Bankruptcy Fight May Be The Least Of Team Prenda's Concerns, As The FBI Comes Knocking

from the whoo-boy dept

Thu, May 26th 2016 10:42am — Mike Masnick

If you've been following the Prenda Law saga around here for any length of time, you're aware that it's been going on for years, with sketchy copyright trolling practices that appeared to include Team Prenda uploading their own content to torrent sites, tracking who downloaded them, and then filing questionable lawsuits. That scheme fell apart after a series of judges, led by Judge Otis Wright, called out Team Prenda for committing fraud on the courts, and referred the issue to the feds, while also hitting them with a fine. That was three years ago. Other courts piled on more fines and attorneys' fees -- and more referrals to the feds. After the second such referral, Ken "Popehat" White noted that these things take time, but that something would probably happen eventually:

The wheels turn slowly, friends, but make no mistake, the wheels turn. The wheels are grinding down Team Prenda, and doing so faster and faster every month. With two different federal judges referring the matter to state bars and the U.S. Attorney's office, the probability of bar investigations and federal grand jury investigations approaches certainty.

Of course, it's been three years since then and a few things have happened. One of the three main members of Team Prenda (though, probably the least involved of the three) passed away. But the other two are both facing bar complaints over ethical violations. Paul Hansmeier also famously tried to declare bankruptcy, but appears to have lied to the court in the process. Fight Copyright Trolls just recently had an update on that case, and suffice it to say, it's hilarious. Hansmeier has not just lost his lawyer after she told the court that she could no longer represent him and be a servant of the court (i.e., heavily hinting that Hansmeier was likely asking her to lie to the court), but he's also lashed out at the trustee handling his bankruptcy for... buying a new car.

And, of course, both Hansmeier and Steele have moved on to a revamped version of the same old trolling trick, but this time using the Americans with Disabilities Act as the fulcrum, rather than copyright law.

But, it appears that all that may be small potatoes. Because, as White told us three years ago, the wheels of justice do keep turning, and he now has strong indications that not only is the FBI actively investigating Steele and Hansmeier for fraud, but that they may be just about ready to move on to the next steps:

Based on my 21 years in the federal criminal justice system, I believe the letter reflects an active, determined investigation in its later stages. The letter represents an abandonment of operational security and confidentiality; it suggests the FBI no longer sees a need for stealth. That, in turn, suggests that the FBI believes it's already developed the evidence it needs to prove the substance of its case (that Team Prenda committed wire and/or mail fraud) and is just identifying as many victims as possible for potential witnesses and to establish the amount of damages. Bear in mind that under the Federal Sentencing Guidelines, the more money wrongdoers made, the more time they're facing.

Now, to be fair, over the years we've noted many times that the DOJ often misrepresents things in criminal filings, so it will be interesting to see what charges are actually filed, assuming that the case really is ready to move. But as White also noted, "Team Prenda needs federal criminal defense attorneys, and needs them right now."

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Filed Under: ada, ada troll, copyright, copyright troll, fbi, fraud, john steele, paul hansmeier
Companies: prenda, prenda law

53 Comments

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Anonymous Anonymous Coward (profile), 26 May 2016 @ 10:55am

Say it ain't so

"But as White also noted, "Team Prenda needs federal criminal defense attorneys, and needs them right now.""
I'm shocked. Shocked I tell you. Ken failed to raise the Popehat signal looking for qualified counsel to defend these poor sods, pro bono. /s
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Pixelation, 26 May 2016 @ 10:58am

I know it's bad form...
but I'm happy to see these turds getting their comeuppance.
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Anonymous Coward, 26 May 2016 @ 10:59am

Popcorn!!!
We NEED fresh POPCORN!!!
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Anon E. Mous (profile), 26 May 2016 @ 11:05am

Here RICO, here boy. Dinner Time!
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Berenerd (profile), 26 May 2016 @ 11:12am

Lets hope the FBI didn't get evidence using one of their stingray devices.
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Anonymous Coward, 26 May 2016 @ 11:12am

I hope the Feds come down as heavy on these trolls as they are doing so to Kim Dotcom but i heave a feeling the Feds will treat these trolls like angles in comparison to Kim Dotcom.
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Peter (profile), 26 May 2016 @ 11:15am

Would this a good time to ...
... send letters to Rightscorp offering not to complain to the FBI if Rightscorp pays a modest $20 'inconvenience fee'?
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Anonymous Coward, 26 May 2016 @ 11:19am

why is it this upsets me? is it because i thoroughly mistrust the filbert's bottled ink people to handle this correctly?
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That Anonymous Coward (profile), 26 May 2016 @ 11:34am

