The Secret Life of Kim Dotcom: Spies, Lies and the War for the Internet

By David Fisher

From a lonely boy’s bedroom in Germany to the penthouses of Hong Kong, from Wellington’s Beehive to Washington’s corridors of power, from the sedate suburb of Coatesville to the motor racing tracks of Europe, this is the untold story of the charismatic internet tycoon who has driven governments to distraction while winning the affection of internet users worldwide.

• Language: English
• Publisher: BookBaby
• Release date: Nov 18, 2013
• ISBN: 9780473267155

David Fisher

David Fisher has been making soap for nearly 15 years and making candles since he was a child. He is the owner of Bath Rabbit Soap Company and a member of the Handcrafted Soapmakers Guild. He lives in Dallas, Texas.

Book preview

Who

1

Born Again

Kim Dotcom sits at home and wonders, sometimes, if he will die that day.

I’ve had a great life. And if it ended tomorrow I would pass with a smile, he says.

But he’d rather not.

First he needs to win. He always needs to win. He was winning with his file storage business, Megaupload — until it was torn apart by the United States of America, driven on and encouraged by an angry and vengeful Hollywood.

Dotcom now needs to win the fight for the truth.

He says the truth is one of a struggle to innovate — for the future of the internet and for technology to break free of outdated laws that uphold a corrupt political system. This system, he says, is how Hollywood compelled the White House to kill Megaupload. If it gets away with it, the United States will control the internet. They are murdering freedom, he says.

The United States has a different view. It says Kim Dotcom is a copyright thief whose criminal conspiracy threatened the country’s economic stability. In the year it began investigating Dotcom, the White House declared that copyright was an issue of national security. The Federal Bureau of Investigation stepped on Megaupload and squashed it. It stepped on Dotcom and three of his colleagues, seizing their money and getting their friends in New Zealand to throw them in jail before they were shipped to the United States for prosecution. At least, that was the plan.

Since the military-style raid in 2012 on Dotcom’s New Zealand mansion, the only people found to have broken any laws are the ones who were trying to put him in jail. The tycoon has yet to be found guilty of anything, but if he is he faces decades in prison, as do his co-accused business partners, Bram van der Kolk, Finn Batato and Mathias Ortmann. Dotcom’s aged 39 now. And he could be dead before he’s released, going by details of his medical history in one of the many files on him held at the High Court in Auckland.

But Dotcom wonders, sometimes, if he’ll die sooner. When yet more deceit, fraud, incompetence or trickery on the part of the prosecution emerges, he starts to think the United States might look for other ways of achieving its aims.

If I die in the next three or four months, then don’t just let it go, he asked a confidant in February 2013. I’ve had a full medical. I’m in excellent health.

It’s not the dying which bothers him. It’s dying without winning. Losing is unthinkable.

If you go into that space [worrying about dying] you would be extremely frightened and depressed and always looking over your shoulder, and I’m not that kind of guy. I have this calm core, because I’ve had everything. I’ve really fulfilled all my dreams. If that would happen, all I’m worried about is that [wife] Mona and the [five] kids are taken care of. I made a contingency plan with my lawyers, so if something happened to me, I would have a smile on my face.

Dotcom speaks with his phone turned off. He turns and checks to make sure there are no other people in the room. Is it paranoia to act this way, when one of the world’s most powerful spying networks actually has been out to get you? No — just an awful reality where few are trusted, most are suspected and facts are lies waiting to be exposed.

Hills ring the property where Dotcom sits, comfortable in an over-size chair, in the courtyard of New Zealand’s most palatial home. These hills have long held threats. Once, they served as surveillance points for police watching the property before raiding it.

Sometimes he wonders if they hide a more malign threat.

The miracle everyone would be so glad about is if I would die tomorrow, he says. Sometimes when I sit here I think how easy it would be to just snipe me in the head from behind. How easy it would be to sneak in and inject me with some shit. There are one million ways to kill someone. I’m sure they would love for me to just disappear from the Earth.

