In 2010, New Zealand's Security Intelligence Service were carrying out special checks on Kim Dotcom as part of his application to become an NZ resident. They turned up something unexpected. The FBI were investigating the Megaupload founder as part of a huge alleged criminal conspiracy. But mysteriously Dotcom was welcomed into New Zealand with open arms, something he now fears was a trap to make him more accessible to the United States.

Due to its location New Zealand is one of the first counties in the world to celebrate New Year and as December 2010 drew to a close, something special lay in store for Kiwis.

A flamboyant businessman called Kim Dotcom had just been granted New Zealand residency and in a show of thanks to his new hosts he planned a massive fireworks display. It would take place from a pair of barges anchored in Waitemata Harbour and be enjoyed by everyday citizens and politicians alike, including Auckland mayor John Banks to whom Dotcom later donated campaign cash.

But surprisingly, especially given the spectacular celebrations and apparent political endorsement, just months earlier Dotcom’s New Zealand residency was hanging by a thread due to some unusual issues turned up by a security background check.

Dotcom first applied for New Zealand residency in June 2010 under a special program for wealthy investors. He had previously been living in Hong Kong where the now-defunct Megaupload was registered.

Four months later behind the scenes discussions were clearly speeding up – and running out of time. Dotcom’s immigration agent David Cooper had informed an immigration manager on October 26 that if Dotcom hadn’t received a decision on his application by November 1, he would cancel and seek residency elsewhere.

But it wasn’t a straightforward case. Two months earlier Dotcom had been convicted in Hong Kong for failing to disclose information to the country’s Securities and Futures Commission and had received a token fine of around $1,000. There were also his historic convictions for hacking, computer fraud and phone card dealings to consider.

Although not required as a matter of policy, these past transgressions led New Zealand’s Security Intelligence Service to carry out a so-called “Match Check” on Dotcom to see if anything else turned up in his background.

According to an Immigration New Zealand report written in October 2010 and obtained by NZHerald under the Official Information Act, during the course of their inquiries the SIS discovered that the FBI were investigating Dotcom.

As a result, on October 13 the Megaupload founder’s application was put on hold and the next day the SIS wrote to the police informing them of the FBI’s involvement. The documents also reveal email correspondence between the SIS and Immigration New Zealand in the last week of October.

By October 29 Dotcom’s previously blocked application had been taken off hold and on October 31 – just a day before Dotcom’s self-imposed deadline had expired – he was granted New Zealand residency.

“I have spoken to Kim and passed on the good news,” wrote Cooper to Immigration New Zealand deputy chief executive Nigel Bickle. “He is absolutely delighted and extends his thanks to all those involved in getting [redacted] and himself across the line.”

Just a year and three months later, New Zealand and the United States teamed up to destroy Megaupload and very publicly arrest Dotcom and his associates as part of the biggest copyright case in U.S. history. This, despite knowing that a criminal investigation was running in parallel with Dotcom’s residency application.

The fact that the Kiwi authorities knew about the FBI investigation yet still accepted Dotcom as a resident is not lost on the entrepreneur, who today described the process as “The New Zealand residency trap.”

“[Prime Minister Key] said ‘There is no conspiracy’. But why did we get residency after SIS learned of FBI case & declined approval?” Dotcom said. “Did we get New Zealand residency because the U.S. govt preferred its extradition laws & cozy politics over Hong Kong?”

Speaking with TorrentFreak this morning, Dotcom said that his team don’t intend to let the matter drop.

“Our lawyers are getting to the bottom of this,” he said.

While New Zealand may have a been the preferred location from which to later pluck Dotcom, Hong Kong has also provided its fair share of headaches for the charismatic businessman. Those came to a head late last week when it was revealed that Dotcom will sue the Hong Kong government for its hand in the demise of his empire.

“We will take the Hong Kong government to court for the destruction of our business because they acted for the US government when shutting down our business and freezing all our bank accounts,” said the 39-year-old.

“We were in the process of preparing a listing on the Hong Kong stock exchange and the valuation of our company was over US$2 billion. Fortunately, the US government will have to indemnify Hong Kong for any damages awarded to us.”.