Appeals Court Smacks Down Team Prenda... Again

from the still-waiting-for-the-truth-to-come-out,-huh? dept

Back in April it seemed fairly clear that the 7th Circuit Appeals Court panel set up to hear the Prenda appeal of the Lightspeed v. Anthony Smith case was not impressed by Team Prenda. I mean, when a judge directly states "there's a lot of shell games going on here" and also points out that it's "shocking" that the lawyer representing Prenda has no idea about the relationship between Prenda, Alpha Law and Steele Hansmeier (a central issue in the case), you expect that the eventual ruling is going to not go well for Team Prenda, but you never really know until the ruling comes out. It has come out. And it is not good news for Team Prenda. Any time a ruling starts off with the following, you know you're going to be in for a good ride:

The first rule of holes, according to an old saying, is to stop digging. The two appeals before us bring that to mind, for reasons that will become apparent.

Yes, a failure to "stop digging" has long been a major fault many of us have associated with Prenda "mastermind" John Steele, and the judges clearly see that as well. They go through the history of the case, highlighting a bunch of questionable moves by Steele and Paul Hansmeier in demanding names from ISPs and using a bunch of questionable legal claims in the original lawsuit, and pretty quickly get at the "shell games":

At the same time, Hansmeier submitted a motion for pro hac vice admission; he did not identify a law firm on the form. Steele entered an appearance in which he listed his firm as Prenda Law. The firm affiliations, however, turned out to be provisional, to put it kindly. At the emergency motion hearing, Steele identified his firm as Steele Hansmeier PLLC, Duffy said that he was with Prenda Law, and Hansmeier was with something called Alpha Law Firm. Steele Hansmeier and Prenda are listed at the same street address, 161 North Clark Street, in Chicago, in different suites.

Later, the court notes dryly that when Hansmeier submitted a motion to withdraw, he did so "without indicating which firm he was with." The court then notes how Team Prenda was engaged in similar shenanigans elsewhere, citing the famous smackdown from Judge Otis Wright in California.

Then we get to the meat of the appeal. First, the silly claims (tried repeatedly) from Steele and Hansmeier that they were never properly informed about Smith's motion for sanctions. The court doesn't buy it. At all:

The record, however, does not support them. First, as the district court concluded, even if we assume that they did not have notice originally, that defect was cured when the district court granted rehearing on the sanctions issue. Indeed, in their briefs before this court, Steele and Hansmeier seem to concede as much. Their complaint has shifted to one focusing on the adequacy of their opportunity to respond. It is too late to change theories, however, and in any event, the district court correctly ruled that whatever procedural flaw there may have been was fully corrected by affording a new opportunity for a hearing. Finally, they received adequate notice in the first place.

The court further notes that the attempts by Steele and Hansmeier to claim that even if Duffy was properly notified it doesn't mean they were ring pretty hollow, given how the three of them keep collaborating and using the ever-shifting names of each other's law firms:

Duffy received notice, he was in charge of Prenda Law, and there was evidence that both Steele and Hansmeier were working for Prenda as well. While appellants huff that the district court “wholly gloss[ed] over the fact that Hansmeier noticed his appearance in the case for Alpha Law Firm, not Prenda Law,” the district court had ample reason to find the Prenda/Alpha distinction illusory at best, fraudulent at worst. Two days after Steele moved to withdraw from this case, he declared in another action that he was “of counsel with the law firm, Prenda Law, Inc.” and that Hansmeier was “also of counsel to the firm.” ... And this is to say nothing of the fact that at least once Hansmeier indicated in this case that he was of counsel to Prenda.

And, that's not all. The court unpacks a bunch of the connections:

A quick look at publicly available documents supports the district court’s finding that service on Duffy also accomplished service on Steele and Hansmeier. In its application for authorization to transact business in Florida, Steele Hansmeier, a Minnesota corporation, listed its mailing ad‐ dress as 161 N. Clark St. No. 3200, Chicago, IL 60601. Paul Hansmeier is listed as Manager and his address is listed as 1111 Lincoln Rd., Suite 400, in Miami Beach, Florida....

Interestingly, 161 N. Clark St. Suite 3200 is also listed as the principal place of business for Prenda Law, Inc., in its 2011 application for authorization to transact business in Florida. Its registered agent, Mark Lutz, uses the same Miami Beach address as Hansmeier did in the Steele Hansmeier application.... Alpha’s connection to Steele Hansmeier and Prenda shows up in a search for Steele Hansmeier on Minnesota’s business filing site. There, Steele Hansmeier lists its registered address as 80 S. 8th St. #900 Alpha Law Firm, Minneapolis, MN 55402.

In conclusion, the court basically calls "bullshit" on Steele and Hansmeier:

Little more need be said. We are disappointed that the appellants’ own attorney, Daniel J. Voelker, was either unable or unwilling to tell us at oral argument about the precise relationship between Prenda and Alpha Law, despite its relevance for the issues on appeal. No matter: we have enough to conclude with confidence that notice to Duffy was reasonably calculated to apprise Steele and Hansmeier of the pendency of the motion. For the icing on the cake, we add that the district court also found that Steele received actual notice via email. Smith sent notice to the email address that Steele shared with Duffy. While Duffy argues that after he withdrew from the case he did not receive those emails, the district court did not find him to be credible. We have no reason to upset that assessment.

