Illinois Attorney Discipline Board Finally Moves Against Prenda Mastermind John Steele

from the going-down dept

Fri, Aug 21st 2015 10:38am — Mike Masnick

People have been wondering for more than two years how it was possible that Team Prenda was still allowed to practice law. With both John Steele and Paul Hansmeier having moved on to shaking down small businesses by abusing the ADA, while still getting regularly smacked around in court, it seemed amazing that they were still practicing law. After all, it was in May of 2013 that Judge Otis Wright referred Team Prenda to their associated state bars (along with the feds and the IRS). And nothing seemed to be happening -- though, as Ken White noted, long ago, the wheels of justice "turn slowly, but make no mistake, the wheels turn."

And it appears they've finally come around on John Steele. The Illinois Attorney Registration and Disciplinary Commission has just filed a humdinger of a complaint against John Steele. It's worth a read, but we'll go through some highlights below. Let's just say that the IARDC may have taken a long time to get this done, but there appears to be a good reason for that. Pretty much everything is in there -- and it must have taken quite an effort to pull it all together. It goes through the history, with Hansmeier and Steele starting a copyright trolling business, and then pretending to hand it off to Paul Duffy* but still actually running the copyright trolling business they pretended they'd left behind.

There are seven counts against Steele, and if you've been following the Prenda saga, none of them will surprise you. The first count is for "Dishonest Conduct and Fraud on the Court," involving everything from Alan Cooper's fraudulent signature in the AF Holdings and Ingenuity 13 cases, to pretending those cases were not connected. The complaint goes through a rather detailed blow-by-blow account of all of Steele and Hansmeier's questionable activities. And it concludes that all of the following were misconduct by Steele:

bringing a proceeding without a basis in law and fact for doing so that is not frivolous, by conduct including filing lawsuits without supporting facts, under the names of fictional entities, and misusing the identity of Alan Cooper, for purposes of exacting settlements, in violation of Rule 3.1 of the Illinois Rules of Professional Conduct;

knowingly disobeying an obligation under the rules of a tribunal by conduct including failing to abide by Judge Wright’s order quashing discovery, and failing to appear as ordered at the OSC hearing, in violation of Rule 3.4(c) of the Illinois Rules of Professional Conduct;

in a pretrial procedure making a frivolous discovery request(s), by conduct including filing the motions for early discovery on behalf of shell corporations in violation of Rule 3.4(d) of the Illinois Rules of Professional Conduct;

in representing a client, using means that have no substantial purpose other than to embarrass or burden a third person, or using methods of obtaining evidence that violate the legal rights of such a person, by conduct including sending the settlement shakedown letters in violation of Rule 4.4 of the Illinois Rules of Professional Conduct;

conduct involving dishonesty, fraud, deceit, or misrepresentation, by conduct including filing lawsuits without supporting facts, under the names of fictional entities, misusing the identity of Alan Cooper as a principal of Ingenuity 13 and AF holdings, for purposes of exacting settlements, in violation of Rule 8.4(c); and

conduct that is prejudicial to the administration of justice, by conduct including failing to respond to reasonable inquiries posed by the tribunal regarding lawsuits Respondents initiated, in violation of Rule 8.4(d) of the Illinois Rules of Professional Conduct.

So, yeah. And that's just the first count. I love the fact that the ARDC flat out calls them "settlement shakedown letters." No beating around the bush here.

The second count involves the lawsuit that Alan Cooper filed against John Steele and Prenda for forging his signature and getting Cooper wrapped up in Steele's shakedown business. It turns out that Steele "settled" the case by paying Cooper $35,000. However, he, nor Duffy, ever wrapped up the fact that the lawsuit was also against Prenda Law. Apparently just last month, the court found that Prenda was in default and should pay Cooper another $5,000 for humiliation and $250,000 for punitive damages. Steele appears to have ignored basically all of that. Oops.

Count number three involves Guava v. Spencer Merkel case, in which Team Prenda was once again smacked around and ordered to pay a pretty big set of attorneys' fees. If you don't recall, this particular case had some "special" features. It started with a fairly sketchy CFAA claim rather than a copyright claim (this was tap dancing, in which Steele pretended that people had "hacked" into the computer to download the videos that he himself had apparently put up). There were also claims that team Prenda would find the opposing lawyer who was actually working with them, leading one judge to flat out ask if the two sides "were in bed together." And that story was given a lot more credence when Spencer Merkel admitted that he'd agreed to "take a dive" for Team Prenda in exchange for getting off easy in Prenda's accusations against him. After running through the detailed history there, it lists the same basic "misconduct" list from the first charge, but for the Guava case.

