Paul Hansmeier Argues Convicting Him Of Fraud Would Seriously Damage The Judicial System

from the he's-not-(completely)-wrong dept

It looks like Prenda's Paul Hansmeier isn't nearly as interested John Steele in striking a deal with the feds. Of course, Steele folded immediately, offering up Hansmeier as bus undercoating, which likely means Hansmeier isn't being feted by feds with plea deals.

The 17-count indictment relayed a story familiar to Techdirt readers, since we have covered nearly every part of the scam: a get-rich-quick scheme that paid off at first for Prenda, but quickly unraveled as courts (and many copyright troll fighters) uncovered fake defendants, shell companies, forged documents, and honeypot-as-business-model tactics.

Faced with numerous charges and seemingly no option to shift the culpability back to Steele, Hansmeier is arguing the entire justice system will collapse if he's convicted. I wish I could tell you I'm exaggerating the dismissal request's prose for the sake of levity, but I'm afraid that's exactly what the dense's 64-page filing [PDF] says (h/t Sophisticated Jane Doe):

The government has issued a lengthy, winding, and jumbled charging document, all grounded upon an unorthodox and unviable legal theory. Because it has opted to proceed in this way, this Memorandum is by necessity heftier than it might otherwise be. Augmented size demands greater organization, so this paper begins with a Table of Contents to give the Court an overview of where the exploration will go, which then leads into the full discussion. All of this requires a fair number of words, but in the end the resolution boils down to a relatively simple concept: Prosecutors ought not be allowed to ground criminal fraud or analogous charges upon someone’s exercise of constitutionally protected civil litigation activities. As will be seen, this core rule is immensely important. Not just in the case at hand, but to this nation’s system of civil justice as a whole. This prosecution is legally unviable, and thus must be dismissed.

The gist of Hansmeier's federal court longform piece is this: the federal government should not be prosecuting people for bad- or zero-faith litigation. There are several sub-gists. As gists go, however, this isn't a bad one. The judicial system has many tools to deploy against bad-faith litigation, including sanctions and outright dismissal. Defendants have some tools at their disposal as well, but no matter how much Hansmeier attempts to pretty this up, it still costs real money to defend against bogus litigation.

The toolset is limited and, sometimes, completely useless. Prenda faced these tools on multiple occasions before finally deciding to get out of the copyright trolling business. Unpaid sanctions remain unpaid. Hansmeier moved on to trolling of the ADA variety and presented the Minnesota court system with perhaps the best argument to date for the reestablishment of debtors prison during his bankruptcy proceedings.

But the overall point remains a good one: it shouldn't be illegal to engage in litigation, no matter how misguided or disingenuous. Allowing the government to literally make a federal case of it could chill legitimate litigation. This point should not be understated. However, the filing ignores that Hansmeier wasn't just engaged in bad faith litigation, but rather he was piling all sorts of illegal behavior on top of it: forgeries, perjuries, fake plaintiffs, defendants who had made a deal to be a defendant solely for revealing IP addresses, fake claims of "hacking" to make questionable CFAA claims and much much more.

By its legal theory propounded here, the federal government now proposes to: (a) arrogate authority unto itself; (b) to patrol the civil dockets of this and any other tribunal of its choosing; (c) searching for instances of what it views to be baseless or otherwise unethical or inappropriate civil litigation activities; (d) all with the aim of prosecuting, penalizing, and imprisoning those litigants or lawyers who it deems to have stepped out of line. Or more accurately, anyone who the government chooses to target at any given moment. Prosecutors could, as in the present case, charge someone who has instituted a civil action against a fellow citizen to redress a legally recognized grievance. But the government could just as easily train its sights on, say, a citizen who has brought a Bivens action against a federal law enforcement official. Or it could bring similar charges against a detainee pursuing a civil habeas corpus action. Or against a lawyer seeking a declaration that some statute enacted by the Legislative Branch violates the United States Constitution. Or against a litigant seeking to enjoin some unlawful action of the Executive Branch.

But Hansmeier is also arguing that engaging in copyright trolling should only be punishable by judicial sanctions and the like, no matter how ineffective those deterrents are, and, apparently, no matter how much fraudulent behavior the litigants engage in. In fact, Hansmeier tries to claim the fraudulent litigiation Prenda engaged in produced no victims. (From the Bill of Particulars [PDF] submitted with the dismissal motion, via SophisticatedJaneDoe)

We ask that the prosecution be directed to identify the victim(s) of the offenses alleged in the indictment, to explain how they were victimized, and to specify the loss amount(s). Is the alleged victim the computer users described above and below? Or civil courts? Or both? Or someone else? Is the government relying upon “fraud on the court” judicial opinions imposing civil sanctions? If so, by what reasoning?

The 64-page wall of text is worth reading, if only to admire the sheer number of words expended to tie Hansmeier's "honest" copyright trolling into the government's conspiracy charge. This may seem counterproductive, but Hansmeier's representation's angle has its own genius: if the conspiracy charges cannot be extricated from Prenda's "protected" litigation, the government's whole case falls apart.

The Court may thus wonder whether the present motion to dismiss is confined to the standalone Mail/Wire Fraud counts, (Counts 2-16), or if it encompasses the above conspiracy counts as well, (Counts 1, 17).

Because the government’s deficient prosecution theory pervades and fatally infects both the standalone and above conspiracy counts, all must fall. The reason stems from the law of conspiracy, which is an inchoate offense involving a mere agreement rather than actual accomplishment of the underlying alleged criminal objective.

The theory goes on for several pages, but the underlying theory is this: the 15 counts of wire fraud are actually just the fed's (apparently severely-misguided) interpretation of Prenda's non-criminal "copyright protection" litigation efforts.

