Things Looking Even Worse For Prenda's Paul Hansmeier: Bankruptcy Fraud On Deck

from the welcome-to-the-big-leagues dept

So, let's just say that things probably haven't been looking very good for Prenda's Paul Hansmeier lately. Obviously, there was a long series of legal losses in the Prenda and Prenda-related cases, but those are in the distant past now. Back in September, he lost his law license for some of the Prenda copyright trolling activities (if you haven't been playing along, Prenda set up their own honeypots with their own films --which they pretended were some other company's, filed bogus CFAA charges to try to get IP addresses, demanded cash from people to drop lawsuits, lied in court multiple times and more...). Then, in December, the two main players: John Steele and Hansmeier were finally indicted and arrested. Then, just a couple weeks ago, Steele took a guilty plea, making it clear he's thrown Hansmeier under the bus and will testify against him (given the history of Steele throwing many others under rapidly approaching buses, this is no surprise).

So... that's not a really good position to be in. But it may be getting worse. As you may recall, in July of 2015, after a number of cases went against Prenda, and Steele and Hansmeier were told to pay large sums of money in opposing legal fees and sanctions, Hansmeier declared bankruptcy. Except, as with so much related to Hansmeier, that was a disaster too. It got so bad that Hansmeier's own lawyer admitted to the court that "he's a bad actor." As the bankruptcy process wore on, it became apparently worse. Turns out that he denied a certain trust fund was under his control, but that wasn't actually true. Oh and also more shell companies. Oh, and also $180,000 in cash hidden under his bed. As we noted all the way back in 2015, even before all of this came out, bankruptcy fraud is a bad idea.

And now, according to some of the latest filings in Hansmeir's bankruptcy case (also submitted in his criminal trial), Hansmeier admits that he's aware he's being investigated for bankruptcy fraud as well (ht: SJD):

Oh, and back in December it was reported that the FBI was also investigating his ADA trolling efforts. So that makes him indicted for Prenda and under investigation over more potential (serious) issues for doing more Prenda-like activities with the ADA and then also for bankruptcy fraud. As Paul Hansmeier himself once said in an angry threat letter: "welcome to the big leagues." Amusingly, that was in a letter to a critic threatening litigation for daring to suggest that Hansmeier had been involved in criminal activities.

Oh, and that's not all. Also via SJD, we find out that the trustee in the bankruptcy case, noting the indictment, has been asking Hansmeier to "waive his discharge" (effectively forcing Hansmeier to remain in bankruptcy, rather than being able to discharge his debts). The trustee (who is, somewhat amazingly, a former law school classmate of Hansmeier's) sent Hansmeier an email to this effect, noting that assuming Hansmeier would invoke the 5th Amendment in his criminal case, that will "allow the bankruptcty court to draw numerous adverse inferences against you."

Ouch. The document below, in which Hansmeier reveals the bankruptcy fraud investigation, is actually part of his effort to have the bankruptcy court to hold off on these proceedings while all this other stuff gets taken care of. But, even if he weren't facing criminal charges where his partner in crime has already admitted everything and agreed to testify against him, and even if he weren't also facing separate investigations over bankruptcy fraud and ADA trolling, it appears that Hansmeier's bankruptcy case is getting even worse than it was before. This is beyond big leagues. This is beyond the All-Star game. This is truly Hall of Fame material.


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  • icon
    That One Guy (profile), 20 Mar 2017 @ 10:52am

    Thank you Prenda

    It took far too long to get to this point, but what's not to love about a font of guilt-free schadenfreude, that, just when you think it's over, crops right back up with even more stuff to smile about?

    Now so long as the legal system doesn't somehow screw this one completely up, it seems that Prenda will go out not with a bang nor a whimper, but a hearty round of applause and laughter by the audience.

    reply to this | link to this | view in chronology ]

    • icon
      Roger Strong (profile), 20 Mar 2017 @ 11:30am

      Re: Thank you Prenda

      Now so long as the legal system doesn't somehow screw this one completely up,

      Like having GCHQ spy on them through their microwave ovens.

      I hear there's a lot of that going around.

      reply to this | link to this | view in chronology ]

      • identicon
        Jeff, 20 Mar 2017 @ 2:09pm

        Re: Re: Thank you Prenda

        It's not B.S.: https://www.extremetech.com/extreme/133936-using-wifi-to-see-through-walls

        Microwave ovens operate around 2.1GHz while routers operate around 2.4GHz.

