Judge Wright Tells Team Prenda To Pay $80k, Refers Their Activity To State Bars, Feds & IRS
from the boom dept
Plenty of folks have been waiting to see how Judge Otis Wright would finally rule in the Prenda case he was overseeing. As you may recall, Judge Wright began to see through the tricks and facades put up by Brett Gibbs and Prenda, and eventually ordered everyone to show up in his courtroom (twice). The hearings, as you may recall, did not go well for Team Prenda and all its associated players. While Wright may be somewhat limited in what he can do to Prenda, it appears he's doing his best to throw whatever book he can at them, randomly using as many Star Trek references as he can cram into the tight 11 page order. The discussion lays out the details pretty clearly. We'll post the whole key part of the discussion, because it Judge Wright isn't wasting time and I'm sure many of you will appreciate it:Steele, Hansmeier, and Duffy (“Principals”) are attorneys with shattered law practices. Seeking easy money, they conspired to operate this enterprise and formed the AF Holdings and Ingenuity 13 entities (among other fungible entities) for the sole purpose of litigating copyright-infringement lawsuits. They created these entities to shield the Principals from potential liability and to give an appearance of legitimacy.That last paragraph is the key one. Given all of this, Judge Wright looks at what he can do. First, he digs into the failure of Team Prenda to "conduct a sufficient investigation" into whether or not anyone they were suing actually infringed on the copyrights they held. However, he notes, his bigger concern is not the lack of sufficient investigation, but rather Prenda's attempt at a "cover-up" of this point as well as Gibbs' "hasty after-the-fact investigation, and a shoddy one at that." In fact, he calls certain statements from Gibbs concerning the investigation "a blatant lie."
AF Holdings and Ingenuity 13 have no assets other than several copyrights to pornographic movies. There are no official owners or officers for these two offshore entities, but the Principals are the de facto owners and officers.
The Principals started their copyright-enforcement crusade in about 2010, through Prenda Law, which was also owned and controlled by the Principals. Their litigation strategy consisted of monitoring BitTorrent download activity of their copyrighted pornographic movies, recording IP addresses of the computers downloading the movies, filing suit in federal court to subpoena Internet Service Providers (“ISPs”) for the identity of the subscribers to these IP addresses, and sending cease-and-desist letters to the subscribers, offering to settle each copyright infringement claim for about $4,000.
This nationwide strategy was highly successful because of statutory copyright damages, the pornographic subject matter, and the high cost of litigation. Most defendants settled with the Principals, resulting in proceeds of millions of dollars due to the numerosity of defendants. These settlement funds resided in the Principals’ accounts and not in accounts belonging to AF Holdings or Ingenuity 13. No taxes have been paid on this income.
For defendants that refused to settle, the Principals engaged in vexatious litigation designed to coerce settlement. These lawsuits were filed using boilerplate complaints based on a modicum of evidence, calculated to maximize settlement profits by minimizing costs and effort.
The Principals have shown little desire to proceed in these lawsuits when faced with a determined defendant. Instead of litigating, they dismiss the case. When pressed for discovery, the Principals offer only disinformation—even to the Court.
The Principals have hired willing attorneys, like Gibbs, to prosecute these cases. Though Gibbs is culpable for his own conduct before the Court, the Principals directed his actions. In some instances, Gibbs operated within narrow parameters given to him by the Principals, whom he called “senior attorneys.”
The Principals maintained full control over the entire copyright-litigation operation. The Principals dictated the strategy to employ in each case, ordered their hired lawyers and witnesses to provide disinformation about the cases and the nature of their operation, and possessed all financial interests in the outcome of each case.
The Principals stole the identity of Alan Cooper (of 2170 Highway 47 North, Isle, MN 56342). The Principals fraudulently signed the copyright assignment for “Popular Demand” using Alan Cooper’s signature without his authorization, holding him out to be an officer of AF Holdings. Alan Cooper is not an officer of AF Holdings and has no affiliation with Plaintiffs other than his employment as a groundskeeper for Steele. There is no other person named Alan Cooper related to AF Holdings or Ingenuity 13.
