Yet Another Court Not Happy With A Prenda Lawyer

from the order-to-show-cause dept

It's been, what, a week or two since we had a story about a judge somewhere being pissed off at Prenda/AF Holdings? You may recall that, over in Georgia there was one of the many AF Holdings/Prenda cases that was a bit more bizarre (if you can believe it) than the others. That is, in part, because rather than having the usual Paul Duffy/Paul Hansmeier/John Steele triumvirate doing the laughably bad lawyering, you had something... worse. Back in the early days, Team Prenda would hire local lawyers to represent them, and down in Georgia they found themselves with quite a peach in Jacques Nazaire, a lawyer who advertised his willingness to pop into court on your behalf via Craigslist, matching the sort of "go get 'em" attitude that Team Prenda seemed to appreciate.

This was yet another case where when the going got tough, AF Holdings/Prenda tried to turn tail and run by dismissing the case, but the defendant, in this case a guy named Rajesh Patel, fought back and sought sanctions from AF Holdings for the bogus lawsuit it had initially filed -- and the whole "forged" copyright assignment by Alan Cooper. Nazaire turned the whole thing into an ongoing circus. Soon after the fight over sanctions began in this case, Judge Wright in California famously issued his big ruling, calling out Team Prenda and AF Holdings for a variety of misdeeds. Patel's lawyer, Blair Chintella, sought to add that ruling to the record, leading Nazaire to bizarrely argue that the Judge in this case should ignore that California ruling because California recognizes gay marriage. Later, he tried again with a bizarre and nonsensical claim about hackers being after him. Then, he sought to file all future documents under seal because some of you people in our comments (yup, Techdirt comments were filed as a part of the case) said mean stuff about him and that was mean.

Throughout all of this, Chintella kept seeking additional evidence via discovery -- which Nazaire repeatedly appeared to ignore completely, or file nonsensical arguments why he wasn't going to comply. Elsewhere, though, Chintella was able to dig up a a series of recordings from GoDaddy customer service in which the same individual identified himself as John Steele, Alan Cooper and Mark Lutz in different calls. He also got Comcast to reveal that a key IP address that was presented in another case as being the IP address that uploaded the content in question, directly belonged to John Steele and Paul Hansmeier, further confirming that they were uploading their own works to file sharing sites (calling even further into question the legality of what they were doing with Prenda).

Oh, and Chintella sought to depose Mark Lutz, the purported head of AF Holdings, who simply didn't show up -- the start of a now repeating pattern of Lutz disappearing rather than showing up when required to by a court.

Still with documents flying back and forth, the judge eventually angrily told both sides to shut the hell up and to stop filing anything.

Having completed the other business he was working on, Judge William O'Kelley of the district court in Northern Georgia, has finally ruled in this case and he's still not at all pleased. He's clearly angry with both lawyers, but the majority of his anger is directed at Nazaire, whom he repeatedly upbraids for a variety of problematic actions. The end result is that he's clearly threatening sanctions, potentially against both lawyers, and will hold a hearing in which both lawyers will need to show cause why they should not be subject to such sanctions. But that's not all. He has also ordered Nazaire to produce the original copyright assignment allegedly signed by Alan Cooper, which is at the heart of this matter. O'Kelley does not appear at all interested in hearing any excuse for not showing up with the original. Among a variety of things he orders to happen for the hearing, the one bit he italicizes is the following:

Specifically, plaintiff must produce the original assignment agreement for inspection.

Note the "must" in there. Somehow, I doubt that he's going to be satisfied.

The Judge is clearly unhappy about Mark Lutz not showing up, and finds Nazaire's excuses to be ridiculous:

Plaintiff’s excuses for Lutz’s failure to attend the deposition are beyond frivolous. Plaintiff’s “justification” for the failure of plaintiff’s managing member to attend his deposition is that Lutz “has been deposed before,” which plaintiff considers sufficient to conclude that “the defense wants Mr. Lutz to fly to Georgia by his own expense for the sole purpose of being humiliated.” ... (“Mr. Lutz has every reason not to appear at a deposition which may also be attend [sic] by individuals who follow a website named dietrolldie and which has identified him as a troll as well.”) (emphasis in original)). However, Lutz was never deposed in this case. The fact that this would not have been Lutz’s first deposition on his relationship to AF Holdings is irrelevant. The fact that there are individuals on the internet adverse to plaintiff’s litigation strategy is irrelevant. However, the court’s ability to address blatant and willful discovery violations is very relevant.

The court finds that Lutz failed to attend a properly noticed deposition and that Lutz’s failure to attend was not justified. Rather than provide any meaningful explanation for Lutz’s failure, plaintiff offered bizarre tangents about how “any new deposition of Mr. Lutz or any interrogatories or any production responses will be sought solely for the purpose of providing a good laugh for” several websites.

He further notes that the law requires him to impose attorneys' fees in this situation, though he'll figure out how much after the show cause hearing. Of course, I'm wondering if Mark Lutz will ever make a reappearance. As we noted recently, while his signature showed up on a recent document, he still hasn't explained another one of his mysterious disappearances, which Team Prenda insisted he would explain.