The ruling seems to be dripping with that kind of sarcastic understatement. The court then takes on the claim by Steele and Hansmeier that they were never given an opportunity "to be heard" in response to Smith's motion for sanctions. Again, the court says "yeah, right."

Once again, the record belies their assertion. As we have noted, they had adequate notice of the hearing. Duffy submitted a memorandum in opposition to Smith’s motion, but Steele and Hansmeier did not. Nonetheless, the court gave all three appellants another opportunity to be heard on the matter after they submitted motions to vacate or reconsider the order granting Smith’s request for attorneys’ fees. Before the rehearing, Steele and Hansmeier both submitted briefs in opposition to Comcast’s fees. They chose not to submit additional briefs (apart from what was presented in the motion to vacate or reconsider itself) on any other aspect of the order

At the hearing Hansmeier explained in detail why he thought that sanctions should not be imposed against him; Steele spoke as well. This more than sufficed as an opportunity to be heard.

The court then turns its attention to Duffy. Duffy whined that he wasn't given an opportunity to respond to the lower court's decision granting fees to ISPs. Remember, in this case Team Prenda made the incredibly stupid decision to drag Comcast and AT&T into this lawsuit, after those two companies refused to just cough up names of people. Both companies decided to go after fees from Team Prenda, which they got. Duffy claimed that he never had a chance to respond to the motion for fees. The court, once again, points out that this is hogwash (or, more specifically, "frivolous.")

While Steele and Hansmeier submitted timely memoranda in opposition to the ISPs’ motions, Duffy did not. He asserts that he was not given an opportunity to respond because the district court ruled on the motions before the time to respond expired under the court’s local rules. This argument is frivolous. Duffy does not cite any local rule for this point, and had he taken the time to look at the rules, he quickly would have realized that there was time to respond. The ISPs electronically filed their motions on November 8, 2013. The local rules allow 17 days for any response to electronically filed motions... The rules provide that “[f]ailure to file a timely response to a motion may, in the Court’s discretion, be considered an admission of the merits of the motion.”.... Duffy had until November 25, 2013, to submit his response, but he did not file anything. The district court granted the ISPs’ motion on November 27, 2013. Duffy had an opportunity to respond; he simply chose not to exercise it.

The court also rejects the claim from all three that they didn't have a chance to respond to the details of the fee itemization, noting that all three "had a full opportunity to respond to Smith’s itemization but chose to focus on other issues." The court does admit that they didn't really have a chance to respond to the ISPs' itemization, but says "we conclude that this error was harmless." It notes that no one has come close to suggesting that the ISPs' itemization was unreasonable. In fact, the court points out that one of Team Prenda's arguments is that Smith's itemization is much higher than Comcasts -- suggesting that they find Comcast's to be more reasonable.

From there, they move on to the main act: Team Prenda wants to overturn the main ruling against them. The court is, again, not impressed:

Appellants next throw a variety of arguments regarding the substantive ruling against the wall, with the hope that one might stick. None does.

The court notes that Team Prenda's use of the CFAA to try to route around copyright laws was clearly bogus. Even noting that the CFAA is ridiculously broad, the court notes that "this is a frivolous charge." The court also rejects Team Prenda's Hail Mary attempt to blame ISPs because people may have infringed on their service, an argument that is clearly blocked by the law (citing the DMCA's safe harbors, though probably could have used CDA 230 as well for the non-copyright claims).

To this day, the appellants have provided no support for the idea that every time an internet user does something unlawful online, the user’s ISP is unjustly enriched because it continues receiving subscriber fees from the malefactor. The law in fact is to the contrary. See 17 U.S.C. § 512(a) (a “service provider shall not be liable … for infringement of copyright by reason of the provider’s transmitting, routing, or providing connections for” material distributed by others on its network).

As for the claim that there was a conspiracy between all the defendants, including the ISPs because they refused to cough up info? Um, no.

These assertions are utterly without legal merit. The complaint lacks even the most rudimentary allegation of agreement that would satisfy federal pleading standards. In addition, a service provider does not risk becoming a co‐conspirator every time it challenges a subpoena. To argue that challenging a subpoena makes the ISPs co‐conspirators in a fictional copyright infringement ring is frivolous. Appellants’ theory is all the more outrageous given the fact that the Illinois Supreme Court quashed a functionally identical abusive subpoena.

The court basically agrees with everything the district court said about Team Prenda's scheming in deciding that they deserved to be sanctioned for their actions:

The district court similarly did not abuse its discretion in awarding attorneys’ fees to Smith from the inception of the suit. Lightspeed raised baseless claims and pressed for a meritless “emergency” discovery hearing. The district court found that the litigation “smacked of bully pretense.” At the November 13, 2013, hearing on fees, the court could not have been more clear: it stated that appellants were engaged in “abusive litigation … simply filing a lawsuit to do discovery to find out if you can sue somebody. That’s just utter nonsense.” We see no need to belabor the point. The record amply supports the district court’s conclusions, as our discussion of the case thus far demonstrates. There was no abuse of discretion in the court’s decision to grant either the ISPs or Smith fees for the entire case

So far, Team Prenda seems to be scoring a perfect zero, and their luck doesn't get any better as they move into challenging the fact that the court lumped all of them together in making them jointly and severally liable. Team Prenda didn't like it. The court says, deal with it:

Appellants begin by asserting that the district court misapplied section 1927 by holding them vicariously liable for each others’ actions. They are mistaken. While it is true that section 1927 liability is direct..., an order holding parties jointly and severally liable for costs after determining that each one is individually liable is a finding of direct liability.

