Ashburn at Center of Megaupload Piracy Indictment

Just as the Stop Online Piracy Act (SOPA) is gaining attention in the media, the U.S. Department of Justice announced an unrelated piracy indictment against a Megaupload Limited, Vestor Limited and seven individuals in what’s been deemed the Mega Conspiracy to distribute copyrighted material without authorization. A significant portion of the alleged conspiracy centers on data servers in Ashburn.

While there are several stories (Huffington Post, Washington Post, AP) outlining the full conspiracy, Ashburn Patch decided to focus on the connection to Ashburn in the case, including the alleged illegal distribution of the following movies The Green Hornet, Thor, Bad Teacher and The Twilight Saga: Breaking Dawn – Part 1.

The indictment identifies popular file-sharing website Megaupload as a service operated by the Mega Conspiracy that reproduces and distributes copies of popular copyrighted content over the Internet without authorization. In total, the conspirators are alleged to have reaped $175 million while costing victims in the case $500 million in harm.

The indictment alleges that Kim Dotcom, aka Kim Schmitz and Kim Tim Jim Vestor, 37, a resident of both Hong Kong and New Zealand headed the criminal enterprise. Dotcom founded Megaupload Limited and serves as the director and sole shareholder of Vestor Limited, which has been used to hold his ownership interests in the Mega-affiliated sites.

The following co-conspirators also were identified:

• Finn Batato, 38, a citizen and resident of Germany, who is the chief marketing officer;
• Julius Bencko, 35, a citizen and resident of Slovakia, who is the graphic designer;
• Sven Echternach, 39, a citizen and resident of Germany, who is the head of business development;
• Mathias Ortmann, 40, a citizen of Germany and resident of both Germany and Hong Kong, who is the chief technical officer, co-founder and director;
• Andrus Nomm, 32, a citizen of Estonia and resident of both Turkey and Estonia, who is a software programmer and head of the development software division;
• Bram van der Kolk, aka Bramos, 29, a Dutch citizen and resident of both the Netherlands and New Zealand, who oversees programming and the underlying network structure for the Mega conspiracy websites.

The FBI and Department of Justice websites crashed following the announcement of the indictment.

Here’s how the case involves Ashburn, according to the indictment [The full indictment is attached as a PDF]:

• On or about June 24, 2010, members of the Mega Conspiracy were informed, pursuant to a criminal search warrant from the U.S. District Court for the Eastern District of Virginia, that 39 unauthorized copyrighted movies were present on leased servers at Carpathia Hosting, a hosting company headquartered in Dulles and with data centers in Ashburn, Harrisonburg, Phoenix, Los Angeles and Toronto. A member of the Mega Conspiracy informed several of his co-conspirators at that time that he located the named files using internal searches of their systems. As of November 18, 2011, more than a year later, 36 of the 39 infringing motion pictures remained on servers controlled by the Mega Conspiracy.
  
• The Mega Conspiracy leases approximately 25 petabytes of data storage from Carpathia to store content associated with the Mega Sites. Carpathia owns and operated more than 1,000 computer servers in North America for the benefit of the Mega Conspiracy; more than 525 of these computer servers are currently located in Ashburn. Carpathia Hosting continued to provide the Mega Conspiracy with leased computers, Internet hosting and support services as of Jan. 5.
  
• The Mega Conspiracy’s PayPal Inc. account has been utilized to receive payments from Virginia and elsewhere for premium Megaupload.com subscriptions — which included the following fees: $9.99/monthly, $59.99/yearly and $199.99/lifetime. The same PayPal account has been used by the Mega Conspiracy to pay Carpathia Hosting in the United States and Leaseweb in the Netherlands as well as other operating expenses (including, but not limited to, direct financial rewards to uploaders of popular content). From on or about Nov. 25, 2006, through on or about July 2011, the Mega Conspiracy’s PayPal account received in excess of $110,000,000 from subscribers and other persons associated with Mega Conspiracy.
  
• It was further part of the Conspiracy that the content available on Megaupload.com and Megavideo.com was provided by known and unknown members of the Mega Conspiracy, including several of the defendants, who uploaded infringing copies of copyrighted works onto computer servers leased by the Mega Conspiracy in North America to further the reproduction and distribution of copyrighted works; in particular, copyright infringing content was hosted by the Conspiracy on various servers in Toronto, Los Angeles and Ashburn.
  
• From at least Nov. 24, 2006, until at least the date of this Indictment, infringing copies of copyrighted materials were stored on computer servers located at Carpathia Hosting in Ashburn.
  