While Judge O'Kelley makes it clear he's not interested in rehearing stories of Prenda/AF Holdings' actions elsewhere, he's solely focused on misconduct in this case, and he certainly suggests there's been a fair amount of that. Beyond calling out Nazaire for arguments that are "legally frivolous and generally incomprehensible," as well as "nothing more than disjointed assertions that are completely immaterial to the case," the judge has a long list of things he's concerned about and wants to hear Nazaire try to explain:

• Nazaire's failure to properly disclose everyone who had a financial interest in the matter
• Nazaire's potential failure to properly list all of the lawyers working on the case (earlier, the judge highlights that when Nazaire filed the complaint, he appeared to use Brett Gibbs' email and phone number.)
• Nazaire's "failing to make a reasonable inquiry into the facts and the law before filing this case."
• And also "whether Nazaire facilitated vexatious and frivolous litigation by maintaining a meritless suit, filing frivolous and unwarranted motions, and making frivolous and unwarranted objections to defendant's discovery requests."

And those are just the issues directed at Nazaire himself. There are separate issues concerning AF Holdings, mainly concerning potential sanctions for a variety of activities, but also whether (as other courts have found) the company committed fraud on the court by filing a case where they had no standing, based on a forged copyright assignment.

The Judge also scolds Chintella for "a lack of familiarity with basic evidentiary and procedural rules" and also asks him to further explain the effort to crowdfund money to hold Lutz's deposition. Nazaire suggests this is sanctionable, and while O'Kelley seems unsure exactly what the problem is, he wants to hear Chintella's defense of this action.

Judge O'Kelley also adds the following "note of caution" which suggests he's not interested in any kinds of games, though given Prenda's history, they seem almost unable to avoid trying to play games. It will be a measure of incredible self-restraint for them to actually abide by the following:

In case this order did not adequately drive the point home earlier, the court is not pleased with how this litigation has progressed. Failure to attend the show cause hearing will not be well received. Failure to attend will result in severe sanctions and may result in referral to the State Bar of Georgia. Failure to directly address the court’s concerns will result in equally severe sanctions.

Notwithstanding this court’s prior order prohibiting the parties from filing additional motions, the parties may file a supplemental brief addressing the court’s concerns to the extent that the supplemental brief provides facts not already present in the record. The parties are strongly encouraged to bring any relevant evidence to the show cause hearing. Specifically, plaintiff must produce the original assignment agreement for inspection. If a party wishes to present testimony that it deems critical to its case, the party should be prepared to solicit that testimony through a live witness. The parties are on notice that they may not use affidavits as a means to circumvent cross examination.

Can't wait to see how that hearing turns out.

Filed Under: blair chintella, jacques nazaire, john steele, mark lutz, paul hansmeier, rajesh patel, william o'kelley
Companies: af holdings, prenda, prenda law

Latest Team Prenda Shenanigans: Arguing Nevis Law Applies In California; Also Mark Lutz Makes An Appearance... Sorta

from the good-luck-with-that-argument dept

John Steele and Paul Hansmeier (who various courts have made clear, make up the core of "Team Prenda") are engaged in so many different lawsuits in which they're getting hit with so many different orders to pay up for their questionable behavior that it may be difficult to keep up. However, in Northern California last month, Judge Edward Chen ruled that Steele and Hansmeier are liable for sanctions and attorneys' fees awarded against "AF Holdings," the semi-mysterious shell company set up in Nevis, which many people (including courts) have recognized was almost certainly set up by Steele and Hansmeier themselves as some sort of way to (a) hide the fact that they were representing themselves and (b) to hide where the money goes. Of course, as court after court has seen through this charade, things aren't looking good for Steele and Hansmeier who should be fearing the eventual law enforcement response to all of this, which is almost certainly approaching.

However, they just can't resist fighting the fight, because that's what they do. When backed into a complete corner, Steele and Hansmeier tend to go into attack mode, trying any and every argument they can possibly think of, no matter how insane. But, and here's the key, they make those arguments with extreme confidence, as if only a moron would think they were wrong. The reality, of course, is that almost all of their claims are laughable. Take for example, the latest one in response to Judge Chen's ruling. Steele and Hansmeier have filed very, very similar filings that (among a few other arguments) try to argue that they cannot be found to be considered the "alter ego" of AF Holdings because Nevis law says that can only be done with the permission of the people being claimed to be the alter ego.

Under Nevis law, accordingly, a person may become an alter ego of a limited liability company only with his or her express consent.

Yes, AF Holdings was registered in Nevis, but if Steele and Hansmeier automatically think that means they can avoid liability in California, their legal skills are even worse than previously expected. Remember AF Holdings was the one who sued first... in California. The issue here is who is responsible for the absolutely bogus lawsuit. And the Court has very good reason, and significant evidence to support, that it's John Steele and Paul Hansmeier. Pretending that registering the company in Nevis somehow gives them a get-out-of-jail-free card is laughable.

Meanwhile, across the country, in the one case where Prenda actually seemed to be having some success, in front of former RIAA lobbyist Beryl Howell, John Steele has withdrawn as counsel and substituted Prenda buddy Paul Duffy. That, alone, isn't particular noteworthy -- these three guys seem to pass around cases like a group of high school kids under the bleachers passing around a joint. However, what is noteworthy is that in filing this, Steele notes that the "Plaintiff consents to Attorney Steele's withdrawal in this matter, as noted by his signature below." Who's the plaintiff? Why, it's the very same AF Holdings. And whose "signature" is it? Why, it's "Mark Lutz." And the date of the signature is... November 5th.