Next, they contend that FM Industries, Inc. v. Citicorp Credit Services, Inc...., stands for the proposition that a lawyer cannot be held responsible for documents that bear another’s name but not his own. FMI, however, does not stand for such a broad proposition. There, we upheld sanctions against an attorney, but we found that they could not be levied against the copyright specialist retained by plaintiff’s principal counsel....

[....]

The relevant question thus relates to the scope of responsibility undertaken by each individual attorney. In our case, the district court found that while Steele and Hansmeier were not listed on every court document, the evidence showed that they were “in cahoots” with Duffy and worked with him to use the judicial system for a legally meritless claim. Their efforts seem to have continued in this court. While both Steele and Hansmeier now contend that they showed up in this case only after the federal proceedings were underway, the record shows that both were also involved in the shadows of the state court proceedings. Steele called AT&T’s counsel about the subpoenas, and he appeared and argued against the ISPs’ motion to quash and motion to stay. Hansmeier appeared at a conference before a magistrate judge and was the sole signatory of the 10‐page opposition to the ISPs’ motion for the stay of discovery. While Steele and Hansmeier insist that they had only minimal activity with this case, the district court did not abuse its discretion when it found otherwise.

And finally, the court takes on Team Prenda's appeal for their being found in contempt by the district court. As you may recall, after the original district court ruling that told them to pay $261,025.11, Team Prenda simply ignored it. They didn't pay. When hit with the contempt claim, Team Prenda tried to pretend that the sanctions were ineligible for contempt (by twisting the law and pretending it was a "money judgment" and not "sanctions") and then claiming they couldn't pay. This was when the court ordered financial statements from all of them, receiving documents where the CPA who prepared them flat out admitted that they "elected to omit substantially all of the disclosures required by generally accepted accounting principles." And thus, they were found in contempt, and Team Prenda appealed that too. Guess what the appeals court thinks of that? You're right.

Appellants try to evade it by arguing that they thought the order was for a money judgment. But this was neither private nor public litigation against the attorneys. What was at stake was the court’s power to govern its bar. As section 1927 (and for that matter 28 U.S.C. § 1651) reflect, courts have the authority, through contempt proceedings, to sanction attorneys and to enforce their orders.... The money‐judgment defense gets appellants nowhere.

Oh yeah, almost forgot. Team Prenda claimed there was no evidence that they didn't comply with the sanctions. The court laughs:

Appellants next argue that there is no evidence that they did not substantially comply with the order, or at least take reasonable and diligent steps to do so. This position ignores the record. At the show‐cause hearing appellants made clear that they had not paid anything and, when questioned about payment, they never pointed to any step in that direction. They elected instead to defend on the ground that they were unable to pay. Inability to pay is indeed a valid defense in contempt proceedings..., but the question whether the sanctions were paid is different from the question why payment was not made. The district court was entitled to answer the first one in the negative, given appellants’ admission on the record that they had neither paid the required amount to defendants nor posted a supersedeas bond.

What about the whole "inability to pay" thing? Yeah, guess what the court thinks of that. It simply notes that the burden of an inability to pay is a high one and it's totally on Team Prenda to prove -- and they totally failed to do that.

End result: appeals court basically calls bullshit on every single Prenda claim and upholds the original ruling and the contempt finding. It also notes that while it may have skipped over some of the many arguments Team Prenda threw against the wall "any arguments we have not discussed do not merit separate attention." Oh yeah, and the costs of the appeal are now to be added to the amount that Team Prenda has to pay up.

Filed Under: 7th circuit, anthony smith, john steele, paul duffy, paul hansmeier, team prenda
Companies: alpha law group, lightspeed, prenda, prenda law, steele hansmeier

Prenda Hit With $12,000 In Sanctions Over Its Bogus Defamation Suit

from the Assclown-Law-racks-up-another-debit dept

The spectacular Prenda flameout continues. As was reported here back in January, US District Judge John Darrah approved Paul Godfread and Alan Cooper's request for sanctions at the tail end of Prenda's disastrous defamation suit (one John Steele himself did plenty to undermine). Now, we have a dollar amount. (via Ars Technica)

Today, Judge Darrah in the Northern District of Illinois granted yet another sanctions award against copyright troll Prenda Law. Paul Godfread and Alan Cooper have been awarded $11,758.20 as reimbursement for a portion of the fees they have spent on attorneys in defending themselves against Prenda’s defamation lawsuit.

The Court awarded the sanctions under both Federal Rule of Civil Procedure 11 as well as its inherent power to sanction provided in 28 U.S.C. § 1927. In the Court’s own words, the sanctions award was “[b]ased on Prenda’s misrepresentations in this Court” and the Defendants’ incurred fees were “occasioned by the misconduct of Prenda Law and Paul A. Duffy in this Court.”

This will be added to the half-million in (mostly uncollected) sanctions levied against Prenda since the beginning of last year. Prenda tried to argue that the hourly fee requested was ridiculously high.

