Unsealed Motions Shows How Team Prenda Sought To Hide Money

from the can't-have-anyone-find-this-cash,-could-we? dept

Back in April, we wrote about a really enraged John Steele (famous for his likely leading role in the Prenda scam) angrily hitting back against a sealed motion for contempt against him, arguing that he was lying and hiding assets in his attempt to plead poverty, after a court ordered Team Prenda to file detailed financial statements. They did not do so. Instead, as the court noted:

In the case where there has been no attempt to comply with the Court’s order, plaintiff’s counsel must show a “complete inability to pay.” … Plaintiff’s counsel, “stated differently, . . . [has] the burden of establishing clearly, plainly, and unmistakably that compliance is impossible.” ….

The Court finds that plaintiff’s counsel has not met its burden. They submitted incomplete, and to say the least suspicious, statements of financial condition. Attached to each statement was a letter from their certified public accountant (“CPA”). In these letters, the CPA indicates a departure from generally accepted accounting principles. He further notes that plaintiff’s counsel elected to omit substantially all of the disclosures required by generally accepted accounting principles. The Court finds these statements insufficient to establish plaintiff’s counsel’s inability to pay.

Following that, lawyers Dan Booth and Jason Sweet filed the motion that got Steele so angry — highlighting significant evidence that Steele and others had hid money offshore. Steele hit back at that, with little effect, and, as Fight Copyright Trolls now alerts us, the original filing that reveals some of Steele’s financial shenanigans has been unsealed. Not surprisingly, it paints a picture of a lot of “shell games” for how the money was moved around. Here’s just some of the details:

1. On December 13, 2011, Steele opened a CitiCard account. In the application for the account he identified his income amount as $900,000.00 and his total income for 2011 as $930,000. See Exhibit A hereto.

2. A statement from Fifth Third Bank shows that Steele had $2,177.005.27 in personal savings accounts there on September 5, 2012. See Exhibit B hereto. By September 25, 2012, two deposits totaling that amount had been transferred from Steele?s personal account into Prenda?s IOLTA account. The remainder of that money was then wired to an unknown destination the next day. See Exhibit C hereto.

3. On December 18, 2012, Prenda Law, Inc. (?Prenda?) paid out $5,000.00 to McCullough Sparks, an asset protection law firm located in Provo, Utah. See Exhibit D hereto. McCullough Sparks promotes its key service as the ?541 Trust,? which ?removes assets from your personal ownership and from any disclosure of your personal assets. It is a private document and it cannot be discovered through any public records.? See Exhibit E hereto. A CPA would not know about such a trust unless Plaintiffs? Counsel disclosed it to them.

4. Plaintiff?s Counsel brought this case, like hundreds of others, as part of their coercive litigation settlement practice. See Dkt. No. 61 pp. 14-19. Between 2010 and 2013, when that practice was at its height, BluePay, one of several online credit card processors they used to process settlements from Doe defendants, processed more than $4.4 million in settlement monies, paid out to Prenda, Steele Hansmeier PLLC, Media Copyright Group, LLC, and LiveWire Holdings, LLC. See Exhibit F hereto; see also Dkt. No. 124 p. 4 n.3 (detailing relationships between Plaintiff?s Counsel and these and other non-parties).

5. Smith?s subpoenas sought information about eighteen closely related non-parties. See Dkt. No. 116-1; Dkt. No. 124 p. 4 n. 3. The non-parties opened at least forty-seven bank accounts in just two of the banks subpoenaed since 2010, and have closed all but a few of those accounts. Several of these accounts were opened and shut so quickly as to suggest that Plaintiff?s Counsel have transferred monies between accounts and related entities in a deliberate attempt to obscure its sources and their current holdings. For example, on August 13, 2012, Steele withdrew $29,924.56 from Media Copyright Group, LLC. See Exhibit G. He then opened two Fifth Third Bank accounts in his personal name the same day, depositing $27,924.56 into the account identified in Exhibit H and $2,000 into the account identified in Exhibit I. He then closed the account in Exhibit H on September 25, 2012, transferring all its funds into the other account in Exhibit I, which he closed on January 7, 2013 (after transferring $1,000 to Prenda Law, Inc. on October 2, 2012.).