The Principals ordered Gibbs to commit the following acts before this Court: file copyright-infringement complaints based on a single snapshot of Internet activity; name individuals as defendants based on a statistical guess; and assert a copyright assignment with a fraudulent signature. The Principals also instructed Gibbs to prosecute these lawsuits only if they remained profitable; and to dismiss them otherwise.
Plaintiffs have demonstrated their willingness to deceive not just this Court, but other courts where they have appeared. Plaintiffs’ representations about their operations, relationships, and financial interests have varied from feigned ignorance to misstatements to outright lies. But this deception was calculated so that the Court would grant Plaintiffs’ early-discovery requests, thereby allowing Plaintiffs to identify defendants and exact settlement proceeds from them. With these granted requests, Plaintiffs borrow the authority of the Court to pressure settlement.
Gibbs’s statement is a blatant lie. His statement resembles other statements given by Plaintiffs in this and their other cases: statements that sound reasonable but lack truth. Thus, the Court concludes that Gibbs, even in the face of sanctions, continued to make factual misrepresentions to the Court.However, he notes that even with this, it is inappropriate to impose Rule 11 sanctions (typically used for attorney misconduct) because the cases have already been dismissed. Wright then goes through a list of other deceptions by Prenda, including the Cooper forgery, ignoring the order blocking early discovery, the self-dealing with the copyright, the failure to disclose their own interest in the case, and other attempts to obfuscate facts. However, he notes, sanctions are still not the most appropriate, given that a decently large sanction wouldn't be effective because the plaintiffs "will transfer out their settlement proceeds and plead paucity."
However, he obviously does not feel they should be let off the hook. So he orders:
- They have to pay the defendant's legal fees of $40,659.86, which he then doubles "as a punitive measure" to $81,319.72, noting "This punitive multiplier is justified by Plaintiffs’ brazen misconduct and relentless fraud."
- He notes that "The Principals, AF Holdings, Ingenuity 13, Prenda Law, and Gibbs are liable for this sum jointly and severally, and shall pay this sum within 14 days of this order." Basically, all of them together are responsible for figuring out how to pay the money. As defined earlier, Steele, Hansmeier and Duffy are "the Principals" though I wouldn't put it past the three of them to claim that they are non-parties to all of this and thus not responsible for the payment.
- The bigger issue: referring the conduct of Steele, Hansmeier, Duffy and Gibbs to various state and federal bars. As Wright notes: "there is little doubt that that Steele, Hansmeier, Duffy, Gibbs suffer from a form of moral turpitude unbecoming of an officer of the court." That won't look good on a resume.
- The even bigger issue: alerting the feds of possible racketeering violations:
though Plaintiffs boldly probe the outskirts of law, the only enterprise they resemble is RICO. The federal agency eleven decks up is familiar with their prime directive and will gladly refit them for their next voyage. The Court will refer this matter to the United States Attorney for the Central District of California. The will also refer this matter to the Criminal Investigation Division of the Internal Revenue Service and will notify all judges before whom these attorneys have pending cases. For the sake of completeness, the Court requests Pietz to assist by filing a report, within 14 days, containing contact information for: (1) every bar (state and federal) where these attorneys are admitted to practice; and (2) every judge before whom these attorneys have pending cases.
- And, finally, a smaller issue: Duffy and Gibbs, who are admitted to practice in California are referred to the "Standing Committee on Discipline." That's a relatively minor point given all of the above.
So now we wait to see what, if anything, the feds will do -- though, as Ken noted, when a federal judge recommends such an investigation, the feds tend to follow through.
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Filed Under: angela van den hemel, brett gibbs, john steele, mark lutz, morgan pietz, otis wright, paul duffy, paul hansmeier, prenda
Companies: prenda, prenda law
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Fine. Time to put PAID to the whole Prenda topic.
