Judge Decides The Prenda Buck Should Stop With John Steele And Paul Hansmeier
from the another-shoe-drops dept
The latest ruling in the AF Holdings v. Navasca case has come out with Magistrate Judge Nador Vadas completely slamming Team Prenda, focusing mainly on John Steele and Paul Hansmeier, whom he thinks should clearly be directly liable for the attorneys' fees already ordered on AF Holdings in the case, but which haven't yet been paid (of course). This is in response to the hearing from a few weeks ago, in which Judge Vadas had made it clear that he wanted AF Holdings/Prenda to answer some very specific questions. Paul Duffy, representing AF Holdings, did not answer most of the questions, and the Judge noticed. He also noticed that AF Holdings did basically nothing to actually respond to most of the issues, other than trying to attack Brett Gibbs or Navasca's lawyer Nick Ranallo.Even after the excoriating decision Judge Wright issued in Ingenuity 13, and the troublesome findings Judge Chen made in his order awarding attorneys' fees to Navasca, AF chose not to oppose the majority of the arguments in Navasca's motion for sanctions. Instead, AF introduced immaterial issues in its opposition, attacked its former counsel Gibbs, and attacked Navasca's counsel.... AF addressed the “Salt Marsh” issue and the working relationship between AF's former counsel Gibbs and its CEO/manager/sole employee Lutz.... However, AF failed to oppose Navasca's arguments that Steele and/or Hansmeier (1) manufactured Cooper's involvement in AF and forged his signature; (2) were in cahoots with the computer forensic experts who identified the alleged illegal downloaders that AF then sued; and (3) themselves uploaded the Video to Pirate Bay to induce others to download the Video. AF failed to offer any evidence to rebut Navasca's evidence establishing these points. AF's counsel attacked the affidavit of Delvan Neville, who explains how he determined that John Steele or someone with access to Steele's GoDaddy account uploaded the copyrighted works that form the basis of AF's lawsuits to BitTorrent swarms in order to induce infringement.... But AF did not actually rebut the evidence Neville presents. Instead of grappling with these admittedly difficult accusations, AF “respectfully request[ed] that to the extent the Court deems one or more to be relevant in any respect, that it identify those matters and allow Plaintiff opportunity to respond and present evidence to contradict them.” .... AF's counsel is apparently not familiar with the rules of federal procedure, or with basic principles of motion practiceThat last sentence? Ouch. Later, the Judge restates the three straightforward questions he'd ordered Duffy and AF Holdings be prepared to answer, and then notes "AF chose not to present any witness at the evidentiary hearing, continuing its campaign of obfuscation."
From there, the Judge notes that Judge Wright's initial findings against Team Prenda were compelling and adopted in this case. He finds that Gibbs' testimony concerning John Steele and Paul Hansmeier was convincing, and notes that Paul Duffy presented little evidence to counter any of it. The Judge also faults Steele and Hansmeier for claiming that they haven't had "a full and fair opportunity to litigate these issues," noting that's not at all true, going back to the opportunity before Judge Wright.
The key point of all of this is to see if John Steele and Paul Hansmeier could be made personally liable to pay the attorneys' fees ordered by Judge Chen in this case, and Judge Vadas is clearly convinced. Still, he notes that he's unable to do so under some of the proposed theories. He can't use the court's inherent powers, since neither Steele nor Hansmeier technically appeared as attorneys in the case (even if Hansmeier was deposed as a corporate representative). Still, the court notes that there's tons of evidence that Steele and Hansmeier deserve sanctions, but since they're not officially part of the case, there's just no jurisdiction.
However, that doesn't let them off the hook. The court finds that it can add Steele and Hansmeier personally as debtors to the original judgment, noting that they are basically an "alter ego to the original debtor." It then goes into a fair amount of detail about why this makes sense, highlighting the evidence that Steele and Hansmeier really controlled the lawsuit, that they had a financial interest in the ruling, and, most importantly, their near total failure to refute any of the evidence against them, despite multiple opportunities.
