After Even His Own Lawyer Admits Prenda's Paul Hansmeier Is A 'Bad Actor,' Bankruptcy Court Liquidates His Assets

from the found-jesus? dept

It’s not been a good year for Paul Hansmeier, the Prenda attorney-turned-“ADA Champion.” He’s been hit with counter-claims on his Americans with Disabilities Act (ADA) lawsuits which claim thousands in damages from local companies despite no actual issues. This was followed in May by an appeal hearing on Judge Wright’s infamous Star Trek order where after summing up the Prenda business model 9th circuit Appeals Judge Pregerson called it an “Ingenious crooked extortionate operation.”

Then in August, one of the three central figures in the Prenda saga, Paul Duffy, died, moving the focus more squarely onto Hansmeier and Steele. Finally, just over two weeks ago, the Minnesota Law Board started proceedings to disbar him, meaning his ability to continue as a lawyer at all would be in jeopardy.

Amongst all that, in July Hansmeier filed for Chapter 13 bankruptcy (RECAP docket), seeking to repay his debts (many of which are damages and costs from various Prenda cases nationwide) totaling $2.43 million via installments. Under US Bankruptcy law, a person owed money by someone in Chapter 13 proceedings cannot start or continue collection proceedings, so for Hansmeier, it would have been a neat way to push payment of these debts down the road, while paying them off at a fraction of their value. (His proposed plan would have paid off a maximum of $161,400 in monthly installments of $2,690 across 5 years legal maximum at which point all debts would be discharged and considered paid.)

However, petitions by the creditors (those who are owed money) pointed out in motions leading up to a December 3rd hearing at the United States Bankruptcy Court for the District of Minnesota that he had shown he was not trustworthy. “The argument that somehow there’s going to be a payment in full, your honor, just doesn’t ring true,” Michael R Fadlovich, the attorney representing the Bankruptcy Trustee is reported to have said.

Even Hansmeier’s lawyer admitted “he’s a bad actor,” but claimed “he’d found Jesus,” although given the number of Does filed against, it’s entirely possible Jesus was found by their speculative invoice letters. She also claimed that the sale of Hansmeier’s downtown Minneapolis condo for $1.2 million would have provided a rare chance to have his debts mostly paid off, despite figures submitted by the trustee that indicate less than $90,000 would be realized by the sale.

Nevertheless, U.S. Bankruptcy Judge Kathleen H. Sanberg was not swayed, converting the proceedings from Chapter 13 to Chapter 7, and requiring a liquidation of assets to pay, while any money left from the sale of the condo goes towards the debt fund. However, the court is not yet finished with Hansmeier. Numerous lawyers (representing creditors) highlighted a number of suspicious money transfers, possibly to hide assets, as other judges have already discovered. At issue was his constant dishonesty with courts, in this proceeding and others, which the judge sided with. While further actions are coming, Hansmeier has to now be very careful, as bankruptcy fraud is an imprisonable offense, and investigated by the FBI who are presumably already well aware of Mr. Hansmeier courtesy of Judge Wright.

It seems that Hansmeier’s ‘luck’ has just about run out.

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Companies: prenda, prenda law

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Comments on “After Even His Own Lawyer Admits Prenda's Paul Hansmeier Is A 'Bad Actor,' Bankruptcy Court Liquidates His Assets”

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35 Comments
Wendy Cockcroft says:

Re: Christmas has come early

O Schadenfreude, O Schadenfreude
How much I do enjoy thee!
O Schadenfreude, O Schadenfreude
You never will annoy me
I get the popcorn and the beer
Then set the chair beneath my rear
O Schadenfreude, O Schadenfreude
I always will enjoy thee!

O Schadenfreude, O Schadenfreude
Fill heads and hearts with much mirth
O Schadenfreude, O Schadenfreude
O’er Prenda’s bust and butthurt
Their hubris was a thing to see
Their victim watch them fall with glee
O Schadenfreude, OhSchadenfreude
They’re getting their just dessert

Oh Schadenfreude, Oh Schadenfreude
There’s always more to follow
Oh Schadenfreude, Oh Schadenfreude
And ne’er too much to swallow
When narcissistic fools are crushed
Our gloating can’t eas’ly be hushed
O Schadenfreude, O Schadenfreude
And laughter is not hollow

Anonymous Coward says:

Re: Re:

Reputation management is simple, just used the Streisand HOLE Effect to simply bury the negative stuff!

Got busted for child porn?
File 5 million lawsuits over something stupid so that something stupid moves up to the top of the search results thus burying the child porn stuff, very few people click to the 2nd or 3rd page of search results.

