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Summons May Be Mailed To Megaupload's Alter Ego

Friday, December 21, 2012
U.S. prosecutors could meet Fed. R. Crim. P. 4(c)(3)(C)'s requirement to mail a criminal summons to Megaupload Ltd.'s last known address within the district court's jurisdiction by mailing a copy to any extradited Megaupload officer who happened to be an alter ego of the company, the U.S. District Court for the Eastern District of Virginia ruled Oct. 5 (United States v. Dotcom, E.D. Va., No. 1:12-cr-00003, 10/5/12).

It would be unusual indeed, the court said, for a procedural rule to permit “a foreign corporate defendant to intentionally violate the laws of this country, yet evade the jurisdiction of United States' courts by purposefully failing to establish an address here.”

Indictments Delivered in January, February
In a 72-page indictment the Department of Justice in January accused the operators of the cyber locker website Megaupload.com of racketeering, conspiracy to commit copyright infringement, conspiracy to commit money laundering, and two counts of criminal copyright infringement (13 PTD, 1/23/12).

The indictment alleged that the operators of Megaupload conspired to copy to its servers all copyrighted videos that appeared on third-party websites such as YouTube.com. Indeed, the grand jury was presented with internal e-mails that demonstrated that in 2006 Megaupload's founder, Kim Dotcom, thought that it was a “priority” to copy YouTube's videos.

In February, the DOJ issued a second indictment replacing the original one, and adding charges of criminal copyright infringement and wire fraud (34 PTD, 2/22/12).

Motion to Dismiss Denied
Megaupload sought dismissal of criminal charges against it because it had no location in the United States where the government could meet its obligations under the rule.

Rule 4(c)(3)(C) provides for service of a criminal summons on an organization by delivering a copy to an officer or other listed representative. The rule goes on to say, “A copy must also be mailed to the organization's last known address within the district or to its principal place of business elsewhere in the United States.”

Judge Liam O'Grady said the rule does not require such an extreme result as dismissal, and that in fact no court has dismissed a case on this basis. To begin with, it said, while the mailing provision is a requirement, the clear implication is that it is not a part of perfecting service of process, which is addressed in the rule's first sentence.

And the court analogized this issue to piercing the corporate veil, where the legal distinction between a corporation and its alter ego is eliminated. “[M]ailing a copy of the summons to the address of the corporation's alter ego is, for all intents and purposes, the same as mailing the summons to the corporation itself.”

Here, the court concluded, the government may ultimately be able to mail the summons as required, and so the motion was denied without prejudice.


Order at /uploadedFiles/Content/News/Legal_and_Business/Bloomberg_Law/Legal_Reports/megauploads(1).pdf

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