That's interesting. Because back at the end of September, Mark Lutz continued his magic disappearing act by not appearing in a Minnesota court, despite being ordered to be there. Hansmeier was given until the next day to explain the disappearance, and filed a substance-free brief that basically said, "I'm sure Lutz has a good reason, which he'll tell you about when he can." Specifically, Hansmeier told the court:

Based on my prior experience with Mr. Lutz, including Mr. Lutz's in-person attendance before this Court on August 5, 2012, I believe that Mr. Lutz will be able to provide a good-faith reason for failing to make his flight to Minnesota.

While there has been plenty of activity in the docket for this case (including Hansmeier's weak attempt to get magistrate judge Franklin Noel kicked off the case), there has been nothing from Lutz since Hansmeier's promise on October 1st that Lutz would explain what happened. In fact, he hasn't appeared anywhere.

But... suddenly his signature appears on November 5th in a different circuit? Hmm. It would appear he's fairly tardy in getting in his explanation. Of course, there's been some chatter on Twitter wondering if this is really Lutz's signature. We have examples of his actual signature on previous filings, so you can compare. Here's the latest one, supposedly from November 5th: And here's his notarized signature from May 2nd: My gut reaction is that those were not written by the same person, but I'm not a handwriting expert, so we'll give Lutz the benefit of the doubt. I found another Lutz signature that looks more like the first, but it's not notarized -- and I've got a lot more confidence in the notarized version.

Of course, here's the issue. If we give Steele and Lutz the benefit of the doubt here that the signature is legitimate -- and I'm willing to do exactly that -- it would appear that they've got a different problem to deal with: the fact that Lutz never explained his absence in Minnesota. I'm trying to think if there's any other option. Either Lutz has flat out ignored a court order in Minnesota, or someone forged his name in DC. If anyone can come up with any other option, I'm all ears. I guess there's the possibility, also, that both things are true -- that he both ignored a court order and had his signature forged -- but that doesn't make the situation any better...

Filed Under: edward chen, franklin noel, john steele, jurisdiction, mark lutz, nevis, paul hansmeier, signatures
Companies: af holdings, prenda, prenda law

Prenda Loses Big Again; Court Orders It To Pay Back Settlement Money, Refers To Law Enforcement

from the and-another-one dept

And here we go again. In yet another Prenda court case, Team Prenda has lost big. These are the cases in Minnesota that were reopened earlier this year, after the court became aware of Judge Wright's ruling in California, showing how Paul Hansmeier, John Steele, Paul Duffy and Mark Lutz appeared to be engaged in fraud on the court. In August, the magistrate judge assigned to review the cases, Franklin Noel, started demanding real answers to questions -- answers which never came.

Instead, we got a hearing in Minnesota that revealed some explosive new info, while Mark Lutz disappeared never to be heard from again. While Hansmseier and Duffy were never able to produce Lutz or answers to Judge Noel's questions, they did try to get Judge Noel kicked off the case.

None of the above strategies worked. At all. Judge Noel today not only rejected the request to pull him off the case, but also slammed Team Prenda, yet again, ordered them to pay back all the settlement money they got from the specific cases involved and then referred the case to law enforcement to look into the activities of Hansmeier, Steele, Duffy and Lutz. While he notes there are other issues being dealt with elsewhere, the main focus of Noel's inquiry was the legitimacy of Alan Cooper's signature -- and Judge Noel concludes, as have multiple other courts, that Cooper did not sign the document. And he's pretty thorough about it. He notes that AF Holdings, the shell company in question here, "failed to meet its burden of proving the authenticity of the copyright-assignment agreements."

Even more specifically, Judge Noel says that he thinks Steele lied on the stand:

Based upon Cooper’s side of these two conversations, Steele testified that it was his “understanding that he [Cooper] had given authority to Mark and his people if he wasn’t available, that he could sign the various documents as long as he understood what the document related to . . . .” Finding Steele’s testimony regarding his “understanding” of an agreement between Cooper and Lutz to be vague, the Court asked directly, “Did you hear Mr. Cooper give Mr. Lutz authority or permission to sign his name to documents?” Steele replied “yes.” The Court expressly disbelieves Steele’s testimony in this regard.

Noel goes on to point out that AF Holdings failed to produce an officer of the company who was "capable of testifying to the authenticity of each copyright-assignment agreement." He doesn't make much of Lutz's not appearance (and subsequent disappearance) other than mentioning that Lutz did not appear.

In the end, the court finds that fraud was committed on the court and orders the return of all the settlement money and the payment of attorneys' fees, which should add some more to the top of what Duffy, Hansmeier and Steele have on their ever-growing tab. The court also notes that it would be a waste of its time to "untangle the relationship between Hansmeier, Steele, Duffy, Dugas, Lutz and Prenda Law, on the one hand--and the Plaintiff AF Holdings, LLC., on the other." Instead, "such investigation can more effectively be conducted by federal law enforcement...." While it's likely federal law enforcement was already looking into all of this after Judge Wright alerted them to the case, having another judge make a similar recommendation can't hurt (well, unless you're Team Prenda. Then it hurts).