6. Likewise, on December 15, 2011, John Steele transferred $159,000 from his personal account to that of Steele Law. See Exhibit J. That same day, Steele Law transferred $160,000 into the account of Miami Beach Consulting (?MBC?). Id. MBC is a business owned by John Steele?s wife, Kerry Steele (ne? Eckenrode). See Exhibit K. Four days later, $150,000 of that money was wired to an unknown destination via Sabadell Untd. Bank, a subsidiary of Banco de Sabadell, S.A. and provider of international banking services.6 Miami Beach Consulting?s account was closed two months later. See Exhibit L.

7. Duffy and Steele are the two signatories Prenda?s IOLTA and operating accounts with Fifth Third Bank. See Exhibit M hereto. This tends to refute Steele?s repeated denials that he has an ownership interest in Prenda.7 Similarly, and despite his denials otherwise, Paul Hansmeier was a partner in Media Copyright Group (a/k/a/ 6881 Forensics), the IT firm which Plaintiff?s Counsel used to identify alleged infringements. A check made out to Media Copyright Group from Alpha Law and signed by Hansmeier clearly states ?capital contribution? ?for 50% interest? See Exhibit N hereto.

In the footnotes, it also highlights that the use of “Steele Law” for transferring money is especially suspect, given that Steele claimed that Steele Law was gone as an entity ten months earlier. The filing also discusses money transfers to Latvia, combined with evidence that Steele had been reading about hiding money in Latvia with a program designed to get you a Latvian passport and citizenship.

It’s still somewhat circumstantial evidence, but as FCT notes, it’s somewhat surprising that Steele apparently missed the deadline to try to keep this particular document sealed…

On top of that, in a second filing, even more questionable moves are revealed. Again, just a snippet:

A. Sabadell Bank.
Smith has identified transactions between accounts owned by Steele and Sierra Investment Partners (?Sierra?) totaling $212,125.00. See, Ex. Q. Sierra is a business Steele co-owns with Robert Balzebre that maintains an account at Sabadell Bank. See, Ex. R. Mr. Balzebre has been involved with Steele in several business ventures going back to 1997?including Steele Hansmeier. See Ex. S. Continued discovery would clarify the true extent of Steele?s financial holdings.

Hansmeier transferred at least $62,979.00 into an account at ING (now owned by Capital One). See Ex. T. Similarly, Hansmeier has transferred $515,000 to Monyet LLC with the notation that such checks were for ?estate planning.? See Ex. U. Smith can only surmise that Monyet?s account(s) may also be found at ING. Said company has no discernible address, officers, employees, products or services?but a transfer from Livewire indicates who the owner is: ?Monyet/Paul Robert Hansmeier.? Id.

C. Pershing, LLC.
Steele?s frenzied attempt to prevent GMS Group, from complying with discovery though Smith has not yet subpoenaed them, is now understood. Dkt. No. 158. Documents produced by Pershing include statements from GMS Group. Pershing is a clearing firm for GMS Group, and while it has in its possession some documents from GMS Group, it by no means has them all. What Smith was able to obtain indicates Steele transferred via GMS Group in excess of $200,000.00 to various accounts, and under at least two other of his business aliases/shell companies to banks with branches in the US, UK and Canada. See Ex. V.

Remember how, among other things, Judge Wright had referred Team Prenda to the IRS? I wonder if they’ll be interested in some of these transactions….

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Companies: prenda, prenda law

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Comments on “Unsealed Motions Shows How Team Prenda Sought To Hide Money”

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That One Guy (profile) says:

'Let loose the hounds...'

With so much money bouncing around between accounts, both listed and not, I’m sure the IRS is very interested in having a little ‘chat’ with Steele and co, as properly reporting on income, and paying the relevant taxes would rather defeat the purpose of shuffling money about in order to hide it, so I can’t help but think he might have ‘forgotten’ to file all the relevant paperwork, and properly pay the taxes required.

Ah to be a fly on the wall when they realize their attempted shenanigans just went public, and even better, to be in the room when they try the ‘we can’t pay because we’re just too broke’ excuse again after this tidbit entered the record. Somehow I don’t see any judges buying it from this point onward, though I’m sure that won’t stop they from attempting it anyway.

That Anonymous Coward (profile) says:

Re: Re:

Sadly none of the acronyms have brought a criminal case yet.
People are fond of the phrase the wheels of justice move slowly, as little people we never see the slow unless it is making the system correct itself.