        This technique was demonstrated.

        reply to this | link to this | view in chronology ]

        • icon
          Roger Strong (profile), 20 Mar 2017 @ 2:36pm

          Re: Re: Re: Thank you Prenda

          Being able to detect whether someone is walking around in the adjacent room - and nothing more - is an extremely small value of spying. People can easily do that without microwaves.

          Now limit it to only working in the kitchen. And only while the oven is operating, maybe 0.01% of the day.

          It's like last week's media hype that one could bridge an air gap to extract data from another computer using only drive lights. Yes, you could make a working demonstration, but that doesn't make it a remotely credible threat.

          reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 20 Mar 2017 @ 2:57pm

            Re: Re: Re: Re: Thank you Prenda

            Well, windows keeps the drive lights active, and the user password is not a lot of data.

            /fake news conspiracy theory.

            reply to this | link to this | view in chronology ]

          • identicon
            Jim, 21 Mar 2017 @ 6:29am

            Re: Re: Re: Re: Thank you Prenda

            I thought that was proven way back, wireless keyboards. The same group, put on a demonstration of wired keyboards. I seem to remember the same with the screen typing just recently, something of the resistive signal and EMF field theory. Small amounts of radio field work. But separating to a single user in a room of people? That may be harder or a lot of GIGO.

            reply to this | link to this | view in chronology ]

        • icon
          Aaron Walkhouse (profile), 20 Mar 2017 @ 7:00pm

          Wikipedia disagrees:

          Consumer ovens usually use 2.45 gigahertz (GHz)—a
          wavelength of 12.2 centimetres (4.80 in)—while large
          industrial/commercial ovens often use 915 megahertz
          (MHz)—32.8 centimetres (12.9 in).

          For household purposes, 2.45 GHz has the advantage over 915
          MHz in that 915 MHz is only an ISM band in the ITU Region 2
          while 2.45 GHz is available worldwide.

          reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 21 Mar 2017 @ 12:59am

      Re: Thank you Prenda

      IT appears that the drunk hippo has finally got Hansmeier's attention. And his attention isn't worth the paper it's written on.

      reply to this | link to this | view in chronology ]

  • icon
    orbitalinsertion (profile), 20 Mar 2017 @ 10:58am

    Mike, when will you admit that you just hate copyright?

    reply to this | link to this | view in chronology ]

    • identicon
      Christenson, 20 Mar 2017 @ 11:19am

      Re: Learning to Love Copyright

      Mike will learn to love copyright when, and only when, he is exposed to it doing awesome, good things.

      Right now, we have:
      #prenda
      #malibu media
      (both probably connected to Guardaley, and there's a suggestion the MPAA/RIAA just loves all those privacy-destroying ISP subpoenas)
      #dmca abuse as censorship
      The "mickey mouse" copyright term curve
      My building code only available for a few hundred bucks, but it's the law.
      Digital Rights (mis)Management making sure my computer is untrustworthy.

      And the greatest copying machine man has ever known...the internet!

      Tell us, please, how modern copyright isn't just a sophisticated lottery ticket, a license for big companies to abuse small consumers and profit off their backs?

      reply to this | link to this | view in chronology ]

      • icon
        That One Guy (profile), 20 Mar 2017 @ 11:26am

        Re: Re: Learning to Love Copyright

        You might want to get your sarcasm meter re-calibrated and/or replaced, I'm almost certain the comment you replied to is a poe mocking the 'MM hates copyright' trolls.

        reply to this | link to this | view in chronology ]

        • identicon
          Scote, 20 Mar 2017 @ 11:49am

          Re: Re: Re: Learning to Love Copyright

          Could be. But dead pan sarcasm can be indistinguishable from trolling. That's on the person using sarcasm without a tag. Sarcasm is fake commenting, someone gets "misunderstood" using it, it's their own damn fault, not the fault of the audience.

          reply to this | link to this | view in chronology ]

          • identicon
            nick, 20 Mar 2017 @ 2:21pm

            Re: Re: Re: Re: Learning to Love Copyright

            "Sarcasm is fake commenting, someone gets "misunderstood" using it, it's their own damn fault, not the fault of the audience."

            While it is wholly possible to engage in sarcasm on the interbridge that is so subtle that it gets missed ... this is not even close to that case.

            Also, sarcasm is not "fake" commenting. It is the use of a rhetorical tool. Fake commenting would be to come on here and claim to have evidence that the President of the United States had illegally ordered electronic surveillance his potential successor, when, in fact, that evidence doesn't exist. Sarcastic commenting would be to say that that is a *brilliant* strategery, designed and implemented to distract people from the real problem ... that our current President is a delusional paranoid nutball.

            reply to this | link to this | view in chronology ]

            • icon
              Eldakka (profile), 20 Mar 2017 @ 5:39pm

              Re: Re: Re: Re: Re: Learning to Love Copyright

              Fake commenting would be to come on here and claim to have evidence that the President of the United States had illegally ordered electronic surveillance his potential successor, when, in fact, that evidence doesn't exist.

