and to effect the objects of the above-described Conspiracy were committed in the Eastern District of Virginia and elsewhere: a. From at least November 24, 2006 until at least January 19,2012, infringing copies ofcopyrighted materials werestored oncomputer servers located atCarpathia Hostingin Ashburn, Virginia, which is in the EasternDistrict of Virginia. b.<br><br> For the 180days up to and includingJanuary 19, 2012, members of the Conspiracy infringed copyrights, inthe EasternDistrict of Virginiaand elsewhere, by reproducing and distributingby electronic means at leastten copies and phonorecords of one or morecopyrighted workswhichhad a totalretailvalueofmorethan $2,500for purposes of commercial advantage and private financial gain. c. For the 180 days up to and including August 31, 2010, members of the Conspiracyinfringedcopyrights,inthe EasternDistrict of Virginiaand elsewhere,by reproducing and distributingby electronic means at least ten copies and phonorecords of one or 31 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 31 of 90 PageID# 276 morecopyrighted workswhichhad a totalretailvalueof morethan $2,500forpurposes of commercial advantage and private financial gain.<br><br> d. For the 180 days up to and including August 16, 2008, members of the Conspiracy infringed copyrights, in theEasternDistrict ofVirginiaandelsewhere, by reproducing and distributingby electronicmeansat leastten copiesand phonorecords of one or more copyrighted works which hadatotalretail value ofmorethan$2,500 forpurposes of commercial advantage and private financial gain. e.<br><br> For the 180 days up to and including October 31, 2007, members of the Conspiracy infringedcopyrights, in the EasternDistrictof Virginiaand elsewhere,by reproducing and distributing byelectronic means at leasttencopiesandphonorecords ofoneor morecopyrighted works from the Youtube.com platform which had a total retail value of more than $2,500 forpurposes ofcommercial advantage andprivatefinancial gain, f. During thecourseofthe Conspiracy, theMegaConspiracy haspaidmore than $65million to hosting providers around the world for computer leasing, hosting, bandwidth, and support services. The amounts of some of these payments are detailed in Count Three, and incorporatedherein by reference.<br><br> These payments involved the use of proceeds of criminal copyrightinfringementto promote the objects of the conspiracy. g. FromatleastSeptember 2005 untilJuly2011,theMegaConspiracy offered and provided financial incentives toits premium subscribers to upload copies of popular worksto Megaupload.comand then distribute linksthat provided a download of that file, with a singleclick,to anyoneon the Internet.<br><br> Thoughthe "UploaderRewards" program warnedthat theuploading ofcopyrighted files wouldresult indisqualification, theMegaConspiracy rarely, if ever, terminated theaccounts of individuals whopostedcopyrighted content. In fact, the Mega 32 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 32 of 90 PageID# 277 Conspiracyaffirmatively choseto financially reward specific uploaders of infringingcopies of copyrighted content, including repeat offenders. h.<br><br> An early version of the "Uploader Rewards" program for Megaupload.comfrom approximately September 2005 announced: "Today we are also introducing our groundbreakingUploaderRewards. Ournew rewardprogrampays moneyand cash prizes to our uploaders. This makes Megaupload the first and only site on the Internet paying youforhostingyour files.<br><br> Themorepopularyourfilesthemoreyoumake." Directly addressing"file traders," the announcement continued: "You deliver popular content and successfulfiles[.] Weprovidea power hostingand downloadingservice. Let's team up!" In addition, the announcement stated: "You must have at least 50000 downloads within 3 months to qualify"and"You must allowus to list yourfiles& descriptionson our Top 100pages." The rewardsincluded"$1 USD Cashper 1000downloads of youruploadedfiles", plus an additional bonusbetween$50to $5,000for Top 100"Megauploaders withthe mostdownloads"duringa three-monthperiod, to be paid through PayPal accordingto the following ranking: Rankl: $5,000 USD Bonus Ranks 2-5: $1,000 USD Bonus Ranks 6-10: $500 USD Bonus Ranks 11-50: $100 USD Bonus Ranks 51-100: $50 USD Bonus i. A later version of the "Uploader Rewards" program, available at least as earlyasNovember2006,offeredthe following: "For everydownload of yourfiles,youearn 1 rewardpoint.