Prenda Law

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Prenda Law, also known as Steele | Hansmeier PLLP and Anti-Piracy Law Group,[1] is a Chicago-based law firm that claims it battles copyright piracy, but is also strongly identified with copyright trolling.[2] Attorneys who have been associated with Prenda at various times are Paul Duffy,[3] Brett Gibbs, Paul Hansmeier, and John Steele.[4]

History[edit]

Prenda first came to prominence through the practice of identifying the IP addresses of Internet subscribers who, it claims, downloaded copyrighted X-rated videos. Prenda's practice is to first file federal copyright infringement lawsuits against fictitiously-named "John Doe" defendants, and to then issue subpoenas to the Internet service providers (ISPs) associated with those IP addresses. Once the ISP subscribers are identified, Prenda sends letters to the subscribers accusing them of piracy and threatening a $150,000 statutory penalty. The letters offered to make the case go away for a fee—$4,000 was the price of silence offered to some.

The letters said that if the recipient refused to pay, the recipient's name would be entered on a public legal document along with the names of the videos. That is, the recipient would be identified (e.g., to friends, employers, spouse, children, coworkers, etc.) as someone who illegally downloaded specific pornography titles on the internet. The amount demanded is usually less than a typical attorney would charge to defend the case on its merits, so even the completely innocent have a strong incentive to pay what Los Angeles-based U.S. District Judge Otis D. Wright II called an "extortion payment".

Judge Wright summarized Prenda's business model: "Plaintiffs have outmaneuvered the legal system. They've discovered the nexus of antiquated copyright laws, paralyzing social stigma, and unaffordable defense costs. And they exploit this anomaly by accusing individuals of illegally downloading a single pornographic video. Then they offer to settle—for a sum calculated to be just below the cost of a bare-bones defense...So, now, copyright laws originally designed to compensate starving artists allow starving attorneys in this electronic-media era to plunder the citizenry".[5]

The rewards reaped by what Wright called the "porno-trolling collective" ran into the millions. Steele told Forbes magazine that his firm had filed over 350 lawsuits against more than 20,000 people, resulting in "a little less than $15 million" in settlements.[6]

Sanctions for "brazen misconduct and relentless fraud"[edit]

Attorney Brett Gibbs claimed to have—but never produced—an original notarized signature of "Alan Cooper, Manager of Ingenuity 13 LLC."[7][8]

On May 6, 2013, Judge Wright sanctioned Prenda Law and its "principals" Gibbs, Steele, Hansmeier, and Duffy, whom he termed "attorneys with shattered law practices", $81,319.72 for "vexatious litigation", "[stealing] the identity of Alan Cooper", and "representations about their operations, relationships, and financial interests [that] varied from feigned ignorance to misstatements to outright lies". Wright also referred the attorneys to the U.S. Attorney's office and the Internal Revenue Service-Criminal Investigation Division for possible criminal prosecution; and to various federal and state bars for "moral turpitude unbecoming of [officers] of the court." Steele, Hansmeier, and Duffy had pleaded the Fifth Amendment privilege against self-incrimination when questioned about Prenda's litigation activities.[9]

Judge Wright also found that the attorneys "purposely ignored" his orders quashing subpoenas to ISPs so that ISPs would be "unaware of the vacatur and would turn over the requested subscriber information"; and had created sham companies such as "AF Holdings LLC" and "Ingenuity 13 LLC" "to give an appearance of legitimacy" to their pursuit of "easy money".[10]

In a footnote, Wright wryly observed that $81,319.72 "is calculated to be just below the cost of an effective appeal", a nod to his finding that plaintiffs' settlement demands were set "just below the cost of a bare-bones defense".

Wright's order is replete with Star Trek references: "It was when the Court realized Plaintiffs engaged their cloak of shell companies and fraud that the Court went to battlestations.... As evidence materialized, it turned out that Gibbs was just a redshirt...[Though] Plaintiffs boldly probe the outskirts of law, the only enterprise they resemble is RICO (a reference to federal criminal statutes regarding 'racketeer-influenced and corrupt organizations'). The federal agency eleven decks up (the U.S. Attorney's office on the 13th floor of the Los Angeles federal courthouse) is familiar with their prime directive and will gladly refit them for their next voyage."

Morgan E. Pietz, a Manhattan Beach, California attorney who represents John Doe defendants, and who was awarded $76,752.52 of the sanctions award for his fees and costs, described Prenda Law as "the courtroom equivalent of a common bully". Pietz credited the efforts of "a number of attorneys all over the country [who helped] unravel the puzzle pieces and reveal [Prenda Law] for what they are, profiteering copyright trolls who are abusing the law".[11]

Attorney John Steele, who denies having any "ownership interest" in Prenda Law, told Adult Video News that "he has faith in the appellate process" and complained that his attorneys were not permitted to present "evidence or testimony". He denied ever practicing law in California, and claimed he had "satisfied" previous inquiries from the Illinois State Bar.