Someone want to setup a Google News Alert for the obituary of Mark Lutz?
Not only was he an employee, but he was a client, cog, and lets face it they kept him around as a patsy to blame.
Its very hard for the dead guys to defend themselves and they can be offered up to provide doubt.
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Anonymous Coward, 26 May 2016 @ 11:36am

Re:
Prenda is definitely obtuse.
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crade (profile), 26 May 2016 @ 11:39am

It would be nice if they actually got in trouble for the substance of what they were doing instead of just for being terrible lawyers.
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Anon E. Mous (profile), 26 May 2016 @ 11:47am

What will be interesting is if this will fit the statues of RICO and if it does which one of the two remaining Prenda gang will be tripping over themselves to try and strike a deal.

We all know CEO mastermind of AF Holdings and related shell companies Mark Lutz (formerly Johns Steele's paralegal and process server) will cave in five minutes of questioning and beg to be a witness, and after his brilliant performance when questioned by the Florida Judge in the Sunlust that went over like a led balloon and it didn't help that Steele was trying to whisper the answers to Lutz who was being questioned by the Judge, until the Judge noticed that and then started questioning Steele on what he was doing and who he was.

So Lutz would roll the easiest. Now Gibbs who Steele and Hansmeier tried to get to take the blame and then pressure to take the hit before Judge Wright in his court room would make a very powerful witness for the DOJ as Gibbs would have inside knowledge as to how the trolling scheme for settlements worked.

I am sure Steele and Hansmeier may be wishing that they did not try to throw Gibbs under the bus. I wouldnt at all be surprised to see if Steele and Hansmeier tried to put the blame Duffy's way since he has passed on and there would be no rebuttal from that end.

Everyone knows Steele and Hansmeier reaped the profits from their trolling collective and the greed became so much that they started to loathe having to give the pron producers who were their clients when they started this their cut from the settlements, so they decided to be their own porn creators, leakers, monitoring firm, and law firm with the goal of keeping as near as 100% of the profits of their scheme to themselves.

How the mighty have fallen. Hansmeier bankruptcy getting converted due to falsehoods on his original chapter filing. Now his Americans with Disabilities Act lawsuit settlement scheme is about to come to a crashing halt due to the state of Minnesota enacting legislation to prevent the drive by ADA lawsuits and their abuse of the Americans with Disabilities act in Minnesota which incidentally was brought to the forefront because of Paul Hansmeier filing so many lawsuits and looking for settlements.

The Irony that Hansmeier and his greed is bringing his ADA lawsuits settlement came crashing down around him is way more than just and just too damn funny, you reap what you sow Paul.

So Steele must be on his desk peeing his pants at what has transpired with Hansmeier and knowing he is on the trolley tracks and people in Illinois are starting to make noise over the ADA suits Steele is filing there and not only that but the ADA abuse and lawsuit generation scheme is gaining notoriety all over the USA as people are complaining to the politicians about the issue.

Its been a long time coming and the Prenda gang deserves what they get, I hope they have many many sleepless night ahead of them as they have cause many for a lot of their victims.

The bell tolls for Hansmeier and Steele, it will be interesting to see what happens when the music stops playing and their are no chairs left. The race will be on to cut a deal. Who will fold first I wonder.
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Baron von Robber, 26 May 2016 @ 12:03pm

Remember when Popehat says, "The wheels of justice turn slowly but they do turn."? I think I finally heard a 'crunch'. :)
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Anonymous Coward, 26 May 2016 @ 12:21pm

Re:
would that be acute or obtuse?
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Anonymous Coward, 26 May 2016 @ 12:27pm

Re:
Thank you, as always, for your splendid recaps.

I see one of three scenarios playing out:
Steele and Hansmeier will argue that 'bad lawyering' is a disability covered under the ADA and therefore they are exempt from any civil/criminal penalties;

Steele and Hansmeier will argue that they are such stupendously good lawyers that any criminality they might commit would never be detectable by law enforcement and therefore these charges cannot exist, QED and churros all around!;

The FBI, being...the FBI, are spending untold time and resources proving that Steele's caretaker, Alan Cooper, is just not that good of a caretaker.
My money is on scenario 3.
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David, 26 May 2016 @ 12:30pm

Re: Popcorn!!!
Popecorn.
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Anonymous Coward, 26 May 2016 @ 12:57pm

I forgot all about Gibbs. Definite witness for the prosecution.

