Judge Isn't Buying Team Prenda's Excuses

from the of-course-not dept

Thu, Oct 17th 2013 1:31am — Mike Masnick

Team Prenda keeps trying... and failing. In the AF Holdings v. Joe Navasca case in northern California, Judge Edward Chen has accepted the findings of Magistrate Judge Nador Vadas, who had found that John Steele and Paul Hansmeier were clearly the forces behind AF Holdings and Prenda. Judge Chen completely rejects Hansmeier and Steele's protests about all of this, arguing that there is plenty of compelling evidence that Prenda was really managed by the two of them, and they failed to present any evidence to the contrary. Rather, Judge Chen notes, it appears that the protests from Steele and Hansmeier were almost always attempts to kick up dust to distract from the basic facts, rather than attempts to dispute them.

Judge Vadas took into account AF’s attempt to impugn Mr. Gibbs’s credibility but found the evidence unpersuasive: The declarations (of Mr. Gibbs and other attorneys who represented AF in other states) “do not rebut Gibbs’ testimony that Steele and Hansmeier alone communicated with the purported client, and that they directed Gibbs’ litigation strategy. The declarations actually corroborate Gibbs’ testimony: he communicated with local counsel for AF, essentially acting as a go-between for Steel and Hansmeier.”

AF has objected to the finding that Mr. Steele and Mr. Hansmeier were directing Mr. Gibbs’s actions, but the objection is without any merit. The gist of AF’s objection is that, if Mr. Gibbs did in fact simply follow the directions of Mr. Steele and Mr. Hansmeier without doing any investigation of his own, then he violated his duties as an attorney under, e.g., Federal Rule of Civil Procedure 11. But just because Mr. Gibbs’s conduct may have been improper does not mean that any improper conduct on the part of Mr. Steele and Mr. Hansmeier should therefore be immunized. All three of the individuals can be deemed to have engaged in improper conduct

Furthermore, Judge Chen also notes the non-appearance of Mark Lutz and the subsequent bizarre excuse sent in a week later. We had noted how odd it was that it would take a week for Lutz to file such information, and Judge Chen makes it clear that the entire thing raises serious questions about Lutz's credibility:

The Court acknowledges AF’s objection that no negative inference should be read from the fact that Mr. Lutz did not appear at the evidentiary hearing because he intended to appear but was not able to because of unforeseen circumstances.... But the claimed inability to appear is highly questionable. First, AF waited for about a week after the evidentiary hearing before bringing up the argument that Mr. Lutz could not appear because of “very sensitive” reasons that would “expose [him] to undue scrutiny.” Second, in spite of the professed sensitive reasons, Mr. Lutz ultimately ended up publicly filing an affidavit (without permission from Judge Vadas) explaining why he could not appear. Third, the affidavit itself strains credulity. According to Mr. Lutz, he had bought a ticket to fly to San Francisco from Miami but, when he arrived at the Miami airport at 5:30 a.m., he was detained by federal authorities and was ultimately detained up until 10:00 p.m. – i.e., for more than 16 hours. And while Mr. Lutz suggests that he had no way to contact his attorney while detained, that is a dubious claim. Moreover, even if he could not contact his attorney while detained, there is no explanation as to why he did not ask for relief the next day.

It's good to see judges seeing through such bizarre filings. Judge Chen also has little patience for Hansmeier and Steele's attempts to attack Alan Cooper, which again he finds have little credibility.

The Court is somewhat sympathetic to AF’s point that it, Mr. Steele, and Mr. Hansmeier did not have a chance to cross-examine Mr. Cooper either at the March 11 hearing or at the April 2 hearing. But that is hardly a reason for the Court to entirely discount Mr. Cooper’s testimony. This is because, even if AF, Mr. Steele, and Mr. Hansmeier did not have a chance to cross-examine Mr. Cooper, they still had the opportunity to introduce their side of the story as to what happened with Mr. Cooper at the April 2 hearing but they effectively chose to do nothing. Mr. Steele and Mr. Hansmeier stated that they would not answer any questions. Tellingly, Mr. Steele did offer an explanation in or about May 28, 2013, in conjunction with another case involving AF in Arizona. (claiming that Mr. Cooper voluntarily expressed interest in getting into the business of fighting digital piracy, Mr. Steele put Mr. Cooper in touch with Mr. Lutz, and that Mr. Cooper thereafter participated in a limited number of transactions in 2011 with Mr. Lutz’s companies). There is no reason why Mr. Steele could not have offered this explanation during the April 2 hearing before Judge Wright.

