3News.co.nz/Screenshot by Greg Sandoval, CNET

The FBI has begun extradition proceedings in New Zealand to bring Kim Dotcom, aka Kim Schmitz, to the United States to face charges of racketeering, money laundering, and Internet piracy.

DotCom and three associates are in custody and are being held without bail until Monday, when a new hearing is scheduled. Three other alleged accomplices are still at large. During a hearing yesterday, DotCom told the court he didn't object to allowing photographers in the courtroom. He said: "We have nothing to hide."

In an interview with CNET, Ira Rothken, an attorney well known in the tech sector for defending Web sites accused of copyright violations, said that his clients are assembling a team of crack copyright, criminal and technology attorneys to defend them in courts across the globe.

"There are significant issues of due process," Rothken said early this morning. "The government has taken down one of the world's largest storage providers and have done so without giving MegaUpload an opportunity to be heard in court."

The U.S. Justice Department has accused DotCom, 37, along with six other people, of operating a huge criminal enterprise as part of his cyberlocker service MegaUpload, which over the past several years has emerged as one of the most popular destinations for online video. Federal officials say DotCom and his alleged accomplices pocketed millions of dollars in loot and cost the film industry more than $600 million in damages.

Rothken dismissed the government's attempt to file criminal charges against his clients. "Many of the allegations made are similar to those in the copyright case filed against YouTube and that was a civil case....and YouTube won."

The attorney declined to name any of the other lawyers he is talking to about joining his team but said MegaUpload and DotCom will be represented by lawyers who are expert in criminal, copyright and technology law.

"We don't think MegaUpload did anything wrong as it regards to copyright issues," Rothken said. "This government's case is wrong on the merits."

MegaUpload's site has been shut down and after the arrests were announced, an online group known as Anonymous launched denial-of-service attacks on a number of music and film industry sites as well as the Web site of the Justice Department.

This story is shaping up to be one of the most sensational copyright cases of all time. We have hackers staging online protests at the doorstep of U.S. law enforcement. We have Kim DotCom, a former illegal street racer, hacker, and convicted felon who operates one of the most popular video sites on the Web and who lives in a $30 million mansion in New Zealand.

Finally, we have the U.S. government attempting to test its ability to make criminal copyright cases.

Ira Rothken

The case appears to have begun when the FBI oversaw raids around the globe. Search warrants were executed in at least 8 countries: across Europe, in Hong Kong, and in New Zealand.

In New Zealand today, TV news was filled with images of police removing property from Schmitz's home, which he named The Dotcom Mansion. Police seized 18 vehicles, including a vintage pink Cadillac, a Lamborghini, a 2010 Maserati, and 2008 Rolls Royce Phantom with a personalized license plate that reads "God."

Some of the other license plates found on the cars read, "Stoned," "Mafia," "Hacker" and "Guilty."

DotCom was known for his flamboyant lifestyle and partying. He was certainly not hiding out in New Zealand. He threw a New Year's party and paid for a huge fireworks show over Auckland.

Nonetheless, when police came to his door, DotCom tried to evade arrest, according to authorities. "Despite our staff clearly identifying themselves, Mr Dotcom retreated into the house and activated a number of electronic locking mechanisms," Detective Inspector Grant Wormald said in a report from New Zealand news outlet TVNZ. "While police neutralized these locks he then further barricaded himself into a safe room within the house which officers had to cut their way into."

They said they found DotCom near a sawed-off shotgun, but that he was arrested without further incident.