Latest Prenda Filing: John Steele Knows Who Alan Cooper Is, But Won't Say, Plus Almost 300 Pages Of Tap Dancing Around Important Questions

from the who-is-alan-cooper dept

The hits just keep on coming in the Prenda situation today. The latest is a filing from Morgan Pietz, the lawyer fighting against Prenda, which includes an incredible 300 page deposition of John Steele's law partner, Paul Hansmeier, acting as a representative for AF Holdings, one of the shell companies that people have been arguing is really owned by those associated with Prenda. The deposition actually happened back in February on a different case and it's quite a read. Acting as the lawyer for Hansmeier, by the way, is Brett Gibbs, and his role appears to be the resident pain in the ass, objecting to nearly every question. Hansmeier continues the standard operating procedure of Prenda Law in trying to tap dance his way around pretty much anything that looks really bad. If you want to skim the "good parts," Pietz helpfully highlighted the parts that directly pertain to the hearing on Monday in yellow, but there's much, much more. I've spotlighted some key parts here.

A quick summary: John Steele knows who Alan Cooper is, but won't tell anyone. No one seems to know who owns AF Holdings, but it's a trust, and that trust has no human beings as beneficiaries (zombies? aliens? we don't know). No one ever seems to get paid. AF Holdings makes no revenue, but holds money in a trust. Hansmeier represents AF Holdings but doesn't get paid. Mark Lutz is the sole employee and CEO for AF Holdings, but doesn't get paid. There is no clear financial relationship (i.e., no money being paid) between AF Holdings and the companies it supposedly gets its copyrights from. Since Lutz is the only employee, he handles the "not very complicated" books, but when asked to discuss how much cash AF Holdings has, well, that's too complicated.

These guys really think they've set up a system where they can basically hide everything. Eventually, a court is going to call bullshit on all of this. Perhaps on Monday...

I'd jump straight to the "Alan Cooper" question, since that's a big one, but Hansmeier's tap dancing there requires some other details first. So, let's go back to the question of who actually controls AF Holdings. The answer, apparently, is "a trust." Who's in the trust? We don't find out. But who works for AF Holdings? Apparently the sole employee has been Mark Lutz all along. Except that he's not paid anything and it's unclear if there are any actual records that he works for AF Holdings. Yeah. A snippet from the deposition:

Q. And who is AF Holdings -- who are AF Holdings' employees?
A. AF Holdings' sole employee is Mark Lutz.
Q. When was Mark Lutz hired?
A. He was hired very shortly after the incorporation, within a day or two, so May 2011.
Q. And does AF Holdings maintain employment records that would reflect Mr. Lutz' employment?
A. Could you specifically describe some of these employment records.
Q. A W2 for example.
A. It does not maintain a W2 for Mr. Lutz.
MR. PIETZ: How about a 1099?
THE WITNESS: It does not maintain a 1099 for Mr. Lutz.
MR. PIETZ: What can kind of records does it maintain for Mr. Lutz?
THE WITNESS: I guess -- which topic is this again so I can refresh my recollection?
MR. PIETZ: I'm not going to answer that, but it's on the list.
MR. GIBBS: Objection. It's not on the list.
MR. PIETZ: I disagree. You can go ahead and answer.
MR. GIBBS: Which one is it? I disagree.
MR. PIETZ: It's not our job to tell you.

This goes on for a bit with them arguing over whether or not they're allowed to ask about this, and Hansmeier eventually saying that he's sure that they "could get... some form of document" to prove that Lutz is employed by AF Holdings, though he also says:

I guess what I can say on behalf of AF Holdings is that I do not review any documents that would fall within the category of documentary support. Does that mean they have them, perhaps. Perhaps they don't have them. It wasn't one of the noticed topics. I inquired of Mr. Lutz as to who the employees of AF Holdings were and Mr. Lutz said that he was the sole employee.

Incredibly, they're arguing that the documentation of Lutz's employment was not previously "noticed" as a topic that would be covered, even though the list of topics included "identity and terms of employment for any and all AF Holdings' employees and independent contractors utilized by AF Holdings." So, as the sole employee, and "essentially" the CEO, he must make some money, right? No.

