The Department of Justice has responded to Megaupload’s claims that they "planted" evidence and tried to mislead the court. According to United States Attorney Neil MacBride these allegations are "sensationalist rhetoric" and a "conspiracy theory." The Government says it never asked Kim Dotcom's file-hosting service to preserve any infringing files, and asks the court to deny Megaupload’s request to be heard on the matter.

Early January Megaupload filed a motion claiming the U.S. Government deliberately misled the court.

When the U.S. Government applied for the search warrants against Megaupload last year it told the court that they had warned Megaupload in 2010 that it was hosting infringing files.

Through its hosting company Megaupload was informed about a criminal search warrant in an unrelated case where the Government requested information on 39 infringing files stored by the file-hosting service.

At the time Megaupload cooperated with this request and handed over details on the uploaders. The files were kept online as Megaupload believed it was not to touch any of the evidence. However, a year later this inaction is being used by the U.S. Government to claim that Megaupload was negligent, leaving out much of the context.

According to Megaupload this course of action was misleading and the company now wants to address the matter through a so-called Frank’s hearing.

However, in a new filing yesterday the U.S. Government asks the court to deny Megaupload’s request. According to United States Attorney Neil MacBride it would allow Megaupload to circumvent the Federal Rules of Criminal Procedure.

The United States Attorney further refutes Megaupload’s “planted evidence” allegations, saying that they’re an unfounded conspiracy theory, and certainly not enough to grant a hearing.

“Megaupload has supplied nothing but a conspiracy theory; this is not enough,” the U.S. writes.

“Because Megaupload’s claims are insufficient as a matter of law to authorize its intervention in this matter, Megaupload has wrapped them in layers of sensationalist rhetoric. However, Megaupload’s claims regarding government misconduct are unfounded.”

The Government argues that it never asked Megaupload to preserve any of files that were under investigation in the NinjaVideo case.

“The government made no preservation request, and the government is not aware that the service of a search warrant creates an obligation on the part of the recipient of a search warrant to preserve infringing content on a computer in a way that continues to make it available for illegal download.”

Megaupload’s argument that they didn’t want to disable access to the files, because this could alert the targets of the investigation, is also weak according to the U.S. – especially when Megaupload regularly disabled access to infringing links.

“If this [removing links] practice was common, it would not necessarily be alerting. Megaupload also, when removing infringing content, did not as a practice inform customers that their content had been removed. It is also unlikely that any Court would interpret a sealing order to require the continued distribution of infringing content,” the U.S. writes.

The U.S. basically says they did not specifically request that the files should remain intact, or be removed.

Dotcom’s lawyers may not contest this specific language, but find it misleading that the Government did not mention Megaupload’s full cooperation in the indictment or the search warrants. Instead, the U.S. uses the fact that the files were not deleted as an example of criminal behavior.

The U.S., however, believes that is was not necessary to provide the complete context.

“Megaupload’s theory that the government misled the Court by omitting a discussion of the June 24, 2010 search warrant misstates the relevant law. An affiant does not need to include every potentially relevant fact in a seizure warrant affidavit,” the U.S. writes.

The above, leads the Government to conclude that Megaupload should be denied a hearing on the matter.

However, United States Attorney Neil MacBride does not object to a Megaupload representative being heard as a witness in the hearing that’s scheduled for Megaupload user Kyle Goodwin, the reporter who is trying to gain access to his lost files.

“Though Megaupload’s claims are false, nothing prevents Kyle Goodwin from asserting them. If Mr. Goodwin wants to develop a factual basis for his claim, and the Court allows the live testimony, Mr. Goodwin could call a representative from Megaupload as a witness.”

The court now has to decide what action is appropriate here.

This upcoming decision may become crucial for the ongoing criminal proceedings. If the hearing is granted and the warrants are declared unlawful, as happened earlier in New Zealand, then Kim Dotcom and his fellow defendants will be at a significant advantage.