Dinesh D'Souza Prevails in Legal Dispute Related to '2016: Obama's America'

An arbitrator has issued a “final reward” favoring Dinesh D’Souza in a legal battle against Doug Sain over money and ownership stakes in 2016: Obama’s America.

D’Souza had already prevailed in an interim award handed down in December, and the final award dated Feb. 7 and obtained by The Hollywood Reporter on Saturday resolves the dispute, which has stretched for more than a year.

Sain, through his Sain Communications Inc., was arguing that he deserved 45 percent instead of 25 percent of Obama’s America Foundation, the entity created for the purpose of turning D’Souza’s book, The Roots of Obama’s Rage, into a film. The movie, 2016, earned $33 million and became the second most popular political documentary in U.S. box-office history.

STORY: '2016: Obama's America' Filmmaker Indicted for Violating Campaign Finance Laws

Obama’s America Foundation owns 50 percent of 2016 while investors own the other 50 percent.

Sain also sought about $1.6 million for administrative duties he performed, finder’s fees for money he raised and other matters.

Arbitrator J. Richard Haden, though, found that D’Souza raised $2.14 million for 2016 while Sain and another man, Christopher Williams, together introduced just $260,000. Since Sain has already been paid $170,000 in finder’s fees, “he must disgorge $157,000 which he did not earn and has taken without authority,” according to arbitration documents.

STORY: Jeffrey Katzenberg's Secret Call to Hillary Clinton: Hollywood's 2016 Support Assured 

Haden also says D’Souza is entitled to $515,000 in finder’s fees for raising $10.3 million for prints and advertising, plus additional compensation of "2.5 percent of net film revenue prior to the further distribution of profits.” D’Souza, though, has already received much of the $515,000.

Haden also said Sain Communications (CSI) “breached its fiduciary duty owed to Obama’s America Fund (OAF) … by misappropriating OAF funds to pay SCI unearned future fixed compensation,” as well as a host of other “misappropriations.”

VIDEO: Dinesh D'Souza's 'America' Trailer Released

Sain had also made an issue of D’Souza loaning money to OAF to buy DVDs from Lionsgate, but Haden said the loan was necessary since Sain had frozen OAF’s Wells Fargo business account. Sain also objected to another bulk sale of DVDs to an independent party but Haden said DVD distributor Lionsgate approved of the bulk sale.

Haden said Sain should pay more than $900,000 in legal fees to D’Souza and Williams, and about $830,000 to OAF for unaccounted expenses.

“I’m just relieved to be vindicated on all counts,” D’Souza tells THR.

Email: Paul.Bond@THR.com

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Kim Dotcom: New Site Is Legal, 'Fresh Start,' Not Revenge on Hollywood

SYDNEY - Indicted Internet entrepreneur Kim Dotcom formally unveiled his new file sharing and cloud storage service Mega in a press conference from his mansion near Auckland, New Zealand on Sunday, arguing that it was legal and made possible because of the shutdown of Megaupload.

STORY: Kim Dotcom's Letter to Hollywood

"This fresh start for Mega is a good thing,” the German-born, New Zealand resident said during the press conference, which was live streamed online ahead of what was billed as a lavish Sunday night launch party for the new site at his mansion.

He even argued that the downfall of his former website Megaupload made the new site possible. "It wouldn't have even been possible to do this," news organization Fairfax NZ quoted him as saying. "No one else who is currently in business in the file storage arena can just update their site and be like us, you have to start from scratch."

In an interview with Reuters, meanwhile, Dotcom emphasized that the new site launch was not meant to be revenge on Hollywood or U.S. authorities. "This is not some kind of finger to the U.S. government or to Hollywood," he said.

And he added: "Legally, there's just nothing there that could be used to shut us down. This site is just as legitimate and has the right to exist as Dropbox, Boxnet and other competitors," he said in reference to well-known cloud storage services.

STORY: Hollywood to Produce Kim Dotcom Documentary; Book in the Works

At one point during his Sunday press conference, Dotcom even said his goal was to list the new business, which uses the company name The Privacy Company, on the New Zealand Stock Exchange.

Ahead of the launch of Mega, the Motion Picture Association of America, which claims copyright infringement by Megaupload, remained skeptical.

"We are still reviewing how this new project will operate, but we do know that Kim Dotcom has built his career and his fortune on stealing creative works," the MPAA said in a statement cited by Fairfax NZ. "We'll reserve final judgment until we have a chance to take a closer look, but given Kim Dotcom's history of damaging the consumer experience by pushing stolen, illegitimate content into the marketplace, count us as skeptical."

The Mega site launched Sunday morning New Zealand time, and within several hours over 250,000 users had registered for the site, according to Dotcom. As the site went live, he tweeted: "As of this minute one year ago #Megaupload was destroyed by the US Government. Welcome to Mega.co.nz”.

Dotcom and several associates were arrested during a raid on his mansion in outer Auckland a year ago on charges of racketeering, copyright infringement and money laundering. The charges said that Doctom’s then-website, Megaupload, enabled Internet piracy and illegal downloading through its file sharing service.

Hearings about a possible extradition to the U.S. are due to be heard in New Zealand in March. Dotcom said Sunday he was hoping to stay in New Zealand if the extradition proceedings fail.

"My biggest fear is if we succeed, will there be an end - will that be enough to say, 'OK, we made a mistake, leave this guy alone' or will the people in government and the senior people in law enforcement take this defeat and be bitter about it and try and find something else,” he told the press conference.

The new Mega site has been designed by Dotcom and Mathias Ortmann, Bram van der Kolk, and Finn Batato, Dotcom’s co-accused in the Megaupload case, while industry veteran Tony Lentinos serves as the CEO.

THR COVER: Megaupload's Kim Dotcom: Inside the Wild Life and Dramatic Fall of the Nerd Who Burned Hollywood

Mega.co.nz, like Megaupload, allows users to store and share large files, providing registered users with 50 gigabytes of free storage. The key difference is an encryption and decryption feature for data transfers. The decryption keys for uploaded files are held by the users, not Mega, which means the company can't see what is in the files being shared. Dotcom can therefore argue that Mega can't be held liable for content it can not see, according to Fairfax NZ.

"Even if we wanted to, we can't go into your file and snoop and see what you have in there," the company says in an online introduction. “We are a dedicated group of technologists who were given the time, opportunity and Internet access to build an awesome cloud storage service that will help protect your privacy. We have programmed this Internet service from scratch in Auckland, New Zealand. Unlike most of our competitors, we use a state of the art browser based encryption technology where you, not us, control the keys.”

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