The evidence adduced at the August 28, 2013 evidentiary hearing confirms Judge Wright's findings. AF's failure to refute that evidence with any of its own also speaks volumes. Although the undersigned ordered AF to be prepared to explain at the hearing the money trail and provide an accounting of the funds it received from copyright infringement actions or settlements, AF failed to present a witness who could do so or documents that might shed light on these issues. During the evidentiary hearing, Duffy represented to the undersigned (but did not testify) that it was his belief that the settlement or litigation proceeds were held in IOLTA trust accounts by AF's attorneys (including Prenda Law, formerly known as Steele Hansmeier). Duffy also represented as a "fact" to this court that a settlement check in another matter was written to Prenda Law.... However, no witness testified regarding whether any of the funds ever left Prenda's trust account(s). Thus, there is no evidence before the undersigned that any settlement or litigation proceeds ever reached AF.The end result is that Vadas has sent the case back to Judge Chen with a recommendation for yet another Order to Show Cause why Steele and Hansmeier shouldn't be added as debtors to the original award for attorney's fees. In short, Hansmeier and Steele now get to argue why they shouldn't personally be liable for this debt. I'm sure their filings will be highly entertaining.
As a post script to this story, elsewhere we had noted that Mark Lutz had failed to show up at the hearing, despite Paul Duffy insisting that he knew Lutz was in town and would be present soon. A week later, Duffy finally filed with the court stating that Lutz had a good excuse, but wanted it to remain secret from the public. The court rejected two separate attempts to explain secretly why Lutz did so, and then just before Vadas' ruling filed a statement from Lutz that claims he was detained at the airport for the entire day by federal officials and unable to contact anyone, including his lawyer. He does not explain why he was detained, other than that it "was not for any actions I took at the airport and had no way of knowing that I was going to be detained on that day until it happened."
There are a number of oddities in this explanation, including the earlier claims from Duffy that he knew Lutz was apparently in town, when he wasn't, as well as the claim that he was unable to contact his lawyer during the entire 16.5 hours that Lutz claims he was detained. That's an awfully long time to be detained without access to one's lawyers. It also doesn't explain why it took Duffy a week to file anything with the court about this absence.
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Filed Under: alan cooper, brett gibbs, edward chen, joe navasca, john steele, liability, mark lutz, nador vadas, nick ranallo, otis wright, paul duffy, paul hansmeier, sanctions
Companies: af holdings, ingenuity 13, prenda, prenda law
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Apparently this judge feels enough is enough and it is time to end the games. I'm not sure I would want to be personally liable for court costs and attorney fees. I suspect in this case they will be rather on the high side.
I think we can put up the popcorn bowl. Such volumes are doubtfully needed to be continued long term.
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Probably my cynicism talking but...
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Re: Probably my cynicism talking but...
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Re: Probably my cynicism talking but...
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Re: Probably my cynicism talking but...
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Re: Re: Probably my cynicism talking but...
My takeaway from this and other absurd cases (SCO vs IBM, SCO vs Novell) is that Judges put on a big show of threatening this or that horribly named sanction, but nothing happens as soon as the media eye drifts to the next catastrophe.
It's pretty clear that Judges and Lawyers are totally part of the same cartel, if not not conspiracy.
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Re: Probably my cynicism talking but...
The gap in this is if the pricks have off-shored every dime and then flee to Kitts or Belize or...
With the corporate domicile of AF in St. Kitts and the litigation turning so badly against Prenda, Navasca and all the related parties should request an order that Steele/Hansmier/Lutz surrender their passports until the sanctions are satisfied. The Honorable Judge Wright, bless him, would probably be happy to do so.
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Going for the high score baby.
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Re: Where the fanboys LIE about me in advance.
I've never defended these clowns in the least, don't agree with them at all, believe this is MUCH too light (IF it's enforced); they should be in jail already and dis-barred, just think that Mike covers the details WAY too much. It's lawyer fare, DULL as dish water.
I'm ALSO DELIGHTED when ACs troll this site with out of the blue lies, showing what a hostile environment it is. Visitors beware!
Is there anyone lower or duller than a lawyer groupie? ... Mike just loves discipline at the bench: a real masnickist!
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It's hilarious watching you squirm and tantrum.
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Re: Re: Where the fanboys LIE about me in advance.
How about a Masnick groupie?
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Re:
If you couldn't guess, that was sarcasm, and i am claiming you are as bad as them.
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I miss the old days, when Steele would pop up under yet another name and mock the people calling him out.