              Of course the evidence doesn't exist of illegal spying. That's because I'm sure the President got some legal adviser to provide written, classified, legal advice that it is entirely within the President's power to spy on anyone, anywhere, anytime, thus making it legal spying.

              (And just in case it's not obvious, this is an ironic reference to the John Yoo torture memo)

              reply to this | link to this | view in chronology ]

            • icon
              sorrykb (profile), 21 Mar 2017 @ 9:46am

              Re: Re: Re: Re: Re: Learning to Love Copyright

              Sarcasm is dead.
              Long live sarcasm.

              reply to this | link to this | view in chronology ]

      • icon
        DannyB (profile), 20 Mar 2017 @ 11:53am

        Re: Re: Learning to Love Copyright

        Don't forget: Righthaven.

        reply to this | link to this | view in chronology ]

        • identicon
          Christenson, 21 Mar 2017 @ 12:37pm

          Re: Re: Re: Learning to Love Copyright

          (Smiley)
          Hey, Rightscorp is feeling left out here!

          To All those telling me I got trolled or sarcasmed or something above: A word to the wise is sufficient. Ooops!

          reply to this | link to this | view in chronology ]

  • icon
    Anonymous Anonymous Coward (profile), 20 Mar 2017 @ 11:05am

    And for desert...

    ...there is the possibility that the IRS is just around the corner.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 20 Mar 2017 @ 11:07am

    Steele's guilty plea

    Whether actively coordinated or not, Steele's guilty plea (and in particular, his willingness to testify for the State) makes a lot more sense now. Hansmeier is in very deep even without Steele's testimony. Knowing this, whether or not he actively warned Hansmeier of his intent, Steele may have opted to plead guilty in hopes that his testimony against Hansmeier would save Steele, without meaningfully damning Hansmeier further. At this point, is there anything they did that Steele could confess to that would make Hansmeier's situation that much worse than if Steele dropped dead and took all his testimony with him? If not, then it makes perfect sense for Steele to testify against Hansmeier: Hansmeier is screwed either way, and maybe Steele gets a better sentence.

    reply to this | link to this | view in chronology ]

    • icon
      That One Guy (profile), 20 Mar 2017 @ 11:17am

      Re: Steele's guilty plea

      I imagine if Steele tries to give them something they already have the response will be something along the lines of pointing out that if he's not 'willing to work with them' then they're not 'willing to work with him'.

      If he wants to save his own skin he'd have to give them something new, something they don't already have nailed down, so it's going to have to be something significant, and with how much they almost certainly already have that would take some real doing.

      reply to this | link to this | view in chronology ]

    • icon
      streetlight (profile), 20 Mar 2017 @ 11:21am

      Re: Steele's guilty plea

      I wouldn't be surprised if Steele hasn't been deposed under oath with video cameras and appropriate text transcription all stored in multiple ways. This, just in case Steel drops dead. Of course it's tough to confront a dead witness.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 20 Mar 2017 @ 12:46pm

        Re: Re: Steele's guilty plea

        I wouldn't be surprised if Steele hasn't been deposed under oath with video cameras and appropriate text transcription all stored in multiple ways.

        I would. The FBI only relatively recently learned to use technology that lets it record an interview in real time, rather than trying to memorialize the interview in agents' notes well after the fact. ;)

        reply to this | link to this | view in chronology ]

      • icon
        Vidiot (profile), 20 Mar 2017 @ 2:45pm

        Re: Re: Steele's guilty plea

        "Of course it's tough to confront a dead witness."

        So you think Paul Duffy won't be called?

        reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 20 Mar 2017 @ 1:25pm

      Re: Steele's guilty plea

      Hansmeier is toast.

      Steele, the king of the liars club, has turned states evidence against him. I think that Steele will say WHATEVER gets him out of harms way.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 20 Mar 2017 @ 11:17am

    I don't understand at all what the article means with the bit about the fund trustee's action. I gather it's bad and funny for the Prenda guy somehow, but other than that I'm confused.

    reply to this | link to this | view in chronology ]

  • icon
    Mononymous Tim (profile), 20 Mar 2017 @ 11:46am

    Oh, and also $180,000 in cash hidden under his bed.