According to the American Intellectual Property Law Association’s 2013 Report of the Economic Survey, intellectual property attorneys based in Chicago and Boston within the first quartile bill $400 per hour, in line with the amount billed by Defendants’ counsel, who are based in Chicago and Boston. (Dkt. No. 61, Ex. B.) Yet, Prenda argues that this rate is “exorbitant” because Defendants’ attorney Erin Russell is not registered before the United States Patent and Trademark Office and, therefore, not an intellectual property attorney.

"Apropos of what," Judge Darrah doesn't even bother asking.

Prenda cites no law supporting this contention, and its claim of exorbitant rates fails.

Prenda also argued that some of the fees incurred were "self-inflicted" and not the direct result of its bogus lawsuit/endless dicking around. Darrah dismantles this argument as well.

The basis of Prenda’s mitigation argument is that Defendants chose not to trust Prenda to withdraw its motion to remand. Defendants’ failure to trust Prenda was not unreasonable, given Prenda’s vigorous defense of its motion to remand on the same day it filed its motion to withdraw the motion. In any event, Defendants’ response to Prenda’s motion to remand was sufficiently quick and efficient. Not only did Defendants file their response within six days, they filed it on the same day that Prenda presented its motion to withdraw. Prenda’s opposition with respect to Defendants’ fees being self-inflicted or avoidable is denied.

Prenda did manage to come out of this in slightly better shape than it could have. Darrah only awarded the attorney's fees racked up in his court, not including anything that occurred in a separate court in 2013. That decision cut the awarded amount roughly in half.

This appears to be the final moments for Prenda Law, a sordid episode of legal abuse that is ending with lots of (gavel) banging and (Prenda partner) whimpering.

Filed Under: alan cooper, defamation, john steele, paul duffy, paul godfread, paul hansmeier, sanctions
Companies: af holdings, prenda, prenda law

Appeals Court Overturns Prenda Win From Former RIAA Lobbyist Judge

from the good-to-see dept

As we've been covering the Prenda debacle for years, there was still the one big "victory" it had, in which a DC district court judge ruled that randomly lumping together over a thousand unrelated "Does" was perfectly legitimate, something most other courts had found to be inappropriate. Of course, people quickly figured out that the judge who found in favor of this bizarre joinder ruling, had only recently been appointed to the bench, having previously been an RIAA lobbyist, and who, years earlier, had helped write the DMCA as a Congressional staffer.

That case made its way slowly through the appeals process, and earlier today, the DC Circuit appeals court overturned the ruling, highlighting a bunch of Prenda's bad behavior, but (perhaps more importantly) pointing out that the subpoenas for information on these 1,000+ Does was clearly inappropriate, first because almost none of the Does appeared to live in Washington DC, and thus were outside the court's jurisdiction. Prenda/AF Holdings complete failure to do anything even remotely close to figuring out if people might be located in DC was pretty damning here:

Federal Rules of Civil Procedure 45 and 26 set forth the relevant considerations. Rule 45(d)(3)(A) requires a district court to “quash or modify a subpoena that . . . subjects a person to undue burden.” If a subpoena compels disclosure of information that is not properly discoverable, then the burden it imposes, however slight, is necessarily undue: why require a party to produce information the requesting party has no right to obtain?

And, here, the court certainly finds the discovery attempts to be "undue," because AF Holdings/Prenda could show no good faith belief that they were going after information relevant to a lawsuit in that court.

Here, we think it quite obvious that AF Holdings could not possibly have had a good faith belief that it could successfully sue the overwhelming majority of the 1,058 John Doe defendants in this district. AF Holdings concedes that under the District of Columbia’s long-arm statute, which along with the Due Process Clause governs this question... the only conceivable way that personal jurisdiction might properly be exercised over these Doe defendants is if they are residents of the District of Columbia or at least downloaded the copyrighted work in the District.... But AF Holdings has made absolutely no effort to limit its suit or its discovery efforts to those defendants who might live or have downloaded Popular Demand in the District of Columbia. Instead, it sought to subpoena Internet service providers that provide no service at all in the District. As Duffy reluctantly conceded at oral argument, AF Holdings could have no legitimate reason for objecting to the court’s quashing the subpoenas directed at these providers.... Even for those providers that do serve the District of Columbia, AF Holdings’s discovery demands were overbroad because it made no attempt to limit its inquiry to those subscribers who might actually be located in the District. It could have easily done so using what are known as geolocation services, which enable anyone to estimate the location of Internet users based on their IP addresses. Such services cost very little or are even free.

The court notes that Prenda's failure to do even the most basic things to limit discovery raises questions about its motives:

Given AF Holdings’s failure to take even these minimal steps, we cannot escape the conclusion that it sought the vast majority of this information for reasons unrelated to its pursuit of this particular lawsuit.... . Indeed, Duffy essentially admitted as much at oral argument, stating that if, as appears to be the case, 399 of Comcast’s 400 identified subscribers were found to live outside the District, “the 399 likely wouldn’t be named as defendants in this case.”

The court then checks in on the big question of "joinder" -- and whether or not it's appropriate to lump together over 1,000 totally unrelated individuals in one of these copyright trolling lawsuits. Like most courts to date, but unlike Judge Howell, the appeals court sees how problematic this is.

We are unconvinced. For purposes of this case, we may assume that two individuals who participate in the same swarm at the same time are part of the same series of transactions within the meaning of Rule 20(a)(2). In that circumstance, the individuals might well be actively sharing a file with one another, uploading and downloading pieces of the copyrighted work from the other members of the swarm.

