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

by Mike Masnick

from the whoo-boy dept on Thursday, May 26th, 2016 @ 10:42AM
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 Hansmeier has not just lost his lawyer after she told the court that she could no longer represent him and be a servant of the court (i.e., heavily hinting that Hansmeier was likely asking her to lie to the court), but he's also lashed out at the trustee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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Daily Deal: Automatic Connected Car Adapter (Deals)

by Daily Deal

from the good-deals-on-cool-stuff dept on Thursday, May 26th, 2016 @ 10:36AM
Get an easy-to-read look into what's going on with your car with the Automatic Connected Car Adapter. Plug it into your dashboard and start tracking fuel efficiency and driving habits, figure out what that warning light is trying to tell you, or find your car when you've forgotten where you've parked. The adapter also monitors for major collisions and will alert Automatic Labs to call and to stay on the line with you until help arrives. It is compatible with most vehicles sold in the US after 1996 and integrates with a number of apps so you can track mileage for business or control your Nest to heat up the house on the way home. It is currently available in the Techdirt Deals Store for $89.95.


Note: The Techdirt Deals Store is powered and curated by StackCommerce. A portion of all sales from Techdirt Deals helps support Techdirt. The products featured do not reflect endorsements by our editorial team.
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House Budget Bill Guts Net Neutrality, Kills FCC Authority -- All Because The FCC Dared To Stand Up To Comcast & AT&T (Politics)

by Karl Bode

from the punished-for-doing-your-job dept on Thursday, May 26th, 2016 @ 9:28AM
We've noted a few times now that ever since the FCC passed net neutrality rules, loyal ISP politicians in the House and Senate have been engaged in a full-court press to punish the agency for daring to stand up to big broadband ISPs. That has involved an endless parade of taxpayer-funded hearings pretending to be about agency transparency and accountability -- but are really just about publicly shaming the agency. It has also involved a laundry list of bills that attempt to thoroughly gut FCC funding and authority under the pretense of saving the country from a power-mad FCC.

This not-so-subtle ballet continued this week, when the House passed a new budget bill that would gut the FCC's 2017 budget by $69 million, stall the FCC's attempt to bring competition to the cable box, and prevent the FCC from enforcing net neutrality violations until the industry's lawsuit is settled. In fact, like previous bills, this new budget bill uses an absurdly broad definition of "rate regulation" to effectively prevent the FCC from doing anything:
"The GOP proposals define rate regulation so broadly that Wheeler says they would prevent the FCC from enforcing key net neutrality provisions and disrupt its process for reviewing mergers. The budget bill again uses a definition of rate regulation that goes far beyond the utility rate-setting traditionally imposed on landline phone providers. The proposal would prevent the FCC from using its net neutrality rules to act against discriminatory data cap policies, among other things."
Note that this latest push comes -- not coincidentally -- as ISPs like AT&T and Comcast have started pushing usage caps harder, and the FCC has started dropping hints that it might just do something about it.

All the while, the pretense continues that this is all just the House's quest to ensure government is fiscally responsible, transparent, and accountable before the "American people." From an announcement by House Appropriations Committee Chair Hal Rogers:
"The job of this bill is two-fold: to make wise investments with taxpayer dollars in the programs and agencies that we need to grow our economy and enforce our laws, and to tightly hold the reins on the over-spending and overreach within federal bureaucracies. This bill makes great strides on all accounts – carefully investing taxpayer dollars in programs that promote opportunity, while keeping these agencies accountable to the American people."
You are, of course, supposed to ignore that Rogers received $25,000 in campaign contributions during the current election cycle from the telecom industry, and that this is all just a giant stage play designed to punish the telecom regulator for actually doing its fucking job.
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Yes, A Billionaire Looking To Destroy A Media Organization Through Lawsuits Is A Big Deal Even If You Don't Like The Media Organization (Free Speech)

by Mike Masnick

from the slapp dept on Thursday, May 26th, 2016 @ 8:31AM
So I had thought that our post yesterday about Peter Thiel allegedly financing Hulk Hogan's lawsuit against Gawker would be the only time we posted about that story, but a few things have happened that seem to merit a further post. First, Thiel has admitted to it, and insisted that he views it as "philanthropy." There are a number of claims that Thiel makes that are quite troubling. First, he admits that he didn't just back Hogan, but rather gave lawyers money to go hunting for anyone who might want to sue Gawker, directly out of spite.
He said that he hired a legal team several years ago to look for cases that he could help financially support. “Without going into all the details, we would get in touch with the plaintiffs who otherwise would have accepted a pittance for a settlement, and they were obviously quite happy to have this sort of support,” he said. “In a way very similar to how a plaintiff’s lawyer on contingency would do it.” Mr. Thiel declined to disclose what other cases he had supported but there are at least two current cases against Gawker.
Later on he admits: "It's safe to say this is not the only [case]."

