Team Prenda Finally Goes To Jail: Hansmeier & Steele Indicted & Arrested

from the shit-gets-real dept

For many, many, many years, we’ve been covering the saga of Prenda Law — a legal operation set up to file tons of shakedown copyright infringement lawsuits in an effort to get as many people as possible to just pay up and settle. The scam got deeper and deeper the more you looked, including forged signatures, clear evidence that the main actors behind Prenda — John Steele and Paul Hansmeier — were uploading their own works as a honeypot, while pretending to represent clients that they themselves owned through various shell companies — which they denied owning. It went on and on and on. And on and on and on. Things really went sideways almost four years ago when Judge Otis Wright in California was the first judge to put much of this together, and called all of them to court, where everyone pleaded the fifth (yes, lawyers were pleading the fifth in a case they themselves brought). In response, Judge Wright referrred the case to law enforcement, leading many people to ask over the past four years how it was these guys weren’t in jail (and, in fact, they continued to file lawsuits, reprising the same scheme but with ADA shakedowns.

Court after court after court has slammed Prenda, and ordered Hansmeier and Steele (partner 3, Paul Duffy, died in the middle of all of this) to pay up lots of money. Of course, in response to that, there were further accusations of illegally hiding money, bogus trusts, a questionable bankruptcy claim and more. And, yet, they still were not in jail. Oh, and we didn’t even mention the various ethics investigations that recently suspended Hansmeier’s license.

Ken “Popehat” White — who as a former Assistant US Attorney and current criminal lawyer — has kept saying that the wheels of justice turn slowly, but they do turn. Back in May, White noted that it appeared that ofifcials were getting mighty close to filing charges against Hansmeier and Steele, based on some evidence he had seen, suggesting the investigation was wrapping up. And the wheels continued to turn… until earlier today when it was revealed that Steele and Hansmeier have both been indicted and arrested in connection with the Prenda scam.

You can read the indictment or Ken White’s excellent analysis of it. As White notes, the indictment is incredibly thorough. We’ve written about a number of indictments in the past in which law enforcement is fairly lax on details. This is not one of those cases. The overview gives a really good summary of everything:

Between 2011 and 2014, defendants Paul R. HANSMEIER and John L. STEELE orchestrated an elaborate scheme to fraudulently obtain millions of dollars in copyright lawsuit settlements by deceiving state and federal courts throughout the country. In order to carry out the scheme, the defendants used sham entities to obtain copyrights to pornographic movies–some of which they filmed themselves–and then uploaded those movies to file-sharing websites in order to lure people to download the movies. To learn the identities of the people caught in the trap they constructed, HANSMEIER and STEELE filed specious copyright infringement lawsuits and fraudulently procured permission from courts to send subpoenas to internet service providers for subscriber information associated with the IP addresses used to download their pornographic movies. After receiving this information, the defendants–through extortionate letters and phone calls–threatened the subscribers with enormous financial penalties and public embarrassment unless the subscribers agreed to pay a settlement, all the while concealing their collusion in the alleged copyright infringement. When courts restricted their ability to sue multiple individuals in the same lawsuit, the defendants shifted tactics. They filed lawsuits falsely alleging that computer systems purportedly belonging to their sham clients had been infiltrated by hackers, and then recruited ruse defendants against whom they brought these illusory “hacking” lawsuits. Finally, when courts became suspicious of the defendants’ tactics and motives, the defendants began a long process of lies and deceit designed to conceal the truth and deflect responsibility from themselves. In total, the defendants obtained approximately. $6,000,000 made possible by the fraudulent copyright lawsuits they peddled to courts throughout the country

I believe the $6 million number is new. But everything else in there we’ve covered in the past. The lawsuit names some people by initials only — but who are easily identifiable if you’ve been following the saga. M.L. is likely Mark Lutz the “paralegal” who was involved in many of these cases, and was a figurehead owner of some of the sham corporations. You may remember him from one of the earliest Prenda stories we had, where Lutz “appeared” in court as a “corporate representative” of one of Prenda’s “clients” and yet knew nothing at all about the company he was supposed “representing.” That story also involved an appearance by John Steele who claimed he was there just observing, but which the judge immediately became suspicious about.