Funny, they are all winning against you now... it's a shame your not paying out any of the sanctions.
Charter just moved to get repaid by you, and asked that the court add the amount of the original award each and every day. Given how slowly you like to file paperwork and do things, I think your going to be out a pretty penny. And I do hope that Charter keeps the list of names you obtained with the faulty subpoena, that the court ordered you not to use and destroy, so if your dumb enough to launch another lawsuit against them the heavens will open and a thunderbolt from the bench will FINALLY strike down your entire enterprise.
I think I told you to be afraid a couple times Steele, you did not heed my warning. Funny, I'm laughing with my basement dwelling friends as everything you built burns around you.
Rule 1 - Don't piss off the internet.
We never forgive, and we never forget.
Imagine those you think are huge pirates on the same team as officers of the court, all working to bring you down. Brings a tear to my eye, no wait... thats just from the smoking rubble of your law degree.
For our next trick, we are going to salt the earth from where you sprang. It's kinda marshy, so we'll need lots of salt.
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wtf?
Perhaps if Duffy pounded his square-head into a round hole, this makes sense.
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Detention
He also doesn't identify the federal agency that detained him. It could have been FBI (who work with the US Attorneys) or IRS who Judge Wright referred the Predna matter too. Or some other agency like the Secret Service who has jurisdiction over some wire fraud, credit card scams, identity theft and computer fraud.
Presumably whoever intercepted him did so because he was on some watch list and knew they could pick him up at the airport.
All very strange.
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Re: Detention
Plus there was that incident that landed him in jail in Mexico the last time he went on walk about.
I would hope that if there were investigating him, that they wouldn't have screwed with a Federal Judges docket just to try and shake him.
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Re: Detention
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Have copyright trolls, for the most part given up on filing suits to subpoena ISPs in California? Seems as if the dockets have been quiet since February 2013.
I know there have been several, less than favorable rulings out of CA District Courts for the trolls that have may have set precedence to proceed else where.
Does California Case Law now stipulate that an IP address alone is not enough to grant early discovery to subpoena ISPs?
Specifically, with this 'Order' by Judge Otis Wright out of the Central District of California:
http://torrentlawyer.wordpress.com/category/issues/ip-address-defendant/
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I believe the phrase used was "federal authories"
Duffy writes that Lutz was detained by a pair of "federal authorities" and was required to go with them to their office. That's singular 'office', which means it wasn't two agencies, rather two representatives.
We don't have any reason to believe that Lutz is such a high priority federal fugitive that actual federal agents would lie in wait for him at the airport. If that were the case, it would be to put him under arrest, not question him.
Who does that leave? The TSA. Specifically TSA screeners. That would explain the wording: the people that grope you aren't actually 'officers' or 'agents' (words that have specific meaning). They could be described as "federal authorities", although only a non-native speaker or someone bent on obscuring the truth would use a description as a designation.
So the only thing that fits the facts is that the TSA stopped Lutz.
I can think of two reasons for that.
The first is that Lutz wanted to be stopped. He wanted an airtight excuse, nominally beyond his control, for missing the hearing. It would be easy to get the TSA to be that excuse. TSA screeners are notorious for their 'DYWTFT' attitude (Do You Want To Fly Today?) It wouldn't take much to let them flex their power to make you miss a flight.
The second reason is showing up at the security checkpoint drunk. Not 'had a drink because I fear flying', but sloshing drunk. Lutz has a known history of DUIs and alcohol problem, so this would be a natural. An obnoxious drunk would be put aside for a few hours to sober up before further questioning.
I'm guessing it was a combination of the two. Lutz didn't want to go to the hearing. Duffy, Steele and Hansmeier really feared what might come out, and put a lot of pressure on him. So he showed up at the airport 'tired and emotional' and found it easiest to get the TSA to be his excuse.
I suspect that Duffy didn't plan this. If he had, he would have over-acted in court.
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Re: I believe the phrase used was "federal authories"
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Re: I believe the phrase used was "federal authories"
He is known for throwing people under a bus to try to protect himself.