Filed Under: alan cooper, franklin noel, john steele, mark lutz, michael dugas, paul duffy, paul hansmeier
Companies: af holdings, prenda, prenda law

Prenda Wants Another Judge Who Ruled Against Them Disqualified Because He Gave A Speech

from the same-old-bag-of-tricks dept

One of the many (weak) tricks in the big ol' Prenda "bag of tricks" is to accuse judges who rule against them of bias, and try to get them thrown off the case. It hasn't worked so far, but the Prenda spirit seems to be to never, ever, ever give up trying the same old bogus crap. So here we are with Paul Hansmeier trying to get magistrate judge Franklin Noel disqualified from the case in Minnesota where he's been a giant pain in the ass for Team Prenda, because he's been digging into their actions to determine if a bunch of Minnesota lawsuits were actually fraud on the court. Noel's been pretty careful and methodical, even as Team Prenda has done their usual tapdance. Remember, Judge Noel was the one who ordered them to show up in court with someone who could answer questions -- and Prenda failed to produce Mark Lutz (who, as far as I can tell, is still missing).

So what was Noel's big crime that should get him thrown off the case? Apparently it was giving a talk about copyright trolls and some of the details of Prenda to the Student Federal Bar Association at the University of Minnesota Law School (added bonus: Paul Hansmeier and John Steele are alumni of that school). They claim that the talk is a form of ex parte communication and shows that Judge Noel has "prejudged" them in part because the emailed description of the event mentioned Prenda's "bad behavior." Even as they admit that Noel probably didn't write the email, they say it's guilt by association.

They also claim that the emailed announcement contains details that Hansmeier insists were only filed under seal in the cases -- suggesting that Judge Noel may have revealed that information:

The e-mail further discloses information about the settlement demands in this case. Yet, Plaintiff’s settlement demands were filed under seal by order of the district court. The e-mail’s author appears to be in possession of non-public sealed information, which a reasonable person might conclude was furnished by the Magistrate Judge, even if it was not.

Of course, the information on settlement demands by Team Prenda can be found widely online. Hansmeier leaves that bit out, of course.

Hansmeier continues to flail wildly around, arguing that Judge Noel has clearly been reading blogs including those "created by individuals who have been caught infringing" because "many of his comments echoed criticisms" on those blogs. Of course, what Hansmeier leaves out is that those same criticisms have now been validated by multiple federal courts. It is not, in any way, out of turn for Judge Noel to make note of that. Later, Hansmeier argues that the cases have generated "notoriety" and uses the example that a letter he sent the judge "was the subject of an immediate feature story on several pirate websites." As far as I know, we here at Techdirt were actually the first to write about that letter. I know Ars Technica picked up on our story and wrote one as well. Neither of our sites are "pirate blogs." We're both media organizations that cover a variety of issues. Earlier in his filing, Hansmeier argued that these pirate blogs were all set up by people who had been accused of infringement. That's a blatantly false statement regarding us, and one hopes that Hansmeier will correct the record, though that seems unlikely.

Back to the issue at hand, it does seem a bit strange, and perhaps unwise, for a judge to give a talk about a case that is still ongoing. But whether or not it actually qualifies for being disqualified from the case seems like a stretch. But, it is the Prenda way: flail and flail and flail some more.

Filed Under: copyright trolls, disqualify, franklin noel, john steele, paul hansmeier
Companies: af holdings, prenda, prenda law

Paul Hansmeier Tries To Explain Away Brett Gibbs Revealing Prenda Spreadsheets

from the might-not-be-real-and-if-they-are,-so-what? dept

So, last week, Brett Gibbs dropped quite the bombshell in one of the key Prenda cases, in which he revealed some spreadsheets that had been shared with him via a Dropbox account, showing that John Steele and Paul Hansmeier had received about 70% of Prenda's proceeds, despite insisting they had no direct relationship with the firm. As expected, lawyers in other Prenda cases have rushed to file those documents in their cases as well. In Minnesota, Paul Hansmeier has responded, seeking to block the filing of the documents to Magistrate Judge Franklin Noel, who has been overseeing an investigation into the possibility of fraud on the part of Team Prenda. The argument, summed up, is "who knows if those documents are legit, they don't show anything bad, they're not relevant and they were obtained illegally." Almost all of that is, in typical Hansmeier fashion, ridiculous:

Second, the documents Mr. Godfread proposes to file are inadmissible because they are not authenticated. Mr. Godfread claims that the exhibits "appear" to be financial records of Prenda Law, Inc. Perhaps he is right, but I have not reviewed Prenda Law's financials and neither, presumably, has he. Until he can authenticate the documents, they are inadmissible;

Seems like there's a pretty quick way to take care of that. Judge Noel can put one of the Prendaristas on the stand and ask them if the documents are accurate. Either way, claiming that they're not "authenticated" seems like pretty weak sauce at this stage of the game.

Third, the documents undermine Mr. Godfread's narrative. I have consistently stated—often to deaf ears—that I sold my law practice to Prenda Law in late-2011 and subsequently pursued other interests. That is what these documents show. I am labeled an "old owner" throughout the documents. With one de minimus exception, the only transfers I received from Prenda Law were in consideration of the sale of my practice;

As Gibbs detailed in his filing, the use of "old owners" was clearly done to leave open exactly this excuse, but it does not seem even remotely credible given the massive amount that continued to go to both Steele and Hansmeier long after the sale. While it's certainly not unheard of for service businesses like law firms and accounting firms to include a percentage of ongoing revenue for a few years after sale, having this much go to Steele and Hansmeier suggests something else. At the very least, it's quite relevant for a deeper discussion into Hansmeier's and Steele's claims of having no relationship with Prenda.