A Hollywood movie could script it that way. Much of this crazy tale of the takedown of Megaupload, was scripted in Hollywood. There are other elements, too, which help make sense of this story — but it is only by grasping one after another of its wildly divergent threads that a tapestry starts to emerge. And the longest and most enduring thread runs back to Kiel in northern Germany, where Dotcom was born in 1974.

The mediaeval German port town of Kiel, Kim Dotcom’s birthplace.

KIM DOTCOM GREW up in a house of alcohol and violence. His name then was Kim Schmitz and his father, Helmut Schmitz, drank and terrorised those in the house with threats and violence.

He is an alcoholic who used to beat my mother and myself into hospital many times, said Dotcom later. For the young Kim, his mother, Annelie Miettinen, was his salvation. She spent all hours working multiple jobs, cleaning and cooking and saving, so there would be food on the table.

Kim and his mother made their own life to escape domestic hell.

When Kim was six, mother and son made their own home. He went to school, excited and smiling in one photograph that shows him holding a bundled-up mat decorated with Smurfs in his arms. Kim didn’t fit the stereotype of the alienated young genius — he was a model student, diligent and eager to learn.

Kim’s early years were notable for their normalcy.

Then computers came into his life, around 1985. Kim was 11 when he saw a Commodore C-16 in a shop window. He asked his mother to buy it for him, repeatedly, until she did. The machine opened doors to new worlds which excited his brain, spinning him off in unexpected, selfcreated directions.

Kim was a model student till computers came into his life.

This was a very different kind of learning experience from what he was expected to put up with at school He grew bored and frustrated with traditional learning, and academic accomplishment evaded him. He was kept back a year. There was a trip to a psychiatrist — an inattentive man who failed to notice Kim had left with his wallet, using the proceeds to buy treats for his friends.

And when Kim bought his first modem, he was a geek unbound and liberated. The telephone handset sat on a cradle, squeaking and squawking down the phone line into the structured yet Wild West of bulletin board networks, which pre-dated the modern internet. It was a cornucopia of grey-market delights — largely anonymous chat rooms which stored small, text-based files containing instructions on how to connect with other networks, pushing past rudimentary security features and even offering stolen credit card numbers to leapfrog unwanted financial hurdles. The money was never the point — knowledge was the prize and the proof of owning it was tales of trespassing on other people’s cyber property. These included incursions into sectors of US government, such as NASA and the Pentagon, just to show he could do it and to build the legend.

By 15, he was electronically flitting back and forth across the Atlantic, reaching out and touching foreign networks without leaving Germany. The pre-internet bulletin board networks were home to those for whom personal computers fit like a limb they had always known was missing. Kim’s focused on American telephone exchanges, the lowest hanging fruit in those early online days. He gravitated towards boards filled with hackers — those who made the most of this disruptive technology which allowed them to tinker with the world. It was on these boards he met Mathias Ortmann, one of the three others who would be arrested with him in New Zealand in years to come. They were teenagers — about 15 years old when they first met online. Kim was called Kimble and Ortmann was known as SCSI (Scuzzy), named after a set of standards for transferring data between computers and peripheral components.

PUTTING TOGETHER THE A-TEAM I — MATHIAS ORTMANN Mathias is an absolute genius. I would be nothing without him, says Dotcom. "He has one skill and that is the coding. He doesn’t have social skills, he doesn’t have business skills. But he is the best at writing code. He is efficient, he thinks very analytically, the things he puts together in code are art. He is an artist in software development.

What’s unique about him is that he thinks in complex layers. His code is like a chess game. Most programmers will only think two moves ahead. But in his code, when he writes, he’s like eight moves ahead. It’s much more analytical and extremely sophisticated code. In my whole career, working with some of the best developers, I’ve really only met three people that can match his skill. I’ve always looked out for the guy. I’ve always made sure he’s okay.

IN 1990, KIM was running pay-per-minute phone chat lines. The vogue was party lines, and the profits grew as the number of callers into the line grew. He later estimated it earned around $200,000. His ambition then, he said, was to buy a better computer, better modem and better software. But the business fell apart when he was arrested, at the age of 18, and charged with using stolen calling card numbers to pimp up his call totals — the higher the number of callers, the higher the profit he could claim on the lines. He was considered a minor when arrested but still spent a month in jail until given a suspended sentence on multiple charges of computer fraud. While in prison, he began to appreciate how valuable his knowledge was — he could tell because so many telecoms companies trooped into jail to ask him about it.