The very simple matter is these asshats are lawyers.
They are lawyers who, as Federal Judges have observed, are willing to lie to the courts.
The case against them needs to be air tight, else it will become an even larger boondoggle.

I look forward to seeing some Doe Defenders, once the criminal complaints are done, taking aim at the assets for the Does who were most hurt by all of this.

Nothing will ever make the Does whole, their peace of mind was shattered. They struggled to avoid lawsuits that would bear no fruit in court, because they fear a system that trusted the lawyers to be truthful.

I don’t think everyone was innocent, but if you stick a bowl of candy out with a sign saying take one then pop out and demand payment for the candy… yeah that is wrong.

The only thing going for us is the players have egos that will not let them quit. None of them with take the cowards exit, so they will be twisting in the courts for a very long time.

I look forward to seeing which locals have already cut deals with the Feds, because if they haven’t they have a very useless degree now. The complete failure of undertaking the required responsibilities should end their tenure with the bar for a while. Guessing anyone with ties to Prenda is going to have a very rough go of it.

steell (profile) says:

Re: Re: Re:

You really think being white has any affect on the IRS?
From personal experience I can assure you the IRS is truly color blind. The Prenda dudes are going down, straight to the Federal Pen. The IRS does whatever the hell they want, you may think they may be constrained by rules, but they don’t think so. The IRS “Will” put these dudes in prison, but we won’t hear anything until it’s a done deal.

orbitalinsertion (profile) says:

Re: Re: Re: Re:

Why do you think the IRS is implied here? Being white affects everything anyway, even if the IRS is indiscriminately ravenous. But anyone non-white (or not white enough, or possibly the wrong kind of white) would have had a probe shoved up their ass by every “terrorist”-watching agency long ago. And I’m sure white people manipulating accounts rather tend to get more of a pass from bankers who are supposed to mandatorily report such things.

That Anonymous Coward (profile) says:

Re: Re: Re:2 Re:

They made me credible.
That alone should motivate the powers that be to do something about this.
They can come down on these idiots like a ton of bricks, throw the book at them, consider something for the targets, call it case closed problem solved, no reason to look at copyright law anymore.

Except them in jail won’t stop me, them losing the money won’t stop me, the Does being made whole won’t stop me.
Because they inspired copycats.
And them getting stopped won’t stop me.

To make me stop requires fixing copyright law.

I started out tilting at windmills…
I’ve killed 3 so far…
always bet on the crazy…

Anonymous Coward says:

Re: Re: Re:

Only you could think that Prenda has ANYTHING to do with copyright law.

Prenda are a criminal organisation that is being called out for the fraud that they committed against the courts and the public.

Only a moron like you could root for Team Prenda. You are disgusting excuse for a human.

That Anonymous Coward (profile) says:

*adjusts his tinfoil hat*

I think some people need to be eating some really big plates of crow right about now…

Copyright trolling is about money for lawyers.
It does nothing to help the situation.
The law is flawed and broken, and it is time to stop listening to only one side, and ignoring the largest stakeholder who is getting screwed over and over.
Millions of dollars earned by creating the infringement to benefit from it.

There is nothing in the law to deal with this, yet hundreds of thousands of people who were “sued” are left shaken and abused by a system that trusted the wrong players. They will have a hard time trying to get their extorted funds back because they are hidden around the globe, and many still will not want their name associated with porn.

Extortion with a dead sheepskin on the wall.
It is well past time the system clean up its mess, & work to make the victims whole.

OldGeezer (profile) says:

Gonna miss these guys

No doubt about it, they are on their way to a federal pound me in the ass prison. It won’t take long for the IRS to get them on tax evasion. Throw in extortion, perjury, fraud and money laundering for good measure. I’m sure the trials will afford much entertainment but once they get sent up the hilarity ends. The only giggles after that will be if they are in the news getting stabbed or ass raped. Don’t think prisoners like lawyers much. One guy with a law degree prosecuted them and another failed to get them off.

Anonymous Coward says:

Re: Gonna miss these guys

You don’t understand. They’re not going to prison. Prison is for poor uneducated black people — that is, if they’re not shot in the head or beaten to death by a cop. Rich white people don’t go to prison, even if they’re successfully prosecuted — and they’re often not. (See “Wall Street meltdown of 2008, zero indictments to date”.)