Q. To be more specific. Could you elaborate on the terms of Mr. Lutz's employment with AF Holdings?
A. He is the -- well, he's essentially the CEO of AF Holdings.
Q. How much is he paid?
A. He does not receive a salary for duties as CEO.
Q. Does he receive a salary for any other role that he fills at AF Holdings?
A. He does not receive a salary from AF Holdings.

Okay, so Lutz is the guy for AF Holdings, even though there are no records of him actually working there and he doesn't receive a salary or any other compensation (they later asked about other non-monetary compensation as well). Hansmeier chooses his words carefully so they keep repeating the question, and even directly pointing out to Hansmeier that his choice of words is clearly "leaving open an exception" in terms of how Lutz is compensated.

Then we get back into a long bout of tap dancing around the structure of AF Holdings itself, which is owned by a trust, but Hansmeier refuses to provide any more information, insisting that the details of the owner of AF Holdings were not on the list of topics to be covered. He says that the trust itself has no beneficial owner, and when questioned about how a trust can have no beneficial owner, Hansmeier gets snarky: "I would suggest that your experience is not complete when it comes to trusts." Then they go around and around and around again in circles with Hansmeier coming up with new and unique ways to refuse to answer the basic question. He even claims he doesn't know the name of the trust that owns AF Holdings.

At one point, they bring up "Salt Marsh," which in one document is listed as the "owner" of AF Holdings. Hansmeier again is tap dancing, saying:

My testimony was that I don't know what the exact name of the trust is. If the name of the trust is Salt Marsh, then Salt Marsh is the owner. If the name of the trust is not Salt Marsh, then --

Very useful. They then ask if a trust can read, followed by pointing out that in another filing AF Holdings claimed that "Salt Marsh" had read an ADR certification handbook. Then, they note that if the owner is a trust, and the owner is Salt Marsh, then to claim that the trust read a handbook doesn't make much sense. They even present him with the ADR certification that has a signature for "Salt Marsh" and he still refuses to answer the question. Even when asked directly, he states flat out that despite being the representative for the company he doesn't know who owns it.

Q. But your testimony as AF Holdings corporate representative who has been subpoenaed to appear and testify on the noticed topics, which include as No. 6, AF Holdings' corporate structure, your testimony is that as the corporate representative for AF Holdings, you do not know the name of the trust that owns AF Holdings?

THE WITNESS: Yes. My testimony is that in preparing for this deposition, I did not expect the name of the trust to fall within the scope of this. I did not review the history of the name of the trust.

That does not seem particularly believable, but we'll see what some judges have to say about that eventually, I imagine. He keeps insisting that the owner of AF Holdings is and has always been a trust, and not an individual, and implies that Salt Marsh may be the name of the trust though he does not know. That becomes important later... because the name Salt Marsh (or, rather, Saltmarsh) returns, but we'll get there.

From there they go on to an equally long and equally unenlightening conversation about what happens to money that is paid into AF Holdings in the form of settlements. Again, it's all about the tap dancing. AF Holdings apparently never recognizes revenue because they use "mark to market" revenue recognition based on the "value of their assets" and how much they appreciate, rather than actual cash flow in. And even if they did use cash flow in, Hansmeier can't say where the cash goes, other than that individual attorneys have it put in trust and it's used to pay for legal costs because piracy is such a big problem and they have to keep fighting it. Or something along those lines.

Eventually, however, they get Hansmeier to admit that he has an interest in the Alpha Law Firm, who has represented AF Holdings in some cases, and Hansmeier is asked how they got paid... to which he notes that the money actually went to Prenda's trust account. He's asked if, as a representative of AF Holdings, he's concerned that his own client (based on his earlier statements) does not appear to be getting paid, and he responds:

Well, I can say as an attorney I have no concern over how the proceeds are handled.

They keep pressing him on where the money goes, and he keeps saying to fund further litigation, and then finally he says this:

THE WITNESS: Yes, that's correct. The purpose of the litigation isn't to generate money for AF Holdings. The purpose of the litigation is to generate a deterrent effect in stealing its copyrighted works.

