German national Kim Dotcom, also known as Kim Schmitz, was one of four men arrested on Friday, a day before his 38th birthday, in an investigation of the Megaupload.com website led by the U.S. Federal Bureau of Investigation.

The group was accused of engaging in a scheme that took more than $500 million away from copyright holders and generated over $175 million in proceeds from subscriptions and advertising.

A police official said dozens of officers, backed by helicopters, forced their way into the mansion, nestled in lush, rolling farmland, after Dotcom refused them entry, a scene more reminiscent of a high-octane spy drama than the usual policeman's lot in rural New Zealand.

"Despite our staff clearly identifying themselves, Mr Dotcom retreated into the house and activated a number of electronic-locking mechanisms," said Detective Inspector Grant Wormald from the Organised and Financial Crime Agency New Zealand.

Officers broke the locks and Dotcom barricaded himself into a safe room which officers had to cut their way through to gain access.

"Once they gained entry into this room, they found Mr Dotcom near a firearm which had the appearance of a shortened shotgun," he said. "It was definitely not as simple as knocking at the front door."

ROLLS-ROYCE PHANTOM

Two firearms were seized and a 55-year-old New Zealand man has since been charged with illegal possession of a pistol. Computers and documents were also retrieved and more than NZ$10 million ($8 million) was seized from financial institutions.

Television footage showed vehicles, including a pink Cadillac and a Rolls-Royce Phantom Drophead Coupe, being removed from the property.

The house where Dotcom was arrested was one of the largest and most expensive in the country, worth around NZ$30 million.

Located in hills northwest of New Zealand's largest city, the mansion is surrounded -- at suitably discreet distances -- by other substantial country homes and luxury lifestyle blocks complete with stables, swimming pools and tennis courts.

Dotcom leased the property after being blocked from buying it last year by the government after failing to meet a "good character" test for migrants, although he was granted residency in 2010.

Dotcom has previous convictions for insider trading and embezzlement from his time in Germany and Thailand, according immigration authorities, leading some opposition politicians to question why he was allowed to settle in the first place.

"New Zealand is under the radar, away from Interpol and a better lifestyle than Eastern Europe," Jeffrey Carr, an Internet security expert founder of Taia Global Inc, said of Dotcom's decision to settle in New Zealand.

"They obviously weren't aware how closely the FBI has been building its international relationships over the past few years."

The FBI said Dotcom personally made $42 million from Megaupload in 2010 alone.

Standing some 6'7" tall and reportedly weighing around 300 pounds (136 kg), Dotcom appeared to revel in his outlaw reputation.

Personalized number plates on some 20 vehicles seized from the site included KIMCOM, HACKER, STONED, GUILTY, MAFIA, GOD and POLICE, according to the indictment.

One video on YouTube shows him racing a Mercedes in the Gumball 3000 road rally and talking about bribing a Moroccan official.

Another clip shows a 2011 New Year's Eve fireworks display over Auckland organized and paid for by Dotcom to celebrate his family being granted residency. The display was reported to have cost $500,000.

PIRACY DEBATE

The arrests were made as the debate over online piracy reaches fever pitch in Washington where Congress is trying to craft tougher legislation.

Lawmakers stopped anti-piracy legislation on Friday, postponing a critical vote in a victory for Internet companies that staged a mass online protest against the fast-moving bills.

The movie and music industries want Congress to crack down on Internet piracy and content theft, but major Internet companies like Google and Facebook have complained that current drafts of the legislation would lead to censorship.

Dotcom and the other men made a brief court appearance on Friday will appear again on Monday. They face extradition and a trial in the United States.

On Friday, in a show of support, hackers attacked and temporarily disabled a number of government and entertainment company websites, including the U.S. Justice Department's website.

U.S. Justice Department officials have said that the estimate of $500 million in economic harm to copyright holders cited in a U.S. indictment was at the low end.

The allegations included copyright infringement as well as conspiracy to commit copyright infringement, conspiracy to commit money laundering and conspiracy to commit racketeering. Two of the offences carry a maximum penalty of 20 years.

The companies charged, Megaupload Ltd and Vestor Ltd, were both registered in Hong Kong and owned either in large part or solely by Dotcom.

Some 100 officers raided four premises in Hong Kong on Friday including luxury hotel rooms, seizing computer equipment and freezing HK$330 million ($42.5 million) in financial assets, according to Hong Kong Customs.

Megaupload has boasted of having more than 150 million registered users and 50 million daily visitors, according to the indictment. At one point, it was estimated to be the 13th most frequently visited website on the Internet.

Users could upload material to the company's sites which then would create a link that could be distributed. The sites, which included video, music and pornography, did not provide search capabilities but rather relied on others to publish the links, the U.S. indictment said.

Megaupload's U.S. lawyer said the company would "vigorously defend itself" and was trying to recover its servers and get back online.

The Megaupload group used more than 1,500 computer servers in Virginia, Washington D.C., France and the Netherlands to host its sites, according to the FBI.

(Additional reporting by Chris McCall, Michael Perry and James Pomfret; Writing by Lincoln Feast; Editing by Nick Macfie)

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