Megaupload kingpin found in panic room when arrested, say cops

Kim Dotcom has retained and then lost a star-quality US attorney, as debate over the raid and the Megaupload owner’s residency turns political in New Zealand.

At issue in the political debate is why Dotcom, who was refused permission to purchase the multi-million dollar mansion he occupied on character grounds, was nonetheless allowed to gain NZ residency.

The residency was granted under provisions that required him to invest more than $NZ10 million in New Zealand government bonds for a minimum of three years. That country’s immigration department says Dotcom had fully disclosed his previous convictions in applying for residency.

However, the country’s opposition is critical of the “investor plus” program which allowed Dotcom’s residency.

According to New Zealand’s 3News, police have claimed that to make the arrest they had to cut into a secure “panic room” where they found their target “near a firearm” described as “like a shortened shotgun”.

Reuters is now reporting that high-profile US lawyer Robert Bennett of Hogan Lovells, whose name alone sparked news stories over the weekend, has withdrawn from the case citing an unspecified conflict of interest. Bennett’s previous clients include President Bill Clinton in the Paula Jones sexual harassment case.

As The Register is preparing this story, Dotcom’s bail application is being heard in the North Shore District Court before Judge David McNaughton. ®

Update: Fallout from the Megaupload mega-shutdown has begun, with cloud storage outfit Filesonic disabling file sharing features. Users can only access files they have uploaded themselves. ®

Remanded until Wednesday National Business Review has now reported that Dotcom and his three co-defendants have been remanded in custody until Wednesday, when Judge McNaughton will deliver a detailed judgement on their bail application. ®