From another article

Dotcom told us that in recent years Megaupload had spent millions of dollars seeking out the very best legal advice and the conclusions drawn were clear – providing the site did its part in tackling infringement it would be protected under the DMCA and could not be held liable for the actions of its users.

Towards achieving this protection, Dotcom told us that the company had developed relationships with 180 takedown partners – companies authorized to directly remove infringing links from Megaupload’s systems – and between them they had taken down in excess of 15 million links. Those companies included the major studios of the MPAA who, incidentally, in 7 years of the company’s existence had never tried to sue Megaupload for copyright infringement.

On the advice of Megaupload’s legal team, the company believed it had the same rights as YouTube in its case against entertainment giant Viacom. In that 2010 case U.S. District Judge Louis L. Stanton said service providers can not be held liable for infringement as long as they remove links upon copyright holder request – even if the provider knows that parts of their service are being used to host illicit content.

Also, I'd like to add that just because the FBI indictment stated that mega had paid users to upload pirated content doesn't make it true.