Daily Dicta: Prenda Porn Lawyer Gets 14 Years in Prison for Copyright Shakedown Scheme
U.S. District Judge Joan Ericksen complimented Hansmeier for being 'smarter than all get-out' before blasting him for his conduct.
June 17, 2019 at 02:45 PM
7 minute read
“The internet is for porn!” sings a puppet in the Broadway musical comedy Avenue Q. “Why do you think the net was born? Porn! Porn! Porn!”
I doubt that's what Al Gore would say, but one thing's for sure: The vast reservoir of online pornography has created an opening for lawyers to bring a flood of copyright infringement lawsuits, including those ranging from ethically dubious to outright criminal.
One of the most notorious porn copyright trolls of all, Prenda Law's Paul Hansmeier, was sentenced on Friday by a federal judge in Minnesota to 14 years in prison—18 months more than what Justice Department prosecutors sought—after he pleaded guilty to conspiracy to commit mail fraud and wire fraud and conspiracy to commit money laundering.
According to the Minneapolis Star-Tribune, U.S. District Judge Joan Ericksen “complimented Hansmeier for being 'smarter than all get-out,'” before blasting him for his conduct.
“It is almost incalculable how much your abuse of trust has harmed the administration of justice,” Ericksen said, according to the Star-Tribune. “The major harm here is what happens when a lawyer acts as a wrecking ball.”
Hansmeier, who earned his J.D. in 2007 from the University of Minnesota Law School, was also ordered to pay $1.54 million in restitution and serve two years of supervised release.
It's not just bottom feeders bringing these cases. For example, before Lincoln Bandlow left Am Law 100 firm Fox Rothschild in May to launch his own firm, he represented pornography production company Strike 3 Holdings in more than 2,000 copyright infringement lawsuits.
The suits involve an uneasy combination—copyright scofflaws, yes, but also an overlay of shame and embarrassment (would you want the world to know your porn habits?) that some say verges on extortion.
There's a fine line—but Hansmeier and his Prenda Law partner John Steele didn't just cross it, they catapulted over it.
It wasn't so much that they raked in millions by shaking people down for settlements (typically $3,000-$4,000) for watching pirated porn. After all, copyright infringement is a legitimate issue for the porn industry, reportedly costing IP owners $2 billion a year.
But prosecutors said Hansmeier and Steele were also behind a scheme to upload (and in some cases, actually create) the pornographic content themselves to lure downloaders.
“Hansmeier engaged in a complex scheme to defraud thousands of people. He repeatedly lied to courts, both in writing and in person, and encouraged others to lie on his behalf. He created sham entities, some domiciled in foreign countries (St. Kitts and Nevis, island countries in the Caribbean), in order to shield himself from responsibility,” wrote Assistant U.S. Attorney Benjamin Langner in Minnesota in court papers on June 11. “He used other people, including his own employees, to protect himself. When his crimes were detected, he suborned perjury and destroyed evidence.”
The scheme began to unravel in 2012 when local counsel for Hansmeier and Steele's Prenda Law filed a cookie-cutter complaint in U.S. District Court for the Central District of California. The complaint accused a John Doe defendant (Mr. IP address 108.13.119.253) of illegally downloading an adult entertainment video called “A Peek Behind the Scenes at a Show.”
But this John Doe fought back. When he got a notice from Verizon about the request to unmask his identity, he hired Morgan Pietz of Gerard Fox Law PC.
Pietz did some digging, and quickly called the court's attention to Hansmeier and Steele's track record.
On behalf of shell companies, they “have filed a tsunami of John Doe pornographic copyright infringement actions in United States District Courts,” Pietz wrote.
He also alerted the court to evidence of “widespread fraud” and “a very troubling series of as-yet unexplained circumstances.”
For example, the man listed as the sole principal of two of Prenda's porn company clients was actually the caretaker of some property Steele owned in Minnesota. The man said he knew nothing about the scheme and that the lawyers stole his identity.
In May of 2013, U.S. District Judge Otis Wright in Los Angeles issued a blistering sanctions order. “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,” he wrote.
“Then they offer to settle—for a sum calculated to be just below the cost of a bare-bones defense. For these individuals, resistance is futile; most reluctantly pay rather than have their names associated with illegally downloading porn. So now, copyright laws originally designed to compensate starving artists allow, starving attorneys in this electronic-media era to plunder the citizenry.”
Which may be sleazy, but is not necessarily illegal. However, for the lawyers to hide their underlying role and lie to a judge—that's another matter.
“It was when the court realized plaintiffs engaged their cloak of shell companies and fraud that the court went to battlestations,” Wright wrote.
The judge awarded the John Doe his legal fees—and then doubled them for good measure. He also referred the matter to the U.S. attorney's office and the criminal investigation division of the IRS.
In December of 2016, Hansmeier and Steele were indicted on 17 counts including fraud and perjury.
Both pleaded guilty. Steele is set to be sentenced next month.
Still, Hansmeier hasn't given up the fight entirely. Through his lawyer, public defender Manny Atwal, he said he intends to pursue an appeal, calling the government's fraud theory “novel and complex.”'
“[T]he government supplies no authority for its implicit claim that a copyright holder's placement of protected works on a file-sharing network somehow vitiates any civil claim against downloaders under the federal Copyright Act,” he argues, adding that “the government's principal theory is that the copyright holder misled courts to access judicial subpoena power as an investigative tool, not to somehow trick putative downloaders into paying a settlement to which they bore no legal exposure.”
He asked the court to let him remain free on bail pending appeal—a request which was denied.
As the Minnesota U.S. attorney's office noted, Hansmeier's attempt to “assert facts suggesting that he had a 'good-faith' basis to bring the copyright infringement lawsuits, are entirely beside the point. The only issue preserved for appeal is whether the indictment, assuming its averments are true, states an offense.”
The prosecutors added, “[I]t is virtually certain that the Eighth Circuit will agree with this court.”
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