Bankruptcy Fight May Be The Least Of Team Prenda's Concerns, As The FBI Comes Knocking

from the whoo-boy dept

If you’ve been following the Prenda Law saga around here for any length of time, you’re aware that it’s been going on for years, with sketchy copyright trolling practices that appeared to include Team Prenda uploading their own content to torrent sites, tracking who downloaded them, and then filing questionable lawsuits. That scheme fell apart after a series of judges, led by Judge Otis Wright, called out Team Prenda for committing fraud on the courts, and referred the issue to the feds, while also hitting them with a fine. That was three years ago. Other courts piled on more fines and attorneys’ fees — and more referrals to the feds. After the second such referral, Ken “Popehat” White noted that these things take time, but that something would probably happen eventually:

The wheels turn slowly, friends, but make no mistake, the wheels turn. The wheels are grinding down Team Prenda, and doing so faster and faster every month. With two different federal judges referring the matter to state bars and the U.S. Attorney’s office, the probability of bar investigations and federal grand jury investigations approaches certainty.

Of course, it’s been three years since then and a few things have happened. One of the three main members of Team Prenda (though, probably the least involved of the three) passed away. But the other two are both facing bar complaints over ethical violations. Paul Hansmeier also famously tried to declare bankruptcy, but appears to have lied to the court in the process. Fight Copyright Trolls just recently had an update on that case, and suffice it to say, it’s hilarious. Hansmeier has not just lost his lawyer after she told the court that she could no longer represent him and be a servant of the court (i.e., heavily hinting that Hansmeier was likely asking her to lie to the court), but he’s also lashed out at the trustee handling his bankruptcy for… buying a new car.

And, of course, both Hansmeier and Steele have moved on to a revamped version of the same old trolling trick, but this time using the Americans with Disabilities Act as the fulcrum, rather than copyright law.

But, it appears that all that may be small potatoes. Because, as White told us three years ago, the wheels of justice do keep turning, and he now has strong indications that not only is the FBI actively investigating Steele and Hansmeier for fraud, but that they may be just about ready to move on to the next steps:

Based on my 21 years in the federal criminal justice system, I believe the letter reflects an active, determined investigation in its later stages. The letter represents an abandonment of operational security and confidentiality; it suggests the FBI no longer sees a need for stealth. That, in turn, suggests that the FBI believes it’s already developed the evidence it needs to prove the substance of its case (that Team Prenda committed wire and/or mail fraud) and is just identifying as many victims as possible for potential witnesses and to establish the amount of damages. Bear in mind that under the Federal Sentencing Guidelines, the more money wrongdoers made, the more time they’re facing.

Now, to be fair, over the years we’ve noted many times that the DOJ often misrepresents things in criminal filings, so it will be interesting to see what charges are actually filed, assuming that the case really is ready to move. But as White also noted, “Team Prenda needs federal criminal defense attorneys, and needs them right now.”

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Comments on “Bankruptcy Fight May Be The Least Of Team Prenda's Concerns, As The FBI Comes Knocking”

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Anon E. Mous (profile) says:

What will be interesting is if this will fit the statues of RICO and if it does which one of the two remaining Prenda gang will be tripping over themselves to try and strike a deal.

We all know CEO mastermind of AF Holdings and related shell companies Mark Lutz (formerly Johns Steele’s paralegal and process server) will cave in five minutes of questioning and beg to be a witness, and after his brilliant performance when questioned by the Florida Judge in the Sunlust that went over like a led balloon and it didn’t help that Steele was trying to whisper the answers to Lutz who was being questioned by the Judge, until the Judge noticed that and then started questioning Steele on what he was doing and who he was.

So Lutz would roll the easiest. Now Gibbs who Steele and Hansmeier tried to get to take the blame and then pressure to take the hit before Judge Wright in his court room would make a very powerful witness for the DOJ as Gibbs would have inside knowledge as to how the trolling scheme for settlements worked.

I am sure Steele and Hansmeier may be wishing that they did not try to throw Gibbs under the bus. I wouldnt at all be surprised to see if Steele and Hansmeier tried to put the blame Duffy’s way since he has passed on and there would be no rebuttal from that end.

Everyone knows Steele and Hansmeier reaped the profits from their trolling collective and the greed became so much that they started to loathe having to give the pron producers who were their clients when they started this their cut from the settlements, so they decided to be their own porn creators, leakers, monitoring firm, and law firm with the goal of keeping as near as 100% of the profits of their scheme to themselves.

How the mighty have fallen. Hansmeier bankruptcy getting converted due to falsehoods on his original chapter filing. Now his Americans with Disabilities Act lawsuit settlement scheme is about to come to a crashing halt due to the state of Minnesota enacting legislation to prevent the drive by ADA lawsuits and their abuse of the Americans with Disabilities act in Minnesota which incidentally was brought to the forefront because of Paul Hansmeier filing so many lawsuits and looking for settlements.

The Irony that Hansmeier and his greed is bringing his ADA lawsuits settlement came crashing down around him is way more than just and just too damn funny, you reap what you sow Paul.