Thus, since the standalone Mail/Wire Fraud counts (Counts 2-16) are grounded upon a legally and/or constitutionally invalid prosecution theory, each such deficient count must be dismissed. The government alleges this identical Mail/Wire Fraud theory as the sole objective of the Mail/Wire Fraud Conspiracy (Count 1), (ECF 1, ¶¶ 15-17), and the Money Laundering Conspiracy claim (Count 17), (ECF 1, ¶ 40). Under Griffin/Yates and the other opinions cited, these legally-deficient charged conspiracy objectives mean that that each of these conspiracy counts must fall away as well.

If Hansmeier can convince a judge the government intends to treat copyright litigation as wire fraud -- and thus cause damage to the judicial system as a whole -- he may get a dismissal of those charges. That takes care of most of them. Of course, that requires effectively ignoring all of the other activity that wasn't just bad-faith litigation. Alternatively, he can convince a judge the conspiracy charge is unfounded, which would wipe away the fraud charges as well. That's why we have a 64-page pretrial motion to dismiss on our hands, rather than a few more weeks of pre-trial plea bargaining.

The motion takes issue with the federal indictment -- both in its depiction of copyright trolling as a criminal enterprise as well as its use of "charged language" like "extortionate tactics" and "sham clients." Hansmeier says the government's wire fraud charges basically boil down to a recap of normal copyright trolling efforts.

According to the government, the accused lawyer Mr. Hansmeier is criminally liable for the federal offenses of Mail/Wire Fraud and money laundering due to his institution of “fraudulent copyright lawsuits,” which (it is claimed) qualify as such because—

(a). The defendant lawyers and others “uploaded the [protected works] to file sharing websites hoping to lure people into downloading” those same protected works;

(b). The defendant lawyers owned and/or controlled the statutory exclusive rights in protected works rather than the named plaintiff business organizations, thus giving the defendant lawyers a personal stake in the outcome of the litigation;

(c). The defendant lawyers were derelict in their professional ethics obligations, including a duty of candor to federal civil courts when invoking court-overseen discovery procedures to identify computer users who had downloaded the protected works at issue; and

(d). The defendant lawyers employed “extortionate tactics to garner quick settlements” from such identified computer users, who were “unaware of the defendants’ role in uploading the [protected works at issue], and often were either too embarrassed or could not afford to defend themselves.”

Hansmeier argues this is all perfectly legal litigation and that the government has made no showing that these lawsuits were so baseless they should be indicted for them. But that's an extremely generous interpretation of Prenda's practices, which included forged documents, honeypot uploads, shell corporations, faux defendants, and other instances of fraud upon the court. Prenda was on the receiving end of multiple sanctions by the time it fell apart (and showed no signs of wanting to stop or recognizing that it had done anything wrong) and all of this sprung out of its speculative invoicing process, which used federal courts and statutory damages as leverage in multiple baseless infringement lawsuits.

The motion claims the government's interpretation of wire fraud statutes would endanger a great deal of legitimate litigation (although citations of Malibu Media cases probably isn't the best argument for trolling's legal legitimacy). The conclusion reached is that this prosecution is some twisted fed vendetta, with the government going after a longtime internet punching bag:

[T]the government broadly disapproves of the lawyer-entrepreneurial activities described earlier, i.e., forming organizations to pursue civil enforcement of the Copyright Act, monitoring computer file-sharing platforms for that purpose, using civil court discovery mechanisms to identify violators, and so on. And its ire is directed with singular force toward Mr. Hansmeier—something of a cause célèbre and object of scorn in the news media and blogosphere and elsewhere—whose litigation tactics have already been penalized by civil courts and state licensing officials. By this prosecution, the government aims to heap yet more punishment on top of all that.

This is a rather amazing (and ambitious) filing. Hansmeier has scored a very good pair of public defenders, ones who are willing to hand the court something few judges are clamoring for: a 64-page, densely-worded pretrial motion to dismiss. It's certainly far more than Hansmeier should expect, given he's done about as much damage to the reputation of lawyering as one man can possibly do. Other copyright trolls* have to be applauding this motion, as it legitimizes their efforts and provides a template for their own defense against criminal charges, should it ever come to that.

*This term (troll) bothers Hansmeier and his defense. This memorable footnote appears in the filing during the motion's discussion of the government's use of trolling opponents' "charged language" in its indictment.

On the debate’s flip side, there are those who use pejorative terms like “pirates” to describe those accused of Copyright Act violations. In truth, none of these or other puerile terms are helpful to sober legal analysis. Quite the opposite. The terms are mentioned here only because they are sprinkled prolifically throughout the literature, and even some court opinions, on this topic. In all, the defense would discourage use of such invectives, as they are analytically unhelpful and unnecessarily inflammatory.

Hide this

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: copyright trolling, doj, litigation, paul hansmeier, wire fraud
Companies: prenda, prenda law


Reader Comments

Subscribe: RSS

View by: Time | Thread


  1. identicon
    Baron von Robber, 25 Apr 2017 @ 12:12pm

    When the Wheels of Justice begin to grind on a vermin, they tend to squeek.

Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here



Subscribe to the Techdirt Daily newsletter




Comment Options:

  • Use markdown. Use plain text.
  • Remember name/email/url (set a cookie)

Follow Techdirt
Insider Shop - Show Your Support!

Essential Reading
Techdirt Insider Chat
Recent Stories

This site, like most other sites on the web, uses cookies. For more information, see our privacy policy. Got it
Close

Email This

This feature is only available to registered users. Register or sign in to use it.