Movie Studios Seek to Freeze Kim Dotcom’s Assets

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Last month, the major Hollywood studios demanded millions from Megupload and its former employees in a brand new lawsuit. With the prospect that Kim Dotcom's seized assets may soon be released in both New Zealand and Hong Kong, 20th Century Fox and friends have moved to freeze his assets pending the outcome of their case.

In early April, Twentieth Century Fox, Disney, Paramount Pictures, Universal, Columbia Pictures and Warner Bros. teamed up to file a new lawsuit in a Virginia District Court.

Their targets were old adversaries Megaupload, Kim Dotcom and associates Mathias Ortmann and Bram Van Der Kolk. Running in parallel with the ongoing criminal proceedings initiated by the U.S. Government, the complaint followed much of the same path.

Earlier this month, Megaupload’s legal team responded by asking the court to freeze the MPAA’s case in order to protect their clients’ Fifth Amendment rights not to implicate themselves in advance of the U.S. government’s criminal case against them.

In the period since both sides’ legal teams have been in discussion over the potential terms of any stay. But, according to papers filed in a Virginia court yesterday, 20th Century Fox are concerned that Dotcom’s fortune could soon be back in the entrepreneur’s hands.

Megaupload’s and Dotcom’s millions were seized following the now-notorious 2012 raid. However, last month the New Zealand High Court said it would not extend the foreign restraining order against his assets.

That decision was quickly appealed by the Crown, but the possibility remains that Dotcom could soon regain his wealth and legally dispose of it. The studios want to stop that from happening.

“If the New Zealand Government loses the appeal, the assets will be unfrozen, and there is a significant risk that they will then be immediately dissipated,” the studios’ lawyers state in yesterday’s filing.

Led by Warner Bros., the studios add that since Dotcom and his associates “have or have had sophisticated global business interests” and with that an ability to “move assets offshore quickly and immediately”, they are taking legal action to try and prevent that.

“To ensure that Defendants’ New Zealand assets remain frozen even if the New Zealand Government loses the pending appeal, several of the Plaintiffs have initiated civil proceedings in New Zealand to freeze Defendants’ assets pending a judgment in the [studios’ civil case against Megaupload/Dotcom].”

dollar-moneyBut the fight to secure Dotcom’s and Megaupload’s cash isn’t confined only to New Zealand. Hong Kong is another battleground and the studios are determined to narrow the options for release of assets there too.

“In addition to opposing extension of the asset freeze in New Zealand, Defendants are also seeking to unfreeze their assets in Hong Kong, which have also been frozen pursuant to this Court’s restraining orders issued in the Criminal Action,” the studio’s lawyers write.

“If Defendants are successful in their efforts to unfreeze their assets in Hong Kong,
there is a significant risk that those assets will be dissipated in very short order. Plaintiffs are monitoring developments in Hong Kong and assessing whether they may need to take legal action there to further preserve Defendants’ assets.”

In conclusion the studios state that while they do not oppose Megaupload’s request for a stay, the terms must not preclude them taking action to freeze the worldwide assets of Megaupload and Kim Dotcom.

But of course, just days after the studios filed their lawsuit in April, the RIAA jumped on board too by filing a a substantially similar suit against the same defendants, again demanding millions in damages.

Yesterday the labels also made their voices heard in the United States District Court for the Eastern District of Virginia in respect of Megaupload’s motion for a similar stay in their case. Although penned by different law firms, the labels’ filings are much the same as those from the studios.

In a slightly different conclusion, the labels oppose a stay order, but note that if one is granted it should not disallow them from seeking to “preserve the Defendants’ worldwide assets.”

Further hearings on the fate of the currently seized millions are scheduled for July 10 in Hong Kong and in the New Zealand High Court tomorrow.

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