National Post (National Edition)
Kim Dotcom’s Canadian connection
COMPUTER SERVERS IN ONTARIO COULD BE KEY IN CASE AGAINST ALLEGED INTERNET PIRATE
As dawn broke over New Zealand’s North Island in January 2012, a police helicopter landed for a few seconds in the front courtyard of a lavish mansion, just long enough to drop off an elite squad of anti-terrorist officers.
They sprinted for the front door and busted through, trying to prevent Kim Dotcom, allegedly the world’s top Internet pirate, from destroying evidence in the massive American racketeering case against him. The fear was that the Finnish/German hacker-turned-file-sharing-mogul had a “doomsday button,” which would erase his servers around the world and leave prosecutors emptyhanded.
As it happened, he did not. Dotcom, who changed his name from Kim Schmitz, fled from his bedroom into a secret staircase concealed in a closet, leading up to a safe room. It took 13 minutes for police to find him, as dozens of officers took control of the estate.
A few hours earlier, in close co-ordination, a smaller raid had taken place with less drama, in downtown Toronto. RCMP officers had raided 151 Front Street, a leading telecommunications hub where a data storage company was renting servers to the jewel in Dotcom’s empire, the file-sharing website megaupload.com. The raid went off without a hitch, and the RCMP still hold the servers today in a facility in London, Ont. They have not yet been forensically examined or shared with the United States.
Now, in a ruling that puts new limits on just how cooperative Canada can be with foreign investigators, Ontario’s top court has refused to let the FBI inspect those servers, for fear of violating the privacy of the people whose personal information might be stored on them.
Ostensibly a simple filesharing service, Megaupload allegedly was a global copyright scam, offering pirated movies, music, shows and video games to an estimated 50 million daily users. The FBI pegged the losses to companies that owned the material at $500 million over a given two-week period. At one point, Megaupload was so popular, it was thought to take up four per cent of the Internet’s total traffic.
Massively rich, Dotcom flaunted his success and gave himself the air of a Bond villain, by mooring yachts off Monte Carlo to host parties for royalty during Formula One races, and enlisting the star power of Hollywood celebrities to produce and promote his own music. But he never set foot in the United States, the country that decided to stop him, and asked its closest allies to help. The governments of those countries largely co-operated, but their courts have not, and the FBI has since run into deep legal trouble trying to get Dotcom himself out of New Zealand, and the evidence on those servers out of Canada.
In their raid, the RCMP were authorized by an Ontario judge’s search warrant to seize 32 computer servers leased to Megaupload. They were labelled “megayyz” 1001 through 1032, in reference to Toronto’s airport code, YYZ, and according to an email from an alleged conspirator, they are thought to have been used “as a database / numbercrunching machines.”
With the evidence in hand, Canada applied for the court’s permission to share the server contents with the FBI. Both Megaupload and the company that owned them agreed that the warrant was justified and carried out properly, but they objected to the proposal to simply hand over a mirror image of their contents, much of which belonged to other people, and was clearly irrelevant to the Dotcom prosecution. So a judge ordered them to come up with some way to sort the wheat from the chaff.
Canada’s preference was to let the FBI send a “clean team” of investigators with no involvement in the case, who would sort it out and report back to the court, without taking the servers out of the country. This is a common FBI practice in foreign jurisdictions, and an Ontario judge approved the plan. But in an appeal, Megaupload and Equinix argued it was unfair to hire FBI agents, “clean” or not, for such a delicate exercise, and the job should be done by an independent expert.
In its ruling Friday, the Ontario Court of Appeal agreed with Megaupload that this “clean team” proposal was “offensive to the appearance of fairness.” So the case is back where it was four years ago, with a judicial order to share the relevant data on the servers, but nothing more. An independent expert seems a likely alternative, but far more expensive.
Toronto has a large sector of web-hosting companies, who regularly co-operate with court-ordered searches, but also have an interest in ensuring they are not overly broad. For example, in another case last fall, a judge agreed Canada could share a massive stash of encrypted BlackBerry Ltd. messages with Dutch police investigating an underworld conspiracy, but only under strict conditions to ensure the data will remain under Canadian control, and not be shared further without a court’s approval.
Dotcom faces charges in the United States of racketeering, money laundering and criminal copyright infringement, and the U.S. has already moved to seize his assets.
In February, a New Zealand judge approved his extradition, but he is appealing, and the case is not likely to conclude for many more months.
MEGAUPLOAD ALLEGEDLY WAS A GLOBAL COPYRIGHT SCAM, OFFERING PIRATED MOVIES, MUSIC, SHOWS AND VIDEO GAMES TO AN ESTIMATED 50 MILLION DAILY USERS. THE FBI PEGGED THE LOSSES ... AT $500 MILLION OVER A GIVEN TWO-WEEK PERIOD.