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Megaupload Faces Mega Problems Before Relaunch

Photos.com/Thinkstock(NEW YORK) -- What do you do when your once-thriving Internet company has the U.S. Justice Department breathing down your neck?

You relocate your site from the states to West Africa, naturally.

That’s exactly what the founder of Megaupload did when U.S. Feds shut down the popular site in January, charging that it engaged in piracy -- providing copyrighted material for free.

The 7-year-old website was once a well-known file sharing site with close to 150 million registered users, including Kim Kardashian, Diddy and other high-profile celebs.  In terms of megabytes transmitted, Megaupload accounted for about 4 percent of total Internet use.

Megaupload no longer has a .com domain in the U.S., but it continues to be involved in criminal court proceedings in Washington, D.C.

Earlier this year, a federal indictment charged that Megaupload, along with a shell company linked to it, caused an estimated half-billion dollars in copyright losses to others and made an estimated $175 million in proceeds.

Despite those allegations, Megaupload is pressing forward with the online file sharing concept.  Its founder and New Zealand entrepreneur Kim Schmitz, who has been charged in the U.S. with fraud and money laundering, has appeared in photos online showing his opulent lifestyle.  The indictment listed a Rolls Royce, Lamborghini, numerous electronic items, artwork and televisions among his possessions.

Schmitz -- better known as Kim Dotcom -- has now announced he will launch a brand-new site called Me.ga that would supersede Megaupload in both speed and storage space while giving users direct control and responsibility over their files.  Me.ga would go live at the beginning of the new year.  Two months later, the German-born Schmitz will face a scheduled extradition hearing to the U.S.

Me.ga will live under the domain .ga, which is used in Gabon, the country on the west coast of Central Africa.

Kim Dotcom believes this move will allow the new site to thrive because it will not be under the jurisdiction of the U.S. and, therefore, protected from legal action in the states.

But his new site may be blocked even before its 2013 launch.  Gabon Communications Minister Blaise Louembe suspended Me.ga, according to Business Insider, saying the site cannot “serve as a platform or screen for committing acts aimed at violating copyrights, nor be used by unscrupulous people.”

Shortly after the announcement, Kim Dotcom tweeted he already had plans to find another domain.  A statement from his attorney Ira Rothken proclaims his innocence.

“It sounds like a lack of net neutrality in Gabon,” said the statement.  “We’re just going to use a different domain.”

Copyright 2012 ABC News Radio

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