Fourth, the documents have no relevance to the subject-matter of this case, which was filed as an action for copyright infringement. Although it has since morphed into a different matter, the day-to-day ledgers of a law firm are not relevant to either inquiry;

Really? I mean, this one doesn't even require a response, since the "subject-matter" of the case is about whether or not Prenda and related companies and individuals were engaged in fraud. It seems highly relevant.

Fifth, if these documents are authentic, then they were stolen. No business would release sensitive financial documents to its adversaries. I understand that this matter is being investigated and will be reported to law enforcement, as appropriate.

Again, as Gibbs explained, it appears these documents were placed in a shared Dropbox account, meaning they were given to him. Yes, at the time he was still part of Team Prenda, but that doesn't mean the documents were "stolen." Anyway, there's something kind of funny about Hansmeier saying that this 'theft' "will be reported to law enforcement." It seems quite likely that law enforcement already knows... and that's because there's an ongoing investigation of Hansmeier.

Filed Under: brett gibbs, franklin noel, john steele, paul hansmeier, spreadsheet
Companies: af holdings, ingenuity 13, prenda, prenda law

John Steele Tries To Get Out Of Alan Cooper's Lawsuit By Arguing That The Use Of 'Alan Cooper' Was 'Coincidental'

from the damn dept

John Steele just can't stop digging. The alleged (and confirmed by multiple courts) mastermind behind Prenda Law's copyright (and CFAA) trolling efforts is likely headed for a world of trouble after Brett Gibbs, a lawyer who used to work for him, finally coughed up incredibly compelling evidence that Steele (and partner Paul Hansmeier) were the people behind Prenda Law -- despite multiple denials of that claim. However, as that was coming out, it appears Steele was busy trying to get himself out of the lawsuit that Alan Cooper brought many months ago, concerning Steele allegedly signing Cooper's name on various legal documents. Steele has now asked the court to dismiss the lawsuit.

For many months, there's been all sorts of bluster from Steele (and others on Team Prenda) suggesting that Cooper's claims were totally bogus and that "the truth will come out" at some point. In other cases, there have been attacks on Cooper's credibility, arguing that he had mental problems and was on medication, that he'd acted in unstable ways. Furthermore, in a variety of cases, Steele argued, often in conflicting ways, that Cooper either really had signed the documents or that he'd somehow given Mark Lutz permission to sign the documents for him. The contradictions made his claims not particularly credible in the first place.

So, now that he's actually filing to dismiss the lawsuit, does he argue that Cooper actually signed the documents? Or that he knew all about the documents even if someone else signed them? No. Instead, he basically argues that Alan Cooper is a very common name and maybe it's coincidental that Cooper's name was on the documents -- and thus, there has been no "invasion of privacy." Yes, it's hard to believe, after everything else claimed that this is Steele's strategy, but as we've seen before, he often seems to think he can talk his way out of everything, even if his other statements totally contradict what he now claims. The filing is really quite incredible.

First, Steele attempts to misrepresent Minnesota common law concerning invasion of privacy. First, he points out that the law is "limited" such that it doesn't apply to incidental mentions of someone:

The value of the plaintiffs name is not appropriated by mere mention of it, or by reference to it in connection with legitimate mention of his public activities; nor is the value of his likeness appropriated when it is published for purposes other than taking advantage of his reputation, prestige, or other value associated with him, for purposes of publicity. No one has the right to object merely because his name or his appearance is brought before the public, since neither is in any way a private matter and both are open to public observation. It is only when the publicity is given for the purpose of appropriating to the defendant's benefit the commercial or other values associated with the name or the likeness that the right of privacy is invaded.

Of course, all of that is sensible law. It's not an invasion of privacy to merely mention someone's name or to talk about their public activities. But that's not what is alleged to have happened here. The accusation is that Steele forged Cooper's signature on legal documents. To pretend that's the equivalent of a mere mentioning of Cooper is ridiculous. From there, Steele argues that the signature is just a "coincidental" signature of someone named Alan Cooper, and since it might not even be this Cooper, it doesn't rely on his "persona," but is rather "a coincidental use of the same name."

Plaintiff alleges that Defendants used the name "Alan Cooper" without his express permission, but he does not allege that Defendants' use of the name leveraged Plaintiff's "reputation, prestige, social or commercial standing, public interest or other values of the plaintiff's name or likeness." Indeed, Plaintiff's own allegations express uncertainty over whether he is even the "Alan Cooper" referenced in the allegedly-offending documents. (See Compl. 91 41) ("Defendants have never identified another person by the name of Alan Cooper who could plausibly have signed the documents shown as Exhibit A or Exhibit B.") The reason why Plaintiff is uncertain whether he is the "Alan Cooper" referenced in Plaintiff's documents is the very same reason why his claim must fail: nothing in the documents containing the name "Alan Cooper" is linked to or otherwise leverages the qualities of Plaintiff's persona. Plaintiff does not allege otherwise. Plaintiff has no exclusive right to the use of the generic name "Alan Cooper." Otherwise, any person who signed a document, "Alan Cooper"--that is, even someone whose legal name was Alan Cooper--could be liable for invading Plaintiff's privacy. The Court should dismiss Plaintiff's Count I with prejudice.