In (futile) hope it'll be my LAST chance, here's the tagline:
Take a loopy tour of Techdirt.com! You always end up same place!
http://techdirt.com/
ZOMG! Yet another item on Prenda Law! A staple in the soporific "At The Bench" series. Mike sez (short version): "Wow. Wow. Wow. ... The story is gripping."
http://www.techdirt.com/articles/20130303/23353022182/prenda-law-sues-critics-defamation .shtml
12:48:24[n-305-6]
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Re: Fine. Time to put PAID to the whole Prenda topic.
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Re: Fine. Time to put PAID to the whole Prenda topic.
"Oh no! Even my degree of madness cannot possibly spin doctor Prenda's sheer idiocy! Make it stop, please Mike, don't make me agree with you!"
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Re: Fine. Time to put PAID to the whole Prenda topic.
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Re: Fine. Time to put PAID to the whole Prenda topic.
Blue: "Oh, an article I don't care about, better hit the thesaurus to find a bunch of big words to use alllllmost correctly to show that I don't like this article."
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Re: Re: Fine. Time to put PAID to the whole Prenda topic.
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Re: Re: Re: Fine. Time to put PAID to the whole Prenda topic.
Just earned one 'insightful' vote.
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Re: Re: Re: Fine. Time to put PAID to the whole Prenda topic.
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Re: Fine. Time to put PAID to the whole Prenda topic.
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Re: Fine. Time to put PAID to the whole Prenda topic.
It's the only reasonable explanation for this barely-coherent post...
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Re: Fine. Time to put PAID to the whole Prenda topic.
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But I imagine that any subsequent investigations by IRS/DOJ/Bar Assoc., will take at least a couple years, and then any actual prosecution would take a couple more.
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It's short, just 11 pages PDF. WORTH the reading!
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OMG The funny! I can't stop laughing!!!
battlestations."
"As evidence materialized, it turned out that Gibbs was just a redshirt."
"Third, though Plaintiffs boldly probe the outskirts of law, the only enterprise they resemble is RICO. The federal agency eleven decks up is familiar with their prime directive and will gladly refit them for their next voyage."
Finally for the "insightful"...
"Without better technology, prosecuting illegal BitTorrent activity requires substantial effort in order to make a case. It is simply not economically viable to properly prosecute the illegal download of a single copyrighted video."
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Re:
*clinks glass with yours*
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Statue in his honor
That would be absolutely awesome.
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Re: Statue in his honor
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Re: Statue in his honor
I suggest gold-pressed latinum.
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Re: Statue in his honor
A Statue with the Quote Resistance is Futile would be the most awesome sight ever.
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Re:
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"This punative portion is calculated to be just below the cost of an effective appeal."
BOOM!!!!!!!!!!!!!!!!!
Turnabout is fair play!
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I also like that Judge Wright brought up RICO here as well, because after doing a lot of reading The Prenda gang and their antics in this case and others sure seem to fit the definition of RICO in my opinion from what I have read of the requirements and past case history of some of those that have been charged/prosecuted under RICO statutes.
Also nice to see that Judge Wright is going to make other courts aware of the shenanigans that have went on in these cases Judge Wright looked at. Ranallo and Pietz have definitely earned my respect for their valliant effort in exposing the Prenda gang antics and connecting the dots with Salt Marsh etc.
I look forward to watching and seeing what Steele, Duffy, Gibbs, Hansmeier and Lutz do now to try and thwart having to pay this and with their various cases around the country. I envision a mass withdrawl of cases ariund the country to avoid any more damage.
With that being said I would bet we will see a new effort and new names, LLC’s, new copyrights and more of the same. I doubt these guys are just going to quit. I would bet they keep trying to milk the copyright troll teat all they can. They are too addicted too the easy cash…I suspect we will see a little more friendly agreements between defense and plaintiff councils ( hint hint were we have seen this already )
But good on Judge Wright… now lets see what happens in Florida when the Judge there get this information from Judge Wright in the Sunlust case..I would say Prenda’s pain isn’t over yet
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Re:
Not that I'd accuse Steele of murder (but....) signed in the same handwritten style as "Alan Cooper" of course...