But AF Holdings has provided no reason to think that the Doe defendants it named in this lawsuit were ever participating in the same swarm at the same time. Instead, it has simply set forth snapshots of a precise moment in which each of these 1,058 Does allegedly shared the copyrighted work—snapshots that span a period of nearly five months. Two individuals who downloaded the same file five months apart are exceedingly unlikely to have had any interaction with one another whatsoever. Their only relationship is that they used the same protocol to access the same work. To paraphrase an analogy offered by amicus counsel at oral argument, two BitTorrent users who download the same file months apart are like two individuals who play at the same blackjack table at different times. They may have won the same amount of money, employed the same strategy, and perhaps even played with the same dealer, but they have still engaged in entirely separate transactions.... We therefore agree with those district courts that have concluded that the mere fact that two defendants accessed the same file through BitTorrent provides an insufficient basis for joinder.

It's nice to see that the court picked up on many of the amicus arguments made by EFF, ACLU, Public Knowledge and Public Citizen.

Oh, and, in case you're wondering about all the other stuff, such as the Alan Cooper forgery, the court notes those allegations, while saying they are unrelated to the issues here, but, at the very end, in sending the case back to the district court, tosses this in:

Accordingly, we vacate the district court’s order and remand for further proceedings consistent with this opinion. We leave it to the district court to determine what sanctions, if any, are warranted for AF Holdings’s use of a possible forgery in support of its claim.

Filed Under: alan cooper, beryl howell, copyright, copyright troll, john steele, joinder, jurisdiction, mark lutz, misjoinder, paul duffy, paul hansmeier
Companies: af holdings, prenda, prenda law

Chutzpah: John Steele To Court: What, You Think I Would Lie, Cheat And Break The Law? Come On!

from the get-crackin' dept

Having followed the saga of Prenda Law over the past few years, one thing has become clear: John Steele really loves the "I know you are, but what am I" form of legal argument, in which whatever he's accused of, he aggressively accuses his accuser of being guilty of the same. It's a sort of faux macho move, in which every attack on him is met with an equally or more aggressive attack. To date, the strategy has failed badly, but it seems that Steele just can't let go of this kind of approach. In the latest round of the Anthony Smith case, Steele appears to be trying on a variant of that aggressive posture, taking on the very serious and direct accusations made against him (including those by multiple federal judges) and mocking them, by asking another court rhetorically, "what, do you really think I'm guilty of all these crazy things?" when the answer to that question may very well be yes.

At issue is the continuing fight over getting Steele and his collaborators, Paul Hansmeier and Paul Duffy, to actually pay up for their abuse of the legal process. Last we checked in on this particular case, the district court was finding them in contempt and piling more onto the money they would need to pay, while the appeals court does not appear to be impressed by Team Prenda's arguments, clearly calling out the "shell games" that Prenda and associated entities were playing.

While aspects of the case have been stayed during the appeal, other aspects are moving forward, including Smith's lawyer continuing to push for discovery on the actual assets of Steele, Hansmeier and Duffy. As you may recall, despite being required to provide such information, they did so in a questionable manner. As Judge David Herndon pointed out:

The Court finds that plaintiff's counsel has not met its burden. They submitted incomplete, and to say the least suspicious, statements of financial condition. Attached to each statement was a letter from their certified public accountant ("CPA"). In these letters, the CPA indicates a departure from generally accepted accounting principles. He further notes that plaintiff's counsel elected to omit substantially all of the disclosures required by generally accepted accounting principles. The Court finds these statements insufficient to establish plaintiff's counsel's inability to pay.

Since then, Smith's lawyer, Jason Sweet of Booth & Sweet, has continued to push for determining the financial position of the three individuals here. There's a sealed document which apparently hints at some shady financial dealings, but it appears to be making Steele very angry. While Paul Duffy filed a pretty empty opposition saying that he has no offshore accounts, Steele went into full on, ultra-aggressive "who me?" defensiveness in response, leading to some incredible statements, considering what multiple courts have already said about them. The classic part has to be this:

For this Court to find any act of Prenda should be attributed to Steele, the Court would have to believe that Steele lied to multiple federal judges without getting caught, committed massive tax fraud without the IRS finding out, and proactively broke into the Illinois Secretary of State’s corporate records database to hide his ownership of Prenda Law, all because of the remote chance that years later a federal judge might sanction Prenda Law for $261,000.

Except... of course, multiple judges have already claimed that Steele and the others have lied, including in this very case. In the original ruling in this case, Judge Patrick Murphy directly called out Steele for lying, saying: "These men have shown a relentless willingness to lie to the Court on paper and in person." He furthermore highlighted how it was quite clear that Steele was directly involved in Prenda, which Steele is now denying yet again. And no one is claiming he hacked into the corporate records database (though, now that he's denied it, it almost makes you wonder...), but that he was clearly in control of Prenda and received much of the money that went into Prenda.

As for the issue of the IRS, well, last we checked, at least one judge, Otis Wright, has referred their conduct to the IRS, and there are at least some indications that an investigation is ongoing. And while no one thinks they set up this shell game specifically to avoid this particular ruling, it's not difficult to see that they did so to try to avoid a series of similar court rulings, after Prenda's initial approach started getting regularly shot down in court.

