It’s game over for Kim Dotcom, the Mr Big of file-sharing

He is a convicted fraudster who made millions on the internet, changed his surname to Dotcom, tried to buy New Zealand’s most expensive mansion and drove around in a Rolls Royce with the number plate: “GOD”.

But today Kim Dotcom’s life of luxury came crashing down after police in Auckland raided his house as part of an American-led offensive against the hugely popular file sharing site MegaUpload.

The 37-year-old German-born internet tycoon – who changed his name from Kim Schmitz – appeared in Auckland’s North Shore District Court this morning alongside three employees as prosecutors in the States announced that they had taken down MegaUpload.

The Hong Kong based website is one of the world’s most popular file sharing sites, allowing users to quickly download and send attachments that are too large to send via email such as video, multiple photographs and music files.

Mr Dotcom has always insisted that his creation is a legitimate business which makes its money from advertising and selling premium subscription accounts to its users. But in an indictment that was unsealed yesterday American prosecutors say the majority of content that was being shared was pirated material that had cost its victims an estimated $500m and made $42m for Mr Dotcom last year alone.

The timing of the raid is prescient. Earlier this week scores of major websites held a 24-hour protest against new anti-piracy laws making its way through the American legislature that would shift the responsibility of policing online piracy from law enforcement agencies to websites and internet providers.

Critics fear the laws will have a destabilising effect of freedom of speech on the web whilst supporters say the legislation is desperately needed to combat online piracy. If the arrests result in guilty convictions, the raid against MegaUpload could become an example of how traditional law enforcement agencies can tackle file sharing sites.

After requests from the FBI, simultaneous raids took place on MegaUpload assets around the world, including Mr Dotcom’s mansion and nine further properties in New Zealand. He now faces an extradition battle to the United States which could take more than a year to complete.

Police searches unveiled some of the lavish lifestyle enjoyed by a man who has revelled in his outlaw status. In Mr Dotcom’s mansion they found two sawn-off shotguns, valuable artworks and a collection of supercars including a 2010 Maserati Gran Cabrio, a 1998 Lamborghini, a pink Cadillac and 15 Mercedes Benz sporting number platess such as “Hacker”, “Guilty”, “Stoned” and “Mafia”.

The music and movie industries have long complained that file sharing sites like MegaUpload lose them millions of dollars. US prosecutors were able to launch an investigation because some of the allegedly pirated material that went through MegaUpload was held on servers in Virginia.

Activists claiming to be part of the loosely affiliated Anonymous group hit back at a number of websites including the Department of Justice and the Motion Picture Association, briefly taking them off line.

There was no comment from MegaUpload’s lawyers yesterday but in a statement posted before the website went they described the accusations as “grotesquely overblown”.

"The fact is that the vast majority of Mega's internet traffic is legitimate, and we are here to stay,” the statement read. “If the content industry would like to take advantage of our popularity, we are happy to enter into a dialogue. We have some good ideas. Please get in touch.”

Although there are numerous file sharing websites MeagUpload was one of the most popular with 150 million subscribers and 50 million hits a day. Much to the chagrin of their record labels Mr Dotcom received endorsements from a number of music artists who made a promotional video for him including Kanye West and Black Eyed Peas front man Will.i.am.

The German entrepreneur was convicted in Germany for insider trading in 2002 and a number of companies he was involved in have gone bust. But the MegaUpload franchise went on to make him a fortune.

He moved to New Zealand and initially failed to obtain residency because he failed the “good character” test but was allowed to stay indefinitely after he bought $10m New Zealand government bonds.

A huge fan of cars and online gaming he frequently posted videos of himself enjoying the high life including one where he drove a Mercedes across a golf course. He also took part in the Gumball 3000 rally and gave the city of Auckland $1million for their 2011 New Year fireworks calibrations.