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Re: Re:
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Re: Re: Re:
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The roads leading to the stores to haul in popcorn have pot holes from so much use. My popcorn cooker has given up the ghost, as it is been sadly overtaxed to the point of not functioning any more, my popcorn bowl wore out and I replaced it with a wheelbarrow that now has a hole in it from over use.
On the bright side this has been long coming and way over due. I hope to hear that other judges follow Judge Wright's example and double the defense fees in each and every case. I suspect this is the last time we will hear of Prenda and it's assorted officers as anything but an example of what not to do in court.
I am sure this will now drag on for several years as the wheels of justice finely grind Prenda into dust. One thing should be plain, that the travesties such as earlier extortion cases in court may not be such a good idea in the future for other copyright trolls. I think the judge just reduced the nations' court load substantially.
OoTB has no teeth to gnaw with. His insane obsession with Mike and this blog are to the point that maybe the authorities should be called before he starts foaming at the mouth. After all, Florida has just put into effect a suspicious neighbor activity reporting office into being and OoTB sure fits that to a tee. I don't even wanna ask if he owns weapons.
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Re:
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It's like when young boys pull a girls hair and run away.....
Sometimes if the object of your affection doesn't return the love, then some attention, ANY attention is welcomed with open arms.........
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The IRS is like the Mafia (not to be confused with MAFIAA)
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Re: The IRS is like the Mafia (not to be confused with MAFIAA)
Forget the Trek references, I think the pic of the rather crazed-looking Ewok captioned with "PREPARE YOUR ANUS" would be appropriate at this point.
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OMG!
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Re: OMG!
Also, Prenda has ongoing cases in other areas that are going to get a lot more scrutiny because of this ruling.
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Accuracy
... and then he shows the chart with the salt marsh on it. Nice.
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Footnote 5
I'm sure I shouldn't be laughing at that, but I can't help it.
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Re: Footnote 5
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"No taxes have been paid on this income"
Hahahahahaha...
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White Collar Crime
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How to prevent these kinds of trolls
This may be a little off this thread. I'm wondering if there are ways of preventing this kind of trolling. First, it seems that copyright was originally intended to protect the creator of their work. So the problem seems to stem from how copyright can (or if it should) be assigned. It seems that AF holdings has the copyright, but not the distribution mechanism. This observation may be closer to patent law, but if they are not getting paid by the distributor of the porn, then what right do they have to sue, since financial loss would be to the distributor, not the copyright holder. Could this hold as a bit of a litmus test for being able to sue based on unauthorized download of content? So, maybe the first step in copyright reform should be how copyright can be assigned? I don't think the intent was to protect lawyers and large corporations, but to protect the creators. This would bear to the point of difference between a monopoly right based on a creators creation, and an actual piece of property. I am not a legal expert, nor do i have an interest in this other than the entertainment I have received from following this site. So hopefully any flames will at least be educational to me.
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Re: How to prevent these kinds of trolls
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Re: Re: How to prevent these kinds of trolls
Since then, authors such as Victor Hugo and Mark Twain have laid claim to copyright as a source of income, and the argument has become about it being their only source of income.
The fact is, the publishers, collections agencies, and distributors have always got the lion's share of any revenues, and that's how it will always be.
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So true
"So now, copyright laws originally designed to compensate starving artists allow, starving attorneys in this electronic-media era to plunder the citizenry."
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Brazen
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Re: Brazen
He's a federal judge. They have lifetime appointments. It would take a Congressional impeachment to remove him.
In the end, they're only paying double the other side's legal expenses. Considering the way they acted, that's not out of line. And as for the likelihood of an appeal: see footnote 5.
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Re: Brazen
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Re: Brazen
Prenda will likely have to play politics to win an appeal, as things aren't so good from a purely legal perspective. If they have friends in higher places than Judge Wright they might have a shot. Otherwise, I wouldn't bet my money on it.
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Re: Re: Brazen
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Re: Brazen
But nope, he must have had a vendetta or something against those 'shining defenders of copyright', and was just out to get them. /s
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Re: Brazen
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Re: Re: Brazen
Then I'd like to see it sink into the sea like a leaking oil tanker and blow up in a massive fireball.