Count number four is about the Lightspeed v. Anthony Smith case (the one where Team Prenda was just last week ordered to pay another $94,000). Once again, the IARDC walks through all the details... and charts out the misconduct list again.

Count number five is still about the same Lightspeed case, but this time related to "obstructing discovery and dishonest conduct." As you may recall, Steele directly reached out to falsely tell parties that subpoenas had been quashed, even though they had not been. These were subpoenas looking into whether or not Steele was lying in pleading poverty to the court to try to get out of paying yet another ruling against him. Or, hell, let's just let the IARDC tell it:

On February 19, 2014, Judge Herndon entered an order denying Respondent’s motion to quash the subpoenas Smith issued in case number 12-CV-00889. Respondent learned of the order shortly after it was entered.

On March 3, 2014, two weeks after Judge Herndon had denied Respondent’s motion to quash, at Respondent’s direction Paul Duffy sent a file-stamped copy of the motion to quash to JP Morgan.

Paul Duffy’s actions, in sending the file-stamped motion to quash to JP Morgan after it had already been denied, were intended to mislead JP Morgan officials into believing that they did not have to respond to Smith’s subpoena because it was subject to a motion to quash.

As of April 16, 2014, there was no stay in place in 12-CV-00889. On that date, Respondent Steele sent an e-mail to officials at Sabadell informing them that a stay was in place in case number 12-CV-00889. Respondent Steele’s statement was false and Respondent Steele knew it was false because he knew that a stay was not in place when he made that statement in his e-mail, and his statement that a stay was in place was intended to mislead Sabadell officials into thinking that they did not have to comply with the subpoena Sabadell had received.

The misconduct here included:

making a false statement of fact to a tribunal, by conduct including claiming an inability to pay the sanction awards imposed against them, in violation of Rule 3.3(a)(1) of the Illinois Rules of Professional Conduct;

knowingly disobeying an obligation under the rules of a tribunal by conduct including failing to comply with reasonable discovery requests, in violation of Rule 3.4(c) of the Illinois Rules of Professional Conduct;

conduct involving dishonesty, fraud, deceit, or misrepresentation, by conduct including obstructing discovery and misleading the court in an effort to avoid paying sanction awards imposed against them, in violation of Rule 8.4(c); and

conduct that is prejudicial to the administration of justice, by conduct including obstructing discovery and misleading the court in an effort to avoid paying sanction awards imposed against them, in violation of Rule 8.4(d) of the Illinois Rules of Professional Conduct.

Count six is about more of the same in another Guava case -- one of the ones involving what appeared to be another Alan Cooper situation with the ever changing person "Allan Mooney"/"Alan Mooney"/"Alan Mony." This was in one of the St. Clair County CFAA cases, that sought to hide that it was really a copyright case. Again, the IARDC finds all sorts of misconduct.

Finally, the seventh count involves that time when Steele (and Duffy and Prenda) sued Alan Cooper and his lawyer, Paul Godfread, (and a bunch of internet commenters) for defamation. As you may remember, Steele quickly dismissed his own direct lawsuit against them (perhaps once he realized that he had not followed the proper procedures in Florida for filing a defamation case), though the case technically filed by Prenda lived on -- and was finally tossed out a few months ago.

But, as you may recall, there were some shenanigans there as well, where the original Prenda suit was filed in Illinois state court, which Cooper and Godfread removed to federal court, correctly noting that the plaintiffs were in Illinois and they were in Minnesota (which creates diversity, which allows the case to be removed). Except, Team Prenda then lied to the court, said the original complaint had not been served, and then filed an amended complaint that randomly added Paul Hansmeier's Minnesota law firm, so that there would no longer be diversity (diversity is only if there is no overlap in states between plaintiffs and defendants). Not only was this a pretty blatant (and bullshit -- since none of the already questionable statements that the suit claimed were defamatory about Hansmeier's law firm) attempt to try to get around having the case removed to federal court, it also involved lying to the court to file that amended complaint. Then there were more games, where Duffy tried to get the case sent back to the state court again, playing some more tricky games (this post is getting long enough so you can read the full story to get the details).

And, yup, the IARDC was paying attention to all of that too.