So Steele must be on his desk peeing his pants at what has transpired with Hansmeier and knowing he is on the trolley tracks and people in Illinois are starting to make noise over the ADA suits Steele is filing there and not only that but the ADA abuse and lawsuit generation scheme is gaining notoriety all over the USA as people are complaining to the politicians about the issue.

Its been a long time coming and the Prenda gang deserves what they get, I hope they have many many sleepless night ahead of them as they have cause many for a lot of their victims.

The bell tolls for Hansmeier and Steele, it will be interesting to see what happens when the music stops playing and their are no chairs left. The race will be on to cut a deal. Who will fold first I wonder.

Anonymous Coward says:

Re: Re:

Thank you, as always, for your splendid recaps.

I see one of three scenarios playing out:

Steele and Hansmeier will argue that ‘bad lawyering’ is a disability covered under the ADA and therefore they are exempt from any civil/criminal penalties;

Steele and Hansmeier will argue that they are such stupendously good lawyers that any criminality they might commit would never be detectable by law enforcement and therefore these charges cannot exist, QED and churros all around!;

The FBI, being…the FBI, are spending untold time and resources proving that Steele’s caretaker, Alan Cooper, is just not that good of a caretaker.

My money is on scenario 3.

Anonymous Coward says:

Re: Re: Re:

You missed the obvious:

The FBI is attempting to bring a case before the court where it can compel Apple to decrypt Hansmeier’s Samsung phone to provide parallel construction for the stingray attack they did on him to get the evidence they’re currently planning to use. Meanwhile, the IRS is closing in on Steele with an asset forfeiture case based on a NIT they placed on his computer with the help of Gibbs, under a warrant filed in the state of California.

Anonymous Coward says:

Remember all - "Innocent until proven guilty"

Wells folks, just remember, even though these are a bunch of low-life lawyers, we still need to give them the “benefit of doubt” and until “proven guilty” we need to still keep in mind that they are “innocent”.

I know, I know, the record does speak for itself, but we still need to make sure that they get a fair trial, even though they didn’t ensure that for those they persecuted.

If we don’t then we are making special cases that will come back and bite us severely in the future.

Anonymous Coward says:

Re: Remember all - "Innocent until proven guilty"

I’m all for a fair trial, they can have the same fair trial everyone else gets, all their assets seized(and if anyone deserves their assets seized it’s these guys) and be represented by an overworked underpaid public defender unless they can find someone to defend them pro bono.

Maybe they can get Saul Goodman to represent them.

That One Guy (profile) says:

Re: Remember all - "Innocent until proven guilty"

Yes and no. Do I want them to get a fair trial? Absolutely, and not just because it makes any appeals a lot more difficult to fight against and overturn on some minor technicality, but because everyone, from scum to saint deserves a fair trial in court or the very concept of ‘justice’ goes out the window.

At the same time do I want to see them crash and burn for all the actions they have demonstrably done, from lying in court to extortion masquerading as ‘copyright protection’? You bet so long as it’s done legally, and really with how much evidence there should be for the FBI to work with they would have to really screw this one up to fail to nail the three of them to the proverbial wall.

That Anonymous Coward (profile) says:

Re: Remember all - "Innocent until proven guilty"

Except their own documents have shown they are guilty.

They deserve a fair trial, I’ve never said otherwise.
The legal system failed in a spectacular way, giving the benefit of the doubt over and over to lawyers who lied directly to the court over and over. The fact it took this long and this much lying to courts to get the wheels of justice to do anything should lead to very serious questions about where else the system is failing the citizens.

Those of us who oppose them are very open about the fact we have our own bias, and we present the evidence we have that support our conclusions. There are years and years of bits and pieces of information, some of us just assembled the puzzle faster.

Would I love to see them fry, you betcha but I’m not impartial. I want every i dotted and every t crossed, and I want them to get all of the justice everyone deserves… even the scum sucking bastards. I want to see them someplace other than a Club Fed, the misery they visited upon people who might have been really and truly innocent with the backing of the courts reserves them a special place in hell… but the law has to follow the law.

Anonymous Coward says:

Re: Re: Remember all - "Innocent until proven guilty"

The legal system failed in a spectacular way, giving the benefit of the doubt over and over to lawyers who lied directly to the court over and over.

The legal system failed in a spectacular by not giving the benefit of doubt to those who were accused by the lawyers who lied to the court.

Once all the evidence is presented it will be up to a jury of their peers (excluding all who have any understanding of copyright, law and any other relevant technical matters) to decide if the evidence is sufficient to prove guilt.

Even though the evidence so far presented in all courts (and other avenues) shows them to be corrupt and guilty, it may not be enough to convince the jury.

We will just have to see. However, when they do come before the Great Judge, they will truly face full force of that court. They will need to have the Great Advocate on their side if they want mercy there. There is only one way to get Him to speak on your behalf. I don’t think any of the principals of Prenda would know how to do that, but I could be mistaken.

That Anonymous Coward (profile) says:

Re: Re: Re: Remember all - "Innocent until proven guilty"

Their own words & actions will convince a jury.