P.H. is likely to be Peter Hansmeier, Paul’s brother, whose name has appeared at times in connection with the Prenda scam and had been described as the technology person tracking down who was downloading the files in question. The indictment also mentions P.D. who is obviously Paul Duffy, the official owner of Prenda Law, but who was always sort of the third wheel of the operation before dying just as all the mess was unfolding. A.C. is clearly Alan Cooper, named here as “an acquaintance of Steele,” but who was a caretaker for some Steele properties, and whose signature Steele forged on documents pretending to own AF Holdings, one of the bogus shell companies he set up. B.G. is almost certain Brett Gibbs, a California lawyer who filed a bunch of Prenda lawsuits early on, but was one of the first to reveal details once judges started to catch on.

Perhaps the most interesting part of the indictment is it details multiple lies that Team Prenda told under penalty of perjury or under oath to various courts. It’s a pretty long and detailed list. It includes filings by Mark Lutz and Brett Gibbs, which the indictment claims were all done, under penalty of perjury, at the direction of Steele and Hansmeier — so they don’t even get off for trying to keep their names off these documents.

Based on all this, they’re facing a bunch of charges, for mail fraud, wire fraud, conspiracy to commit money laundering (involving the transactions to hide money from courts) and conspiracy to commit and suborn perjury.

As White rightly reminds us, an indictment is just a bunch of allegations, not yet proven, but having followed Team Prenda and all these actions for many years, the feds seem to have clearly figured out what was going on, and appear to have the evidence to back up many of those claims. Things don’t look good for Steele and Hansmeier. According to the Minneapolis Star Tribune, US Attorney Andrew Luger called a press conference to announce all of this and call out the actions of Steele and Hansmeier.

“The defendants in this case are charged with devising a scheme that casts doubt on the integrity of our profession,” Luger said in prepared remarks. “The conduct of these defendants was outrageous ? they used deceptive lawsuits and unsuspecting judges to extort millions from vulnerable defendants. Our courts are halls of justice where fairness and the rule of law triumph, and my office will use every available resource to stop corrupt lawyers from abusing our system of justice.”

Turns out that when you abuse the judicial system to shake people down… people aren’t going to be too happy about that. Of course, now we have to wonder if the other giant copyright troll, Malibu Media, may be facing similar issues going forward…

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Companies: af holdings, guava, ingenuity 13, livewire, prenda, prenda law

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Comments on “Team Prenda Finally Goes To Jail: Hansmeier & Steele Indicted & Arrested”

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Anon E. Mous (profile) says:

Finally the Prenda gang is starting to feel some real pain. Their torrent litigation was using legitimate content producers as plaintiffs to sue people, that was until they discovered how easy money this was to get and then started to loathe having to give those porn producing plaintiffs their cut.

I dont know whether it was Hans or Steele that thought of creating their own offshore companies and using them as plaintiffs to sue for so they could keep all the profits, but the fact that they did so, and then thought to use people like Alan Cooper and Salt March and stooge Mark Lutz as the face of these entities just shows how they thought no one would look closely at the threads that were holding this scheme together.

There were a lot of people in the Anti troll community that made this happen, because they knew this was a scam and they slowly started assembling the facts and putting all that information out there to educate people about what the Prenda gang was up to.

I would have loved to have seen the looks on Hansmeier and Steele’s face when the cars came screeching up and men in blue jackets came running up the driveway and for once it wasn’t the Dominos guy, but the FBI coming to slap the wrist bracelets on both of them

Both are well deserving of this, I cant wait to see who the witnesses will be that are going to want to save their own asses and cut deals already. Gibbs? Lutz? Who knows, but it should be interesting to see these guys squirm while they are under indictment.

Will the Prenda gang stop with the ADA lawsuits while they are under indictment? I would bet not, they see ADA lawsuits as easy money and as we have all seen, that easy money is way too hard to walk away from

art guerrilla (profile) says:

Re: Re: Re:4 Re:

“…but Steele had just installed a new deck, pool,…”

you know why ? you can ‘hide’ assets in your primary residence in la florida… in other words, as a state resident, your primary residence is pretty much immune from being sold to pay the proceeds of judgments won against you…
(or from being taken by creditors, bankruptcy, etc, if i remember correctly… AND while i might dislike that this apparently benefits prenda-scum, i think it is a good law for us 99%, too… one reason you have rich pukes here with zillion dollar mansions…)

That One Guy (profile) says:

Re: Re: Re: Re:

Six million dollar fraud and extortion racket according to the indictment, run by two people with a long history of lying to the courts including financials, and the judge figures that a promise to show up in court is good enough?