    He probably closes his eyes and thinks you can't see him too.

    reply to this | link to this | view in chronology ]

  • icon
    SirWired (profile), 20 Mar 2017 @ 11:57am

    Yeah, Steele's plea probably isn't going to buy much

    With all this dirt pending on Hansmeier, Steele's promise to spill the beans probably won't buy him very much, which accounts for the odd nature of the deal. (It appears to be a "I throw myself at the mercy of the court" sort of thing, rather than much of a quid pro quo for turning.)

    I suspect many of the conversations Steele is having with the Feds consist of:
    Steele: "I can totally tell you how Hansmeier was behind [insert X nefarious scheme here]
    Fed: "Yeah, we knew that already, and don't try to pretend you didn't have a lot to do with it. Tell us something we don't know that won't lead to you getting shredded on the stand when you testify to it."

    reply to this | link to this | view in chronology ]

    • icon
      DannyB (profile), 20 Mar 2017 @ 12:10pm

      Re: Yeah, Steele's plea probably isn't going to buy much

      You forgot to enclose the steps of that conversation within a loop.

      while( ! pissedOffYet() ) {

      Steele: "I can totally tell you how Hansmeier was behind [insert X nefarious scheme here]

      Fed: "Yeah, we knew that already, and don't try to pretend you didn't have a lot to do with it. Tell us something we don't know that won't lead to you getting shredded on the stand when you testify to it."

      }

      Fed: I can see that this conversation can serve no further purpose.

      reply to this | link to this | view in chronology ]

  • identicon
    bob, 20 Mar 2017 @ 1:09pm

    where it goes from here

    So have any laws, procedures, or rules been updated yet to prevent this massive amount of fraud in the future? Or is it still to early.

    reply to this | link to this | view in chronology ]

  • identicon
    coward (anon), 20 Mar 2017 @ 1:49pm

    Trump

    I'm betting on Presidential pardons for the two of them once they are convicted.

    reply to this | link to this | view in chronology ]

  • icon
    Ehud Gavron (profile), 20 Mar 2017 @ 2:09pm

    Paul Duffy got away with it

    Paul Duffy made as much as these guys during the Prenda days. What he did with his money or to whom he gave it will not be part of the investigation nor will these third parties be brought in.

    There are no "stolen" assets to disgorge, and what Paul Duffy got away with will never be punished nor recovered.

    E

    reply to this | link to this | view in chronology ]

    • icon
      Roger Strong (profile), 20 Mar 2017 @ 3:00pm

      Re: Paul Duffy got away with it

      Well sure. Duffy died before any conviction. And even if he were convicted just before he died, his conviction would be vacated.

      Consider Ken Lay (spit) of Enron. Found guilty in in three separate trials of many counts of securities fraud, wire fraud, and making false and statements.

      Then he died on vacation. Because he hadn't exhausted his appeal process when he died, his convictions were vacated.

      And so his family got to keep the money. His name was cleared. His memorial service attended by former President George H. W. Bush.

      reply to this | link to this | view in chronology ]

    • icon
      That Anonymous Coward (profile), 20 Mar 2017 @ 3:46pm

      Re: Paul Duffy got away with it

      Sorry but Duffy did not pull as much cash as Steele & Hans did.
      While he was involved, the lions share of the cash went to Hans & Steele.

      He was a shitty human, but he's beyond reach now.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 20 Mar 2017 @ 9:27pm

      Re: Paul Duffy didn't away with it

      Like all of us, he has to stand before the Great Judge and account for his life. Unless he actually took up the salvation in Jesus Christ before he died (and there doesn't appear to be any evidence for that), he will have no advocate but himself before the Great Judge. I don't fancy his chances of getting away with anything in that court.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 21 Mar 2017 @ 1:32am

        Re: Re: Paul Duffy didn't away with it

        I think the biggest sin is the fact that his family got away with it and continue to live off the fat of his exploits without so much as a slap on the wrist.

        Shari in particular boasted of her husband's achievements on Facebook (in addition to other posts on a happy, divorced life where she could do whatever she wanted due to the discrepancy in life spans between genders), and enjoys life as a socialite and event planner.

        It's hard to feel sorry for her loss when by all appearances and admittance, she came off the best in this whole sorry saga.

        reply to this | link to this | view in chronology ]

      • icon
        Roger Strong (profile), 21 Mar 2017 @ 7:53am

        Re: Re: Paul Duffy didn't away with it

        Unless he goes venue shopping for a more sympathetic Great Judge. Vishnu, Allah, Zeus or Woden might be more amenable towards copyright trolling.