Steele said Livewire Holdings, identified by Judge Wright as being a member of the Prenda family, “is filing multiple new cases this week (the week of May 6, 2013)".[12]

Prenda, and attorney Paul Hansmeier, filed an "emergency motion" in the U.S. Court of Appeals for the Ninth Circuit seeking a stay of Judge Wright's sanctions order; it was denied without prejudice to the sanctioned parties' right to request a stay in Judge Wright's court. They then filed an ex parte motion seeking a stay from Wright. On May 21, 2013, Wright responded by ordering each sanctioned party ("Steele, Duffy, Hansmeier, Gibbs, AF Holdings, Ingenuity 13, and Prenda") to pay an additional $1,000 per day (to the clerk of the court), on top of the previously ordered $81,319.72 payable to John Doe's attorneys, until all sanctions are fully paid.[13]

Hansmeier's application for admission to the bar of the Ninth Circuit was also denied, at least for now, by a court commissioner who cited Hansmeier's "referral to the Minnesota State Bar and to the Central District of California Standing Committee on Discipline, based on [Judge Wright's] finding of moral turpitude". Hansmeier, who had sought admission to the Ninth Circuit bar in order to represent his wife in her objection to a class-action settlement, was told he may not do so.[14]

On May 20, 2013, attorneys Steele, Hansmeier, and Duffy secured and posted a bond of $101,650 on behalf of themselves, Prenda Law Inc., Ingenuity 13 LLC and AF Holdings LLC, to guarantee payment of Judge Wright's sanctions order if upheld on appeal. The bond doesn't cover Gibbs, who claims he is indigent and has brain cancer.[15] The amount of the bond was later raised to a total of $237,584 to cover a possible attorney fee award on appeal; the Prenda parties' appeal of this order was denied, 2-1, by a three-judge Ninth Circuit motions panel.[16] The increased bond must be filed by July 15, 2013.

On July 12, 2013, attorney Steele's bid to reconsider the original sanctions order, and for sanctions against attorney Pietz, was met with skepticism by Judge Wright. Among Steele's claims was that he never received notice of the original sanctions hearing. "You're getting all the due process you can stand", said Wright. Steele remarked that "this is an appellate issue", to which Wright retorted, “They’ve got a reserved parking spot for you at the Ninth Circuit. Raise your voice again and I’m going to introduce you to the United States Marshals".[17]

Other court fraud allegations[edit]

At an unusual November 27, 2012 hearing (see transcript) before U.S. District Judge Mary S. Scriven of the Middle District of Florida, paralegal Mark Lutz claimed to be a "corporate representative" of Prenda's "client" "Sunlust Pictures." However, when placed under oath and questioned by Judge Scriven, Lutz could not name any of Sunlust's officers or directors, nor could he recall who signs his paychecks. Scriven stated she would entertain a motion for sanctions against Prenda and its attorneys for "attempted fraud on the Court".[18] Defendant Tuan Nguyen, represented by attorney Graham Syfert, filed multiple motions for sanctions which were withdrawn with prejudice on May 20, 2013.[19]

On June 3, 2013, in another Florida case, attorney Syfert filed a declaration by expert witness Delvan Neville which accused Prenda Law of "seeding" its own content in an effort to induce copyright infringement.[20] Neville's declaration presented digital forensic evidence that someone with access to the GoDaddy.com account of John Steele was also sharing pornographic content through Pirate Bay user "sharkmp4". In response to the declaration, The Pirate Bay released logs of the user "sharkmp4" which further confirmed the claims in the declaration.[21] Syfert concluded: "Prenda Law's business structure is such that it is copyright-violating pirate, forensic pirate hunter, and attorney. It also appears that Prenda Law also wants to/has formed/is forming a corporate structure where it is: pornography producer, copyright holder, pornography pirate, forensic investigator, [law] firm, and debt collector."

On May 21, 2013, Hennepin County, Minnesota District Court Judge Ann L. Alton awarded no damages to Alan Cooper on his identity-theft claim against Steele and Prenda, but she ordered attorney Paul Hansmeier to "stop using Alan Cooper's name" and to "never, ever again send fraudulent demand letters." Alton said she will refer Hansmeier to the Minnesota Lawyers Professional Responsibility Board for [violating] "a whole lot of rules".[22]

A Prenda defendant says he agreed to "take a dive"[edit]