This also seems ethically dubious, even if it's perfectly legal. I, frankly, don't have a huge concern over people funding others' lawsuits. While it can be abused, you can also see where it could be helpful for people who otherwise couldn't afford the legal costs. That said, specifically funding lawyers to go hunting for plaintiffs with the deliberate intent of killing a media publication? That's problematic. And that's true no matter how terrible you think Gawker is as a media property.

Incredibly, Thiel, who has given a large amount of money to the Committee to Protect Journalists, and who has claimed to be a big supporter of freedom of expression and freedom of the press, pulled a classic "I support freedom of speech, but..." line in response to questions along those lines, basically saying that he doesn't think Gawker counts.
He said he did not believe his actions were contradictory. “I refuse to believe that journalism means massive privacy violations,” he said. “I think much more highly of journalists than that. It’s precisely because I respect journalists that I do not believe they are endangered by fighting back against Gawker.”

He continued, “It’s not like it is some sort of speaking truth to power or something going on here. The way I’ve thought about this is that Gawker has been a singularly terrible bully. In a way, if I didn’t think Gawker was unique, I wouldn’t have done any of this. If the entire media was more or less like this, this would be like trying to boil the ocean.” Mr. Thiel said he had not targeted any other media companies.
And this brings me to the second reason I'm posting more on this story: a surprising number of people (to me) keep supporting Thiel in this, and arguing that because what Gawker did was so horrible that this vendetta against them is okay. This is dangerous thinking. And I wanted to dig in on why it's so dangerous. First, there's the obvious: freedom of expression is supposed to protect the speech you dislike the most. Otherwise, we wouldn't need it. Carving it out because he thinks they're "bullies" is the kind of stuff that the First Amendment doesn't allow.

Second, the idea that this won't impact other journalism organizations is hogwash. As Felix Salmon wrote, this gives other billionaires a "dangerous blueprint" to be vindictive against any publication they dislike. Basically, he notes that publications are always extra careful about writing about notoriously litigious billionaires. But Thiel's plan is much more dubious: just have lawyers watching for anyone else who may be aggrieved, where a publication maybe wasn't quite as careful, and then mount a series of lawsuits, some perhaps more dubious than others (hold that thought...) to bury the company in legal expenses. Salmon points out that this opens up a huge number of possibilities for others:
If Thiel’s strategy works against Gawker, it could be used by any billionaire against any media organization. Sheldon Adelson, Donald Trump, the list goes on and on. Up until now, they’ve mostly been content suing news organizations as plaintiffs, over stories which name them. But Thiel has shown them how to go thermonuclear: bankroll other lawsuits, as many as it takes, and bankrupt the news organization that way. Very few companies have the legal wherewithal to withstand such a barrage.
Both Sheldon Adelson and Donald Trump have done vindictive SLAPP suits against news publications that have said things they didn't appreciate. And then there was the infamous case of billionaire Frank VanderSloot who waged a years long SLAPP legal campaign against Mother Jones over reporting he didn't like.

Josh Marshall, over at Talking Points Memo also does a good job of showing why this is so concerning:

Regardless of his politics, this news should disturb everyone. People talk a lot about the dominance of the 1% or in this case more like a tiny fraction of the 1%. But being able to give massive political contributions actually pales in comparison to the impact of being able to destroy a publication you don't like by combining the machinery of the courts with anonymity and unlimited funds to bleed a publication dry.

We don't have to go any further than Donald Trump to know that the incredibly rich often use frivolous litigation to intimidate critics and bludgeon enemies. Mother Jones had a lawsuit like this, clearly intended to bleed them dry through endless legal expenses. They won, though at a steep cost. But when bully plutocrats do so in their own name there is at least a self-correcting dynamic at work. A plaintiff in a libel suit opens him or herself up to reputational harm and highly intrusive legal discovery which is often enough to scare people away. (Remember, when Trump sued Tim O'Brien for publishing Trump insiders' claims that Trump was worth less than $250 million dollars, Trump was eventually forced to show O'Brien's lawyers his tax returns.) In some ways, this lines up with something I noted in my 'Brittle Grip' series of posts: growing calls from the extremely rich to not only be able to use their money without limit to shape the political process but to do so anonymously to avoid being "intimidated" or "vilified".

And even if you still think it's okay because (1) Gawker is awful or (2) "publishing a sex tape shouldn't be protected," consider, again, that Thiel has admitted that he's funding more lawsuits against Gawker. I currently know of at least four other lawsuits against Gawker -- with at least three of them using the same lawyer as Hogan used. And those lawsuits are ridiculous. We've written about both the Shiva Ayyadurai lawsuit (with the same lawyer) in which he's mad that Gawker accurately pointed out that Ayyadurai did not invent email, and the laugh out loud bad lawsuit by Chuck Johnson against Gawker. For what it's worth, Ayyadurai denies knowledge "of any behind-the-scenes financial arrangements involving my attorneys and anyone else." So perhaps Thiel is not funding his lawsuit, but with Thiel admitting to funding others, there aren't that many other choices.

