Megaupload founder denied bail

Kim Dotcom, the New Zealand-based internet millionaire who founded Megaupload and is now at the centre of what is billed as the world's biggest copyright case, was denied bail today.

Dotcom, 38, has been held in custody since armed police swooped in on his luxury $30 million Coatesville mansion on Friday.

Now the German-born businessman will be held behind bars until 22 February on charges of copyright, money laundering and conspiracy.

The FBI is seeking to extradite Dotcom to the United States, claiming that his Megaupload activities have caused US$500 million "harm" to copyright interests.

On Monday, in the North Shore District Court in Auckland, Judge David McNaughton reserved judgment on a bail application, citing the extent of the allegations and investigations.

Today, McNaughton agreed with prosecution claims that Dotcom presented a flight risk, a claim denied by the defence.

"With significant determination and financial resources, flight risk remains a real and significant possibility which I cannot discount and bail is declined," McNaughton concluded in a 20-page statement issued shortly before noon New Zealand time.

McNaughton said he was mindful of the extent of the charges and that it is "the biggest case of its kind ever prosecuted in the US".

The judge said it was impossible for him to determine how the extradition proceedings would go, but he noted the "less serious" copyright charges carried a maximum five-year jail term, as opposed to the maximum 20-year racketeering and money-laundering charges the US authorities allege and seek.

In his findings, the judge also noted how Dotcom possessed an unregistered firearm, suggesting links to criminal elements, which could lead to them helping with an escape.

Dotcom also had access to bank accounts, including 23 in Hong Kong, 15 with DBS Bank and eight with Citibank exceeding US$8 million under various aliases.

The FBI also claimed Dotcom had registered bank accounts in the Philippines and the UK, together with credit cards in Germany along with limited liability companies.

"I am sure he has the financial resources to obtain forged identities or travel documents to arrange transport out of the country by covert means," the judge said.

"There is a risk and it is a significant risk. The applicant has explained his provision of three passports in three different names and the reason for changing the names, but the fact remains that he has no qualms about changing his identity and had up to the time of his arrest been operating at least one bank account under another name."

Dotcom plans to appeal the decision to the High Court. Three other co-accused arrested on Friday, who are also in custody, are due to have their bail matters settled today.

Updated at 1:24pm, 25 January 2012: added the judge's reason for denying Dotcom bail.