Did they ever find Lutz after his not showing up in court a couple times? He'll roll over, too.
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Baron von Robber, 26 May 2016 @ 12:59pm

Re:
or the very very elusive and never seen, Salty Marsh?
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Anon E. Mous (profile), 26 May 2016 @ 1:05pm

Re:
I believe Lutz is working with Steele in Illinois in the ADA lawsuit game that Steele has going on there. What's that old saying Birds Of A Feather...
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Robert Beckman (profile), 26 May 2016 @ 1:18pm

Re: Say it ain't so
Rakofsky is the only counsel qualified to handle this, and somehow I'm sure they know each other.....
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Anonymous Coward, 26 May 2016 @ 1:50pm

Re:
AS much as I despise prenda I do hope the prosecution used legal methods to go after them. Otherwise we might end up with a case where we have to support prenda against our will just to keep the law fair for all.
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Anonymous Coward, 26 May 2016 @ 2:17pm

Welp, I guess it's time for Team Prenda to meet the Drunken Hippo!
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Anonymous Coward, 26 May 2016 @ 2:58pm

Re: Re:
You missed the obvious:

The FBI is attempting to bring a case before the court where it can compel Apple to decrypt Hansmeier's Samsung phone to provide parallel construction for the stingray attack they did on him to get the evidence they're currently planning to use. Meanwhile, the IRS is closing in on Steele with an asset forfeiture case based on a NIT they placed on his computer with the help of Gibbs, under a warrant filed in the state of California.
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Anonymous Coward, 26 May 2016 @ 4:08pm

Remember all - "Innocent until proven guilty"
Wells folks, just remember, even though these are a bunch of low-life lawyers, we still need to give them the "benefit of doubt" and until "proven guilty" we need to still keep in mind that they are "innocent".

I know, I know, the record does speak for itself, but we still need to make sure that they get a fair trial, even though they didn't ensure that for those they persecuted.

If we don't then we are making special cases that will come back and bite us severely in the future.
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Anonymous Coward, 26 May 2016 @ 4:23pm

Re: Remember all - "Innocent until proven guilty"
I'm all for a fair trial, they can have the same fair trial everyone else gets, all their assets seized(and if anyone deserves their assets seized it's these guys) and be represented by an overworked underpaid public defender unless they can find someone to defend them pro bono.

Maybe they can get Saul Goodman to represent them.
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That One Guy (profile), 26 May 2016 @ 4:59pm

Re: Remember all - "Innocent until proven guilty"
Yes and no. Do I want them to get a fair trial? Absolutely, and not just because it makes any appeals a lot more difficult to fight against and overturn on some minor technicality, but because everyone, from scum to saint deserves a fair trial in court or the very concept of 'justice' goes out the window.

At the same time do I want to see them crash and burn for all the actions they have demonstrably done, from lying in court to extortion masquerading as 'copyright protection'? You bet so long as it's done legally, and really with how much evidence there should be for the FBI to work with they would have to really screw this one up to fail to nail the three of them to the proverbial wall.
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Anonymous Coward, 26 May 2016 @ 5:30pm

I miss groklaw
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Anonymous Coward, 26 May 2016 @ 5:36pm

How long will it take at this point before the DOJ finally files charges against them? 6 months to a year? and then how long till trial? another 6 months to a year? and how long will a trial then last?
I'm just trying to figure out if it will be another 2-3 years before we finally see a conviction, even if it is just a plea deal.
And that will still just be 1 part of a hat trick; DOJ conviction, IRS conviction, and disbarment.
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Anonymous Coward, 26 May 2016 @ 5:37pm

Re: Groklaw
Ditto
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That Anonymous Coward (profile), 26 May 2016 @ 5:51pm

Re: Remember all - "Innocent until proven guilty"
Except their own documents have shown they are guilty.

They deserve a fair trial, I've never said otherwise.
The legal system failed in a spectacular way, giving the benefit of the doubt over and over to lawyers who lied directly to the court over and over. The fact it took this long and this much lying to courts to get the wheels of justice to do anything should lead to very serious questions about where else the system is failing the citizens.

Those of us who oppose them are very open about the fact we have our own bias, and we present the evidence we have that support our conclusions. There are years and years of bits and pieces of information, some of us just assembled the puzzle faster.