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Another post 2 weeks from now
Otis Wright has started a chain reaction of nothing short but disaster, in which judges are railroading lawyers left right and center because of clear personal bias and an unwarranted, reckless vendetta against intellectual property. Troublingly, but unsurprisingly, you parade this as though it was some sort of victory. So you can steal pornography? Otis Wright must be removed before the global economy gets irreparably flushed down the toilet.
By the way, Anonymous Coward, nice try attempting to bait me. I don't hate "due process". "Due process" was what wasn't observed here. Prenda Law has not been given a chance to testify, period, and everyone is jumping on them like bullies. This is fact no matter how you want to spin it, and only brave souls like out_of_the_blue and average_joe have the courage to protest your social tyranny. Aside from you it's always the censored posts that prove the most worthy of reading.
Demented madmen like you must be taken off the streets.
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Re: Another post 2 weeks from now
Well, you're half right - they took the fifth.
But nice try anyways.
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Re: Another post 2 weeks from now
As the adage goes, when the facts are on your side, hammer the facts. When the law is on your side, hammer the law. When neither is on your side, hammer the Table!
Otis wright had issues because A) there were questions of violations of the law B) The Lawyers involved refused to say anything, and C) when the judge demanded they actually respond to questions about their actions, they all chose to take the fifth in a civil proceeding and their lawyer only made legal arguements rather then factual ones. Refrencing the above adage, that suggests there are no facts which would support the individuals in question, so they default to legal wrangling.
'Due Process' Involves investigations, reasonable suspision, and evidence. Judges Across the country have pointd out that A) there is a lack of evidence that the people being 'sued' in many cases are, in fact, the infringers and the level of investigation is questionable, and B) That the discovery process is being abused, because it is highly unlikely they are getting 100% settlements, but cases never seem to go to court, indicating that the fast settlements were the goal and beyond the settlements they have no interest in the case something you can't use the discovery process for. Thats a violation of due process. Infringement is bad, but if you are going to sue someone for it, they get the full benefit of due process.
In the otis wright case those accusing these laywers of fraud made their case. In the court of law it is the accusers who must prove their case. Otis Wright was clearly convinced by the evidence provided by the defence team that the Prenda lawyers were not above board, and that John Steele and Paul Hansmeier were a part of it. The judge then called not 1 but 2 hearings entirely devoted to giving the accused a chance to respond to the accusations. How do I know this? The hearings were part of an "Order to show cause", specificly to show cause why he shouldn't find prenda to have committed fraud. He stated he was looking for facts and answers, evidence that what he had been told was wrong. Instead what he recieved was "You dont have the authority to ask those questions of my client and you don't have any evidence (but claimed in a non-specific way that in no way actually rebuts any specific piece of evidence)".
Honestly,the way you jump from an assumption about how this gives carte-blanche to infringe pornography to complete and total economical collapse makes me wonder if you are trying to use satire to prove how horrible copyright support arguments are, but the rest of your post disproves that theory.
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Re: Another post 2 weeks from now
Newsflash: They both sold their souls a looonnnggg time ago.
MUHAHAHAHAHAHA!
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Re: Another post 2 weeks from now
You seem intent on confusing who the defendants are in this case, but that's not a surprise either, because whenever copyright enforcers mess up, you blame everyone else but copyright. You'd rather take farmyard impersonations than logical analysis for arguments.
I'm going to say it now, I'm going to say it again, and I'm going to point it out each and every time you show your sorry, non-censored, nameless equine ass around.
horse with no name just hates it when due process is enforced.
horse with no name just hates it when due process is enforced.
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Prenda's multiple chances to testify
The smoking gun in Lutz' failure to appear is the excuse that his absence thwarted answering the judge's questions. Had there been any significant effort to prepare for the court date, Duffy would have been armed with numerous exhibits as well as having full familiarity with the (supposedly) legitimate details. I have very little doubt that Lutz not being there was arranged.
This would fit Prenda's business model, though. They promoted piracy by seeding torrents, sued with only questionable evidence, and then held victims' reputations as hostage, holding out for hush money. All the while, hiding behind smoke, mirrors, and lies.
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What does Lutz know?
It's very likely that Lutz's story would fall apart on cross-examination. He can memorize dates, but questions that would be simple for the real principles would cause problems:
"How did you come up with the name 'AF'?"
"What's the telephone country code for Nevis?"
"What kind of accent do they have in Nevis?"