Moreover, if Mr. Steele and Mr. Hansmeier really felt that cross-examination of Mr. Cooper was critical, there is no reason why they could not have issued a subpoena requiring Mr. Cooper’s presence at the evidentiary hearing before Judge Vadas.

Finally, it is worth noting that Mr. Navasca submitted evidence to Judge Vadas that Mr. Cooper’s identity had been stolen independent of the assignment agreement that bore Mr. Cooper’s name and signature. As Judge Vadas recited in the report and recommendation, Mr. Navasca provided an audio recording from GoDaddy.com, in which the caller identified himself as “Alan Cooper” but who was in fact, as testified to by Mr. Gibbs (who recognized the voice of the caller), Mr. Steele. There is also documentary evidence from GoDaddy.com reflecting that the customer’s name was “Alan Cooper” but the e-mail address was “johnsteele@gmail.com.” Docket No. 93 (Pl.’s Ex. G). Furthermore, the physical address for the customer was 4532 E Villa Theresa Dr. – an address that is linked to Mr. Steele’s sister and “Anthony Saltmarsh.” Mr. Steele and Mr. Hansmeier did not provide any evidence explaining these circumstances.

Basically: the judge isn't buying any of Steele and Hansmeier's attempts to kick up dust without actually answering any of the key questions. The judge, in fact, points out that Steele and Hansmeier did not actually answer the key question that Judge Vadas directly warned them needed to be answered at the hearing: what happened to the funds.

All this concludes with a new hearing, to be held November 21st, in which Steele and Hansmeier are going to have to show cause for why the attorneys' fees that were awarded to Navasca from "AF Holdings" should also apply to the two of them directly. The judge warns them to think twice about filing motions on this, noting that they will carry little weight, since the judge appears to want to get to the bottom of these issues at the actual hearing.

Gov Uscourts Cand 254869 120 0 (PDF)Gov Uscourts Cand 254869 120 0 (Text)

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Filed Under: edward chen, joe navasca, john steele, nador vadas, paul hansmeier
Companies: af holdings, prenda, prenda law

35 Comments

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Anonymous Coward, 17 Oct 2013 @ 1:42am

Whether or not these people are good or assholes.... This looks like a frame job of some kind. There is way too much weirdness.
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- That One Guy (profile), 17 Oct 2013 @ 2:02am
  
  Re:
  A frame job? They were/are extortionists, who went around threatening essentially random people with expensive lawsuits over fetish porn titles(wrecking both the defendant's bank-account and their reputation) unless the target 'settled', who got caught out on their scuzzy actions one too many times, and have been trying(and failing) to lie their way out of it.
  
  Put simply, the reason for all the 'weirdness' is because this pack of parasites are really bad liars, and can't keep their stories straight from case to case, judge to judge.
  [ link to this | view in chronology ]
- That Anonymous Coward (profile), 17 Oct 2013 @ 2:16am
  
  Re:
  So I'm curious, how exactly is this a frame?
  Detail your findings, cause well you've got a large deficit to overcome.
  I'm an asshole, and I am more beloved than the 'total fraudsters' of Pretenda.
  
  Much of what your trying to spin as weirdness is caused by their statements no longer being limited to 1 district at a time. So when they say
  in court 1 - the sky it is blue!
  in court 2 - the sky it is purple!
  well now courts are aware that the answers aren't syncing on things that should be solid facts.
  
  They offered perjured testimony.
  They cut a deal with a patsy to not oppose them getting unlimited discovery against an unlimited number of Does.
  They stole a man's identity.
  They were found by a court to be engaged in fraud.
  They have cheated the legal system out of MILLIONS.
  They could/would not answer who the hell signed a document central to their claims.
  