Something else happened to Kim about this time; something that would affect everything he did thereafter. Driving, and at speed, has always been more for him than mere transport. It is a meditative and transcendent experience — one he says he also had during prolonged periods of online gaming.

The autobahn offered speed without limits. I always loved speed. When I was 18 years old, you could go on any German highway and go as fast as your car would take you.

In his Mercedes, surrounded by leather and steel, he put electronic dance music on the car stereo and turned it up loud. You drive fast at night and you go 250kmh, 260kmh … and you have these lights flashing by, the little lights in the middle — it turns into a line. It is like you go so fast that it almost feels like flying. At those speeds … I’m a concentration freak. I like things that require me to be extremely focused and concentrating. When I get into that zone where my brain has to make an extra effort to be extra careful and extra focused, that’s when I really get a kick. I feel great about that.

The intense concentration of such driving liberated the mind, freeing ideas which would otherwise be trapped. It requires you to turn on areas of your brain that you usually don’t use, he says. "You need to think so fast and you are so focused. The funniest thing is sometimes … I have the best ideas … at that moment. You enter into a zone. You’re not even looking anymore, it is just all happening, and then you start thinking about things. I get the same out of online games. That’s why I always play competitive games — it’s the same kind of thing. For me it is exciting because the brain achieves a Zen moment.

Meditation for most people is being quiet and having to empty your head — meditation for me is going to an extreme mode of concentration. You wouldn’t believe the kind of great side effects that has. When I am in a zone like that, let’s say for several hours, I’ve played extreme online gaming like Quake 2, and I’m so focused. Your brain really has to work hard — your head actually heats up. It’s like you have a fever. When I went to bed after long sessions like this, or after five hours of high-speed driving on the Autobahn, I would have dreams that are so vivid that I can control. I am in charge. I go places, I pick the destination. When I am in that zone, it feels like I have spent days in that dream and explored worlds … And I can fly, I fly through space and I visit other worlds. I jump off bridges and fly, pick up girls … it actually feels so real. That was for me the side-effect that made it so amazing. It is almost like a natural drug that goes off in your brain that triggers that.

But driving at speed almost cost Kim everything. Aged 20, he was on the Autobahn travelling from Berlin to Munich at the wheel of a Mercedes E-Class Limousine. He had a friend in the passenger seat and his girlfriend Kirsten sitting in the rear. It was one of the first cars to have electronic stability control, which would detect any loss of traction and automatically apply the brakes to correct it. The car’s ability to interfere with the driver’s commands annoyed Dotcom.

Kim was 20 when he lost control of his Mercedes E-class limousine

while doing 250kmh on the autobahn between Berlin and Munich. Trying to avoid a car cutting in front of him

he ended up at the centre of a wreck from which no one expected him to emerge alive.

The incident changed his life forever

I always thought: ‘I want to be in control myself, I want to be the guy who knows when to brake and when to accelerate and how to get out of situations if the car gets unstable.’

It was about 9pm, and a light rain was falling as he led the two-car convoy back to Munich along the three-lane highway. The speedometer was sitting on 250kmh as he flew down the far-left lane, where the fastest cars sit. We’re going into a slight corner and all of a sudden there is a Volkswagen Passat moving over all the way from the very right into the very left lane … hopping two lanes. No reason. There was no traffic. He didn’t have to do it.

Dotcom signalled, flashing his headlights to warn the car, but the speed with which it cut in front of the Mercedes had him tap the brakes. The automatic stability control kicked in, Dotcom and the car were at odds — and suddenly he was going sideways towards the hard metal barrier at the side of the Autobahn, still doing 250kmh. I didn’t even wear a seat belt. I didn’t start putting a seatbelt on until I had kids. (Totally stupid by the way, he says, switching to a road safety campaigner. Be clear on that, right?)

