Major US ISP Frontier Files For Bankruptcy, Monopolistic Apathy Isn't A Business Model.

from the ma-bell-got-the-ill-communication dept

The nation's phone companies don't really want to be in the residential broadband business. They routinely refuse to upgrade their networks despite millions in taxpayer subsidies, yet often lobby to ensure nobody else can deliver broadband in these neglected footprints either. US telcos have a bizarre disdain for their paying customers, delivering the bare minimum (slow DSL) at the highest rates they can possibly charge without a full-scale consumer revolt. It's not surprising, then, that many telco DSL customers are fleeing to cable broadband monopolies like Comcast, assuming they even have the choice.

The poster child for this kind of dysfunction has long been Frontier Communications. Frontier, the third biggest telco in the U.S., has been repeatedly busted in a series of scandals involving substandard service and the misuse of taxpayer money. In States like West Virginia, leaders have buried reports exposing the depth of Frontier's grift, and, until recently, a Frontier executive did double duty as a state representative without anybody in the state thinking that was a conflict of interest. The company has since been under investigations from New York to Minnesota for failing to upgrade or even repair its aging network.

This week, Frontier finally filed for bankruptcy, hoping to finally wipe the slate clean after several decades of bungled and ill-advised mergers, massive debt, and operating a business model where snide neglect was the centerpiece. Of course the company's announcement can't acknowledge any of these self-inflicted gunshot wounds, with Frontier insisting it has learned its lesson:

"With this agreement with our Bondholders, we can now focus on executing our strategy to drive operational efficiencies and position our business for long-term growth,” said Bernie Han, President and Chief Executive Officer. “At the same time, the COVID-19 pandemic continues to impact the entire business community, and our team is focused on ensuring the health and safety of our employees and customers. The services we provide to our customers keeps them connected, safe and informed, and I would like to thank our team for their continued dedication, especially in light of the current environment."

But nobody has learned any lessons here. Frontier engaged in mindless mergers and growth for growth's sake, refused to upgrade vast swaths of its network, and then ran to government (read: lobbying) shelter when the house of cards started to fall apart. And while it acknowledged in a report to investors that mindless M&A and under-investing in its network was a part of the problem, investors generally like network under-investment and mindless M&As because they're profitable on the short term.

There are a few simple reasons the U.S. has mediocre to terrible broadband, and contrary to conventional wisdom the problem isn't logistics, geography, financing (we've thrown billions upon billions the the problem) or the difficulty in deploying it. The problem is the entire U.S. system is built to reward short term thinking and punish long term vision, especially as it pertains to unsexy things like infrastructure. Well that, and powerful telecom monopolies that all but own state and federal legislatures and most regulators, ensuring that real disruption and competition rarely takes root.

Filed Under: bankruptcy, broadband, competition
Companies: frontier, frontier communications

After Years Of Scandal And Incompetence, US Telco Frontier Files For Bankruptcy

from the ill-communication dept

We've long explored how the nation's phone companies don't really even want to be in the residential broadband business. They routinely refuse to upgrade their networks despite millions in taxpayer subsidies, yet often lobby to ensure nobody else can deliver broadband in these neglected footprints either. US telcos have a bizarre disdain for their paying customers, delivering the bare minimum (slow DSL) at the highest rates they can possibly charge without a full-scale consumer revolt. It's not surprising, then, that many telco DSL customers are fleeing to cable, assuming they even have a second broadband option.

This dynamic often results in some absurd dysfunction. Like in West Virginia, where incumbent telco Frontier has repeatedly been busted in a series of scandals involving substandard service and the misuse of taxpayer money. The graft and corruption in the state is so severe, state leaders have buried reports, and, until recently, a Frontier executive did double duty as a state representative without anybody in the state thinking that was a conflict of interest. The company has since been under investigations from New York to Minnesota for failing to upgrade or even repair its aging network.