Would I love to see them fry, you betcha but I'm not impartial. I want every i dotted and every t crossed, and I want them to get all of the justice everyone deserves... even the scum sucking bastards. I want to see them someplace other than a Club Fed, the misery they visited upon people who might have been really and truly innocent with the backing of the courts reserves them a special place in hell... but the law has to follow the law.
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FM Hilton, 26 May 2016 @ 6:46pm

Ah, the grinding wheels of justice
Someone should write a book about this. I mean, there's lots of paper coming out of this case that hasn't even been addressed yet, and the Feds are still lurking in the shadows, waiting for the best time to strike.

It's not a matter of "if", but "when and how hard" they'll take Prenda down the rest of the way to hell, where they all belong.

Definitely a case that even Dickens would be hard pressed to top.

But we do need fresh popcorn!
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sophisticatedjanedoe (profile), 26 May 2016 @ 6:47pm

An FBI agent to Steele, Hansmeier, Lutz, Gibbs et al: "Let's start our Game Theory workshop. Today's topic: 'The Prisoner's Dilemma'."
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Anonymous Anonymous Coward (profile), 26 May 2016 @ 7:19pm

Re: Ah, the grinding wheels of justice

"Someone should write a book about this."
While there is a boat load of material via transcripts of cases, etc. turning this into a page turner novel, even a true crime novel will be difficult. Of course there is porn in the case, which will fare well, except maybe in Utah, but putting some action into the rather mundane interactions of dreaming up ways to illegally scam thousands of people is...not terribly active. The sex is there, but where's the violence? Isn't violence part and parcel for a best seller? No car chases, no murders, no...well maybe some psychosis could be developed, but while these guys are bad they do not constitute a Hannibal Lecter, for instance. I just don't see this as the kind of material that could constitute a best seller...unless the author has the kind of imagination these guys had...
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That Anonymous Coward (profile), 26 May 2016 @ 7:27pm

Wait...
does this mean that time Lutz didn't show up in court and the excuse later was that he was detained by government men could be true!?
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Charles (profile), 26 May 2016 @ 7:44pm

Re: Re: Groklaw
Amen
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Anonymous Coward, 26 May 2016 @ 8:41pm

A lament, for all the trolls that defended team Prenda over the years: ha ha.
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Jay (profile), 27 May 2016 @ 1:30am

I was wondering just a couple days ago
While reading Techdirt the other day, I thought to myself what has been going on with the Prenda Gang. I believe it it was while reading about other Trolls. I really missed reading about The Prenda Gang. Maybe they should revive Devils Island just for them.
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Anonymous Coward, 27 May 2016 @ 2:26am

"Your honour we shall be defending ourselves..."

- This needs televising!
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Anonymous Coward, 27 May 2016 @ 2:56am

Re:
out_of_the_blue, darryl, Jacques Nazaire (who spammed this site under the psuedonym "Nora") have fallen into the dirt.

antidirt posts obscurely on anything these days, and when he does, it's never logged in. The whole "pay Techdirt for insider to mock Techdirt while giving Techdirt money" gambit didn't work out considering how much he loathes the site.

horse with no name shook his fist at sophisticatedjanedoe on the grounds that she was posting anonymously, then resurfaced under names such as My Name Here and Just Sayin'. In that time he got booted off Torrentfreak for posting under the names of bobmail, fitta and other throwaway troll accounts, and the moderators took notice. He now posts under Whatever but stays away from topics like these like the plague. He still sheds a trollish tear for the downfall of his heroes.

Maurice Ross... well, he's still about. He spent a lot of effort on FCT and DTD defending Prenda, then rapidly changed sides to Malibu Media to claim that they're not Prenda, and also that they "had no choice" but to mimic Prenda's practices in chasing after porn-torrenting grandmothers.

Copyright law's best and brightest.
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Anonymous Coward, 27 May 2016 @ 3:00am

Re: Re: Remember all - "Innocent until proven guilty"
The legal system failed in a spectacular way, giving the benefit of the doubt over and over to lawyers who lied directly to the court over and over.
The legal system failed in a spectacular by not giving the benefit of doubt to those who were accused by the lawyers who lied to the court.

Once all the evidence is presented it will be up to a jury of their peers (excluding all who have any understanding of copyright, law and any other relevant technical matters) to decide if the evidence is sufficient to prove guilt.

Even though the evidence so far presented in all courts (and other avenues) shows them to be corrupt and guilty, it may not be enough to convince the jury.