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Re: Brazen
Have fun picking up the mess, you anti-anonymous anonymous jackass. Maybe you can emblazon John Steele's name alongside Evan Stone and Andrew Crossley in the list of glorious, bright and shining defenders of copyright.
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Re: Brazen
Tagged your post as "funny".
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Re: Brazen
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Re: Brazen
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Re: Brazen
Would that we could eliminate the Ass with No Brain so easily...
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Re: Brazen
You sir/madam/it(?) have absolutely no clue. You are potentially as bad or worse than that insanity who calls himself out_of_the_blue or AJ. Brazen are the actions of Prenda and associates/patsies. The 80K that Judge Wright ordered is miniscule to the costs afflicted upon numerous others. What is going to be exceptionally entertaining are the fines, judgements, etc...that the associate Fed entities hand down. This will be an anal reaming on par with using an oil drill to clean out a tooth cavity. This is karma/divine retribution at its finest.
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Re: Brazen
*snicker*
i've said previously that the only thing car salesdroids are good for, is plugging sinkholes; but i think we can find room for parasites, er, lawyers too...
look at just about ANY evil shit this planet is up to, and you'll -more than likely- find white, rich lawyers behind it...
based on a true story...
art guerrilla
aka ann archy
eof
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Re: Brazen
Who insisted that Wright was to blame
When it came to mind
That John Steele was fined
His horsey ass blew up a vein
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Escape Pods
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Re: Escape Pods
"The Romulans do not take prisoners"
--Chekov "The Deadly Years"
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Lying under oath, identity theft, contempt of court, falsifying evidence - 80K
WHAT IS WRONG HERE?
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From the Phoenix Wright school of Attorney
None of this can be true as we're all androids! And we're legally not people! Thus, we cannot be assigned sanctions and are immune to criminal prosecution!
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Re: From the Phoenix Wright school of Attorney
Pistorius, get over here. We have a job for you.
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Re:
For another thing, Judge Wright can only really apply sanctions for the case in front of him. To make up for that, he just referred Team Prenda to the state and federal bars, the USA (for possible RICO violations), and the IRS CID (for possible criminal tax fraud).
Under RICO, Prenda could face damages of up to $25K and 20 years in prison _per_count_ of racketeering -- and Prenda has filed a _lot_ of lawsuits. As for the CID, these are _not_ the friendly IRS auditors who show up when they suspect you're lying about your deductions. These are the people who, among other things, investigate terrorist money laundering and illegal drug money. You absolutely do _not_ want them looking at you.
Prenda is absolutely, completely, and utterly screwed.
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Ethically Challenged Lawyers?
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I'm sure this is not over. We all can hope right?
I love to see just to see how high OotB (prenda, carrion, etc) can push the "full retard" bar up just a little higher each time.
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But I think the only thing they can appeal is the fee award. The referrals to the various bar associations, the DOJ, and the IRS, aren't court orders making somebody do something, so they can't be stopped. They're just notices to completely separate agencies about what's going on. If any/all of these other agencies decide to start their own investiagation/prosecution, they do it under their own power and not via this court order, so it can't be stopped by appealing this. Not to mention that
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Not to mention that....these referrals will probably get to those agencies pretty quick, but any appeal will take many, many months, at least.
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"This punitive portion is calculated to be just below the cost of an effective appeal."
Looks like Prenda's getting a taste of their own medicine.
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IN A SALT MARSH!!!!!!!DUM DUM DUM!
Now it all makes sense
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Revenge of a angry Judge
Now the ball has been set in play. Let's see how long it will take the various Federal agencies (I hear the IRS calling, as well as the FBI...)to take apart this Borg cube called Prenda.
I've also heard that the IRS does not have a very good sense of humor. They're mean when they're pissed off at you.
I expect some criminal complaints, trials and convictions before another year is out.
Resistance is indeed futile, Prenda. Give up before you're assimilated into the Federal prison system.
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