In the end, it's difficult to see how Steele gets out of this in a manner that will ever let him practice law again. There's a lot in there. The IARDC filing is pretty damn thorough, though it does miss a few of Steele's other adventures -- such as his infamous comedy routine in a Florida court where he was not allowed to practice law (but appeared to be doing so anyway). Also missing: the evidence suggesting that Steele himself was uploading all the videos he'd later claim were infringing. But, you know, there's plenty in there already.

One wonders if something similar will show up for Hansmeier in Minnesota at some time soon. And if the federal investigations will eventually become public as well...

* As a side note, Duffy, the third wheel with Hansmeier and Steele, who was the only official partner of Prenda Law, passed away last week, which explains why he's discussed throughout, but is not listed as a respondent himself.

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Filed Under: discipline, iardc, illinois, illinois bar, john steele, paul duffy, paul hansmeier
Companies: prenda, prenda law

41 Comments

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Anonymous Coward, 21 Aug 2015 @ 10:50am

"Also missing: the evidence suggesting that Steele himself was uploading all the videos he'd later claim were infringing. But, you know, there's plenty in there already."

Does this mean that the copyright trolls can still get away with uploading videos (honeypot) until they are actually charged and found guilty of such matter?
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Anonymous Coward, 21 Aug 2015 @ 11:12am

With Duffy passing away, I'm guessing Steele will try to dump as much as is plausible (or even implausible) on Duffy. Suddenly, Duffy will posthumously become the mastermind behind everything Steele and Hansmeier did. Not that it would get Steele out from under anything, but he's tried desperate/crazy defenses before, so it wouldn't be surprising.
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Sheogorath (profile), 21 Aug 2015 @ 11:13am

The court calling 'speculative invoicing' exactly what it is: [...] by conduct including sending the settlement shakedown letters in violation of Rule 4.4 of the Illinois Rules of Professional Conduct [...] :D
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Anonymous Coward, 21 Aug 2015 @ 11:36am

Cause of death for Paul Duffy
Anyone else read the official cause of death as a formal way of saying he died of stress & alcoholism? If so, I'm sure neither of them could possibly be related to the extended losing streak of Team Prenda.
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Baron von Robber, 21 Aug 2015 @ 11:46am

What? No mention of Salt Marsh? But he was my favorite character!! =b
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Ninja (profile), 21 Aug 2015 @ 11:47am

Re:
First thing I thought. Not that Duffy is any saint in these cases..
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Ninja (profile), 21 Aug 2015 @ 11:53am

though, as Ken White noted, long ago, the wheels of justice "turn slowly, but make no mistake, the wheels turn."

Geologically speaking, of course. One is already dead ;)
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Anonymous Coward, 21 Aug 2015 @ 12:01pm

Re: Cause of death for Paul Duffy
What a sad, sad obituary the Duffy article turns out to be. To see a man's life summed up to their malfeasance and personal demons?

How willing would a guy like Duffy be willing to change his story at the beginning, if he knew how poorly it would end?
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Anonymous Coward, 21 Aug 2015 @ 12:14pm

"* As a side note, Duffy, the third wheel with Hansmeier and Steele, who was the only official partner of Prenda Law, passed away last week, which explains why he's discussed throughout, but is not listed as a respondent himself."

And what will happen to all that illgotten gains that he got from Prenda? Would any of it have to be paid back or given to pay for any sanctions that are still outstanding if any in his name that hasn't been paid?
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Anonymous Coward, 21 Aug 2015 @ 12:20pm

Will they lame the blame asll on Duffy?
I wouldn't be surprised if Hansmeier and Steel both come out with a story laying all the blame and fault of Prenda's extortion, scams etc. all on Duffy just for them to weasel out and getting off scott free from all these sanctions and charges that are now against them. What better way to lay the blame game on a dead man who cannot defend himself and deny the accusations.
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Dan (profile), 21 Aug 2015 @ 12:22pm

Re:
And what will happen to all that illgotten gains that he got from Prenda? Would any of it have to be paid back or given to pay for any sanctions that are still outstanding if any in his name that hasn't been paid?