At the point where the Mercedes came off the road, the metal barrier had been removed for a planting project. Instead of the hard metal, which Dotcom says would have destroyed the car and all in it, there was a stand of young trees and that is what cushioned the whole crash. The Audi carrying his five friends watched the car spin through the air, over the edge of the road and into the trees. No one thought we would have survived that. Glass shattered, smoke was everywhere.

The moment I lost control of the car, I just took my hands off the wheel and said, ‘That’s it, game over.’ I was quite sure I’m going to die. The trunk at the rear of the car was severed by a road sign as it flew into the stand of trees, coming to rest on its roof. Dotcom’s head collided with that of his friend in the passenger seat, knocking him out. The side airbag broke his arm.

I woke up in the back of the car. The space between the two front seats is this much — he holds his hands about a foot apart — I never figured out, how did I fit through that and wake up in the back?

He opened his eyes. Kirsten was hanging upside down in her seatbelt. Her head has knocked out the side window and blood was running towards the ground, over the top of her face. In the front, his friend was coughing as smoke filled the car. He clambered out, a sore head from connecting with Dotcom’s, and started photographing the scene. If you see pictures of the car, no one would believe someone would just get out and walk around. The car was completely destroyed. You would not believe the three people in it got out alive.

Dotcom was sedated and, along with Kirsten, taken to hospital. She spent a month in a head-brace, forehead swollen and blue-black from bruising. He woke with his arm, braced from surgery, broken bones pinned to a titanium plate, and a room full of friends with photographs of the wreckage and a detailed recounting of the crash.

And that’s what I decided there in the hospital bed. I said, ‘Dude, I’m going to live life to the fullest.’

Life began at that moment. I shouldn’t even be here. That’s why every day that I have means something to me.

Kim Dotcom decided he would not be constrained by demands or expectations. Germany, he said, has an unspoken code of conduct which governs how life is lived: not offending others with indulgent or outrageous behaviour is a priority. You cut down on your enjoyment and what satisfies you because it might offend somebody. In that moment I switched completely. I said, ‘I don’t give a shit what people think. I’m going to do what I like because life is short and you don’t know how much time you have. I just want to live a great life’.

The accident also changed his attitude to money. "Money for me was really just a tool to collect experiences, rather than having it sit in the bank and accumulate and get more interest. For me, money was there to be spent, to have a great life because it could end at any time.

That’s really where this whole lifestyle began.

No matter how big the background, Kim Dotcom is always larger than life.

DOTCOM AND ORTMANN met in real life in about 1991 at a Munich 2600 meeting. The number is legendary in hacker history, being that of the 2600 megahertz tone once needed to access operator level in the American telephony network. The meeting was organised by Sven Echternach, who would become another long-time friend and one of the co-accused in the Megaupload case, although not caught up in events in New Zealand. Another figure from Munich was Finn Batato, the charming and handsome future sales director of Megaupload.

PUTTING TOGETHER THE A-TEAM II — FINN BATATO New to Munich, Dotcom was 18 and already surrounding himself with the sort of trappings that would follow through life. There was the big, powerful Mercedes — more on that soon — and one of the newly introduced mobile phones, the latest ultimate accessory. He headed out into the evening, going to one of the city’s popular clubs. I think it was called Skylounge, says Dotcom. "I had this giant phone. It was one of the first phones that came out. It was really heavy, a big clunky thing with an antenna. I was in there, a little bit showing off because it is so new nobody knows it exists. I’m calling my mum. (Finn) comes in and he’s like, ‘What the hell?’ We got to talk and became friends. We’ve done two Gumballs (Gumball Rally) together and travelled. Whenever I went on a holiday, we always went together.

He has the best social skills. He picks up the girls. He’s really good at his job when it comes to relationship management with advertisers and going out to the fairs, making a lot of friends and really competent socially.