  I'm guessing there is a short list of locations this was posted from.
  GA, MN, IL, or a DoD network exit node.
  [ link to this | view in chronology ]
  - Anonymous Coward, 17 Oct 2013 @ 4:00am
    
    Re: Re:
    Obviously S&H are trying to frame Gibbs and Cooper. They are just doing a really bad job of it.
    [ link to this | view in chronology ]
    - That Anonymous Coward (profile), 17 Oct 2013 @ 4:09am
      
      Re: Re: Re:
      No no the current target is Lutz and AFH.
      
      Lutz was the mastermind who bamboozled all of them, Cooper is just a crank out to screw Steele on behalf of the terrorists at EFF, and Gibbs screwed us to save his own ass because he is evil.
      
      We never had anything to do with this, and anything that says differently we dismiss with the jedi mindtrick wave of our hand.
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  - Loki, 17 Oct 2013 @ 9:56am
    
    Re: Re:
    Speaking of which, according to the judge's statement above:
    
    Tellingly, Mr. Steele did offer an explanation in or about May 28, 2013, in conjunction with another case involving AF in Arizona. (claiming that Mr. Cooper voluntarily expressed interest in getting into the business of fighting digital piracy, Mr. Steele put Mr. Cooper in touch with Mr. Lutz, and that Mr. Cooper thereafter participated in a limited number of transactions in 2011 with Mr. Lutz�s companies).
    
    Yet according the the write-up on Sept. 30th by Nancy Sims:
    
    Steele also testified that he had helped Cooper set up VPR, Inc, that Steele had introduced Cooper to Mark Lutz, and heard Cooper's end of phone calls with Lutz on at least two occasions, and that Cooper had gotten "a kick" out of being associated with the adult industry, and repeatedly joked with friends and others about coming to work for him in his porn company, at least as early as 2011.
    
    So which is it? Did he merely facilitate an introduction between Lutz and Cooper or did he help Cooper set up a company as well? And what sort of business relationship was it, helping fight digital piracy, or being actively involved with porn?
    [ link to this | view in chronology ]
Anonymous Coward, 17 Oct 2013 @ 1:54am

The judge has basic told Steele and Hansmeier he's had enough BS. They will either be forthcoming or they will have to fork up the money. The noose has definitely tightened and I imagine it is no longer comfortable as in the days when Steele was planning that $10,000 a day income.
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- That Anonymous Coward (profile), 17 Oct 2013 @ 2:25am
  
  Re:
  No this can move the cashed owed to against them personally. Before it was owed by companies, that shield their owners from liability unless the veil is pierced.
  
  All the money went into the trust account in Prenda... Prenda is closed, why was the money not paid to the client from the trust account?
  [ link to this | view in chronology ]
Viln (profile), 17 Oct 2013 @ 1:56am

As entertaining as this saga is, on some level the pace and redundancy is incredibly frustrating. Judges are still pointing out inconsistencies in their testimony and demanding explanations for why they shouldn't pay slap-on-the-wrist fees... when their criminality and deceit is glaringly and obnoxiously obvious. We shouldn't still be watching them squirm and embarrass themselves in court at this point, likely with all their gains squirreled away into off-shore accounts. At this point we should be reading about the manner in which their anuses are being passed around the cell block like a chew toy at an animal shelter.
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- Jay (profile), 17 Oct 2013 @ 3:03am
  
  Re:
  Sorry, but with the amount of fraudulent behavior going on, even IF there's jail time, I doubt they'd be put in with actual felons in the drug system.
  
  I'd rather see them disbarred with some jail time in a low security prison (which may be what happens) but people really should stop passing that story around.
  [ link to this | view in chronology ]
  - Anonymous Coward, 17 Oct 2013 @ 3:32am
    
    Re: Re:
    Ah America where possessing a plant is worse than running an extortion racket and lying about it in court.
    [ link to this | view in chronology ]
    - Loki, 17 Oct 2013 @ 9:37am
      
      Re: Re: Re:
      Sadly, as screwed up as this country is, when it is all said and done, these two could probably run for Congress....and win.
      [ link to this | view in chronology ]
    - art guerrilla (profile), 17 Oct 2013 @ 10:33am
      
      Re: Re: Re:
      heh, furriner, we don't need no steenking barbarians criticizing our borked injustice system, we can do that perfectly well ourselves...
      