• From on or about March 1, 2007, through July 3, 2010, payments totaling approximately $13 million were transferred in and affecting interstate and foreign commerce through PayPal by a member of the Mega Conspiracy to WR, the Chief Financial Officer of Carpathia Hosting.
  
• On or about June 24, 2010, members of the Mega Conspiracy were informed, pursuant to a criminal search warrant from the U.S. District Court for the Eastern District of Virginia, that 39 infringing copies of copyrighted motion pictures were believed to be present on leased servers at Carpathia Hosting in Ashburn. On or about June 29, 2010, after receiving a copy of the criminal search warrant, Mathias ORTMANN sent an e-mail entitled “Re: Search Warrant – Urgent” to DOTCOM and three representatives of Carpathia. In the e-mail, ORTMANN stated, “The user/payment credentials supplied in the warrant identify seven Mega user accounts,” and further that “The 39 supplied MD5 hashes identify mostly very popular files that have been uploaded by over 2000 different users so far[.]” The Mega Conspiracy has continued to store copies of at least 36 of the 39 motion pictures on its servers after the Mega Conspiracy was informed of the infringing content.
  
• On or about April 29, 2011, members of the Conspiracy infringed the copyright of the motion picture “The Green Hornet” by making it available on publicly accessible Internet-connected servers at Carpathia in Ashburn, and reproduced and distributed the work over the Internet without authorization. The film, which had been released in U.S. theaters on or about January 14, 2011, was not commercially distributed in the United States until on or about May 3, 2011.
  
• On or about May 13, 2011, members of the Conspiracy infringed the copyright of the motion picture “Thor” by making it available on publicly accessible servers at Carpathia in Ashburn, and reproduced and distributed the work over the Internet without authorization. The film, which had been released in U.S. theaters on or about May 6, 2011, was not commercially distributed in the United States until on or about September 13, 2011.
  
• On or about Aug. 12, 2011, members of the Conspiracy infringed the copyright of the motion picture “Bad Teacher” by making it available on publicly accessible servers at Carpathia in Ashburn, and reproduced and distributed the work over the Internet without authorization. The film, which had been released in U.S. theaters on or about June 24, 2011, was not commercially distributed in the United States until on or about October 18, 2011.
  
• On or about Nov. 20, 2011, members of the Conspiracy infringed the copyright of the motion picture “The Twilight Saga: Breaking Dawn – Part 1” by making it available on publicly accessible servers at Carpathia in Ashburn, and reproduced and distributed the work over the Internet without authorization. The film, which was released in U.S. theaters on or about Nov. 18, 2011, has not been commercially distributed as of the date of this Indictment.
  
• It was further part of the Conspiracy that infringing copies and phonorecords of copyrighted works were stored on computer servers controlled by the Conspiracy located at Carpathia in Ashburn; such conduct occurred at least in part in the United States, under Title 18 of the United States Code, Section 1956(f)(1).
  
• It was further part of the Conspiracy that multiple transfers, which involved proceeds of criminal copyright infringement in the Eastern District of Virginia and elsewhere, from a DBS (Hong Kong) Limited bank account for the Conspiracy were made in and affecting interstate and foreign commerce by a member of the Conspiracy, and the transfers were directed to a PNC Bank NA account for Carpathia Hosting in Richmond, VA, including the following:
  a. On or about December 20, 2010, a transfer of approximately $720,000;
  b. On or about March 31, 2011, a transfer of approximately $1,060,274;
  c. On or about May 5, 2011, a transfer of approximately $950,000;
  d. On or about June 2, 2011, a transfer of approximately $950,000; and
  e. On or about July 5, 2011, a transfer of approximately $950,000.
  
• It was further part of the Conspiracy that multiple transfers, which involved proceeds of criminal copyright infringement in the Eastern District of Virginia and elsewhere, from the PayPal account for the Conspiracy in Hong Kong were made in and affecting interstate and foreign commerce by a member of the Conspiracy to the benefit of Carpathia in Ashburn, including the following:
  a. On or about October 7, 2008, transfers totaling approximately $90,000 to WR, the Chief Financial Officer of Carpathia Hosting;
  b. On or about May 30, 2010, transfers totaling approximately $688,852 to WR, the Chief Financial Officer of Carpathia Hosting; and
  c. On or about July 2, 2010, transfers totaling approximately $688,852 to WR, the Chief Financial Officer of Carpathia Hosting.