I wonder if that explains why TEAM Prenda has filed so many bogus lawsuits?

Socrates says:

Re: Re: Clawback

As I noted, if he did commit bankruptcy fraud, it’ll be investigated by the US attorney’s office and the FBI

I should have been more specific. Is there a chance he would have to serve time for acts that are not directly related to the bankruptcy. Like: extortion, fraud, lying the Judge strait in the face, and so on. Things already proven; things that would land most people in jail.

It would be great if he would serve time for bankruptcy related crimes too. I hope he get a correct aggregate sentence.

Incarceration would not make the victims whole though. A through clawback might restore some of the funds back to the victims. For any business that had to close it is a little late though.

Andrew (profile) says:

Re: Re: Re: Clawback

Not from this court (it’s a joint operation between the department of the interior and the federal court system iirc)

Remember, Wright referred them to the IRS and Us Attorneys office back in 2013, so who knows.

Also with preclusion, if a points argued in one court, it’d done and can’t be re-argued in another. So a lot of what’s done here in this court may be binding on him in others in sanctions actions and appeals. House of cards will fall.

alternatives() says:

Re: Re: Clawback

it’ll be investigated

No, it has a SHOT at being investigated. But just because someone’s committed a crime doesn’t mean it’ll get investigated, charged or even prosecuted.

https://ia601402.us.archive.org/34/items/gov.uscourts.wieb.358648/gov.uscourts.wieb.358648.docket.html sure looks it has LOTS of fraud – yet no charges.

Roger Strong (profile) says:

Re: Clawback

There should be an effort to clawback money from the Paul Duffy estate. As it were extortion money, it were never his money in the first place; it should be payed back to the victims.

Was he both convicted AND his appeals exhausted before he died?

Consider Enron’s Ken Lay. Found guilty on all six counts of conspiracy and fraud by a jury, and another four counts of fraud and making false statements by a judge in a separate trial.

But he died prior to exhausting his appeals – meaning that he didn’t get full due process – so his convictions were automatically vacated. The law views it as though he had never been indicted, tried and convicted. And so his family got to keep the money.

Socrates says:

Re: Re: Clawback

Thanks Roger Strong, that is a compelling argument regarding the Duffy estate.

Wikipedia: On October 17, 2006, since Lay died prior to exhausting his appeals, his conviction was vacated. Precedent in the Fifth Circuit Court of Appeals, the federal appellate court governing the district where Lay was indicted, indicates that vacation of the conviction had to be automatically granted

This indicate that there is a tiny hope that the government can restore money to the victims from the dead scammer. Though if it is the same court all hope is probably lost.

Wikipedia: Civil suits are expected to continue against Lay’s estate. According to legal expert Joel Androphy, claimants may not recover punitive damages against a deceased defendant, although claimants may recover compensatory damages

And a tiny hope that a civil lawsuit might help. But this have its own risks for the victims.

Hansmeier’s lawyer statement about Hansmeier: but claimed “he’d found Jesus,

What is it with the co-variance between religion and nastiness.

Wikipedia: on the day he died, his son, Mark, said that Lay wrote in his journal that Christians should “live by faith, and not by sight”

Such a surprise /s

FM Hilton (profile) says:

Payback time

Oh, to witness the fall of such a mighty troll lawyer-’tis wonderful..and to think he thought he could just walk away from it all with slap on the wrist.

Funny about judges, you know..they get all weird when it comes to being a liar-they don’t like them at all. Guess he got caught at lying once too many times for this to work again.

I just hope they’ve seized his passport in case he thinks he can walk away again. But he’s probably broke anyway due to the court transferring his bankruptcy into straight sale.

Another Anonymous says:

Re: Payback time

Hansmeier and Steele were careful to keep incoming funds obscure (to the point of asking for postal money orders) and easily rerouted. They seemed to expect problems at some point. Ergo, the chain of shell foreign trusts to which ownership was passed.

They both kept enough to live comfortably until then. I suspect they would be secretly quite happy to lose what they kept visible in this country as a full settlement.

Anonymous Coward says:

Having been sued by this dirtball and him knowing I did have handicap access, Hansmeier refused to drop the lawsuit knowing it would cost me more money to hire a lawyer then his settlement amount was. It was hard to explain to our 10 year old why Christmas gifts would be few in 2015.
Also his client that supposedly drove from western Minnesota to the Twin Cities has a criminal record of DWI’s and lying to the police.
BTW Hansmeier website isn’t handicap compliant… go get him

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