The Dotcom saga - tying the threads together

It has been almost six months since internet tycoon Kim Dotcom was arrested following a dawn raid on his rented Coatesville mansion by armed police.

He is accused of money laundering, copyright infringement and racketeering, and the US government wants to force him back to America to face the charges.

The affair is a classic David and Goliath conflict between nations with divergent perceptions of the power of the state over what is legal and what is not.

It is also a test of the independence of the New Zealand judiciary.

The legal process has grown complicated since Mr Dotcom was first arrested in January, and now involves a complex fight over whether the Federal Bureau of Investigation acted illegally in seizing some of Mr Dotcom's data, and then taking it out of the country.

How has the case got to where it is now?

Kim Dotcom and his three co-accused - Finn Batato, Mathias Ortmann and Bram van der Kolk - were arrested on January 20 for their alleged involvement in what the FBI calls a "mega conspiracy" to distribute pirated material, such as music, films and television shows, through Mr Dotcom's Megaupload website.

That website once boasted 4% of the world's internet traffic, and allowed users not only to store their personal data, but to upload and share files such as movies and television shows.

The police raid - brought about by New Zealand and US partnership in the Mutual Assistance in Criminal Matters Act - saw a large amount of property seized, including more than 130 computer items which are now the subject of a High Court judicial review.

Mr Dotcom's legal team from blue-chip firm Simpson Grierson, led by senior litigator Willy Akel, brought in heavy-hitting Queen's counsel Paul Davison to head their in-court defence strategy.

Mr Dotcom was initially denied bail in the North Shore District Court by Judge David McNaughton, who said Mr Dotcom was a flight risk. At one stage of proceedings a clearly flummoxed Judge McNaughton kicked all media out of his court.

Mr Dotcom was held in custody for about a month before electronic bail was granted by Judge Nevin Dawson in late February.

He was bailed to a "mini-mansion" on a property next to the larger $30 million Chrisco mansion on the northern outskirts of Auckland, his former rented primary residence, not far from Paremeremo maximum security prison.

On March 5, the Crown, acting on a request from US authorities, filed papers formally requesting the extradition of Mr Dotcom to America to face charges.

With no access to finances because his accounts were frozen, the High Court's Justice Judith Potter ordered $60,000 a month to be released for Mr Dotcom's living expenses, as well as the use of a luxury 2011 Mercedes Benz G55AMG car.

On April 2, Mr Dotcom was granted the right to use the internet and swim in the pool on the Chrisco property, as well as record music at Neil Finn's Roundhead Studios in central Auckland for a few hours a week.

By the end of April, Mr Dotcom was almost a daily presence in New Zealand media as the John Banks donation scandal emerged.

Mr Dotcom claimed Mr Banks asked him to split his $50,000 donation to his Super City mayoral campaign into two $25,000 chunks so he would not have to declare it.

By mid-May, it had emerged Mr Dotcom's lawyers wanted a judicial review into the search warrant the police used when they raided his property in January.

At the Auckland High Court on May 23, his lawyers argued the warrant was too broad because it only permitted items to be taken that were relevant to the charges brought against Mr Dotcom, but instead police took everything.

The review centred around computer data, and the fact much irrelevant material was scooped up in the seizure, including the device that operates the mansion's lighting system, and a collection of Mr Dotcom's home movies.

The Crown argued it was inevitable that irrelevant material would be caught up in the seizure.

However, the relevance of the judicial review was brought into question when it emerged that the FBI, despite orders from the court, had already taken copies, or clones, of some hard drives and sent them to America.

Paul Davison said the process was "off the rails".

At the end of a two-day hearing Chief High Court judge Helen Winkelmann ordered the Crown back to court to explain how this happened.

In between High Court hearings, District Court Judge David Harvey ruled on May 29 that Mr Dotcom was no longer a flight risk and should have his electronic bail removed.

He was also granted access to the evidence the FBI has against him so he could properly prepare a defence.

This week Justice Winkelmann heard the Crown's response to why the FBI took the data offshore.

Crown lawyer John Pike argued that Mr Dotcom's defence team knew the data had been taken offshore.

However, Mr Dotcom's lawyer, Willy Akel, told the court this was rubbish, and as far as they were concerned both parties had agreed the data would stay in New Zealand.

The defence says the removal of the data from New Zealand went against an order from the solicitor-general to the police commissioner dated February 16, which said police must retain control over the material.

Justice Winkelmann has reserved her decision on whether it was illegal or not until next week.

Mr Akel told NBR ONLINE the defence wants a declaration that it was unlawful for the FBI to take those items offshore.

"We are then seeking an order directing the commissioner of police to notify the relevant US authority of the court's decision, and request the voluntary return of clones taken from New Zealand."

He says they want an independent person to go through the documents that remain in New Zealand, and sort out what is relevant to the case and what is not.

Mr Dotcom is due to face an extradition hearing on August 6.