Not too surprisingly, this combination of apathy, incompetence, and corruption is not particularly sustainable. Last week, Frontier announced it would be exploring a bankruptcy sometime in March. That's thanks in no small part to $16.3 billion in debt it accumulated from buying Verizon's unwanted DSL networks in numerous states as part of a "growth for growth's sake" mindset that involved rampant expansion, and then neglecting the acquired territories. Shockingly, angry customers then fled to the exits, only compounding Frontier's problems:

"Frontier has been losing customers and reducing its staff. Its residential-customer base dropped from 4.15 million to 3.81 million in the 12-month period ending September 30, 2019, including a loss of 90,000 customers in the most recent quarter. Also in that 12-month period, Frontier's business-customer base declined from 422,000 to 381,000."

The bankruptcy comes on the heels of a similar bankruptcy filing by Windstream Communications. Windstream, too, engaged in a "growth for growth's sake" mindset that involved hoovering up government subsidies, acquiring network assets it refused to upgrade, then blaming everything but its own behavior as neglected customers fled for the exits. Once the debt is wiped from the books for both companies, the cycle will just start all over again thanks to US lawmakers that simply refuse to hold politically-powerful telecom giants accountable.

The failure of US telcos may not be great for residential broadband, but it's wonderful news for the nation's equally-despised cable companies, which have been quietly securing an even greater monopoly over broadband across countless US markets, meaning higher prices for everybody -- even if you've never paid a dollar to a US telco. The resulting climate of regulatory capture and muted competition is a major reason you all pay an arm and a leg for substandard service. And no, contrary to industry claims, 5G wireless isn't going to magically fix a corruption and competition problem few in tech or telecom want to seriously address.

Filed Under: bankruptcy, broadband, competition, dsl
Companies: frontier communications

Bob Murray, Who Sued John Oliver For Mocking His Support Of Trump's Plan To Bring Back Coal Jobs... Files For Bankruptcy

from the eat-shit-bob dept

Remember Bob Murray? If you don't, then I highly recommend you go back and watch this 2017 episode of John Oliver's show in which he calls out Bob Murray, as a Trump-supporting coal boss, who pretends to be all about "protecting workers," and who insists that the election of Donald Trump will help save coal miner jobs.

Murray then, famously, sued John Oliver and HBO in what was obviously a totally ridiculous SLAPP suit. He even tried to get a gag order on Oliver and HBO, to stop him from even talking about the lawsuit. The lawsuit did not go well for Bob Murray, though Murray took the somewhat amazing step of directly sending the judge a whiny letter about how people are being mean to him. The judge was not happy (parties in a case are certainly not supposed to be reaching out to the judges in their case directly).

But at least Murray had the Trump administration and all those coal jobs he was going to bring back to save the coal industry, right? Oh, about that. Murray Energy has just declared bankruptcy and is being handed over to investors who are loaning it money to keep the business going.

Robert E. Murray, the U.S. coal baron who pressed the Trump administration to help save America’s struggling miners, placed his company into bankruptcy as demand for the fossil fuel continues to weaken.

Murray Energy Holdings Co. filed for Chapter 11 protection in the U.S. Bankruptcy Court in Columbus, Ohio, to restructure more than $2.7 billion of debt. The miner -- the largest privately owned U.S. coal company -- reached a restructuring support agreement with lenders who hold more than 60% of a $1.7 billion loan, the company said in a statement. The deal provides a new $350 million loan to keep operations going during the reorganization.

Of course, this shows yet another way in which Oliver's story about coal jobs was largely true: in that he noted that the decline in coal jobs in the US was a long, ongoing process, having little to do with any particular presidential administration, but the natural end result of a shift in energy sources, combined with new mining techniques and efficiencies.

Perhaps rather than suing his critics (he sued a number of other news organizations as well) and running fundraisers for Trump or appearing on TV as a Trump supporter, Murray should have been focused on actually helping his company and its employees adapt for the future?

