Dotcom Tries To Reclaim Millions Seized in Hong Kong

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It was a place where Kim Dotcom loved doing business but it took just 13 minutes for a Hong Kong court to authorize the seizure of $42 million of his assets in 2012. Now the tycoon wants his cash back, with his legal team arguing that justice officials misled the courts.

For many months the New Zealand courts have been dealing with the thorny issue of Kim Dotcom. The entrepreneur’s case has traversed the legal system, with claim and counterclaim, decision followed by appeal.

The key topic of Dotcom’s possible extradition to the United States aside, much of the courtroom action has centered around the Megaupload founder’s assets. On the one hand Dotcom has been trying to reclaim his property, and on the other United States-based entertainment companies have been trying to lock it down in preparation for any future damages payout.

But as the fight simmers in New Zealand and largely stalls in the U.S., Dotcom’s legal representatives are fighting to reestablish control of his wealth in a third territory.

Over in Hong Kong, lawyers for Dotcom are attempting to take back HK$330 million (US$42.55m) in assets that were seized by local authorities when Megaupload was shut down in January 2012.

While Dotcom’s servers were being sealed off in the United States and his mansion raided in New Zealand, the Megaupload chief’s Hong Kong offices were being raided by 100 customs officers following allegations of copyright infringement and money laundering.

The seized assets are being held under a restraining order but Dotcom’s legal team are arguing that it should be set aside. In April 2014, Megaupload initiated legal action against the government and now its legal team is accusing the secretary for justice of failing to provide a “full and frank disclosure” of the facts when the application for seizure was made.

“We are applying for [the order] to be set aside because the court has misrepresented the true position,” Dotcom lawyer Gerard McCoy SC told SCMP yesterday.

In a feature that has become a hallmark of the pre-shutdown activity surrounding Megaupload, the Hong Kong restraining order was made ex parte, meaning that the defendants in the case were not allowed to put their side of the story. Dotcom’s lawyers say that in such circumstances the prosecution is under obligation to exercise additional caution

“Did the secretary for justice put his cards on the table face up? This application is a clear example of the duty either being ignored or simply misunderstood,” McCoy said.

According to the lawyer the prosecution deliberately withheld crucial information from the court when applying for the restraining order, not least the fact that Megaupload could not be served with a criminal complaint in the United States as it did not have a US mailing address.

“None of this was ever brought to the attention of the judge. It was all put to one side and never raised,” McCoy said.

In an interview with TorrentFreak in December 2011 before the raid, Dotcom spoke warmly of Hong Kong. “I should write a book about doing business in Hong Kong, that’s how good it is,” he said. “People there leave you alone and they are happy for your success.”

But according to McCoy, one month later the fate of Dotcom, his co-defendants, and his Megaupload empire was sealed in a matter of minutes.

“In about six or seven minutes, the applicant has dealt with the position of nine defendants and managed to freeze a massive amount of money. There is not one word about Megaupload, not a jot, not a tittle,” he told the court.

If the case goes in Dotcom’s favor there could be big implications for the entrepreneur. Not only could he regain tens of millions of dollars in wealth, but he could also be in a position to file a multi-billion dollar civil claim for damages. Before its shutdown, Megaupload was valued at a cool two billion dollars.

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