<br><br> * You can redeem your reward points for premium services and cash[.]" The program required "a premium membership to qualify for a payment." Rewards were paid through PayPal according to the following reward point totals: 5,000 reward points: One day premium 50,000 reward points: One month premium 33 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 33 of 90 PageID# 278 100,000 reward points: One year premium 500,000 reward points: Lifetime platinum + $300 USD 1,000,000reward points: $1,000 USD 5,000,000 reward points: $10,000 USD j. At thetime ofits termination, as recentlyas July 2011,the"Uploader Rewards" program offered rewards according to the following reward point totals: 10,000reward points: One month premium membership 50,000 reward points: 6 months premium membership 100,000 reward points: One year premium + $100USD 500,000reward points: Lifetime platinum+ $500 USD 1,000,000 reward points: $1,500 USD 5,000,000 reward points: $10,000 USD k. In approximately April 2006, members of the Mega Conspiracy copied videos directly from Youtube.comto make them available on Megavideo.com.<br><br> 1. On or about April 10,2006, VAN DER KOLK sent an e-mail to ORTMANN asking "Do we have a server available to continue downloading of the Youtube's vids? ...<br><br> Kimjust mentionedagainthat this has reallypriority." m. On or about April 10,2006, VAN DER KOLK sent an e-mail to ORTMANN indicating "Hope rYoutube.com is] not implementing a fraud detection system now... * praying *".<br><br> n. On or about April 10,2006, ORTMANN sent an e-mail to VAN DER KOLK in reply to the "fraud detection" message indicating "Even if they did, the usefulness of their non-popularvideos as ajumpstartfor Megavideois limited, in my opinion." o. On or about April 10,2006, VAN DER KOLK sent an e-mail to ORTMANNin reply to the "jumpstart for Megavideo"message indicating that "Well we only have 30% of their videos yet..<br><br> In my opinion it's nice to have everything so we can descide and brainstorm later how we're going to benefit from it." 34 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 34 of 90 PageID# 279 p. OnoraboutMay2, 2006, an e-mail wassent from the"Megaupload Abuse Desk" toa representative ofa copyright holder falsely representing that the representative could "remove a batch of files from our servers" by using the Abuse Tool. q.<br><br> On or aboutMay 10,2006,a member of the Mega Conspiracy registered the Internet domain Megaclick.com. r. On or about August 31,2006, VAN DER KOLK sent an e-mail to an associate entitled "lol".<br><br> Attached to the message was a screenshot of a Megaupload.com file download page for the file "Alcohol 120 1.9.5 3105complete.rar" with a description of "Alcohol 120, con crack!!!! By ChaOtiX!". The copyrighted software "Alcohol 120" is a CD/DVD burning software program sold by www.alcohol-soft.com.<br><br> s. On or about November 13, 2006, VAN DER KOLK sent an e-mail to another individual that contained 100 Megaupload.com links to infringing copies of copyrighted musical recordings by the artist Armin van Buuren. t.<br><br> On or about November 13, 2006, a member of the Mega Conspiracy registeredthe Internet domain Megavideo.com. u. On or about December 3, 2006, DOTCOM distributed a Megaupload.com link to a music file entitled "05-50_cent_feat._mobb_deep-nah-c4.mp3" to ORTMANN.<br><br> A copy of this file was still present on servers controlled by the Mega Conspiracy as of December 20, 2011. v. On or about February 5, 2007, VAN DER KOLK sent an e-mail to ORTMANN entitled "reward payments".