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Mega chief could regain assets after court order error

By | Published on Monday 19 March 2012

Kim Schmitz

MegaUpload chief Kim ‘Dotcom’ Schmitz could get back pretty much everything that was seized from him by the New Zealand authorities in January because it turns out police and prosecutors applied for the wrong kind of court order.

New Zealand prosecutors arrested Schmitz and seized $200 million of his assets at the request of the US authorities, who are trying to extradite the Mega boss and six of his colleagues to face charges in the States of copyright infringement, money laundering and racketeering in relation to the Mega enterprise. The firm’s servers, based at two facilities in Florida, were also switched off as part of the same multi-national raid.

Schmitz’s arrest, and the swoop on the $30 million mansion where he was living, was dramatic, and it took the Mega chief a month to secure bail. But it apparently emerged in mid-February, probably before said bail was granted, that prosecutors had applied for the wrong kind of court order before seizing Schmitz’s property and cash reserves.

Reports suggest mistakes were made as the country’s Crown Law Office tried to work out how to secure a warrant without giving Schmitz the opportunity to appeal, which would have prevented the coordinated and sudden raid on his property in New Zealand and servers in the US.

According to the New Zealand Herald, legal reps for the prosecution formally admitted their mistakes to the country’s courts last week, while simultaneously applying for the right court order in hindsight, which was granted on a temporary basis pending further discussions.

Schmitz’s legal people will now argue that the “procedural error” meant that their client’s belongings were seized illegally and should therefore be returned forthwith. The Mega legal team had already been arguing that Schmitz should be reconnected with some of his fortune, to help cover living costs for him and his family, and to cover ongoing legal fees in relation to America’s extradition application.

It remains to be seen if Team Schmitz can now capitalise on this technicality to win their man back his fortune, in the short term at least. A legal expert told the Herald that New Zealand law does accommodate mistakes being made by officials, and the new court order could well be made permanent unless Schmitz’s people can prove prosecutors acted in bad faith by initially applying for the wrong warrant.

But either way, bungling up like this on such a high profile case being conducted under the spotlight of the world’s media is pretty embarrassing for New Zealand’s Crown Law Office.