Yeah, sure. Very believable. Of course, he then admits that part of the "litigation fees" being paid goes to the lawyers. And after some more tap dancing, he admits that they are paid on a contingency basis (i.e., whenever money is collected) though he claims his own firm, Alpha Law Firm, has no contingency fees and is not paid by AF Holdings, despite representing them. He keeps dancing around what others might be paid.

So then they start asking about how much Gibbs makes from these cases, since he's in the room too. Not surprisingly, Gibbs does not like where this is headed and ramps up even more objections than before. They finally give up.

Then... finally, we get to the big question: Who is Alan Cooper? As we've been noting for months, it seems like a fairly straightforward question. Except if you're associated with Prenda Law and don't want to answer it. And... once again, the tap dancing begins pretty quickly.

Q. Who is Alan Cooper?

A. Alan Cooper is an individual who was designated as a corporate representative of AF Holdings, LLC. The circumstances that led to Mr. Cooper's designation as a corporate representative to acknowledge the copyright assignment agreement on behalf of AF Holdings, LLC, is that Mark Lutz -- we're backing up a little bit. AF Holdings makes use of corporate representatives, the reason for that is that obviously you guys know that there's a lot of people out there who don't like what we're doing, specifically to people who have infringed on works and want to retaliate against people who are enforcing copyrights.

Notice he hasn't answered the question. Just claiming that they have to use "representatives" because their critics are so, so mean. And so Alan Cooper's role was to protect Mark Lutz from the mean people out there.

AF Holdings makes use of corporate representatives to help prevent the -- I guess the officer, Mark Lutz, himself, from being targeted by these individuals. The manner in which Mr. Cooper was designated as a corporate representative was Marks Lutz asked attorney John Steele to arrange for a corporate representative to acknowledge the assignment agreement on behalf of AF Holdings. Mr. Steele did so and returned the assignment agreement to AF Holdings bearing the signature of Mr. Alan Cooper.

Other important point in there: John Steele is the one who "found" Alan Cooper. Not a surprise, but just confirming officially what most people expected. So then, Hansmeier discusses a conversation between Lutz and Steele in which Steele insists the Alan Cooper signature is real, but which provides no more insight into whether or not Alan Cooper actually exists.

When this whole -- I guess the first time we heard about any form of controversy with respect to -- the first time AF Holdings heard about any form controversy with respect to the assignment agreement was when an attorney named Paul Godfread, G-O-D-F-R-E-A-D, contacted AF Holdings and said that -- I can't remember the exact text of the e-mail, but something to the effect of he's representing someone named Alan Cooper and they're concerned that Alan Cooper is being held out as AF Holdings CEO.

And so when that occurred, we -- or AF Holdings and Mark Lutz specifically, he asked, you know, what is the exposure of AF Holdings here and there were two specific concerns. One specific concern was the issue of fraud. Namely, that if AF Holdings is distributing agreements that have someone's signature on it, but he didn't sign it or somehow his identity was coopted, then obviously that's something that AF Holdings would have to -- once it became aware of that issue -- stop doing -- shut it down and make sure it didn't happen anymore, because obviously there's no reason to distribute an assignment or any agreement bearing someone's signature if there was a forgery or some sort of fraudulent action involved in that sense.

And so to address that issue AF Holdings -- well, spoke to Mr. Steele -- Mark Lutz spoke to Mr. Steele and said, Well, I understand that there's an issue with this Alan Cooper and asked Mr. Steele point-blank, Is the signature a forgery. Mr. Steele said the signature is not forgery. And he asked him, Is the -- is this signature authentic. Mr. Steele says, yes, the signature is authentic. Based on Mr. Steele's representation, we have no reason to believe from what Mr. Steele said, at least, that the signature is a forgery or there's some sort fraud going on with respect to the signature.

Got that? Steele says Cooper is real, so he must be real. So they turned it around and demanded evidence from Cooper that there was fraud. And then he suggests that even if Cooper did turn out to be a forgery, it wouldn't really matter because the original copyright holder has confirmed that he wanted to assign his copyrights to AF Holdings.