Even when they get arrested they get the silk-glove treatment, really brings respect to the legal system, no? /s

That One Guy (profile) says:

Re: Re: Re: Should have demanded a pinky promise too

Nonsense, people accidentally book passage out of the country all the time. Why just last week I woke up only to realize that I’d sleep-booked-a-flight-out-of-the-country the previous night(thankfully the airlines were understanding about a refund, it being such a common problem).

I’m sure that if he finds himself on a plane or boat heading to a country without extradition to the US it will be as much of a shock to him as it will be to the judge.

Anonymous Coward says:

Re: Yee Haw!

There I was sitting on the can reading this great news.
After taking the browns to the superbowl I was overcome with the craving for popcorn.

I made my way into the kitchen and started searching when I finally came to the realization that I’m out of popcorn!

When will I be able to order the Techdirt Tasty Troll Popcorn?

Anon E. Mous (profile) says:

If I were in the bit torrent litigation game after hearing what occurred today with The Prenda gang I would be seriously concerned whether the FBI & USDOJ are looking at their litigation because there are a lot of similarities in the litigation strategy with the exception that these plaintiffs exist, but IMHO opinion the evidence is suspect at best.

There are issues that have been raised before with the so called evidence, the German monitoring firm and the so called people who signed some of the affidavits from Darren Griffin who may be like Prenda’s version of Alan Cooper and I wont even bring up expert Patrick Paige being booted from the police department disgracefully.

Then there is all those shelf corporation set up and used by the trolls and the fact that the trolls are loathe to have their evidence analyzed and expert give testimony in a jury trial.

I believe we will see more dominoes fall yet, the trolls are loathe to walk away from that sweet sweet easy settlement cash, but as we see with the Prenda gang, it is fraught with danger for those who chase it

streetlight (profile) says:

Has Mike been harasssed by these guys?

I’ve followed this fascinating tale for some time on this site and was wondering if Mike has ever seen any legal action or other harassment from these guys. I can’t remember if he’s reported such in the past. Techdirt is probably not read by “normal” people so maybe these guys ignored it as not worth the effort since other activities were more profitable.

Anon E. Mous (profile) says:

Re: Has Mike been harasssed by these guys?

Well not openly, but there are posters here who believe that either Steele or Hans may have posted here bitching how mike hates copyright defenders and when their posted get down voted bitched about how they got down voted, and it would fit with some of the temper tantrums Steele has thrown around

Anonymous Coward says:

“Of course, now we have to wonder if the other giant copyright troll, Malibu Media, may be facing similar issues going forward…”

If the term “barely legal” comes to mind then someone should start investigating the real ages of those that took part in those films. If “underage” is uncovered then there will be some explaining to do by Malibu Media.

Anon E. Mous (profile) says:

John’s wife Kerry Steele did some work for john and helped John form a new company after the bar complaint was filed against John using that Lincoln Road address in Miami. Rumour has it she was working for John In Chicago.

Hansmeier’s wife Padigrin Browne is now the new face of ADA lawsuits in Minnesota, apparently Paul consults in a non legal capacity at this firm ~wink wink~ and as of up to today she was filing ADA cases in her name

Anon E. Mous (profile) says:

Re: Re:

Here is a quick glimpse of John and Kerry on their wedding night ( I know your thinking dude! Gross I dont want to see John doing the horizontal mumbo.. relax I wouldn’t torture any of you like that! It’s like a picture collage.

If you pause the video at 24 seconds you will see Hansmeier was there as well:

OldGeezer (profile) says:

Re: Re:

So far these are the least of their problems. They are bound to face much more prison time for tax evasion than all other charged combined. Remember when the feds couldn’t touch one of last century’s most ruthless gangster and mass murder Al Capone? One ledger book was all the IRS needed to lock him up until syphilis fried his brain.

Jim says:

But, it's not over yet

Dont worry, there are three others to watch. Until July, I had my Google news include search terms and other extended warnings. One of their report pages, in their analytics groups, there is an group out of Hollywood, Colorado and Washington state. They use push technology to promote porn. And then use the warnings to get money. You don’t even have to see their images. And its done thru search engines. The Java, HTML strips that the search engine produces? Have you ever gone to the last pages in a search for angels, or some other innocuous term? Some times, it was in the search for a definition, in foreign languages. Most interesting, I haven’t seen Minnesota listed, I remember some warnings from there also.

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