BY 1994, DOTCOM and Ortmann had created DataProtect, a business which offered network penetration testing — simulating a hacker attack on companies so they could assess their security. The business legitimised the skill-set which had caused Dotcom trouble. DataProtect was a white hat security consultancy; bad hackers were black hats. Dotcom and Ortmann offered insights, protection and systems penetration testing to blue chip clients. Customers included Daimler and the German stock exchange. The business ran for seven years, growing to a revenue stream worth millions of dollars and with 30 staff until he sold it in 2001. Dotcom’s wealth was already extraordinary by the turn of the century — he holidayed over the Millennium New Year’s Eve on a private super-yacht in the Caribbean — and his profile grew to match the playboy lifestyle.

As the business developed, so did the range of possibilities. There were also the dreams, as many young men have, after watching these James Bond movies of the mansion on private islands, or an oil tanker converted into a super yacht. Crazy stuff, he calls it. No matter, he says, because after the accident it all became possible. Before the accident, money was governed by unspoken rules — doing the right thing, he says. But I realise as long as the money is in the bank it really belongs to the bank, it doesn’t belong to you. You earn, you save, you pay tax and then you die. And then, in many countries, when your family inherits, inheritance tax takes another bite. You’ve already paid, for your whole life, accumulating that wealth. I’m like, dude, I’m not doing that. That’s stupid. This is my life. I’m spiritual but not religious. I don’t know what’s going to happen when I’m gone. I will make this worth something while I’m here. I’ll enjoy it.

The experiences and trips became increasingly outrageous. For the Millennium, Dotcom also chartered a private jet, invited a handful of friends and jetted out to see the world.

Dotcom’s fortune allowed for a jet-set lifestyle and he made the most of it with travel to far-flung destinations.

"Tomorrow, we are going to north Africa. From there we fly onto Brazil and we are in Brazil and sitting there thinking, where are we going now? And then we go to Cuba. We go to Havana and wherever we go we stay in the presidential suite of the biggest five-star hotels. We have an army of girls coming over. The crazy kind of life you only see in movies. And then we would just go on for a month … travelling by private jet wherever we go. The limos pick us up, we stay in the best accommodation, eat at the best restaurants every night — living the life.

Chartering yachts? I always loved yachts. You’re sitting on this 75-metre super yacht and it’s this whole experience of being able to do things with money that a normal, sane person would never do.

Dotcom’s lifestyle and self-promotion propelled the public profile. He already had a Kimble persona — the pseudonym he claimed to have used in early breaches of NASA and the Pentagon. With wealth, and a growing interest in share trading, he became the Kimvestor. The profile came with a tendency to outrageous stunts. He emerged as the selfappointed leader of the self-created YIHAT — Young Intelligent Hackers Against Terrorism. He claimed, on behalf of the group, to have penetrated the bank accounts of Osama Bin Laden and at one stage claimed to have been close to tracking him down.

With the sale of DataProtect in 2001, Dotcom’s public profile was boosted with involvement in the Gumball Rally, officially known as the Gumball 3000. The international motor rally — not officially a race — covers 3000 miles of public roads, attracting more than 100 exotic and powerful cars driven by the famous and wealthy, including actor Adrien Brody, drum and bass star Goldie and boxing champ Chris Eubank. Dotcom found himself feted on German television as the wunderkind of the new technology economy.

Riding high on publicity, he announced plans to invest in a new venture, Letsbuyit.com, a Dutch online shopping network which grouped shoppers together for discounted bulk-buying prices. The bulk purchases made individual items cheaper, with goods then distributed among those who had teamed up for pool purchasing power.

Dotcom invested in the German offshoot of the company, which was suffering financially. He put in $1.4 million, gaining shares in return and then investing another €375,000. Having said he would assist in raising another €50 million, media reports he was funding the entire amount sent the price of shares in the company rocketing upwards. Dotcom, instead of buying more, sold out his original stock for three times what he paid for it. When the transaction became public, he was investigated for insider trading.

Dotcom was on holiday in Thailand when the news broke. Angry, he told media he was finished with Germany. This was interpreted as a refusal to return to face any court action. He also announced the death of Kim Schmitz, interpreted by some as an online suicide note. As German authorities announced charges of insider trading, the death was revealed as a re-birth — Dotcom said he now wanted to be known as His Royal Highness King Kimble the First, Ruler of the Kimpire.