      (tony montana voice:)
      say hello to my li'l friend, the drone...
      
      art guerrilla
      aka ann archy
      eof
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- Vidiot (profile), 17 Oct 2013 @ 4:37am
  
  Re:
  It's been said over and over, but it's really difficult to continually read these reports without imagining what OUR lot would experience if we lied repeatedly and shamelessly, forged documents and generally tried to flim-flam just one -- let alone several -- federal courts. Any of us would be spirited away before we could spell "incarceration".
  [ link to this | view in chronology ]
  - That Anonymous Coward (profile), 17 Oct 2013 @ 5:10am
    
    Re: Re:
    You just need to enjoy the fact that they were undone by a bunch of meddling 'kids' on the interwebs.
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That One Guy (profile), 17 Oct 2013 @ 2:09am

One dollar or one million...
As refreshing as it is to see a judge tell these parasites point-blank, and with no subtly that he's not buying their lies and attempts at misdirection, as long as they continue to receive only monetary sanctions in the form of owed lawyer's fees, something which they appear to have no problem ignoring, it doesn't matter how large the amount is, they really haven't gotten more than a slap on the wrist, legally speaking.
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- That Anonymous Coward (profile), 17 Oct 2013 @ 2:21am
  
  Re: One dollar or one million...
  If they didn't have the dead sheepskin on the wall, this would NEVER have gone on this long.
  Because they are lawyers, the court has to cross every t dot every i... otherwise it could go on even longer.
  
  This is why the law seems unfair, with us regular folk the system moves at blazing speed...
  
  Hoping one of these courts where they have failed to pay holds them in contempt and locks them up. Once it is clear they won't pay until jailed for contempt, there can be dominoes in order holding them for court after court where they owe money.
  [ link to this | view in chronology ]
  - That One Guy (profile), 17 Oct 2013 @ 2:37am
    
    Re: Re: One dollar or one million...
    Kept jailed just long enough for the IRS to finish up their investigation...
    
    Well, one can dream anyway.
    [ link to this | view in chronology ]
    - That Anonymous Coward (profile), 17 Oct 2013 @ 2:42am
      
      Re: Re: Re: One dollar or one million...
      I doubt they would enjoy being jailed until they paid, and having to get the cash would leave a nice trail to follow.
      [ link to this | view in chronology ]
Anonymous Coward, 17 Oct 2013 @ 4:55am

And the joke continues... still no real sanctions, still wasting taxpayer money.
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Anonymous Coward, 17 Oct 2013 @ 5:33am

The porn industry should do a movie about these guys.
Hammering Steele might be a good title ....
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- Anonymous Coward, 17 Oct 2013 @ 10:48am
  
  Re:
  co starring Mandingo
  
  Youch!
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  - btrussell (profile), 17 Oct 2013 @ 4:20pm
    
    Re: Re:
    With special guest, Salty Marsha.
    
    You'll love it for the lultz!
    [ link to this | view in chronology ]
Martin, 17 Oct 2013 @ 5:36am

Typo?
"in which Steele and Hansmeier are going to have to show cause for why the attorneys' fees that were awarded to Navasca from "AF Holdings" should also apply to the two of them directly"

Isn't there a "not" missing in that sentence?
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Anonymous Coward, 17 Oct 2013 @ 6:21am

So did we ever hear what happened to Lutz after that hearing in front of Franklin Noel he was supposed to attend, but was mysteriously missing for?
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wshuff (profile), 17 Oct 2013 @ 6:58am

The article didn't point out that Team Prenda missed the deadline for filing objections to the R&R, which is just typical of the way they've handled everything. Read the Order. Although it appears the judge probably did consider Prenda's objections, since the Prenda objections were untimely, they actually failed to "properly object" to anything in the R&R. Just another way the system is screwing poor ol' Steel Hammer.
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north, 17 Oct 2013 @ 7:31am

Perjury
"...the affidavit itself strains credulity. According to Mr. Lutz, he had bought a ticket to fly to San Francisco from Miami but, when he arrived at the Miami airport at 5:30 a.m., he was detained by federal authorities and was ultimately detained up until 10:00 p.m. � i.e., for more than 16 hours."