The chutzpah it takes to file something like that with the court is rather stunning. He's not denying that he signed Alan Cooper's name. He's just arguing that it's not a violation of Alan Cooper's privacy because Alan Cooper is a common name. That takes balls. Of course, if it really was just some other Alan Cooper, then that's got to come back to bite Steele as well. After all, in the Navasca deposition by Paul Hansmeier, Hansmeier stated that Steele had been the one who got Alan Cooper's signature. And, when Judge Wright ordered "the real Alan Cooper" to appear in his court room, the only one who showed was the one who's now suing Steele. At no point has Steele previously indicated that there was another Alan Cooper, yet now he's trying to get out of this case by shrugging it off and saying it could be any Alan Cooper? Damn. He really does seem to think that everyone else in the world is dumb.

Steele further attacks Cooper's other claims by arguing that it couldn't be a deceptive trade practice because Cooper doesn't show what trade his name was involved in and because Cooper fails to show who was deceived. So, argument number two from Steele: signing someone else's name to a legal document in a court isn't deceptive if no one can be shown to be deceived.

Steele then attacks Cooper's claims that "Prenda Law, Inc., is a mere instrumentality of Steele." And that "Prenda Law, Inc.'s existence was a mere facade for individual dealings of Steele." Steele argues that since there is no allegation that supports those conclusions, the claims must be dismissed. I'm guessing he wrote this part prior to Brett Gibbs' filing, because I imagine that allegation supporting those conclusions rather strongly, complete with spreadsheet evidence, will show up rather quickly. Steele further argues that Cooper failed to show any documents where Steele represented that Alan Cooper was an officer of AF Holdings or Ingenuity 13. Apparently, the signed copyright assignments have completely slipped his mind?

At this point, this particular legal case is more of a sideshow to the other ones (along with the rapidly increasing probability that Steele and Hansmeier may soon have to deal with criminal investigations). But it's yet another glimpse into the mind of John Steele, where his statements indicate, yet again, that if he just keeps talking, maybe he'll talk himself out of the corner he's clearly been backed into.

Filed Under: alan cooper, john steele
Companies: af holdings, ingenuity 13, prenda, prenda law

Oops: Brett Gibbs Releases Spreadsheet Showing 70% Of Prenda Proceeds Went To Steele & Hansmeier

from the seems-dark-down-there-under-the-bus dept

If John Steele and Paul Hansmeier didn't realize they were in serious trouble already, things just got a lot more difficult for them. As you may recall, Steele and Hansmeier have been bending over backwards to insist that they had nothing whatsoever to do with Prenda Law, and that they got no money from any of the settlements. Courts haven't been buying this argument, and earlier this week we wrote about Judge Chen in Northern California noting that he was convinced that Steele and Hansmeier really were Prenda. But the evidence just got a lot stronger. It appears that Steele and Hansmeier's attempt to throw lawyer Brett Gibbs under the bus has just come back to haunt them. Gibbs has just made a filing in the Judge Otis Wright case in the Central District of California (the first case to directly state that Hansmeier and Steele were clearly behind Prenda) that might be Steele and Hansmeier's worst nightmare: because it reveals a spreadsheet showing how most of the Prenda settlement money went to them.

Ostensibly, the filing from Gibbs is an attempt to get out from Judge Wright's order which lumped in Gibbs with Steele, Hansmeier, Duffy and Lutz as "principles" of Prenda, making them all responsible for the attorneys' fees. Gibbs has been trying to distance himself from the Prenda crew for a while, but with this filing he reveals the real meat: it seems that there was a Dropbox account that was shared between Gibbs, Hansmeier and Steele, and in it was a spreadsheet revealing the payouts from Prenda settlements. And while Steele and Hansmeier have told courts that they are not associated with Prenda and not making any money from the cases, the documents... show otherwise.

Steele and Hansmeier have repeatedly claimed that they have no ownership interest in Prenda Law, AF Holdings or Ingenuity 13 and that all settlement proceeds are held in trust accounts for use in future litigation. For example, in the bar complaint filed in this Court, Steele stated “I have never had an ownership interest in Prenda Law Inc”; “I have never had an ownership interest in AF Holdings LLC or Ingenuity 13.” (Id. at pg. 83). In his deposition, Hansmeier testified that he had “no ownership interest [in AF Holdings] whatsoever” and that proceeds from settlements went into an attorney’s trust account and were withdrawn only to pay expenses of litigation. (ECF No. 69-1 at pgs. 9-13).

The truthfulness of these and similar statements is severely challenged by two documents which Prenda Law sent to the Dropbox account on Gibbs’ computer in early 2013: “Prenda Law Profit and Loss Detail, January through December 2012” and “Prenda Law Balance Sheet Detail.” (See Exhibits E and F). The receipt and disbursements shown in these spreadsheets directly contradict the oft-repeated statements of Steele and Hansmeier that they have no financial interest in Prenda Law or its litigation.