All of the Prenda guys will walk. Oh, they might be disbarred and they’ll pay fines and back taxes and other stuff, but they’ll bargain and negotiate and in the end, they’ll walk.

Anonymous Coward says:

Re: Re: Gonna miss these guys

–Prison is for poor uneducated black people 

Maybe there are deeper issues involved with that thought. Could it possibly be a cultural issue?

Last night was freshman orientation at our local highschool, before it starts the principal announces “those of you who are parked in the no parking fire lane that surrounds the school, might want to go move your car since the police are out there writing tickets”

14 people got up to quickly move their cars.
1 white
1 Latino
12 black

There was plenty of parking, in the inconvient back parking lot.

Gerald Robinson (profile) says:

Re: Re: Re:2 Gonna miss these guys

Bertie baby was running a criminal operation that was obvious to even journalists and the DoJ and cost a bunch of fund managers money. Low hanging fruit and no effort required by the DoJ. No sacrifice either and no politically embarrassing revelations. As for the Too Big to Fail Banks they were scammed by the Federalies with fake mortgages and fraudlent lending supported by fannie mae and Obama abated by the Congressional Black Caucus who shutdown an investigation into fannie mae’s illegal accounting practices and fraud. However had the Too Big to Fail Banks done due diligence instead of going “OH Boy it’s free money”. And counting on being bailed out instead of punished things would have been different.

FM Hilton (profile) says:

Hiding in plain sight

Not only is the IRS going to be interested in the moving around of all this money by Prenda, they’re also going to be asking some really uncomfortable questions of the banks that were involved in it.

As if the banks don’t need the additional interest. Money laundering does affect them, too. Good way to be prosecuted under the RICO act, I do believe, under the title of “racketeering”.

Fun reading here: http://en.wikipedia.org/wiki/Racketeer_Influenced_and_Corrupt_Organizations_Act

That One Guy (profile) says:

Re: Hiding in plain sight

Oh come now, what’s suspicious about opening, oh what was it, forty-seven bank accounts in just two of the banks subpoenaed’?

I know any time I plan on doing some banking, I make sure to open up at least a dozen separate accounts, and shuffle the money around between them, before eventually shutting down the accounts and transferring the money to an unlisted account elsewhere, and as I’m sure that’s common practice for everyone, what possible reason could the banks have had to be suspicious?


Gerald Robinson (profile) says:

Prends Fraud

“Remember how, among other things, Judge Wright had referred Team Prenda to the IRS? I wonder if they’ll be interested in some of these transactions….”
Unfortunately the IRS is too busy covering up how it attacked opposition groups at Obama’s request to do its’ job.

Expecting lawyers to do anything remotely ethical is a waste of time.

That Anonymous Coward (profile) says:

Re: Prends Fraud

And with your ‘Thanks Obama’ out of the way…

You underestimate what is going to happen.
You can’t take down the premier copyright trolling operation they said.
You can’t prove they created the incidents they profited from.
You can’t start a battle with another troll firm.
You can’t take out the shady Germans behind the whole thing.

Tell me again how we can’t make things happen, it seems to help them come true.

Anonymous Coward says:

Two cards short of a full deck....

Let me get this straight

Prenda fights paying a few judgements against them when they clearly have the money to pay them and STILL be millionaires.

The result of their fight is the exposure of all their shady financial dealings.

They must be really dumb. It’s quite obvious to me that they should have just paid the sanctions and walked away quietly.

Greed sure is an efficient way to dig a really deep hole.

That One Guy (profile) says:

Re: Two cards short of a full deck....

Or they are still under the impression that they’ll be able to get away without paying a cent, and given the ‘punishments’ they’ve had to deal with so far, you can see why they might think that.

‘Pay X’ doesn’t mean much unless it’s followed by some form of punishment for refusal to do so.

rsteinmetz70112 says:

Next Hearing

Isn’t there a hearing scheduled on this coming up and hasn’t the Judge required everyone to show up in person? I wonder if this could lead to the Three Amigos be fitted for orange jumpsuits.

If I was a judge I’d be pretty put out by such brazen conduct and ask the friendly Federal Marshals to help them with overnight accommodations.