Taken as a whole, this takes SLAPP (Strategic Lawsuits Against Public Participation) to entirely new levels. Flooding the zone with lawsuits, even if some have validity, with the sole admitted purpose of trying to destroy a publication you don't like has tremendous chilling effects on the press. Wired, with its tongue firmly in cheek, made this point fantastically with an article entitled How Can We Make You Happy Today, Peter Thiel? which is paragraph after paragraph of this kind of thing:

If you don’t know who Peter Thiel is, set your swoon-sockets to Stun, because Peter Thiel is the best—just an awesome, handsome, awesome guy—and we would never want to give the impression that we think otherwise. See how happy he is in this picture below? That’s how we want him to look every time he thinks about his ol’ buddies at Wired: “Great, great team. Total pros. Definitely not gonna get mad and team up with a former wrestler to secretly bankroll a lawsuit against them, and all because I didn’t like what they said about me.”

Three cheers for Peter Thiel!

Yes, it's exaggerated for comedic purposes, but the chilling effect can be very, very real. Publications that don't want to face such a vindictive campaign are going to stay silent. And that's a serious concern.

Meanwhile, Elizabeth Spiers highlights another point on all of this, focusing mainly on the fact that Thiel's response is massively out of proportion to any actual harm. Her focus is on whether or not this activity coming to light should worry entrepreneurs who work with Thiel, suggesting "I have no sense of proportionality, and might go completely apeshit on you for the slight infraction, or if godforbid we just have a simple misunderstanding."

Or, as a way of summing it up, if you think that it's okay for Thiel to do this because you think that Gawker consists of a bunch of jackasses, be afraid, because there's someone out there who thinks you're a jackass too. And just hope they're not a billionaire who has the free resources to wait for any attempt to destroy you... and then call it "philanthropy."

Hate on Gawker all you want. But this blueprint of trying to bury a company in legal fees, just out of spite, should worry everyone if you believe in freedom of the press. There's a reason that we're so concerned with typical SLAPP suits, and why we keep asking for stronger state anti-SLAPP laws and a federal anti-SLAPP law. Thiel's actions make this even more important today than ever before.
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As Expected, Verizon's Attempt To Woo Millennials Is Falling Flat On Its Face (Failures)

by Karl Bode

from the hip-to-be-square dept on Thursday, May 26th, 2016 @ 6:27AM
For years now Verizon has made it clear that it no longer wants to be in the fixed-line broadband business. Despite countless billions in taxpayer subsidies and numerous unfinished obligations, the company has all-but frozen serious fiber deployments. It has also been either selling off unwanted DSL customers to smaller, ill-equipped telcos (which which almost always ends poorly for everybody except Verizon accountants and lawyers) or has quite literally tried to drive unwanted users away with both rate hikes and apathy.

Instead, Verizon executives decided to try and transform the stodgy old telco into a sexy new Millennial-focused advertising juggernaut. So far that has involved launching the company's Millennial-targeted "Go90" streaming video service, spending $4.4 billion on acquiring AOL, trying to acquire the drifting wreckage that is Yahoo, and developing controversial stealth ad tracking technology to build covert profiles of customer behavior as they wander around the Internet.

Despite the company heavily marketing Go90, zero rating the service so it doesn't count against usage caps, and even giving away data to users that try the service, it has seen extremely limited adoption among Verizon's target demographic. Verizon has refused to release subscriber numbers for the service, and the Go90 app is slowly falling down both the Apple App Store and Google Play rankings. Things have been so underwhelming, Verizon CEO Lowell McAdam was forced to admit to attendees of an investor conference this week that the company may have "over-hyped" the platform:
"It did get a little bit overhyped, and we contributed to that to some extent," McAdam said in a keynote appearance at the 44th Annual J.P. Morgan Conference. McAdam explained that Verizon's strength is in building networks, not necessarily developing popular content. "It's not exactly our strong suit," McAdam conceded.
Granted everybody not at Verizon knew that the company's attempt to magically make an old telco sexy for millennials would be a hard sell, especially given Verizon's long history of trying and failing to be content innovators. The company has long tried and failed when leaning outside of its core competency, whether that's operating its own app store, running a streaming venture with Red Box, or briefly operating a news website where authors were prohibited from talking about things like surveillance or net neutrality. Phone companies, after a generation of regulatory capture and "yes men" boardroom culture -- simply aren't genetically built for real disruption and innovation outside their core competency, no matter how many executives seem to believe otherwise.

McAdam then tried to walk back his comments a little, and tried to argue that Go90 isn't a failure, it's just a vision that's going to take a lot of time, and a lot of money (which won't be spent on networks), to execute:
"We've seen enough success to make us excited about continuing to work it... "Go90 is in a good spot from our perspective, we're going to continue to pursue it. But our expectations are realistic."
As a writer I generally love telecom investor conferences for the simple fact that for whatever reason, phone and cable executives still haven't figured out that the public can hear what's being said at them. What usually happens is a telecom executive will say something uncharacteristically candid, then the company's marketing department will jump in to try and spin the comments a few weeks later. As such it shouldn't be long before Verizon unveils a new marketing barrage that spins McAdam's comments and claims Verizon's quest to become sexy in the eyes of Millennials is going better than ever.
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