"Would you recognize Alisha's voice? Did you deal with her frequently? Did she direct your actions?"
"Did you FedEx your documents to Nevis?"
"Who signed and deposited the checks? Did you monitor the account? How and when?"
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There was no way that Steele , Hansmeier and Duffy were going to let Lutz answer any questions regarding AF Holdings, not after Lutz's brilliant performance in Florida in the Sunlust Case.
Steele and Hansmeier will delay, appeal, and file to try and stave off having to appear in court and have to give any answers under oath. I would expect them to just try and settle it rather than have to appear and take the fifth again.
Duffy the brilliant legal mind he is shouldn't be repping anyone in this case, lord knows you would hate to see anyone get sentanced to the chair at the rate he is going, nice smackdown by the judge.
The mere fact that the Prenda gang doesn't want to submit any evidence to back up their claims is very telling of how much bullshit is coming from their end of the spectrum.
They failed to get their so called expert Peter Hansmeier who is supposedly their forensic investigator to submit evidence or to refute Nevilles claims that Steele allegedly put these files on TPB for downloading.
As much as Prenda tries to put up this fight they really have no fight in them, and nor can they really fight back, they more try and deflect from the issues rather than supply evidence or testimony to refute them.
It ought to be interesting to see what Judge Chen is going to do here, I doubt he was impressed with the Salt Marsh signature story, but let it slide.
Now that Gibbs had piped up and said he never met Salt Marsh and it was Hansmeier who told me the signature was ok, it should make for interesting moments with Judge Chen.
I expect we will see the usual from Duffy, Hansmeier and Steele in deny, deny, deny and try and delay, delay, delay as per usual procedure from the Prenda gang.
I expect we will see a flurry of late filings and hear about someones pet parrot on life support and how they need to be their in case Pedro takes a turn for the worst.
Now that Gibbs has pretty much gave up the Prenda gang I wonder how far off that RICO grand jury is going to be, I am sure that Gibbs testimony was of great intrest to the IRS Criminal Division as was Duffy's statement that a check was made out to Prenda Law...Oops!
Now of course Hansmeier said that no money were paid out to AF Holdings and the money was in Prenda account for future litigation, but Duffy said that Prenda was winding down and had no money...Hmmm where ever did that settlement money go.
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The interesting question is the accounting for the AF trust account. Did all settlement money go directly into the account? Who was paid from the account? Who authorized the distributions? Were the payouts payment for specific, itemized bills that reflect work done?
Those are basic questions that are trivial for legitimate operations to answer.
It's possible that Prenda didn't deposit settlement money into a trust account. If so, that is a huge ethical, tax and legal screw-up. A trust account needs to be a separate account in a third-party financial institution. Not an internal bookkeeping fiction. And, since matching records are kept by the bank, it's tough to paper over later.
I guessing that the payouts were also a problem. It's likely that Steele and Hansmeier were paid a share, in their name, as settlements came in. And that the checks were signed or transfers authorized by Duffy himself. Not a payment tied to billing for services rendered, or hours spent. You might be able to cook up a set of bills and books later, but money paid out immediately is a red flag, especially when other suppliers and providers (e.g. local attorneys) are paid on the last day possible.
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If anything, Prenda truly is a piracy supporter. After all, to seed the cashflow and start the ball rolling, they had to promote copyright violations by seeding those torrents. Of course, this may well have voided any copyrights that they had to the files, but they didn't exactly worry about diligence when suing based on shady data.
That kneejerk against the EFF does suggest that the horsey troll might be a Prenda insider. After all, it does fit the Prenda M.O. of hiding dishonesty, incompetence, and lack of ethics by trying to deflect and smear opponents.
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Also, doubt horse with no name is a Prenda insider; he's been around before Prenda's downfall started to orchestrate. He's just mad because Prenda's arguments rehash most of the RIAA's original talking points and precedents, and thanks to Prenda managing to royally mess things up, it's going to make it harder for copyright enforcers to do their job. So he's decided that the alternative is to smear Otis Wright while trying to lie that he's not a Prenda fan - though it didn't take long for that facade to fall. Searching for "horse with no name" through the search bar proves as much.
The idea that maybe, just maybe, copyright enforcers shouldn't have been breaking the law to begin with is lost on him.
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