That Anonymous Coward (profile) says:

Re: Next Hearing

A Judge has preemptively said NO YOU CAN’T PHONE IT IN, this relies on a few things…
– they actually give a shit what any court says
– they haven’t fled the country with their Latvian passports
– Mark Lutz turning up in the courtroom with notes from their mom’s saying they are sick

It really is 50/50 if they will show up.
Part of me says Steeles ego will make him show up.
Part of me says they are already running.

The fact that Steeles recent remodel on his McMansion has lead to the builder placing a lien to get paid clouds the future.
It could be calculated to make it look like he is broke.
It could be calculated as part of the run away plan.
It could be he shuffled the money so far and lost control of it to shady men who offered to help hide it.

There are many what-ifs, and possible outcomes…
I’m managed to predict several twists & turns, this time I’m not sure.
If Steele gives an interview/comment (I do not know of any outlet he isn’t pissed at right now, even x-biz turned on him) we might get a better idea.

That One Guy (profile) says:

Re: Re: Next Hearing

It could be he shuffled the money so far and lost control of it to shady men who offered to help hide it.

I think, if that one turned out to be the correct one, I could very well laugh to the point of passing out. Goes through all that time and effort conning and extorting people, shuffles it around and around in an attempt to hide it and keep it all, only to lose it all because he trusted the wrong person… such hilarity would make my month, and at that point the only thing that could top it would be listening to his ‘oh woe is me, I got scammed out of my money, won’t you feel pity for me?’ response to it.

Manabi (profile) says:

Re: Re: Next Hearing

The fact that Steeles recent remodel on his McMansion has lead to the builder placing a lien to get paid clouds the future.
It could be calculated to make it look like he is broke.
It could be calculated as part of the run away plan.
It could be he shuffled the money so far and lost control of it to shady men who offered to help hide it.

Given his past actions with Prenda/etc., I’d think it’s probably he has some “brilliant” plan to avoid paying and getting away with it.

It’ll fail of course.

That Anonymous Coward (profile) says:

Re: To play devil's advocate...

It is possible, but doubtful.
Remember they had a huge list of names to extort, we can show a judge ordering them to destroy & not use the data from a case was ignored.
As things were getting bad, which time there have been so many, and the firms name was shattered they dusted off stationary from a defunct name and kept sending demand letters.
It is very possible that they have more names than this, and many more accounts as yet undiscovered or subpoenaed.
They lie to courts, do we think they’d lie on the spreadsheet they were keeping to keep each other honest?

Anonymous Coward says:

What about Duffy

I am interested in knowing how deep Duffy is in this. I have heard that he is broke. There are several foreclosure proceedings against him in Cook County Court and his wife posts on facebook about how they don’t have gas and a working oven. Pictures from an event at their place shows their home looking in shambles. Would love to hear about what is going on with them.

That Anonymous Coward (profile) says:

Re: What about Duffy

he made his bed, he will lie in it.

I don’t FB so keeping track of Sherri falls to others.
She has made some “amazing” posts in the past about how her honest husband was under attack by pirates, perhaps she should have gotten a better view of the story.

Duffy is the weak link in all of this, always has been.
A lions share of the cash went to Steele and Hans, who got Duffy to be the new front man after they destroyed their previous firms reputations. I am sure they showed him piles of cash they got and offered to cut him in if he’d be the new face to carry on the extortion. He thought he’d be getting his fair share… and that day isn’t coming.

If you look into the backgrounds of the lead players, one can find all sorts of things that make you ask isn’t there some oversight for lawyers?!? One can only hope that maybe this time they will be forced to take real action & start doing their job.

Anonymous Coward says:

Re: Re: What about Duffy

What you say makes absolute sense, especially with the offer of cash to him. He’d do anything to pay the bills.

His wife is in her own world. Partying non-stop and pretending to be part of the Chicago A-list. I don’t think a lot of people in their social circle know the full extent of what is going. Once they do, Shari and Paul become a liability. I view them as such nowadays.

Chicago39 says:

Re: Re: Re: What about Duffy

Totally agree with you! I’ve personally seen his wife at a number of high profile events and she’s in her own world! He tosses money at her and he goes to many of her events! She’s some type of booze promoter. Also they live close to me in a nice area if the city and their family certainly is living a lavish lifestyle! John steele dabbled in family law ( mainly repersenting well to do deadbeat dads! Go fingure!) and a friend of mine’s ex hired him! I was reading one of the articles about John when I came accross Paul’s name! His wife paints him as this hardworking lawyer!! Makes me want to puke

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