Inside Life Of Megaupload Founder Kim Dotcom

(Wall Street Journal) - Kim Schmitz legally changed his surname to Dotcom at some point over the last decade, an homage to the technology that made him a millionaire and that led to him being held in a New Zealand jail Saturday.

The 38-year-old internet entrepreneur was arrested Thursday at his birthday celebration inside a 25,000-square-foot mansion in Auckland. When police entered the property, Dotcom fled to a safe room, where he was found with a loaded shotgun, officials said.

Dotcom was charged with criminal copyright infringement and conspiracy to commit racketeering. The FBI shut down his Hong Kong-based website, which it claims was used to pirate half a billion dollars worth of entertainment content.

The husky Dotcom is a kingpin in a little-exposed side of the internet economy, who profited by tapping changes in technology, roiling the entertainment industry.

His company, Megaupload Ltd., and similar online storage sites known as cyberlockers, have many legitimate uses, such as allowing people to share large presentation files and home movies.

But US authorities and entertainment executives say in court documents and interviews that cyberlockers are at the vanguard of online piracy. On Friday, the US Congress abandoned two controversial antipiracy bills.

Despite the legal controversy brewing around his website -- and a previous conviction for insider trading -- Dotcom didn't lay low or hide anonymously behind his computer.

Rather, Dotcom openly enjoyed a lavish lifestyle. He owned at least 18 luxury cars -- including a 1959 pink Cadillac and three cars with vanity license plates that read "HACKER," "MAFIA," and "STONED," according to US officials -- flew helicopters and personally funded the city of Auckland's 2010 New Year's fireworks celebration.

He also raced cars in the Gumball 3000 Rally, a Cannonball Run-like global competition on public roads in locations that change every year. In at least one Gumball race, Dotcom was videotaped driving a black Mercedes sedan in which he zipped past a police officer. Referring to his nickname, Dotcom smiled into the camera, saying, "Dr. Evil is always getting away with it."

While operating Megaupload, Dotcom both fought with Hollywood and embraced its celebrity, last year convincing several rappers, actors and musicians to record a promotional video for his site.

Before the site was taken down by authorities Thursday, Megaupload also listed as its CEO hip-hop super-producer Swizz Beatz, also known as Kasseem Dean and the husband of singer Alicia Keys.

A spokeswoman for Swizz Beatz on Friday confirmed her client had been named CEO, but added, "We're trying to clarify" whether the appointment actually went into effect.

Dotcom couldn't be reached for comment Friday in Auckland, where he appeared at the North Shore District Court for a bail hearing and awaits extradition to the US. His local lawyer, Paul Davison, did not return a call seeking comment.

In the US, Megaupload's case was taken up on Thursday by Washington, D.C., lawyer Robert S. Bennett, known for representing President Bill Clinton when he was accused of sexual harassment by Paula Jones. "We will vigorously defend against the charges," Bennett said.

Read more: Wall Street Journal