Whatever remained outstanding of what Duffy owed remains a claim against his estate. Who knows if it's solvent, but it's definitely something that counsel should pursue.
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avideogameplayer, 21 Aug 2015 @ 12:42pm

Re: Will they lame the blame asll on Duffy?
I doubt that judges will allow flying pigs in the court room...
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Anonymous Coward, 21 Aug 2015 @ 12:47pm

i wonder if any of the 'clients' Prenda supposedly had will jump into the ring to help bail him and the others out? at a guess, i would say a big 'FUCK OFF' is the best he'll get
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alanbleiweiss (profile), 21 Aug 2015 @ 12:59pm

Re:
this is my concern. Nobody seems to care that Salt Marsh has never been located, and none of the court procedures have delved into that fact. Such a shame. I guess we'll never know.
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DB (profile), 21 Aug 2015 @ 12:59pm

I'm surprised but delighted to see that the local bar finally issued a complaint against Steele.

I see him as the mastermind, with the Hansmeier brothers (and perhaps even their father) as co-conspirators.

Duffy was just as evil, but ended up without the big payout of the others. He had a failing law practice, and was convinced to buy into the scheme. Apparently in exchange for being the front man, he would turn over most of the early revenue to Steele and Hansmeier (through a shell named "Under the Bridge") and get a larger cut later. But the scheme fell apart before he got his money. He ended up with under $40K for the year that records were released, while the others ended up with millions.

Duffy must have died knowing that he was a sap, just as hated but without money tucked away in judgement-proof Florida homesteads, overseas accounts, and untouchable trusts such as Monyet.
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Vidiot (profile), 21 Aug 2015 @ 1:01pm

Re: Re:
Based on his cause of death ("chronic ethanolism"), the estate is much more likely to be soluble than solvent.
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DannyB (profile), 21 Aug 2015 @ 1:17pm

Duffy's passing is a loss to the world
After all a three clown act is always funnier than a two clown act.
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Anonymous Coward, 21 Aug 2015 @ 1:37pm

In other news: Popcorn stocks seem to rise and fall with John Steele news stories
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Anonymous Coward, 21 Aug 2015 @ 2:49pm

One nice item to mention. Almost every State Bar has discipline reciprocity with all others. Disbarred in one state, disbarred in all, and the feds too.
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Zonker, 21 Aug 2015 @ 2:58pm

Re: Re:
Spoiler alert:

Salt Marsh is Keyser Söze.
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Anonymous Coward, 21 Aug 2015 @ 3:21pm

Re:
lol he actually called a shell company 'troll'
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FM Hilton, 21 Aug 2015 @ 7:05pm

Prenda loses again, and again..
I'm surprised that they even have any money to pay all these settlements off..or if they don't the next headline will read: "Team Prenda declares Chapter 7 bankruptcy."

Paul Duffy is probably better off dead. The others will probably wish to trade places with him when the wheel really starts rolling-this was a start, but I'm sure that the IRS and other agencies are just roaring to go full nuclear on them.
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Anonymous Coward, 21 Aug 2015 @ 7:28pm

Far, far away is the sound of antidirt, Whatever, Slonecker and out_of_the_blue busily shedding tears for copyright enforcement.
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That One Guy (profile), 21 Aug 2015 @ 9:12pm

Re: Prenda loses again, and again..
They have the money, but what makes you think they'll ever pay any of the settlements out?

That's what makes this move so painful for them, if Steele gets barred from practicing, he can't just shrug that off like he can financial sanctions, it will have a direct effect on any attempts to get more money in the future with similar scams.
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That Anonymous Coward (profile), 21 Aug 2015 @ 9:51pm

Sometimes my gifts of prophecy fail me...

I had predicted that it was Lutz would be found dead having drunk himself to death, then the lawyers would place all of the blame on their client and try to walk away as the Feds tried to get information out of Nevis.

Before that I had wondered if Duffy was dead and had been replaced with a mannequin, he hadn't appeared in person in any court where he was to show up and kept filing the telephonic appearance requests. Given many of the documents filed via ECF were shown to come from machines not in Duffys control. This was dispelled when a Judge finally said no to telephonic appearances and after several more delay tactics Duffy appeared in court.

Because I know his ego won't let him look away...
Hey Steele.
How's it going?
What's it like to fail this hard?
You don't show up and post mocking us anymore, problem?

All my love,
One of those meddling kids on the internet who destroyed your world.

P.S. - Mumbo Jumbo Chicken Gumbo.
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David, 22 Aug 2015 @ 1:00am

Re: Re:
No, not at all. He is a prime candidate for burying under the bus.

But I certainly do hope that there is independent DNA corroboration that the stiff in the coffin is indeed Duffy, and that he's still in there a week later.