Steele's response also ratchets up the ridiculous rhetoric in describing the copyright trolling shakedown business, which they copied from a bunch of other firms:

Steele and his partner, Paul Hansmeier (”Hansmeier”) were early pioneers in catching thieves and hackers who engaged in stealing copyrighted works and other computer related misdeeds, including computer hacking and copyright infringement.

Except, of course, they were neither pioneers, nor were they catching "thieves" or "hackers." Rather, by all accounts, they set up a honeypot site, uploaded their own content to it, shared it on file sharing sites, and then used the IP addresses of those who followed the release that they themselves put online, to shake them down with lawsuits and demands for settlement. The evidence on this is fairly overwhelming.

Steele tries to argue away the "oddities" the court noted in the filings made by the CPA they hired this way:

At the hearing, no reference was made to the GAAP, the Generally Accepted Accounting Rules, a set of standards designed for the financial reporting of corporations, not individuals. Steele submitted his financial statement as directed. Steele’s submissions were accurate, and no filing since has disproved any aspect of Steele’s statement

If he thinks that this will get him out of the fact that the CPA "elected to omit substantially all of the disclosures required" I would imagine he's got another thing coming.

Steele, also tries to angrily argue away the infamous Brett Gibbs spreadsheet that revealed the revenue of Prenda Law, and how 70% of it went to both Steele and Hansmeier, who have long denied being associated with that firm. Steele argues that this spreadsheet was made by Gibbs, as opposed to (as Gibbs has noted) made by Prenda and shared with Gibbs via a shared Dropbox account.

It appears that Mr. Gibbs created some accounting sheet of Prenda Law finances for some period of time prior to this case, and thus is irrelevant. Steele has no personal knowledge of Mr. Gibbs’ accounting records, methodology, or how Mr. Gibbs created his documents. According to Mr. Gibbs himself, he doesn’t either, and claims he doesn’t even know how his document came into existence. Such a document hardly comports with the Federal Rules of Civil Procedure governing admissible evidence.

He focuses on the fact that the spreadsheet is not admissible. Of course, his partner, Hansmeier, having argued basically the same thing in the past, has also suggested that the facts of the document are accurate, noting (incorrectly) that the document supports Steele/Hansmeier's position and that it was "stolen."

Related to all of this, Steele appears to still be playing games. In a separate filing, Sweet details how Steele took it upon himself to (incorrectly) inform various parties that Sweet had subpoenaed, that the stay on one part of the case meant those subpoenas were withdrawn as well. Except that they're part of a separate process, which is still ongoing. Sweet asked Steele to confirm that Steele had gone back to those third parties, and admitted that he was wrong in interfering with the discovery process. Steele did not do so, but rather sent one of his snarky emails about how he promises that he "will address your most recent round of subpoenas as appropriate."

It's been a while since Steele has done this kind of thing, but it's the same old John Steele, cocky until the very end, even as all of the evidence is against him. It reminds you of a little kid who has been caught doing something wrong but figures if he just keeps denying it over and over again, buying himself time, there will be some way to get out of it all.

Filed Under: anthony smith, brett gibbs, david herndon, jason sweet, john steele, paul duffy, paul hansmeier, sanctions, subpoenas
Companies: af holdings, ingenuity 13, lightspeed, lightspeed media, prenda, prenda law

Appeals Court Not At All Impressed By Prenda's Appeal

from the wanna-try-that-again dept

Team Prenda finally got to an appeals court on Monday and it didn't go particularly well. The appeal in the Lightspeed case, in which Judge Patrick Murphy called them out for "flat-out lying" to the court and hit them with $261,000 in attorneys' fees (a number that has been bumped up as Team Prenda was found in contempt for not actually paying) was heard on Monday, and the three judge panel in the 7th Circuit did not appear at all impressed by the arguments made by Daniel Voelker who was representing John Steele, Paul Hansmeier and Paul Duffy. You can listen to the 32 minute hearing yourself for all the fun.

It starts off almost immediately, as Voelker argues there's no basis for the district court ruling -- and is interrupted by one of the judges, noting that the court found that the case was pursued in bad faith "which stands on its own as a basis for sanctions." Voelker insists that the court "didn't rely on any record nor cite any facts" and, again, he's cut off: "well, it talks about an extensive pattern of lying and misrepresentations, and vindictive pursuit of claims that were, in the court's view, frivolous or marginal at best. And, trying to extract settlement payments before an inevitable voluntary dismissal."

In other words, within 3 minutes of the appeal hearing, the judges had made it clear that they were well-informed about the scheme Team Prenda had cooked up and why the district court had ruled the way it had. Voelker tries to slam the judge for taking "extrajudicial notice" of basically every other case where Prenda had been thumped. Of course, I don't see how that helps Team Prenda at all: to argue "please ignore my clients' record of being slammed by judges all across the country" doesn't seem very convincing. And, immediately another judge jumped in to point out that there were, in fact, statements made on the record in those other cases that contradicted what was being said in this case. The same judge immediately highlights the questionable nature of the different organizations, such as the affiliation between Prenda Law and AF Holdings, and says that of course it's reasonable for the judge to take notice of those contradictory claims.

Eventually, the judges ask about the relationship between the various organizations, including Prenda Law, Alpha Law and Steele Hansmeier ("in 25 words or less") and Voelker doesn't inspire any confidence by saying he has no ideas: "I can't your honor. I don't know, I don't know what it is today; I don't know what it was a year ago. So I wouldn't want to even begin to tell you because I just don't know." One of the judge hits back immediately:

That's shocking!

