Feds Scramble to Keep Megaupload in Court

     (CN) – Prosecutors concede that they have failed to serve a criminal summons upon a Megaupload officer but still say a federal judge should uphold its indictment.
     The copyright case against Megaupload accuses the Hong Kong-based company of defrauding copyright holders of more than $500 million.
     Though Megaupload said service of a criminal summons is “impossible” on a corporation without offices in the United States, U.S. District Judge Liam O’Grady refused to dismiss the charges in October 2012.
     The Alexandria, Va., judge said dismissal would be premature because the government may be able to serve an alter ego if it can extradite a Megaupload officer to the United States.
     “Be that as it may, the present motion is based on the argument that the government could never serve Megaupload,” the decision states (emphasis in original). “Because the alter ego analysis provides a means by which it may be possible to serve the corporate defendant, it is appropriate to deny defendant’s motion without prejudice.”
     This ruling led Megaupload to file a renewed motion to dismiss the complaint without prejudice, until a future extradition would make proper service possible.
     Prosecutors countered Tuesday with a brief that accuses Megaupload of trying “to exploit alleged ambiguities in procedural rules.”
     “With respect to the service requirement of Federal Rule of Criminal Procedure 4, the United States will be in a position to serve defendant Megaupload with a summons through the individual codefendants, who are officers and agents of the organization, after they arrive in the United States following extradition,” the opposition brief states. “At that time, the United States can satisfy Rule 4’s separate mailing provision by sending a copy of the summons to the defendants, who acted as alter egos of the company.”
     Temporary dismissal would prejudice the government because, “without a valid pending indictment tolling the applicable statutes of limitations in this matter, various allegations in the indictment may be unfairly time-barred upon re-indictment,” prosecutors said.
     Under the five-year statute of limitations, for example, prosecutors say they would have just six months to complete the extradition process and re-indict Megaupload on Count Eight, which charges criminal copyright infringement before Oct. 31, 2007.
     This deadline is even more impractical “given the unprecedented surrender by the New Zealand courts of millions in illicit proceeds to the defendants and their counsel in New Zealand,” according to the brief.
     “To dismiss the indictment would undermine and disrespect the authority and role of the grand jury and the U.S. judicial system,” prosecutors say.
     It will also “require duplicative expenditures of court, prosecution, and defense resources.”
     The motion further asserts: “There can be no real dispute that the defendant has actual notice of the criminal charges currently pending against it. Since January of 2012, the corporate defendant and the individual defendants have hired at least four law firms in the United States who have incurred millions of dollars in legal fees in the United States trying to resist this Court’s jurisdiction and millions more fighting the extradition of the individual defendants in New Zealand. Equally important, these facts show that the government has vigorously, persistently, and expeditiously prosecuted this matter, and that delays are not due to government inaction. Certainly, there has been no prejudice to the ability to the company from defending itself, since it has already raised an unsuccessful jurisdictional challenge to the Indictment and continues to tax prosecutorial and judicial resources safely in absentia.”
     Prosecutors asked the court to deny Megaupload’s request without oral argument.

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