Megaupload.com a Story of Dotcom Boom and Bust

By Lincoln Feast and Sarah Marsh

January 21, 2012 11:28 PM EST

Among the hip-hop artists and other celebrities plugging Megaupload.com's digital-storage services in an online promotional video, a cameo by the Web site's founder would have gone unnoticed by many.

As a voiceover boasts of the site's 1 billion users and 4 percent share of all Internet traffic, a colossal figure clad in black appears in a music studio.

"Bit by bit, it's a hit, it's a hit!" founder Kim Dotcom booms in a slight accent that hints at his German roots.

The hits may have just run out for Dotcom, also known as Kim Schmitz and Kim Tim Jim Investor, who spent his 38th birthday on Saturday in a New Zealand jail after 70 police personnel raided his country estate and cut him out of a safe room where he had barricaded himself.

The U.S. FBI requested the raid, saying Dotcom masterminded a scheme that made more than $175 million in a few short years by copying and distributing music, movies, and other copyrighted content without authorization.

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Megaupload's U.S. lawyer said the company merely offered online storage, would "vigorously defend itself." and was trying to recover its servers and get back online.

The arrest marks the latest twist in the checkered story of Dotcom, a former hacker who got his first computer when he was 9 before going on to build an Internet fortune and friendships with music stars including Alicia Keys, Will.i.am, and P.Diddy who appeared on the Megaupload.com promo video.

Early Starter

Born in the German city of Kiel, Dotcom -- who was then known as Schmitz -- grew up in northern Germany.

As a child, he made copies of computer games to sell to his friends, and in the early days of the Internet, he began hacking into computers via telephones, according to reputed German daily Die Welt.

Schmitz has made no secret of his controversial past as a cyber-raider, hacking into computer networks at NASA, the Pentagon, and at least one major bank.

As the hacker pioneer generation came of age, so did Schmitz. After being convicted of computer hacking in 1998, he made a fortune providing computer-security consulting and venture-capital investment via the firm Kimvestor.

According to German magazine Der Spiegel, Schmitz once boasted he would become one of the richest men in the world. How was he so sure? "I'm smarter than Bill Gates," he said.

Schmitz, who also called himself Kimble after the wrongly convicted doctor-on-the-run in the film "The Fugitive," became well known for his lavish lifestyle as much as his computer skills.

Copyright 2012 Thomson Reuters. All rights reserved.
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