But he never says who Alan Cooper is. So he's asked again, and the response is basically that only Steele knows and he's not saying:

If you're talking about the guy who's in Minnesota and was John Steele's former caretaker, all I can say is that AF Holdings -- the only person who knows who this Alan Cooper is is John Steele and we asked Mr. Steele, is this the same guy, is this not the same guy, is there another Alan Cooper and Mr. Steele declined to respond on the basis that Mr. Cooper has sued Mr. Steele and they're actively involved in litigation.

That may be the most ridiculous answer yet. The whole reason they're "engaged in litigation" is because Steele hasn't produced the Alan Cooper who signed the documents representing AF Holdings. The best way to end the litigation is pretty simple: have that Alan Cooper show up. Which should be easy enough... if he existed (ah, there's the rub...).

Later on, Hansmeier denies that Cooper works for AF Holdings, insisting that Lutz is the only employee who ever has worked for AF Holdings, which creates some trouble for Gibbs, but we're getting there.

Of course, now that Steele has been brought up, Hansmeier is asked why Steele found Cooper since Steele is supposedly not an employee of AF Holdings. The answer, apparently, is that Lutz is too busy ("there are a certain number of hours in a day") and so he needs to "rely on third parties" to help him "accomplish various tasks." There's a discussion on whether or not Hansmeier and Steele "take orders" from Lutz (Hansmeier implies yes) and the fact that Lutz used to work for Steele, though Hansmeier refuses to say in what role.

Then... another document comes out and the spotlight is back on Gibbs, because it shows a signature from Gibbs, saying that he is "in-house counsel" for AF Holdings. Gibbs quickly realizes where this is going and is not happy about it.

Q. I believe you testified a moment ago that throughout the entire duration of AF Holdings, the only employee or officer -- the person wearing all of the hats was Mark Lutz.
A. Uh-huh.
Q. Based on this document that appears to be incorrect because isn't Mr. Gibbs now in-house counsel for AF Holdings?
A. No. I think it's -- I don't know why it's here. I don't think it's --
Q. So Mr. Gibbs is not in-house counsel for AF Holdings?
A. That's correct.
MR. PIETZ: Well, shoot. I'm just going to ask you, Mr. Gibbs. Did you prepare and sign this document?
MR. GIBBS: It's not my deposition. I'm not quite sure why I would be answering questions.
MR. PIETZ: Well, there's an E-file document here with your signature on it that says you're in-house for AF Holdings. I thought I'd give you the opportunity as a courtesy to clarify for the record.
MR. GIBBS: Okay.
MR. PIETZ: You're not going to address it?
MR. GIBBS: I don't think I need to address it.

I get the feeling he may need to address it on Monday.

As they delve into who else might be involved in AF Holdings, the question comes up as to why Mark Lutz, a paralegal for John Steele, suddenly is running a company that has 20 lawyers working on cases, and is supposedly now employing his former boss, John Steele, as well as Hansmeier. And then... the return to the Salt Marsh, as it were:

Q. So returning to these corporate representatives. Have there been any other corporate representatives other than Alan Cooper, Mark Lutz for AF Holdings?
A. I can think one of other corporate representative.
Q. And who is that?
A. And that would Anthony Saltmarsh.
Q. Where does Mr. Saltmarsh reside?
A. I don't know where Mr. Saltmarsh resides.
Q. Was Mr. Saltmarsh ever compensated for acting as a corporate representative for AF Holdings?
A. Not that I'm aware of.
Q. Exhibit 101 and 102. Those are both the ADRs that are signed by Salt Marsh. I believe you testified you thought that that might be of the name the trust that owns AF Holdings. Could that be a misspelling of Anthony Saltmarsh?
A. The only thing I can say about these documents is that if you wanted me to come prepared to testify about them, you may have included them as exhibits to the notice or supplement the notice with the documents. You're asking me is it possible that Salt Marsh as spelled on here is a misspelling of the name Anthony Saltmarsh?
Q. Perhaps an alias would be a better word for it.
A. Or an alias for Salt Marsh. I'm a bit skeptical of that theory because it says AF Holdings owner and Anthony Saltmarsh is not an owner of AF Holdings.

He's skeptical? Fascinating. The lawyer explains to Hansmeier that Steele's sister lived with Anthony Saltmarsh and Hansmeier insists he knows nothing about all of this.

