Still image from video shows Megaupload founder Kim Dotcom in Auckland's North Shore District Court after his arrest
Megaupload founder Kim Dotcom appears in Auckland's North Shore District Court after his arrest in this still image taken from a January 20, 2012 video. REUTERS

The debate on whether Kim Dotcom is innocent or the brains behind one of the world's largest copyright theft schemes is growing even as the founder of now defunct file-sharing site MegaUpload was remanded to custody pending a bail ruling.

Dotcom, born Kim Schmitz, was arrested Friday at his luxurious mansion in Auckland, New Zealand. Dotcom and other Megaupload executives were charged with racketeering, money laundering, copyright infringement and more. If convicted, they could face up to 50 years in prison.

During the bail hearing on Monday, prosecutor Anne Toohey requested no bail as she believed Dotcom posed a flight risk.

Toohey told the court that when Dotcom was arrested, he was illegally in possession of a shotgun. The prosecutor also alleged that Dotcom could restart MegaUpload if he is released. Moreover, Dotcom has access to money and multiple identities and was in possession of 45 credit cards, three wallets and passports with different identities, at the time of his arrest.

According to the indictment, which was released by the U.S. Justice Department in Virginia, Dotcom and his accomplices operated a huge criminal enterprise as part of his cyberlocker service MegaUpload.

Before the U.S. government shut down the site, MegaUpload had become one of the world's leading file-sharing Web sites. The site was designed to enable and encourage millions of people to store and distribute unauthorized copies of movies, TV shows, music and other media.

However, Dotcom's attorney said in the court that his client was innocent and MegaUpload had nothing to do with the uploading of pirated films or video. The lawyer said the U.S. authority has totally misunderstood the nature of the company's business. Dotcom said he and his company are service providers protected by the Digital Millennium Copyright Act.

Paul Davison, a prestigious New Zealand lawyer representing Dotcom, said his client won't attempt to flee. Davison said Dotcom can't go anywhere because all his assets have been seized by the authorities. Furthermore, his wife is pregnant with twins. It's impossible for Dotcom to start up Megaupload again. According to Davison, Dotcom is even willing to submit to electronic surveillance.

Dotcom and his accomplices are still in jail, waiting for the final decision on the bail issue. The judge said whatever he decides about Dotcom would apply to his accomplices. The four are scheduled to be extradited to U.S. and tried.

The raid and arrest scene was something only Hollywood could conjure. When the police raided Dotcom's mansion, they found that he had locked himself in a safe room. The authorities had to cut Dotcom out of a safe room and he was found holding some kind of sawed-off shotgun, which is unlicensed and illegal in New Zealand.

The police had also seized Dotcom's collection of 20-odd luxury cars, his art collection and NZ$10 million in local investments. The authorities said he still had access to some bank accounts, which the police were not able to freeze.

The FBI has estimated that Dotcom profited $115,000 a day from online piracy.