Megaupload Files Appeal to the Fourth Circuit Arguing Fugitive Disentitlement Violates Due Process

Megaupload, Kim Dotcom, and other interested parties filed their opening appellate brief today in Fourth Circuit Court of Appeals opposing the United States DOJ's attempt to use the Fugitive Disentitlement Doctrine as a procedural method of taking all of Kim Dotcom's and the other Megaupload parties' assets prior to trial and without any hearing on the merits of the underlying criminal claims.

According to Megaupload Appellate Counsel Michael Elkin from Winston & Strawn “the Megaupload defendants were branded by the DOJ as 'fugitives' for lawfully fighting extradition in New Zealand (where they reside with their families).  The district court's denial of their basic rights to defend against asset forfeiture under a 'fugitive disentitlement' doctrine amounts to a violation of basic due process and we filed a brief today with the U.S. Fourth Circuit Court of Appeals seeking to reverse the injustice visited upon Megaupload and others who have been impacted by the Government's overreach."

According to Ira Rothken, Lead Global Counsel for Kim Dotcom and Megaupload “with our appeal today we are asking the Fourth Circuit to rule in favor of fairness, natural justice, and due process by stopping US efforts to take Kim Dotcom's global assets for doing nothing more than lawfully opposing extradition to the United States—a country he has never been to. The DOJ in our view is trying to abuse the Fugitive Disentitlement Doctrine by modifying it into an offensive weapon of asset forfeiture to punish those who fight extradition under lawful treaties, and a provocation for international discord. Today we ask the Court of Appeals for justice.”

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Megaupload and Kim Dotcom filed their opening appellate brief in the Fourth Circuit Court of Appeals today - here is an excerpt below:

In a separate criminal case, the government indicted several foreign defendants on copyright-related allegations. Instead of following typical extradition procedures—bringing the defendants to the United States pursuant to international law and then proving its case at trial before seeking forfeiture—the government took a much more aggressive approach. It brought this civil forfeiture case against foreign property owned by the defendants and others (collectively, “Claimants”) and, relying on the seldom-used “fugitive disentitlement” statute, argued that the owners’ claims to their foreign property should be stricken and the property immediately forfeited. According to the government, Claimants’ participation in extradition proceedings—and failure to immediately leave their homes, families, and busi- nesses to travel to the United States—rendered them “fugitives” seeking “to avoid ... prosecution.” 28 U.S.C. §2466(a)(1) (Addendum-A-2).

Accepting this argument, the district court disentitled Claimants from defending their rights to their property, based solely on their “non-appearance” in the separate criminal case and the government’s allegation that they are thereby “fugitives.” Without any hearing on the merits, the court then adjudged the property— all located abroad—immediately forfeited. In so doing, however, the court committed several reversible errors.

For starters, this Court’s precedent makes control over the defendant property a prerequisite to exercising in rem jurisdiction, and the district court lacked control over this foreign property. Further, the Claimants are foreign citizens and residents who would not be in the United States regardless of the criminal case. Yet, relying on both a misreading of §2466’s intent requirement and an improper assessment of an undeveloped evidentiary record, the court held that Claimants’ intent necessarily was “to avoid prosecution.” Finally, even if these hurdles could be overcome, allowing the government to seize Claimants’ property without an adversarial hearing would be unconstitutional. Claimants have been convicted of no crime; they are asserting established procedural and substantive rights abroad; and the government has never proved that their property should be forfeited.

In sum, the decision below upsets fundamental jurisdictional principles, misapplies the fugitive disentitlement statute, and violates both due process and the Supremacy Clause. If affirmed, that decision would hand the government unprecedented power. By stacking allegations of fugitive status on top of allegations of forfeitability, the government would obtain a roving worldwide license to indict residents of foreign countries who have never lived or worked in the United States and to take their foreign property—all without proving any wrongdoing. That is not how our justice system works. The judgments below should be vacated and the case either dismissed or remanded for trial on the merits...

Read the full appellate brief here.