They then move on to questions about AF Holdings' relationships to the copyrights in question, focusing on Heartbreaker Productions and the copyright over the porn film, Popular Demand. Hansmeier claims that Hartbreaker assigned the entire copyright to AF Holdings and that AF Holdings is not doing anything with the film -- not distributing it or performing it or anything. Hansmeier says that the only distribution is infringing distribution. The lawyers then present him with an article claiming that a new distribution agreement has been reached over Popular Demand, and Hansmeier -- who basically has just been proven to either be ignorant or a liar -- goes with the snark:

Well, I know from reading the blog sites that you two participate in that I shouldn't believe everything I read on the Internet.

Much later in the deposition, there's a bit of an argument over the "financial relationship" between AF Holdings and Heartbreaker. Hansmeier complains about it being unclear what "Heartbreaker" company they're referring to, but eventually notes that the agreement they have shows no actual financial relationship. They then ask Hansmeier over and over and over again if any money changed hands, and Hansmeier refuses to answer other than to say he's already answered, saying that the document is the entire agreement. When asked if that means there was no financial relationship, he just repeats what he said before. It's quite an incredible exchange.

Next up: a long discussion that goes absolutely nowhere concerning Paul's brother, Peter Hansmeier, and the various firms he's worked for who provide "technical services," in which they claim to be able to identify infringers. Paul repeatedly claims ignorance of some key things about his own brother, including what kind of degree he received from college. They then discuss the process by which "infringers" are uncovered, using Peter's company 6681 Forensics.

Further discussion leads to questions about who handles AF Holdings "books" and again it's Mark Lutz. Hansmeier claims that the books are "not complicated" so they don't need a bookkeeper or an accountant (they also don't pay taxes, apparently). Yet a few minutes later, when asked about how much cash AF Holdings has received, it's a very different story with Hansmeier saying it "would be a very difficult topic" because "it's very complicated." Oops. The response from both Gibbs and Hansmeier is to complain that Pietz is not being professional. You can't make this stuff up.

A further discussion is had on how AF Holdings chose to sue the account holder in the particular case at hand, which is handy because part of Judge Otis Wright's concerns is the weak evidence that Prenda has been using in its cases.

Eventually, we get to the other mysterious character we had mentioned this morning: Allan/Alan Monay/Moay/Mooney/etc.

Q. Do you know anybody by the name of Alan Moay, M-O-A-Y?
A. Do I personally know anybody by the name of Alan Moay? I'd have to check my contact list and anyone I've ever talked to in my entire life, but sitting here right now, do I know anybody named Alan Moay, no, I do not.
Q. Do you know anyone who is a principal or an officer or a corporate representative of Guava, LLC, with a first name of Alan?
A. Do I know anyone, principal or an officer --
Q. Or a corporate representative.
A. I'd to have check my records as to who does what at Guava, LLC. I couldn't tell you that answer for most of my clients.
Q. Do you know anybody by the name of Alan Mony, M-O-N-Y?
A. Again, I'd have to check my records to see who I've corresponded with in the past.
Q. Do you know anybody by the name of Alan Mooney, M-O-O-N-E-Y?
A. I have represented an Alan Mooney before, yes.

Then we're back to tap dancing. A lot of "I'll have to check my records..." Later on, they ask him to identify a recording and whether or not it's Lutz, and he claims he can't tell, even though he talks to Lutz all the time:

Q. Is that Mark Lutz?
A. Well, if I don't recognize the voice that's on the voice mail, I can't make an identification of who it is.
Q. How many times would you say you have spoken to Mr. Mark Lutz in the course of your life?
A. Too many to count.
Q. How many times would you say you've had phone calls with Mark Lutz?
A. I can't answer the question, but several times.
Q. Several or lots?
A. I would say several to mean many times.
Q. And you're telling me that you can't definitively say that the voice we just heard is Mark Lutz?
Q. Who might it be if it's not Mr. Lutz?
A. I guess anyone in the world.

And... that's basically it. 291 pages of Hansmeier doing his damnedest not to actually answer rather important questions. And all of that is now on the record for Judge Wright to use on Monday.

Filed Under: alan cooper, brett gibbs, morgan pietz, paul hansmeier, prenda
Companies: af holdings, prenda, prenda law