Wouldn't it be pretty easy to prove if Lutz was detained for 16+ hours, by federal authorities, at Miami airport?
I imagine there would be record of this with those "federal authorities", no?

So if it's found he was not detained at the airport isn't lying in a sworn affidavit perjury?

Why is no one holding him accountable?
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DB (profile), 17 Oct 2013 @ 8:57am

Just to be clear about the order: Steele and Hansmeier don't have to appear at the OSC hearing. And they are free to file all the relevant documents they like.

It's just that all *testimony* will be ignored unless presented in person at the hearing and is subject to cross examination.

They actually said it would be given slight consideration instead of "ignored", and that the statement applied to all parties. But it's clear that this is directed at Steele, Hansmeier, Duffy and Lutz, who have been remarkable for avoiding on-stand testimony.

This extra hearing is an additional expense, and a PITA for anyone else that testifies. But considering that it's basically "prove that you aren't behind this", it will either be trivially short (if they don't show) or tremendously entertaining.

Prenda is my favorite soap opera. Knowing that it won't be sweeps week, my guess is the Steele and Hansmeier won't show.
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Anonymous Coward, 17 Oct 2013 @ 8:58am

My guess? horse with no name is going to claim that this judge is abusive and overreaching too, for demanding answers from lawyers. What a jackass.
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- This comment has been flagged by the community. Click here to show it
  
  horse with no name, 17 Oct 2013 @ 5:55pm
  
  Re:
  Nice flaming bait, as usual. Obviously a job is something you don't have either, in addition to personal hygiene. This is why laws like SOPA were needed, because judges seem to be making a sport out of denying copyright holder and enforcers the settlements they richly deserve. Naturally thieves like you wouldn't understand.
  
  John Steele is the victim here, and Otis Wright is the leader of the bullies. Edward Chen has joined his ranks, and it's sad that you, Paul and the other trolls here aren't able to see this. It's very distressing.
  [ link to this | view in chronology ]
  - Niall (profile), 18 Oct 2013 @ 5:59am
    
    Re: Re:
    Distressing, why do you care so much about some random trolls? Or are they not-so-random to you?
    
    If you must sympathise with them, then sympathise with them for their incompetence, stupidity and viciousness leading to this well-deserved smackdown. If they weren't venal, nasty, conniving liars in the first place, then this wouldn't be happening to them!
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  - Anonymous Coward, 18 Oct 2013 @ 5:58pm
    
    Re: Re:
    horse with no name just hates it when due process is enforced.
    [ link to this | view in chronology ]
wshuff (profile), 17 Oct 2013 @ 11:16am

Having now read the order I like that although the Judge overruled the Defendant's objection concerning the Court's inherent authority due to lack of personal jurisdiction over Steel and HammerTime, issuing the new Order to Show Cause now gives the Court the personal jurisdiction to issue sanctions under its inherent authority. Doh!
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DB (profile), 17 Oct 2013 @ 11:37am

The wording is subtle, but the issue of personal jurisdiction (if this court has power over Steele and Hansmeier) can be contested at this hearing.

At this point it's presumed, based on the evidence, that this court has jurisdiction. Overcoming that presumption would require new evidence, new authority, and (presumably) direct testimony. Which might mean that Steele and Hansmeier would have to show up to effectively contest jurisdiction. And then stick around to answer questions ('take the fifth').
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DB (profile), 17 Oct 2013 @ 4:36pm

OK, the Gibbs filing just went public. What are the updated odds on Steele and Hansmeier showing up to testify?

My call: essentially zero. Gibbs filed Prenda's balance sheet that showed %69.6 of the 2012 settlement money went to Steele and Hansmeier. Plus expenses, and payments to various family members.

No money went to the shell companies that were supposedly the clients.

At this point S&H's best play is to have AF Holdings pay the $23K and try to have the OSC hearing declared moot.
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