Lawyers who pursued porn downloaders are indicted for alleged 'extortionate tactics'
Two lawyers sanctioned by a federal judge for “abusive” copyright litigation against porn downloaders have been indicted for allegedly using sham clients to disguise that they owned the companies seeking damages for copyright infringement.
The lawyers, John Steele and Paul Hansmeier, were charged an indictment made public on Friday, report the National Law Journal (sub. req.), the Washington Post and the Minneapolis Star Tribune. Steele has lived in Florida and is licensed in Illinois, while Hansmeier lives in Woodbury, Minnesota. They were both law school classmates at the University of Minnesota Law School. How Appealing links to additional coverage here and here.
According to the indictment (PDF), Steele and Hansmeier made about $6 million as a result of “fraudulent copyright lawsuits they peddled to courts throughout the country.”
Steele and Hansmeier created sham companies to obtain copyrights to pornographic movies—including some movies they filmed themselves—then uploaded those movies to file-sharing websites such as BitTorrent to lure people into downloading the movies, according to the indictment
“When Hansmeier and Steele ensnared someone in their trap,” the indictment says, “they filed false and deceptive copyright infringement lawsuits that concealed their role in distributing the movies, as well as their significant personal stake in the outcome of the litigation.”
Hansmeier and Steele would ask courts to subpoena internet service providers to learn the identity of the downloaders, and then would use “extortionate tactics” to get quick settlements from individuals who were too embarrassed or financially unable to defend themselves, the indictment says.
When courts began limiting the number of defendants Hansmeier and Steele could sue in one suit, the lawyers began filing suits falsely claiming that some of their sham clients had been hacked. They used those suits to subpoena service providers for identifying information of “additional people who they could extort,” the indictment says.
Hansmeier and Steele tried to distance themselves from the litigation by creating a law firm called Prenda Law and exerting de facto control over the firm, while disclaiming involvement to various courts, the indictment says.
Charges against the lawyers include conspiracy to commit mail and wire fraud, and conspiracy to commit and suborn perjury.
U.S. Attorney Andrew Luger announced the charges at a news conference, according to the Star Tribune coverage. “These lawsuits were a sham,” Luger said. “In fact, the lawyers were effectively the clients and the lawyers had concocted the facts that gave rise to the very lawsuits that they filed—lawsuits that were nothing more than a shakedown.”
