Cut Off from Funds, Megaupload Defendants Are Battling Extradition

Megaupload founder Kim Dotcom is driven to court in a Mercedes SUV.

Finn Batato, Megaupload's former chief marketing officer, arrives by bus.

Both men, along with former Megaupload executives Bram van der Kolk and Mathias Ortmann, have been in Auckland District Court for the past two weeks resisting attempts by the US Department of Justice (DOJ) to extradite them. The men were charged in 2012 with criminal copyright violations, money laundering, and an assortment of other offenses.

Dotcom is represented in court by several attorneys, though at least one has agreed to work for free because of what he says is Dotcom's inability to pay. Batato doesn't even have a freebie lawyer. He's the only one of the indicted Megaupload execs who acts as his own legal counsel.

"I have no choice," he said as we sat in a cafe around the corner from the courthouse. "The money I made (a $400,000 salary in 2010), that's what I've been living on since our arrest. I've had to make some tough choices. Hire a lawyer or feed my family."

Many people may have thought the case was resolved long ago. Not so. In January 2012, the DOJ accused Megaupload's leadership of operating the service as a massive online piracy hub. Since then, attempts by the feds to drag the men to the US were thwarted by legal delays, but the defendants are finally in court. Meanwhile, the United States is pouring on the pressure.

Lawyers for the defendants this week told Judge Nevin Dawson that they can't afford to mount a proper defense because the US refuses to allow the accused any access to the assets that were seized. Unless they do, defense counsel has asked for another stay or for the judge to toss the case.

In February, Andrus Nõmm, an indicted former Megaupload programmer, pleaded guilty to felony copyright infringement and was sentenced to a year in prison. Batato said Nõmm is now cooperating with the DOJ.

Dotcom said via Twitter that the programmer simply ran out of money fighting extradition and was left with few choices. If that's accurate, and Dotcom's assertions that draining someone's resources is a recipe for getting them to roll over on friends, does that mean Batato will be the next to snitch?

Megaupload's former bosses are all old friends. Batato said he's known Dotcom and Ortmann for 20 years. Together they toiled to build Megaupload, founded in 2005, into a colossus. At its peak, 50 million people from across the globe visited daily, a large percentage of them to share unauthorized copies of movies, songs and video games.

But it wasn't all work for management. The boys also loved to party together. DOJ records show that over a three-month span in the summer of 2011, the group sailed around the Mediterranean on spectacular rented yachts that added up to more than $5 million.

"I couldn't [testify against the other defendants]," Batato said. "I would have to do what Andros did. He made up stuff to get this deal and that's what they're quoting now in the extradition hearing… None of us has anything on the others because we all believed we were legal."

Is it really that simple, though? Batato has two young children and just married their mother two months ago. The case has generated a lot of bad press and he hasn't worked in three years. And then there's this: the government's case against him doesn't look as strong as it does the others.

The DOJ has emails from him that show he sent links to people advertising on the service that led to pirated materials, presumably to show them where their ads were placed. He also created some promotional campaigns around lockers owned by repeat infringers. Copyright law requires ISPs not have specific knowledge of infringement, or profit from it. They must also remove pirated materials as soon as they learn about them.

But those aren't nearly as incriminating as some of the evidence against the other defendants. Van der Kolk allegedly wrote in 2008: "We have a funny business … modern-day pirates." The prosecution claims Ortmann, Megaupload's former chief technology officer, responded: "We're not pirates, we're just providing shipping services to pirates."

Anybody who has ever watched Law and Order knows how a prosecutor could use this. They could ask Batato why he would let the others drag him down when he wasn't a founder, and earned far less? Batato didn't sign with Megaupload until two years after the company was created. He was not, unlike the other three, a Megaupload shareholder. Dotcom owned 68 percent, Ortmann 25 percent, and van der Kolk 2.5 percent.

"I'm not happy by the looks of some of it, some of the conversations," Batato said. "But if you're in the engine room, like Mathias and Bram, then you get oil on your hands."

He insists he stands by his fellow defendants, however. "I'm not happy about some of the other things that happened, but if you boil it down to its essence, there's no case against us," he said. "We all operated well within the law."

The extradition hearing is expected to last at least another week.