<br><br> Attached to the e-mail was a text file listing the following proposed reward amounts^ the Megaupload.com username, and the content they uploaded: 35 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 35 of 90 PageID# 280 100USD [USERNAME DELETED] 10+ Full popular DVD rips (split files), a few small porn movies, some software with keygenerators (warez) 100USD [USERNAME DELETED] 5845 files in his account, mainly Vietnamese content 100USD [USERNAME DELETED] Popular DVD rips 100USD [USERNAME DELETED] Some older DVD rips + unknown (Italian serries?) rar files 1500USD [USERNAME DELETED]known paid user (Vietnamese content) The lastindividualreceivedat least $55,000fromthe MegaConspiracy throughtransfersfrom PayPal Inc., as part of the "Uploader Rewards" program. w. On or about February 11,2007, VAN DER KOLK sent an e-mail to ORTMANN indicating that "Kim really wants to copy Youtube one to one." x.<br><br> On or about February 13,2007, ORTMANN sent an e-mail to VAN DER KOLK entitled "my concerns about the thumbnails table." In the e-mail, ORTMANN asked VAN DERKOLKto create "a dummy lifetimepremiumuser," statingthat "[t]his is very importantto preventthe loss of sourcefilesdueto expirationor abuse reports." y. On or about February 21, 2007, VAN DER KOLK sent an e-mail to ORTMANN entitled "2 reward payment files." Attached tothee-mailwasa filecontaining Megaupload.com users' e-mailaddressesandrewardpaymentsfor that time period,which rangedfrom$100to $500. For oneuserthat waspaid $300,VAN DER KOLKwrote,"30849 files,mainlyMp3z,some copyrightedbutmostofthem have a very small number of downloads per file." For other users, allof which were selected for reward payments of $100 bythe Mega Conspiracy, he wrote the following: "Ourold famous number oneonMU,still some illegal files butI think he deserves a payment"; "Loads of PDF files (looks likescannedmagazines)"; "looks like Vietnamese DVD rips"; "This user was paid last time has mainly split RAR files, however more than 50% deleted through abuse reports." 36 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 36 of 90 PageID# 281 z.<br><br> From on or about March 1,2007, through July 3, 2010, payments totaling approximately$13 millionweretransferredin and affectinginterstateand foreign commerce through PayPal, Inc. by a member of the Mega Conspiracy to WR, the ChiefFinancial Officer of Carpathia Hosting in Ashburn, Virginia, which is in the Eastern District of Virginia, for computer leasing, hosting, and support services. The details of these payments are described more specifically in Count Three and incorporated herein by reference.<br><br> aa. Fromon or aboutMarch2,2007, through July 3,2010, paymentstotaling at least $9 million were transferred in and affecting interstate and foreign commerce through PayPal,Inc.by a member of the Mega Conspiracyto Leasewebin the Netherlandsfor computer leasing, hosting, and support services. The details of these payments are described more specifically in Count Three and incorporated herein by reference.<br><br> bb. On or about April 15, 2007, VAN DER KOLK sent an e-mail to ORTMANN entitled "reward batch payment." In the e-mail, VAN DER KOLK stated: "We saved more than half of the money. Most of the disqualifications were based on fraud (automatedmass downloads).<br><br> The other disqualifications had very obvious copyrightedfiles in their account portfolio, but I was rather flexible (considering we saved quite a lot on fraud already). Total cost: 5200 USD." Attached to the e-mail was a file containing the Megaupload.com users' e-mail addresses and selected reward payments for that time period, which ranged from $100 to $1,500. cc.<br><br> On or about May 17,2007, a representative from Google AdSense, an Internet advertising company, sent an e-mail to DOTCOM entitled "Google AdSense Account Status." In the e-mail, the representative stated that "[d]uring our most recent review of your site [Megaupload.comQ" Google AdSense specialistsfound "numerous pages" with links to, among 37 Case 1:12-cr-00003-LO Document 34 Filed 02/16/12 Page 37 of 90 PageID# 282 other things, "copyrighted content," and therefore Google AdSense "will no longer be able to workwithyou." The e-mailcont

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