'We've got nothing to hide': Dotcom

The multimillionaire New Zealand resident at the centre of an alleged global piracy and money laundering conspiracy says he has "nothing to hide".

Kim Dotcom (also known as Kim Schmitz), who turns 38 today, was arrested yesterday by police in a raid on the $30 million mansion in Coatesville, north of Auckland, in which he lives with his family.

Dotcom is the founder of Megaupload, one of the largest file-sharing sites on the internet, which was the target of the FBI-led swoop yesterday.

The American agents had been working with New Zealand police since August last year.

It is alleged Dotcom and six others are part of a group called the "Mega Conspiracy", which is accused of reproducing and distributing infringing copies of copyrighted works - including movies, television programmes, music, software and books.

Assets valued at more than $100 million have been seized worldwide. Among these are $6 million worth of luxury cars, as well as $10 million held in several financial institutions in New Zealand.

The move against Megaupload sparked an immediate and furious reaction from hackers, who shut down websites around the world, among them the United States Department of Justice site.

Also arrested were Bram van der Kolk (29), of the Netherlands, who is a New Zealand resident, Finn Batato (38) and Mathias Ortmann (40), both of Germany.

The FBI will seek to extradite the men to the US to face charges of conspiring to commit racketeering, conspiring to commit money laundering, copyright infringement and aiding and abetting copyright infringement.

Judge David McNaughton remanded the men in custody until Monday for a bail hearing, which has been opposed by lawyers acting for the US Government.

Defence lawyers for the accused men tried to stop news media taking photographs of their clients in court. But as Judge McNaughton was addressing the matter, Dotcom interrupted him.

"We don't mind ... if people want to take photographs of us or cover this event, because we've got nothing to hide."

Dotcom, a dual citizen of Finland and Germany, made $42 million in 2010 from the Megaupload site, according to the indictment laid by US authorities. Last year, he was blocked by the Government from buying the sprawling Coatesville mansion because he did not meet the "good character" test for foreign ownership of land.

The Megaupload site was shut yesterday.

Nearly 80 officers from the Organised & Financial Crime Agency New Zealand (Ofcanz) and police raided 10 properties yesterday to make the arrests after a request from the FBI.

Yesterday, luxury cars with licence plates KIMCOM, GOD, HACKER, STONED, GUILTY, MAFIA and POLICE were loaded on to transporters.

According to the indictment on the US Justice Department website, the harm to copyright holders is estimated at more than $US500 million ($NZ628,000). It is alleged more than $US175 million in criminal proceeds was generated.

The indictment contains emails allegedly sent between the arrested men in which they respond to complaints from users.

An email purportedly sent by Dotcom in July 2010 claims he was worried by a crackdown on sites that were thought to contain pirated content.

"This is a serious threat to our business. Please look into this and see how we can protect ourselfs (sic). Should we move our domain to another country (Canada or even Hong Kong)," he wrote.

The indictment claims the accused knew the site contained unauthorised content.

In a February 2011 email, Ortmann sent Dotcom and Van der Kolk an article headed "how to stop domain names being seized by the US Government." In another email, Ortmann said: "We're not pirates, we're just providing shipping services to pirates :)." Detective Inspector Grant Wormald, of Ofcanz, said Dotcom had "definitely" put money into Government bonds and he confirmed expensive artworks were found at the Coatesville mansion.

Police went looking solely for the items listed on the US-issued warrant, but have not ruled out other assets being seized.

"The warrants covered the addresses where we knew people had been living that we were interested in," Det Insp Wormald said.

"We know of two or three other addresses where they have assets."

Det Insp Wormald said the raid of Dotcom's house went smoothly, despite obstacles at the property including tight security, gating and a bodyguard.

A team of 76 police staff, including members of the Armed Offenders Squad, descended on the sprawling property about 6.45am.

Members of the FBI in New Zealand for about five days in the lead-up to the raid did not participate.

"Police arrived in two marked police helicopters. Despite our staff clearly identifying themselves, Mr Dotcom retreated into the house and activated a number of electronic locking mechanisms, Det Insp Wormald said.

"While police neutralised these locks, he then further barricaded himself into a safe room within the house, which officers had to cut their way into.

"Once they gained entry into this room, they found Mr Dotcom near a firearm which had the appearance of a shortened shotgun."

In total, more than 15 people were in the mansion, including the three arrested men and members of their families, children and staff employed to work at the property.

Police also located two sawn-off shotguns at the mansion.

- Andrew Koubaridis and Anna Leask