Kim Schmitz, 37, originally from Kiel, is alleged to be the mastermind behind Megaupload.com, a file-sharing site that US authorities charge has engaged in large-scale copyright infringement and piracy.
The closure of the site sparked a revenge attack on Friday by hackers who temporarily disabled the Department of Justice and Federal Bureau of Investigation websites.
The Hong Kong-based site has been praised by a raft of American celebrities, including hip-hop star Kanye West. But many have charged it is a cesspool of computer criminals freely trading copyrighted works.
The Süddeutsche Zeitung reported on Friday the arrests came after a raid of Schmitz's estate, north of New Zealand's largest city, Auckland, where officers found guns, a Rolls Royce Phantom, expensive paintings and valuables and cash worth nearly €4 million.
The three Germans and a fourth man from the Netherlands appeared in an Auckland court on Friday, and were denied bail, the New Zealand Herald reported. They are due in court again on Monday the paper said, as the United States launches extradition proceedings in hopes of prosecuting them in the US. Four other suspects are still at large, according to the US Department of Justice.
Justice Department officials said the case was “among the largest criminal copyright cases ever brought by the United States,” in a written statement.
The defendants are said to have made more than US$175 million (€135.6 million) from Megaupload and a string of related sites, and caused hundreds of millions of dollars in damage to copyright holders, the Department of Justice said.
Megaupload was popular because it facilitated the distribution of television programs, music and movies – often before they were even released. The government charged that the site would selectively comply with takedown requests by copyright holders to maintain a veneer of legality, while illegal content remained on the site.
Kim Schmitz, also known as Kim Dotcom and Kim Tim Jim Vestor, has gained notoriety as a brilliant but twisted cyber-criminal who has been convicted of embezzlement, computer fraud and insider trading.
The New Zealand Herald newspaper reported that the New Zealand property he bought in 2010 was worth the equivalent of tens of millions of euros.