After a bit more of a back and forth she understates the situation:

There's a lot of shell game going on here.

Voelker claims this has no relevance to the issue at hand. The judges don't appear to buy it, at all, noting "this is all pretty serious conduct."

It's often a mistake to read too much into what appeals court panels (and Supreme Court Justices) say during oral hearings. Sometimes they're just testing out theories or pushing various attorneys to see how thoroughly their arguments make sense. But in this case, it seems abundantly clear that the judges are incredibly skeptical about Team Prenda's appeal.

Filed Under: 7th circuit, anthony smith, daniel voelker, john steele, patrick murphy, paul duffy, paul hansmeier
Companies: af holdings, alpha law, at&t, comcast, prenda, prenda law, steele hansmeier

Prenda Actually Wins A Round; Order To Pay Back Settlements Tossed In Minnesota

from the well-that's-unfortunate dept

For months now, we've been covering how Prenda had been losing pretty much every one of its legal fights concerning its fraudulent copyright trolling practices. I guess it was bound to happen sooner or later, but Team Prenda has bounced back with an actual victory. You may recall that one of the (many) key Prenda cases was taking place in Minnesota, where magistrate judge Franklin Noel, becoming aware of what was happening with Prenda in other courts had reopened a bunch of Prenda (via AF Holdings) cases in Minnesota to explore if Team Prenda had committed fraud upon the court. Noel dug in, demanding actual answers to various questions that Team Prenda had avoided in other cases, eventually ruling against Team Prenda and (importantly) ordering the law firm to pay back all the settlement money it had taken in via those cases.

Well, it appears that's all for nothing now. Judge Joan Ericksen has apparently stepped in to put magistrate judge Noel in his place, pointing out that he went way beyond what a magistrate judge is allowed to do and then actually siding with Prenda lawyer Paul Hansmeier in saying that the fact that team Prenda forged Alan Cooper's signatures on the copyright assignment isn't fraud on the court... and, in fact, saying that it basically doesn't matter at all. First, as to a mere magistrate judge sniffing out these problems, judge Ericksen isn't having any of it:

AF Holdings consistently objected to the magistrate judge’s authority to determine whether it had committed a fraud on the Court. The magistrate judge had no such authority. See Reddick v. White, 456 F. App’x 191, 193 (4th Cir. 2011) (per curiam) (“A motion for sanctions under the district court’s ‘inherent’ power is not a pretrial matter under § 636(B)(1)(a). Magistrate judges have no inherent Article III powers—they have only those powers vested in them by Congress. Congress has not created statutory authorization for magistrate judges to exercise inherent Article III powers.”

Furthermore, Ericksen points out that, as a magistrate judge, Noel can't really make an order like he did (which is likely accurate), but instead can just make a recommendation for a "real" judge like Ericksen to review. And Ericksen just doesn't seem concerned about the forgery, lying and other shenanigans from Team Prenda.

Cooper’s signatures were immaterial to the decision that granted AF Holdings expedited discovery.... AF Holdings’ submission of the agreements with Cooper’s signatures—legitimate or not, authorized or not—to evince the transfer of the copyrights to AF Holdings did not amount to a fraud on the Court.

It's somewhat disappointing to see a court not all that concerned that an effort that involved forgery is really no big deal, especially when it was about copyright trolling, a practice of abusing the court system to hound people into paying up to avoid having to fight a lawsuit.

That's unfortunate, but given how many other courts have ruled on Prenda's efforts and the multiple referrals to state bars, DOJ and others, I would imagine that this is merely a slight and brief reprieve for Team Prenda.

Filed Under: alan cooper, copyright, copyright trolling, franklin noel, joan ericksen, john steele, paul duffy, paul hansmeier
Companies: af holdings, prenda, prenda law

Team Prenda Slammed Again, Found In Contempt; Judge Blasts Their Attempts To Plead Poverty

from the nice-try,-guys dept

It's been a little while since we had a Team Prenda update, but suffice it to say, judges still don't seem to be buying their brand of bullshit, even as they get more and more desperate. The latest is the followup in the Lightspeed case in which Team Prenda made the incredibly poorly thought-out move of dragging Comcast and AT&T into the proceedings. Not only did Judge Patrick Murphy find that Team Prenda flat out lied to the court, he hit them with an order to pay $261,025.11 in attorneys' fees for wasting everyone's time.

Team Prenda has been avoiding paying that ever since. There was an amusing hearing back in February in which they weakly sought to justify the non-payment, first quibbling with Judge David Herndon that the original order to pay up was a "money judgment" rather than an order, in the belief that this would give them more flexibility in paying. That ridiculous argument was more or less dismissed out of hand by Judge Herndon quickly. Following that, John Steele and Paul Hansmeier specifically tried to plead poverty, arguing that they simply couldn't pay the amount. Judge Herndon said, effectively, okay: prove it. And while they filed documents that attempt to prove that, Judge Herndon is not buying it at all. In a ruling earlier this week finding Paul Duffy, John Steele and Paul Hansmeier in contempt, Herndon noted that even in filing financial statements, it appeared they were trying to deceive the court:

In the case where there has been no attempt to comply with the Court's order, plaintiff's counsel must show a "complete inability to pay." ... Plaintiff's counsel, "stated differently, . . . [has] the burden of establishing clearly, plainly, and unmistakably that compliance is impossible." ....