As federal judges grew increasingly skeptical of Prenda's campaign of federal copyright-infringement lawsuits, Prenda began filing lawsuits in state courts, alleging that by downloading the videos, the defendants violated the Computer Fraud and Abuse Act (CFAA). One such lawsuit, filed in Hennepin County, Minnesota, instead of naming several dozen or hundred "John Doe" defendants, named only a single defendant. According to an affidavit filed by the defendant responded to a settlement demand letter by contacting the Prenda Law firm. Prenda, according to the defendant said it would not enforce its settlement demand, and would dismiss its case against him, if the defendant would "agree to be sued" using an attorney recommended by Prenda. (According to the defendant he agreed to this, but Prenda continued to send him demand letters anyway.) [23]

Upon filing the lawsuit the defendant's attorney then stipulated with Prenda that Prenda could issue subpoenas to defendants "co-conspirators." Defendant's attorney and Prenda's attorney then submitted an "agreed order" to the judge, who promptly signed it. ("Judges in underfunded county courts are happy when defendant and plaintiff agree on something, and (often) endorse such agreements.")[24] Thus, Prenda was able to issue subpoenas seeking the identities of untold hundreds or thousands of ISP subscribers, resulting in Prenda being able to send out hundreds or thousands of new demands for "settlement." [25]

It's not clear that the defendant's attorney knew the true purpose of the "agreed order" or committed any wrongdoing.

Prenda sues Cooper, blog commenters[edit]

In February 2013, Prenda Law Inc., Paul Duffy, Paul Hansmeier and John Steele sued Alan Cooper, his attorney, and numerous "John Doe" defendants in an Illinois state court, alleging defamation. (Cooper had sued Prenda alleging, as was later found to be true by Judge Wright in his sanctions order, that Prenda had "stolen his identity".) The Doe defendants were people who had left comments on two blogs known for being critical of Prenda Law, Fight Copyright Trolls and Die Troll Die. Shortly thereafter, Prenda Law served a subpoena on Automattic, Inc., the parent company of WordPress, the blog software and hosting provider. The subpoena sought production of "all Internet Protocol addresses who accessed [either blog] from January 11, 2011 through February 25, 2013", as well as the identities of the two anonymous bloggers.[26] At least one commentator has characterized the lawsuits as Strategic Lawsuits Against Public Participation or "SLAPP" suits.[27]

WordPress refused to comply with the subpoena without a judicial order, terming it "overly broad". The Electronic Frontier Foundation offered the two blogs a free legal defense,[28][29] and on May 16, 2013, the court granted EFF's Motion to Quash Subpoena—because Prenda didn't file a response. [30]

Process server with alleged Prenda ties charged in judicial drug deals[edit]

On May 28, 2013, in East St. Louis, Illinois, probation worker James K. Fogarty pled not guilty to federal cocaine distribution and possession charges. An FBI agent's affidavit claims Fogarty admitted providing the drug to two St. Clair County judges, one of whom (Joe Christ) died of a cocaine overdose on March 10, 2013.[31]

Fogarty is not directly charged with the death of Judge Christ, although the investigation "continues." Michael Cook, the other judge to whom Fogarty allegedly sold cocaine, was charged with possession of heroin and possession of a gun while using controlled substances.

On April 5, 2013, Anthony Smith, a defendant in Lightspeed Media Corp v. Smith, filed an affidavit claiming he was served with the lawsuit by Fogarty, who gave him his business card with the name and phone number of attorney John Steele handwritten on the back. According to Smith, Fogarty told him that John Steele is a "big deal attorney from Washington, D.C. who has no interest in the case" but wanted to help Smith "negotiate a settlement".[32][33]

References[edit]