According to the Prenda Law Profit and Loss Detail, in 2012 alone, Prenda made “Payments to Old Owners”—Hansmeier, Steele and Under the Bridge Consulting (their jointly-owned company)—equal to almost 70% of Prenda’s total revenue. Hansmeier received $645,821.29 ($185,321.28 directly and $460,500.00 through Under the Bridge). Steele received $660,915.94 ($200,415.94 directly and $460,500.00 through Under the Bridge). This does not include tens of thousands of dollars in additional payments to or on behalf of Steele and Hansmeier for travel and entertainment, meals, credit card charges, and miscellaneous reimbursements, or payments to Steel’s wife, Kerry Eckenrode Steele. It also does not include payments totaling $37,069.56 to Duffy or Duffy Law Group, also classified as “Payments to Old Owners.” Judging from the documents it appears that neither the Profit and Loss Detail nor the Balance Sheet Detail show any payments to AF Holdings, Ingenuity 13 or other Plaintiffs represented by Prenda.

Exhibit E shows that Prenda received income from “Pirates” of $1,931,977.09 in 2012, and made “Payments to Old Owners” of $1,343,806.78 or 69.6% of its total receipts. Considering other payments to or for Steele, Hansmeier and Duffy, the total distributed to them likely exceeded 80% of receipts, even though these distributions left Prenda with a 2012 loss of $487,791.20. These figures do not include payments to Steele and Hansmeier from other Prenda accounts, or settlements that may have bypassed Prenda completely.

In an affidavit, Gibbs points out that Hansmeier had told him earlier that Steele and Hansmeier had setup "Under the Bridge Consulting" (nice troll reference guys, very subtle) and each had a 50% stake. As Gibbs points out, this very strongly supports Gibbs' earlier claims and reinforces that idea that Steele and Hansmeier are both the powers that be behind Prenda and that they directly lied in the past concerning their involvement. While the spreadsheets do say "old owners," Gibbs' filing correctly notes that (1) this suggest they at one time did own Prenda and (2) getting more than 70% of the revenue going to "old owners" certainly doesn't suggest that those two were no longer involved in the business.

Separately, in the filing, Gibbs notes that Hansmeier called him after Wright's original ruling, trying to get him to sign a document that would require him to lie, and also to indemnify both Hansmeier and Steele, in order to be included under the bond that Duffy, Hansmeier and Steele were organizing as required by Judge Wright's order. Basically, Hansmeier offered Gibbs a terrible deal: to get in on the bond that we're getting, you have to lie to the court and then basically accept any and all liability that may come down because of all this. Gibbs, quite reasonably, rejected the deal, leading to this filing now:

After receiving the May 6 Order, Hansmeier telephoned Gibbs in an attempt to persuade him to work with, not against, the Principals as they appealed the Order. Over several conversations, Hansmeier conveyed to Gibbs exactly what he would have to do to be covered by the superseadous bond which the Principals were arranging to purchase. Knowing that Gibbs would not be able to post sufficient collateral to buy a separate bond, Steele and Hansmeier made six demands which Gibbs would have to accede to before they would add him to their bond: (1) Gibbs pay $3,000 to Hansmeier and Steele to reimburse them for the entire cost of the bond; (2) Gibbs sign a unilateral Release and Settlement Agreement releasing any and all claims he might have against Duffy, Steele, Hansmeier, Prenda Law, Steele Hansmeier PLLC, and Alpha Law Firm” (See Exhibit A); (3) Gibbs agree to sign a declaration stating (falsely) that Steele had no involvement in a Florida copyright case; (4) Gibbs represent AF Holdings and Ingenuity 13 in their appeal of the May 6 Order; (5) Gibbs sign an agreement that would create a fiduciary relationship between Gibbs and both Steele and Hansmeier;2 and (6) Gibbs sign an agreement indemnifying Steele and Hansmeier

against any and all claims, demands, actions, suits, losses, costs, charges, expenses, damages and liabilities whatsoever which [they] may pay, sustain, suffer or incur by reason of or in connection with the appeal of the May 6, 2013 order issued by Judge Wright in Case No. 2:12-cv-8333-ODW (JCx) including, without limiting the generality of the foregoing, all costs and expenses (including legal expenses) incurred in connection with any such loss or damage. (See Exhibit B).

The unilateral release and the indemnity agreement proposed by Steele and Hansmeier would have made Gibbs solely liable for the full amount of the monetary sanctions imposed on all of the parties in the May 6 order, as well as the costs and attorneys’ fees incurred in appealing the order. Steele and Hansmeier were also trying to force Gibbs to testify dishonestly or remain silent with regard to the Principals’ fraudulent activities. Gibbs rejected their offer and was not included on the bond.

It's quite incredible that Hansmeier apparently thought Gibbs was so stupid as to accept such a terrible deal. There's a bunch more in the filing worth reading, but these are the highlights -- and ones that I'd imagine are about to be refiled in a number of other Prenda-related cases around the country. My only question, however, is why Gibbs waited until now to file this...

Still, assuming that this information turns out to be legit, and there's no reason to think it isn't, Steele and Hansmeier may be in for a world of trouble. Everyone knew something like this was coming eventually, but I can't see how the two of them will tap dance around this one.

Filed Under: brett gibbs, john steele, otis wright, paul hansmeier
Companies: af holdings, ingenuity 13, prenda, prenda law

Judge Isn't Buying Team Prenda's Excuses

from the of-course-not dept

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.