We will just have to see. However, when they do come before the Great Judge, they will truly face full force of that court. They will need to have the Great Advocate on their side if they want mercy there. There is only one way to get Him to speak on your behalf. I don't think any of the principals of Prenda would know how to do that, but I could be mistaken.
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Anonymous Coward, 27 May 2016 @ 5:56am

Re: Re:
if their best and brightest amounts to those that are paid to parrot the party lines, then we have nothing to fear.
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Anonymous Coward, 27 May 2016 @ 6:34am

Re: Re: Re:
There's nothing really to fear from the trolls - the real problem is the big corporations paying them, who've scammed the government into making sure they never, ever run out of money.
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Wendy Cockcroft, 27 May 2016 @ 7:40am

Re: Re: Ah, the grinding wheels of justice
Were it up to me (I might start a crowdfunder), I'd focus on the victims and the people bringing them to justice. I'd start with something like:

"Daniel Johnson yawned as he padded into the kitchen, the morning's mail clutched in one hand. One of the letters looked official. He opened it.

"What is it, hon?" asked his mom.

"Nothing," he said hurriedly, slipping it beneath the leaflets advertising the new Chinese restaurant. He hoped she wouldn't notice the colour draining out of his face as he rose and left the room. What the hell am I going to do? he thought. It must be a mistake. "I forgot something," he told her as he made his way upstairs.
---------------------------------------------------

We start at Danny reading the Prenda letter and casting about for help and advice, reading Fight Copy Trolls and TD, and getting in on a class action lawsuit on the back of the charges filed by the FBI.

Add some more characters in and develop them, sprinkle in some legal procedural stuff, have a bit of fun explaining bad guy motivation, cover the death of Paul Duffy as knowing at the end of his days that his name is mud forever...

I'm not John Grisham and I'd need a lawyer's input but I could do it.
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Erbo, 27 May 2016 @ 10:14am

It's far more likely that they're trying to come up with a way of getting themselves and the boodle out of the country and into a jurisdiction where they can't be extradited.

Johnny S, woah-oh-oh, he slipped away,
Paulie H caught up with him the very next day,
They got the money, hey, you know they got away,
They're headed down South and they're still runnin' today,
Singin', go on, take the money and run...

(with apologies to Steve Miller)
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Anonymous Coward, 27 May 2016 @ 10:56am

If only these guys faced a jury trial and the "jury of their peers" were to be made up from the numerous people that the Prendi* coerced settlements from...

*assuming "Prendi" is the plural of "Prenda". ;)
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That Anonymous Coward (profile), 27 May 2016 @ 11:21am

Re:
A jury of their peers would be other lawyers of questionable ethics....
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sophisticatedjanedoe (profile), 27 May 2016 @ 1:24pm

Received an email. The author preferred not to be named.

Talked to our lawyer last night. He says that Hansmeier's biggest mistake may end up being the [Chapter] XIII [bankruptcy]. He says this opened him up to discovery in every direction, and the FBI has been taking notes in the background. So, in a way, the trustee has been doing the work for the FBI to establish a criminal case. Brilliant.
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That One Guy (profile), 27 May 2016 @ 2:38pm

Re:
Glorious. Tries to duck out of paying court fees and instead leaves himself wide open to discovery which may make said court fees look like loose change in comparison.
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Jeff (profile), 27 May 2016 @ 3:16pm

Re:
Trying to run away from the fines and ran straight into the noose instead!
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That Anonymous Coward (profile), 28 May 2016 @ 8:18pm

Re: Re: Re: Remember all - "Innocent until proven guilty"
Their own words & actions will convince a jury.

There are many things that haven't been mentioned publicly that are established facts. Despite what people want to believe, we didn't release everything we had. While we took great delight in ripping apart the filings and testimony on the Twitters, there are still secrets that any investigation would trip over.

Besides Hans & Steele wanting a jury trial is not that likely. The now 90+ yr old woman from San Fransisco who they hounded, and when she went to the media they admitted their foolproof never wrong system had failed and left her alone. How do you think a jury will react to a truly innocent victim who was hounded day and night... only to have them drop their 'air tight' case because the evidence wasn't accurate (or was it because the media put her on television calling them scammers out loud & drawing attention to the scam?)
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Anonymous Coward, 29 May 2016 @ 4:23pm

If he didn't hesitate to lie to multiple federal judges in federal court, then some bankruptcy trustee sure won't slow him down.
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Anonymous Coward, 30 May 2016 @ 7:27pm

Re: Re:
Thanks for the update. I do love to see copyrights best and brightest in the centre ring.
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THE MIGHTY DORMAMMU (profile), 1 Jun 2016 @ 9:55pm

"In the eyes of the lawyer a good witness is not so much the witness who tells the truth as the witness who tells convincingly that which helps the lawyer's client to win the case."
(anonymous barrister)
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