The megalife of Kim Dotcom

— -- He looked like a character Hollywood might produce: a giant, swashbuckling, black-suited jet-setter, bikinied babes on his arm, yachts, planes and exotic cars at his disposal. He displayed a villainous visage and a shotgun in his publicity photos, and his fleet boasted "GOD" and "EVIL" on license tags.

But the story of Kim Dotcom, 38, a German born as Kim Schmitz who liked to call himself King Kimble, reaches far beyond a cartoonish persona, self-promotion and a criminal record of pump-and-dump stock fraud.

The former computer hacker is the principle figure behind Megaupload, which U.S. prosecutors charge was a global empire that reaped a mega-fortune from illegal digital distribution of movies, songs and other copyright works.

In a New Zealand jail awaiting extradition to the USA on charges of racketeering, money-laundering and copyright crimes, Dotcom has found himself at the center of a high-stakes battle over Internet freedom vs. copyright protection. It is a fight touching institutions from Congress to Silicon Valley and pitting the recording industry against some hip-hop artists who see Megaupload as a way to bypass record-label middlemen.

Interviews with key players in the case and a close examination of the 72-page indictment and business records in Hong Kong offer a rare inside look at how a small group of computer wizards allegedly made hundreds of millions of dollars, funding Dotcom's flamboyant life of riches and creating one of the Web's most popular and controversial sites — a site that came into the government's cross-hairs two years ago after a complaint from the Motion Picture Association of America.

In the days after Dotcom's arrest, the case has triggered an angry response from the hacker group Anonymous, which began an attack that briefly shut down websites including the Justice Department, FBI, Universal Music and others.

Despite the arrests of Dotcom and his top officers, and seizure of assets on different continents, Megaupload and its defenders say it was just a repository of computer files for millions of subscribers. The Hong Kong-based service, now shuttered, was as innocent as an Internet search engine or data storage service, Megaupload argues.

"Megaupload is a cloud storage service provider," says Ira Rothken, a Silicon Valley lawyer representing the company. "People can upload good and bad things. Congress has provided a certain degree of immunity to such providers."

He attributes the charges and the raid on Dotcom's $24 million New Zealand mansion to "copyright extremism" on the part of the U.S. government.

A darker picture is painted by the movie and record industries, who saw their hopes for a tough anti-piracy Internet law collapse this month in Congress after an online revolt by sites such as Google and Wikipedia turned public sentiment.

"Megaupload was the largest and most serious threat to copyright infringement in the world," says Kevin Suh, senior vice president of the Motion Picture Association of America.

"Megaupload had been one of the most popular and notorious file-sharing services in the United States and (was) used predominantly for trading unauthorized content, including music, movies and other copyrighted works," says Joshua Friedlander, vice president of the Recording Industry Association of America.