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

Team Prenda Loses In Default Judgment; Ruling Clearly Names Steele, Duffy And Hansmseier As Prenda Law

from the and-another-arrow-comes-in dept

Team Prenda is taking hits from pretty much every direction these days. The latest is that, in yet another AF Holdings case, this time in Massachusetts, Prenda had been told to put up a bond of $60,000, which it appears to have ignored. The court has now signed off on a default judgment ruling. Basically this just adds to the pile of money that Team Prenda owes. But a key point here is in the footnote:

As noted in the supporting memorandum, AF Holdings has been found to be an alias of Prenda Law, Inc. and its principals -- John Steele, Paul Duffy and Paul Hansmeier.

Steele and Hansmeier keep trying to claim they have absolutely nothing to do with Prenda, and Steele argues that he's got nothing to do with AF Holdings. Having more courts officially note that AF Holding is really Prenda, and Prenda really is Steele, Duffy and Hansmeier, is going to make their argument more and more difficult going forward.

Of course, as if on cue, in a different case, Paul Duffy is now arguing strenuously that it's unfair to lump Prenda Law in with Steele and Hansmeier or to connect it with AF Holdings. Of course, sooner or later, Duffy is going to realize that if he keeps making this argument, he's actually hanging himself out to dry, almost certainly leading up to Steele and Hansmeier quickly tossing Duffy under the bus when the opportunity permits (one assumes soon after they're done doing the same to Mark Lutz).

Filed Under: default judgment, john steele, mark lutz, paul duffy, paul hansmeier
Companies: af holdings, prenda, prenda law

Asked To Explain The Disappearance Of Mark Lutz, Team Prenda Says They're Sure He Has A Good Reason

from the that's-not-what-they-asked dept

So we already covered the amazing disappearing act of Mark Lutz, the claimed "mastermind" of copyright trolling operation AF Holdings, though it appears almost no one (including courts) believe that Lutz is anything more than a patsy for John Steele and Paul Hansmeier, as was made clear quite early on in the infamous Sunlust hearing last year. Lately, Lutz has been missing a lot of things. He's missed two court hearings and one deposition.

At yesterday's hearing, apparently Magistrate Judge Franklin Noel gave Paul Hansmeier until today at 5pm to "explain the absence of Mark Lutz." Hansmeier actually filed his declaration early, but it doesn't appear to actually explain the absence. Instead, it goes on at length about how Lutz planned to be there (as was stated in court), but when it gets to the point where he's supposed to actually explain where Lutz went, instead we get this:

Mr. Lutz was traveling with another witness to the Hearing. The witness indicated that Mr. Lutz was not on the flight from Fort Lauderdale, Florida. I have attempted to contact Mr. Lutz but have been unable to reach him as of the time of this declaration. Based on my prior experience with Mr. Lutz, including Mr. Lutz’s prior in-person attendance before this Court on August 5, 2013, I believe that Mr. Lutz will be able to provide a good-faith reason for failing to make his flight to Minnesota.

Mr. Lutz has previously complied with orders to appear, including in Ingenuity 13 LLC v. Doe, No. 12-cv-8333 (C.D. Cal.); AF Holdings LLC v. David Harris, No.12-cv-2144 (D.Az.); and in this case, where he appeared in person at the August 5,2013, case management conferences

This is bizarre on multiple levels. First, Hansmeier filed this pretty early in the day, well before he was required to do so. You'd think, given the requirement to explain the absence, that Hansmeier would give Lutz at least some time today to get in touch. Saying he's sure that Lutz "will be able to provide a good-faith reason for failing to make his flight" is not actually answering what the court asked.

Second, the fact that Hansmeier states that Lutz appeared at a few hearings, but then fails to mention that he has missed a more recent hearing and a deposition just seems to be purposely trying to mislead the court. It's pretty clear that the lawyer on the other side, Paul Godfread, will point out those other recent absences, so it's a bit wacky that Hansmeier seems to think that ignoring them will not reflect poorly on himself.

Finally, the declaration also gives the details of Lutz's flight info:

Mr. Lutz also purchased a plane ticket from Fort Lauderdale, Florida to Minneapolis, MN. His booked flight, US Airways Flight 1924, departed from Fort Lauderdale at 8:35 a.m. on Sunday September 29, 2013, and landed in Charlotte, North Carolina. His connecting flight, US Airways Flight 713 departed from Charlotte, North Carolina at 11:25 a.m. and landed in Minneapolis at 1:05 p.m. on Sunday September 29, 2013.

This, itself, raises some questions. First of all, if Lutz did, in fact, live in Miami, Fort Lauderdale is a little bit outside of Miami, so getting to the airport takes some time (I've done that trip a few times). In court, John Steele claimed that he drove around in the morning looking for Lutz and found some of his friends who said he'd turned in early to get ready for the flight. At what time was this? If the flight was at 8:35 am, even if they were aiming to get to the airport at ~7:30 am, Steele must have gone looking for Lutz by 6 am or so (even that's probably pretty late). So Steele went randomly driving around Miami at 6 am and magically found Lutz's friends, but not Lutz? Really?

Filed Under: franklin noel, john steele, mark lutz, paul hansmeier
Companies: af holdings, prenda, prenda law