There are many things that haven’t been mentioned publicly that are established facts. Despite what people want to believe, we didn’t release everything we had. While we took great delight in ripping apart the filings and testimony on the Twitters, there are still secrets that any investigation would trip over.

Besides Hans & Steele wanting a jury trial is not that likely. The now 90+ yr old woman from San Fransisco who they hounded, and when she went to the media they admitted their foolproof never wrong system had failed and left her alone. How do you think a jury will react to a truly innocent victim who was hounded day and night… only to have them drop their ‘air tight’ case because the evidence wasn’t accurate (or was it because the media put her on television calling them scammers out loud & drawing attention to the scam?)

Anonymous Coward says:

How long will it take at this point before the DOJ finally files charges against them? 6 months to a year? and then how long till trial? another 6 months to a year? and how long will a trial then last?
I’m just trying to figure out if it will be another 2-3 years before we finally see a conviction, even if it is just a plea deal.
And that will still just be 1 part of a hat trick; DOJ conviction, IRS conviction, and disbarment.

FM Hilton (profile) says:

Ah, the grinding wheels of justice

Someone should write a book about this. I mean, there’s lots of paper coming out of this case that hasn’t even been addressed yet, and the Feds are still lurking in the shadows, waiting for the best time to strike.

It’s not a matter of “if”, but “when and how hard” they’ll take Prenda down the rest of the way to hell, where they all belong.

Definitely a case that even Dickens would be hard pressed to top.

But we do need fresh popcorn!

Anonymous Anonymous Coward (profile) says:

Re: Ah, the grinding wheels of justice

“Someone should write a book about this.”

While there is a boat load of material via transcripts of cases, etc. turning this into a page turner novel, even a true crime novel will be difficult. Of course there is porn in the case, which will fare well, except maybe in Utah, but putting some action into the rather mundane interactions of dreaming up ways to illegally scam thousands of people is…not terribly active. The sex is there, but where’s the violence? Isn’t violence part and parcel for a best seller? No car chases, no murders, no…well maybe some psychosis could be developed, but while these guys are bad they do not constitute a Hannibal Lecter, for instance. I just don’t see this as the kind of material that could constitute a best seller…unless the author has the kind of imagination these guys had…

Wendy Cockcroft (user link) says:

Re: Re: Ah, the grinding wheels of justice

Were it up to me (I might start a crowdfunder), I’d focus on the victims and the people bringing them to justice. I’d start with something like:

“Daniel Johnson yawned as he padded into the kitchen, the morning’s mail clutched in one hand. One of the letters looked official. He opened it.

“What is it, hon?” asked his mom.

“Nothing,” he said hurriedly, slipping it beneath the leaflets advertising the new Chinese restaurant. He hoped she wouldn’t notice the colour draining out of his face as he rose and left the room. What the hell am I going to do? he thought. It must be a mistake. “I forgot something,” he told her as he made his way upstairs.

We start at Danny reading the Prenda letter and casting about for help and advice, reading Fight Copy Trolls and TD, and getting in on a class action lawsuit on the back of the charges filed by the FBI.

Add some more characters in and develop them, sprinkle in some legal procedural stuff, have a bit of fun explaining bad guy motivation, cover the death of Paul Duffy as knowing at the end of his days that his name is mud forever…

I’m not John Grisham and I’d need a lawyer’s input but I could do it.

Anonymous Coward says:

Re: Re:

out_of_the_blue, darryl, Jacques Nazaire (who spammed this site under the psuedonym “Nora”) have fallen into the dirt.

antidirt posts obscurely on anything these days, and when he does, it’s never logged in. The whole “pay Techdirt for insider to mock Techdirt while giving Techdirt money” gambit didn’t work out considering how much he loathes the site.

horse with no name shook his fist at sophisticatedjanedoe on the grounds that she was posting anonymously, then resurfaced under names such as My Name Here and Just Sayin’. In that time he got booted off Torrentfreak for posting under the names of bobmail, fitta and other throwaway troll accounts, and the moderators took notice. He now posts under Whatever but stays away from topics like these like the plague. He still sheds a trollish tear for the downfall of his heroes.

Maurice Ross… well, he’s still about. He spent a lot of effort on FCT and DTD defending Prenda, then rapidly changed sides to Malibu Media to claim that they’re not Prenda, and also that they “had no choice” but to mimic Prenda’s practices in chasing after porn-torrenting grandmothers.

Copyright law’s best and brightest.

Erbo says:

It’s far more likely that they’re trying to come up with a way of getting themselves and the boodle out of the country and into a jurisdiction where they can’t be extradited.

Johnny S, woah-oh-oh, he slipped away,
Paulie H caught up with him the very next day,
They got the money, hey, you know they got away,
They’re headed down South and they’re still runnin’ today,
Singin’, go on, take the money and run…

(with apologies to Steve Miller)

sophisticatedjanedoe (profile) says:

Received an email. The author preferred not to be named.

Talked to our lawyer last night. He says that Hansmeier’s biggest mistake may end up being the [Chapter] XIII [bankruptcy]. He says this opened him up to discovery in every direction, and the FBI has been taking notes in the background. So, in a way, the trustee has been doing the work for the FBI to establish a criminal case. Brilliant.

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