The Court finds that plaintiff's counsel has not met its burden. They submitted incomplete, and to say the least suspicious, statements of financial condition. Attached to each statement was a letter from their certified public accountant ("CPA"). In these letters, the CPA indicates a departure from generally accepted accounting principles. He further notes that plaintiff's counsel elected to omit substantially all of the disclosures required by generally accepted accounting principles. The Court finds these statements insufficient to establish plaintiff's counsel's inability to pay.

Given all that, he notes that Team Prenda "significantly violated an unambiguous order of the Court" and has tacked on an additional 10% to the original order, giving them until March 31st to pay up... or the amount will keep going up at $500 per attorney per day (so $1,500 more per day). After another 30 days, the amount will increase to $1,000 per attorney per day. Hansmeier is already begging for a reconsideration, but given how many times these guys have been called out for attempted deceptions in court, it seems unlikely he's going to have much luck.

Filed Under: anthony smith, contempt of court, david herndon, john steele, lightspeed, paul duffy, paul hansmeier
Companies: lightspeed, lightspeed media, prenda, prenda law

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

Court Says Team Prenda 'Flat-Out Lied' To Court; Hits Them With $261k More In Attorneys' Fees To Pay Up

from the boom dept

Another court, another set of problems for Team Prenda: Paul Hansmeier, Paul Duffy and John Steele are certainly in trouble, and the damage just keeps adding up. Following yet another big loss for Team Prenda in Illinois, in Lightspeed Media v. Anthony Smith, we noted that Prenda's ridiculous decision to sue Comcast and AT&T for failing to hand over names in that case was backfiring in a big way, since both of those companies asked for attorneys' fees as well. Duffy, Hansmeier and Steele did their usual dance: filing motions arguing that none of them did anything wrong, that the ruling should be overturned, and (of course) that there was a violation of due process because they weren't informed about these proceedings. This is basically the same crap they file every time.

Southern District of Illinois Judge Patrick Murphy is having none of that. In a scathing opinion he rips to shreds the arguments of Duffy, Hansmeier and Steele. Beyond noting the basic procedural deficiencies in their own filings (once again, they don't seem to actually understand the law and just fling as much shit at the wall as possible, and the judge clearly recognizes this), he also appears to be well aware of the larger scam Team Prenda has been pulling. There's a long discussion about the claim that Hansmeier and Steele weren't properly served, in which the judge makes it clear this is simply beyond belief. Here's just a snippet of a much longer discussion:

First and foremost, Steele’s claim that he never got notice of Smith’s motion for fees is baseless. A review of CM/ECF records reveals that notice of Smith’s motion for attorney fees (Doc. 61) went to numerous email addresses, including: docket@wefightpiracy.com—an email address used by both Steele and Paul Duffy. Therefore, it is irrefutable that Steele had actual notice of Smith’s motion for attorney fees prior to the Court’s order granting the motion.

The judge also points out the tremendous evidence that Steele, Hansmeier and Duffy are working quite closely together on all of this anyway.

Aside from being from the same firm, there is other evidence suggesting these three men worked in concert with one another. First, Duffy, Steele, and Hansmeier used each other’s CM/ECF login information, and/or filed documents on behalf of one another. For example, both Steele and Hansmeier used Duffy’s CM/ECF login information to enter their appearances, or Duffy attempted to do so for them (See Doc. 11, 15); Hansmeier also used Steele’s CM/ECF login information to file his motion to continue, or Steele filed it on Hansmeier’s behalf (Doc. 73). Second, the similarities in documents filed by Duffy, Steele, and Hansmeier indicate an ongoing relationship. For example, in the instant motions to vacate/reconsider, the three men use identical formatting from the caption, to the font, and the signature block, and the substance is largely the same...

Then, of course, there's the citation to the numerous other cases that have found against Team Prenda, and noted that those three are clearly in control. The judge also notes that even if they didn't have notice, they clearly had notice in time for a later hearing and still their filings did not state any actual grounds for relief. Basically, the judge points out that they absolutely knew about all of this, and he won't overturn the original decision because for all the shit they threw at the wall, none of it actually stuck.

But then the judge goes further. He calls them liars. He doesn't dance around it. He flat out calls them on it.

The Court also finds that Duffy, Hansmeier, and Steele exhibited a “serious and studied disregard for the orderly process of justice.” .... These men have shown a relentless willingness to lie to the Court on paper and in person, despite being on notice that they were facing sanctions in this Court, being sanctioned by other courts, and being referred to state and federal bars, the United States Attorney in at least two districts, one state Attorney General, and the Internal Revenue Service. For example, at the November 13 hearing, Hansmeier skirted the Court’s direct questions, Steele made feigned protestations, and both flat-out lied about their association with Prenda Law, Inc. in the face of documentary evidence on the record in this case, and their sworn declarations in other cases.

In the end, the judge grants all the requests for attorneys' fees, adding yet another $261,025.11 to the rapidly increasing total from other cases. I imagine it won't end there, though it's unlikely anyone will see any of that money. Instead, we're all still waiting for the main act, when the criminal charges almost certainly arrive.

Filed Under: anthony smith, john steele, lies, patrick murphy, paul duffy, paul hansmeier
Companies: lightspeed, lightspeed media, 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