Megaupload founder Kim Dotcom is considered a significant flight risk, the Crown argued on behalf of the US government today in New Zealand.

The North Shore District Court is currently holding a hearing to decide whether Dotcom and others should be granted bail.

Crown prosecutor Anne Toohey said that Dotcom was a risk because of his numerous aliases - his name varies on his travel documents - as well as his access to funds, and because he allegedly evaded arrest by hiding in a safe room in his mansion.

"Dotcom poses a flight risk at the extreme end of the scale," Toohey said.

Dotcom's lawyer Paul Davison said Dotcom, who was very security conscious, had not been trying to evade arrest by hiding in his panic room, as he had not known the people pounding on his bedroom door were police.

Once he realised they were police, "he was frightened so he stayed there", Davison said.

An unmodified pistol-grip shotgun was present in the panic room, which was illegal as no one in the house had the appropriate firearms license. It was loaded with a rubber bullet and there was "absolutely no suggestion" that Dotcom was going to use it, Davison said.

"No intention of restarting Megaupload"

Crown lawyer Toohey also argued that Dotcom was a flight risk because he had once fled from charges in Germany.

However, Davison said Dotcom had been unaware of charges against him on leaving Germany, and had returned on hearing of them.

Toohey said he also posed a risk of reoffending as there was financial incentive to do so, and because there are numerous domains registered by Megaupload that could be used.

However Davison argued that Dotcom had no intentions of restarting Megaupload.

"He has no interest in reinstating the business until this is sorted," Davison said.

Davison said Dotcom and Megaupload had spent millions of dollars on legal advice to ensure the company was operating within the law.

181 copyright holders were capable of directly removing content from Megaupload, he said.

Invested millions in legal advice over copyright

Users were also required to agree to a Terms of Service agreement barring them from uploading copyrighted material.

The hearing will continue this afternoon.

Police visited Dotcom's home to discuss security before raid

On 19 January, one day before the police raided Dotcom's home, a police officer visited the multi-million dollar mansion to learn about the property. Security-conscious Dotcom wanted the police to understand how to get around the property if he alerted the police to a threat, Davison said.

The police officer hid a camera inside a pen, he said, and captured images from inside the home.

Davison alleges the police knew that Dotcom had four children and another on the way when his home was raided by 76 police officers.

"The police officer on the 19th was told [Dotcom's] wife was pregnant and due to give birth," Davison said.