After several years' delay the extradition hearing of Kim Dotcom finally got moving this morning in the Auckland District Court. Characterizing the case as one of straightforward fraud, Crown lawyer Christine Gordon QC likened Megaupload to a post office shipping drugs, one in which its owners were well aware of their cargo.

Following efforts to have his extradition hearing delayed, on Tuesday Kim Dotcom learned that the process would go ahead today as planned.

This morning all parties were present in the Auckland District Court for a hearing that will determine whether Dotcom and co-defendants Mathias Ortmann, Finn Batato and Bram van der Kolk will be extradited to the United States to face charges of copyright infringement, money laundering and racketeering.

Acting for the Crown and U.S. authorities, Christine Gordon, QC said that despite the apparent complexity of the case, it could be described in straightforward terms.

“In the long prelude to this hearing much has been said about the novelty and technicality of the case,” Gordon said. “When distractions are stripped away it boils down to a simple scheme of fraud.”

Likening Megaupload to a giant Internet-connect hard-drive, Gordon claimed that site’s 50 million users uploaded huge amounts of content, around 90% of which breached copyright. In the meantime, Dotcom and his associates merely played lip service to takedown requests from copyright holders, all while financially rewarding those who provided the most popular content.

“We have the incredible spectacle of processing take-down notices while at the same time paying many of those same repeat offenders,” Gordon said.

“They knew that they paid rewards for specific copyright-infringing material and in some cases they communicated with the rewards claimants and helped and encouraged their activities by giving them special privileges.”

Kim Dotcom and Ira Rothken

In his submissions to the Court, Dotcom said that Megaupload was like a postal service whose infrastructure was used to smuggle drugs without the knowledge of its operators. Gordon took the analogy and turned it around.

“One would shut down the post office if those who created and ran it had actual knowledge that they were shipping drugs and go to great lengths to conceal it from law enforcement, and knowingly make money off each shipment,” she said.

Gordon boosted her argument by referencing Skype discussions that allegedly took place between Dotcom and his co-accused, including one that reportedly read: “[we are] not the dumb pipe we claim to be”.

Another cautioned over what could happen in the future.

“At some point a judge will be convinced about how evil we are and then we’ll be in trouble. We have to make ourselves invulnerable,” Dotcom allegedly told Ortmann in 2010, adding that logging of discussions should be avoided.

“Don’t log our chats. Too much s*** in there,” he said.

It’s alleged that Megaupload made around $US25 million from advertising and another $US150 million from premium subscriptions which allowed users to watch videos without time limits.

“If copyright holders would really know how big our business is they’d surely try to do something against it,” said van der Kolk in another email to Dotcom. “They have no idea we are making millions in profit every month.”

Gordon said that actions of the former Megaupload operators were systematic.

“[They] were part of a conspiracy, they deliberately attracted copyright infringing material to their websites, deliberately preserved that material, deliberately took steps to profit from that material and made vast sums of money,” Gordon said.

Judge Nevin Dawson’s job isn’t to decide whether the defendants are guilty of any crimes, only if there is a prima facie case against them. If he believes there is, the New Zealand justice minister will make a decision on extradition.