Court To Prenda's John Steele: Okay, Now We'll Sum Up How Much You Cost Taxpayers And Need To Pay

Legal Issues

from the the-saga-continues dept

When last we left John Steele, one of the dynamic duo behind the massive copyright trolling scam once known as Prenda Law, he was being scolded by the 7th circuit appeals court (not the first appeals court to do so), for failing to abide by the court’s own advice to “stop digging.” But digging a deeper and deeper hole has always been in John Steele’s nature, it seems. As we’ve mentioned in the past, Steele reminded me of a guy I once knew, who incorrectly believed that he was clearly smarter than everyone else, and thus believed (incorrectly) that he could talk and lie his way out of any situation if he just kept smiling and talking. That generally doesn’t work too well in court — especially when you’re not actually that smart.

In that July ruling, the court upheld most of the money Steele and Paul Hansmeier were told to pay, and scolded them for directly lying about their ability to pay. It referred to Steele’s “entire pattern of vexatious and obstructive conduct.” However, as we noted, Steele kinda sorta “won” on one point, though even that win was a loss. One of the arguments that Steele’s lawyer had made was that on the fine that the lower court gave him for contempt, the basis for that fine appeared to be under the standards for criminal contempt rather than civil contempt. Way back during oral arguments, the judges on the panel had asked Steele’s lawyer, somewhat incredulously, if he was actually asking the court to push this over to be a criminal case rather than a civil one, and Steele’s lawyer answered affirmatively.

And so, the court notes that the contempt fine “falls on the criminal side of the line,” because “it was an unconditional fine that did not reflect actual costs caused by the attorneys? conduct.” So it tossed out the $65,263 fine, but noted that criminal contempt charges might still be filed (out of the frying pan, into the fire). Oh, and of course, it left open the idea that the lower court might go back and actually justify civil contempt fines. And it appears that’s exactly what Judge David Herndon in the Southern District of Illinois has done. He’s ordered Steele to show cause for why he should not be fined, and then details the basis for such a fine.

As a direct result of Steele?s misrepresentations, between January 29, 2014 and June 5, 2015, this Court expended a significant amount of time and effort addressing matters relating to Steele?s ability to pay the Fee Order. This includes the following: (1) reviewing, researching, and issuing orders resolving and/or reconsidering numerous motions stemming from the misrepresentations; (2) preparing for and holding hearings on February 13, 2014 (Doc. 123) and November 12, 2014 (Doc. 187); and (3) reviewing asset statements submitted by John Steele in support of his inability to pay claim.

Steele?s choice to make misrepresentations to this Court and to continue to press the issue of inability to pay necessitated all of the above. Steele?s misconduct resulted in an actual loss to this Court and, more importantly, to the tax payers. It is the tax payers who ultimately bear the cost of adjudicating Steele?s misrepresentations. See U.S. v. Dowell, 257 F.3d 694, 699-700 (7th Cir. 2001). Considering the real cost to this Court and to the tax payers, the Court may impose a sanction that compensates the taxpayers for the Court?s time….

The Court intends to impose a remedial sanction for the Steele?s misconduct, outlined in this Court?s June 5, 2015 Order (Doc. 199). The remedial sanction shall be a fine in an amount necessary to reimburse the Court for the costs incurred as a result of Steele?s misrepresentations to this Court….

So, yes, the tiny “victory” for Steele in having the contempt fine tossed out was short lived, as a new civil contempt fine appears likely to be on the way. And, who knows, perhaps criminal charges as well. Can’t wait to see Steele try to talk himself out of this one too.

Filed Under: 7th circuit, anthony smith, contempt, david herndon, john steele
Companies: lightspeed, prenda, prenda law