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 20 Mar 2017 @ 2:32pm

    I wonder if Hansmeier will try to make some deal by throwing his wife under the bus since she's at least partially helped him in all of this. Knowing these guys it would not surprise me one bit if he tried to.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 20 Mar 2017 @ 3:22pm

    Oh, and also $180,000 in cash hidden under his bed.

    At least that has a plausible explanation.

    I mean, I'm finding loose change under my couch cushions all the time.

    reply to this | link to this | view in chronology ]

  • icon
    That Anonymous Coward (profile), 20 Mar 2017 @ 3:52pm

    12 Dimensional Chess....

    Steele agrees to bury Hans, who is already so far from fucked the light will take 100,000 years to reach him.
    In return, perhaps a trust exists somewhere that rewards him for falling on the sword.

    Steele gets a deal for 'helping', Hans remains just as screwed, and somewhere a shoebox arrives in the mail.

    It has always bothered me that any sort of deal would be offered to Steele or Hans, the case is strong. Was DOJ worried that it would be a hard fight so they loaded the bases offering a deal to the devil?

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 20 Mar 2017 @ 4:32pm

      Re:

      The FBI,and local prosecutors for that matter, have become so used to maneuvering people into plea deals that they consider fighting a case in court to be an unnatural act.

      reply to this | link to this | view in chronology ]

      • icon
        That One Guy (profile), 20 Mar 2017 @ 5:07pm

        Re: Re:

        ... that is actually far more likely than it should be. Why go through the trouble of a trial, even when you have enough to bury someone when you can get them to accept a plea deal and skip the whole thing? Of course if I understand the 'deal' here correctly Steele isn't quite getting out that easy, and it's more along the lines of 'Pretty please will you not throw the book too hard at me if I spill my guts and throw the other person under the bus?', an 'offer' I can but hope the judge tosses before throwing the gorram library at Steele.

        Sure they aren't likely to get as much time/fines as they otherwise might have faced, but it's not like the prosecutor had to deal with the suffering they caused before the system finally caught up with them, so as long as a plea deal makes their job easier what's it to them?

        reply to this | link to this | view in chronology ]

  • icon
    Anon E. Mous (profile), 21 Mar 2017 @ 6:16am

    Oh c'mon the IRS Criminal Division is still waiting in the wings for both Steele and Hansemeier. Remembers they made upwards of 6 million dollars and paid no income tax on that.

    Hansmeier also used the money from his so called trust inappropriately due to how the trust was formed and how those funds can be used and withdrawn, so I am sure the IRS took note of that as well.

    I sure Hope Hans and his wife have been declaring that cash for his ADA trolling or that may get added to the IRS checklist

    For so long Hansmeier and Steele lied and cheat the system, the system is now extracting it's revenge and rightfully so.

    reply to this | link to this | view in chronology ]

  • identicon
    Christenson, 21 Mar 2017 @ 12:56pm

    Peanut Gallery Question

    I have nothing like the experience of, say, Ken White, but the question forming in my mind is, what if Steele has spilled the beans regarding Patrick Acache/Guardaley, who is in many senses may be the true mastermind, and behind multiple trolling operations?

    THAT knowledge isn't yet widely available to the public.

    reply to this | link to this | view in chronology ]

    • icon
      That Anonymous Coward (profile), 21 Mar 2017 @ 9:37pm

      Re: Peanut Gallery Question

      Doubtful, if S|H worked with Guardaley (and in my mind they never did) it would have been a very short lived event.

      They were far to interested in cash to share with anyone, and even had their infamous homebrew million dollar never wrong super secret tech serving up targets.

      To crack Guardaley one needs to flip Lipscom or catch Chartier on a bad day when he is raging. But given the money flowing out of that unholy alliance its gonna take quite a bit. There are enough locals to pursue, but they only serve to insulate the cappos from little people and add another degree of separation for the dons of the scam.

      reply to this | link to this | view in chronology ]

  • identicon
    Gazza, 28 Mar 2017 @ 2:59pm

    Bankruptcy Happenings

    GoogleFu comes into handy sometimes...

    [File link removed as unsure if allowed]

    US BANKRUPTCY COURT Honorable Kathleen H Sanberg Current as of 3/24/2017 at 4:40 PM Monday, April 10, 2017

    Trial: Adversary case 16-04035. (41 (Objection / revocation of discharge - 727(c),(d),(e))), Complaint without demand for jury trial by Daniel M McDermott against PAUL HANSMEIER. No Fee.(Kreuziger-AW, Colin)

    reply to this | link to this | view in chronology ]


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