Because make no mistake: the brazenness of team Prenda definitely calls for a grab-and-run approach: they could not hope to get out of this alive eventually.
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Klaus, 22 Aug 2015 @ 3:40am

Re: Re: Re:
It makes for a good Team Prenda gameplan - fake Duffy's death, heap all the blame on him. Not exactly the first time a lawyer faked his own death...

http://nashvillecitypaper.com/content/city-news/police-allege-music-row-attorney-faked-his-o wn-death
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Dan, 22 Aug 2015 @ 3:50am

Ouch, that complaint hurts! Let's see Steele slink his way out of that mess.

And, ouch that obit hurts! Whatever happened to not speaking ill of the dead. Poor guy, even Col. Gaddafi had a better obituary.
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Dan (profile), 22 Aug 2015 @ 4:55am

One good thing about this complaint is that it's based almost entirely on judicially-determined facts from other cases. Since Steele has previously been informed of all these allegations, and had the opportunity to fight them (though he usually didn't exercise it), he's going to be precluded from re-arguing the facts at the disciplinary hearing, He's instead going to be limited to arguing whether these facts constitute "bringing a proceeding without a basis in law", "knowingly disobeying an obligation", etc. Good luck on that one.

The only real argument, I think, will be what level of discipline is appropriate. It's not easy, as an attorney, to get disbarred. Stealing from your clients is a good way to do it, and so is refusing to abide by previous discipline (e.g., your license is suspended, you're ordered to notify your clients and show the panel/court that you've done so, and you fail to do so). The pattern of fraud and abuse shown here, though, might well do it.
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Anonymous Coward, 22 Aug 2015 @ 5:21am

Also need to remove all Prenda-Related peoples passports, because they Will 100% guarenteed flee the country rather than pay a single cent of a judgement.
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Anonymous Coward, 22 Aug 2015 @ 5:22am

The other thing that needs to be done URGENTLY is a full autopsy of Duffy.

It's entirely within the bound of possibility that either Steele or Hannsmeier (or both) murdered the guy so they could blame him for everything.
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That Anonymous Coward (profile), 22 Aug 2015 @ 6:26am

Re:
I wonder if he will try to play the but I'm not a lawyer in IL card again, IIRC (I admit this one is a bit hazy) something was working its way through the system towards him and he stopped being a lawyer in IL to avoid the hassle.
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See you in the courtyard, 22 Aug 2015 @ 9:25am

Bad Lawyers Are Far Worse Than Bad Cops
If these "people" were never allowed to earn another cent and were to spend the next 50 years in prison, it would still not be enough for their purposeful intent to defraud these innocent people they attacked through the legal system.
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David, 22 Aug 2015 @ 11:24am

Re:
Maybe the three of them played death cap roulette. The loser dies of liver failure and gets blamed for everything.

I mean, the whole outlet was in dire need of a scapegoat. It had appeared like Lutz was the fall guy but maybe he got a life insurance or they realized that he'd be too small to be believable.
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fjpoblam, 22 Aug 2015 @ 2:36pm

Frivolous lawsuit (this included)
One may with some validity wonder, given their (lack of) response to past judgments, whether this lawsuit will yield meaningful results. Ignoring even the possibility of failing to pay or even weasling out of fines and property seizure, does disbarment in Illinois preclude practice elsewhere?
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Dan (profile), 22 Aug 2015 @ 7:21pm

Re: Frivolous lawsuit (this included)
Disbarment in one jurisdiction is reported to other jurisdictions where you're licensed. It's not automatic disbarment there, but it's pretty close.
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sophisticatedjanedoe (profile), 22 Aug 2015 @ 7:46pm

Re:
Too late. The guy was cremated today.
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Anonymous Coward, 23 Aug 2015 @ 7:08am

Re: Re:
One wonders what messages were sent to the family.
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GEMont, 24 Aug 2015 @ 2:23pm

The difference is astounding.
What always amazes me, is that; while the Wheels of Justice Turn Ever So Slowly, as can be easily seen in this long standing case of obvious guilt, the Wheels of Injustice are Jet Propelled.

---
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Dan2, 2 Oct 2015 @ 1:52pm

Duffy's death a strange twist
R.I.P., Paul Duffy. Sounds like his death was related to alcoholism. Obviously a troubled man. But all the trolling aside, nobody deserves to die so young.
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Dan2, 2 Oct 2015 @ 1:52pm

Duffy's death a strange twist
R.I.P., Paul Duffy. Sounds like his death was related to alcoholism. Obviously a troubled man. But all the trolling aside, nobody deserves to die so young.
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