  1. ^ Masnick, Mike (2012-12-18). "Prenda Law Accused Of Trying To Start Over Again Under A New Name". TechDirt. Retrieved 2013-03-13. 
  2. ^ Leonard, Andrew (2013-03-04). "'Die, troll, die' goes to court". Salon.com. Retrieved 2013-03-12. 
  3. ^ "Prenda Law Inc.: Founding Partner Paul Duffy". Retrieved 4 April 2013. 
  4. ^ Mullin, Joe (2013-03-12). "Judge 'came in like a tornado' at Prenda Law lawyers". Ars Technica. Retrieved 2013-03-12. 
  5. ^ Wright, Otis D. II (May 6, 2013). "Order Issuing Sanctions". U.S. District Court. Retrieved May 6, 2013. 
  6. ^ Hill, Kashmir (October 15, 2012). "How Porn Copyright Lawyer John Steele Has Made A 'Few Million Dollars' Pursuing (Sometimes Innocent) 'Porn Pirates'". Forbes. Retrieved April 6, 2013. 
  7. ^ Pietz, Morgan (December 18, 2012). "Ex Parte Application For Leave To Take Early Discovery". U.S. District Court. Retrieved April 5, 2013. 
  8. ^ Wright, Otis D. II (December 26, 2012). "Order Granting Ex Parte Application". U.S. District Court. Retrieved April 5, 2013. 
  9. ^ Mullin, Joe (April 2, 2013). "Judge smash: Prenda’s porn-trolling days are over". Ars Technica. Retrieved April 2, 2013. 
  10. ^ Doctorow, Cory (March 7, 2013). "Mind-croggling deposition of a Prenda Law copyright troll". Boing-Boing. Retrieved March 12, 2013. 
  11. ^ Pardon, Rhett (May 7, 2013). "Sanctions Ordered Against Porn-Piracy Litigants (NSFW)". XBIZ. Retrieved May 8, 2013. 
  12. ^ Staff, AVN (May 7, 2013). "Sanctioned Copyright Lawyer Says He Will Appeal Judge's Order (NSFW)". Adult Video News. Retrieved May 8, 2013. 
  13. ^ Masnick, Mike (May 21, 2013). "Bad Day For Prenda Continues: Judge Rejects Stay, Adds $1k Per Day For Each Day They Don't Pay Up". TechDirt. Retrieved May 21, 2013. 
  14. ^ Mullin, Joe (May 20, 2013). "Prenda Lawyer Gets Kicked Off 9th Circuit Case". Ars Technica. Retrieved May 21, 2013. 
  15. ^ Mullin, Joe (May 31, 2013). "Prenda buys a $100,000 bond, while former lawyer Gibbs pleads for leniency". Ars Technica. Retrieved June 5, 2013. 
  16. ^ Mullin, Joe (July 10, 2013). "Prenda’s motion to reduce $238,000 appeal bond falls flat". Ars Technica. Retrieved July 10, 2013. 
  17. ^ Steinbaugh, Adam (July 12, 2013). "Prenda’s John Steele in LA: Two wrongs don’t make a Wright (happy)". Ars Technica. Retrieved July 12, 2013. 
  18. ^ Spangler-Fry, Claudia (November 27, 2012). "Scriven Hearing Transcript". U.S. District Court. Retrieved March 12, 2013. 
  19. ^ Syfert, Graham (May 20, 2013). "Notice of Withdrawal of Motions". U.S. District Court. Retrieved May 22, 2013. 
  20. ^ Farivar, Cyrus (June 3, 2013). "Prenda seeded its own porn files via BitTorrent, new affidavit argues". Ars Technica. Retrieved July 28, 2013. 
  21. ^ Ernesto (June 4, 2013). "The Pirate Bay Helps to Expose Copyright Troll Honeypot". Torrentfreak. Retrieved June 4, 2013. 
  22. ^ Masnick, Mike (May 21, 2013). "Angry Judge Tells Prenda To Stop Falsifying Alan Cooper's Signature; Calls It Fraud". TechDirt. Retrieved May 21, 2013. 
  23. ^ "Affidavit of author=". Hennepin County District Court. January 24, 2013. Retrieved April 11, 2013. 
  24. ^ Doe, Jane (January 25, 2013). "A "defendant" in a Guava sham lawsuit has admitted that he was blackmailed into participating in a fraud". Fight Copyright Trolls. Retrieved April 11, 2013. 
  25. ^ Masnick, Mike (January 25, 2013). "'Defendant' In Prenda Law Case Reveals He Agreed To Take A Dive". TechDirt. Retrieved April 11, 2013. 
  26. ^ Doe, Jane (March 4, 2013). "Copyright trolls Prenda Law, Paul Duffy, and John Steele commence three lawsuits v. Paul Godfread, Alan Cooper and our community". Fight Copyright Trolls. Retrieved April 11, 2013. 
  27. ^ Masnick, Mike (March 4, 2013). "Prenda Law Sues Critics For Defamation". TechDirt. Retrieved April 11, 2013. 
  28. ^ Doe, Jane (March 9, 2013). "EFF announces its intention to fight the subpoena, and WordPress refuses to comply with this subpoena". Fight Copyright Trolls. Retrieved April 11, 2013. 
  29. ^ Opsahl, Kurt (April 18, 2013). "EFF Moves to Quash Subpoena in Copyright Troll’s Retaliatory Lawsuit". Electronic Freedom Foundation. Retrieved April 20, 2013. 
  30. ^ Masnick, Mike (May 17, 2013). "Court Dumps Prenda's Subpoena". TechDirt. Retrieved May 19, 2013. 
  31. ^ Suhr, Jim (May 28, 2013). "FBI: Illinois man admits selling cocaine to 2 judges". Associated Press. Retrieved June 5, 2013. 
  32. ^ Anthony Smith (April 5, 2013). "Affidavit of Anthony Smith". U.S. District Court. Retrieved June 5, 2013. 
  33. ^ Suddath, Claire (May 30, 2013). "Prenda Law, the Porn Copyright Trolls". Bloomberg BusinessWeek. Retrieved June 5, 2013. 

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