Filed Under: anti-slapp, bankruptcy, bob murray, coal, coal jobs, defamation, john oliver, slapp
Companies: murray energy

US Telcos Teeter Toward Bankruptcy As Comcast's Broadband Monopoly Grows

from the dysfunction-junction dept

We've noted time and time again how the US broadband industry's biggest problem is a lack of healthy competition. In countless markets consumers either have the choice of a terrible phone company or a cable giant. The nation's phone companies have spent the last decade refusing to upgrade (or in some cases even repair) their aging DSL lines, because they don't see residential broadband as worth their while. That in turn is giving giants like Comcast and Spectrum an ever greater monopoly in many markets, reducing the already muted incentive to compete on price or shore up historically terrible customer service.

It's a weird problem that's widely ignored by both parties, and it just keeps getting worse. This week, US telco Windstream filed for bankruptcy protection, partially thanks to a dispute with one of the company's creditors, netting a $310 million settlement Windstream couldn't swallow. More specifically, hedge fund Aurelius Capital Management had argued that a two-year-old spinoff of the company's fiber-optic cable network violated the covenants on one of its bonds, prohibiting "sale-leaseback transactions." The court agreed.

Windstream, for its part, issued a statement insisting that none of this was the company's fault, and that the bankruptcy protection wouldn't impact customers:

"Windstream did not arrive in Chapter 11 due to operational failures and currently does not anticipate the need to restructure material operations,” Thomas said. “While it is unfortunate that Aurelius engaged in these tactics to advance its returns at the expense of Windstream, we look forward to working through the financial restructuring process to secure a sustainable capital structure so we can maintain our strong operational performance and continue serving our customers for many years to come."

But Windstream's inability to swallow the court ruling comes directly from the company's already shaky footing.

Windstream was already $5.6 billion in debt and, like many US telcos, stuck in a cycle of dysfunction. Customers continue to flee to cable competitors at an alarming rate, because the telco often refuses to seriously upgrade its DSL lines to fiber at any real scale. And it can't upgrade its DSL lines to fiber at any scale because customers are leaving at an alarming rate, draining their coffers. Watching these companies (and a few oddly bullish investors) pretend this ends well for anybody involved has often been a comedy of errors.

Windstream isn't alone; telco giant Frontier has also been perched precariously on this cliff for the last few years. Our collective bipartisan reaction to this has been to throw a few million in subsidies at the problem and hope the regulatory capture and other obvious sector problems just magically fix themselves. The problem is so bad, many towns and cities have been forced to build their own broadband networks, something that's immediately vilified as "socialistic" by the same industry whose greed, apathy, and incompetence caused the problem in the first place.

None of this stuff sees much interest in the broader tech sector, but it should.

As vertically-integrated cable giants like Comcast and Spectrum enjoy even greater monopolies over internet access at modern speeds, it has a trickle down impact on the internet ecosystem as a whole, especially in the wake of the death of net neutrality. Comcast's growing power opens the door to broader anti-competitive behavior unchecked by neither regulatory oversight nor healthy competition, impacting all of the smaller businesses hoping to compete for mindshare. Some like to claim that 5G will be some magical panacea that comes in and provides a competitive counterbalance to this dysfunction, but we've noted how that's not likely for a wide variety of reasons.

Natural monopolies dominating the on ramp to the internet and much of the content doesn't end well for anybody in the ecosystem, especially given America's comic inability to enforce antitrust. The broadband industry's issues are a problem that exponentially impacts everything on the internet, yet it's a problem we continue to turn a blind eye to in the hopes it will all just magically sort itself out.

Filed Under: bankruptcy, broadband, cable, competition, dsl
Companies: comcast, windstream

Things Looking Even Worse For Prenda's Paul Hansmeier: Bankruptcy Fraud On Deck

from the welcome-to-the-big-leagues dept

So, let's just say that things probably haven't been looking very good for Prenda's Paul Hansmeier lately. Obviously, there was a long series of legal losses in the Prenda and Prenda-related cases, but those are in the distant past now. Back in September, he lost his law license for some of the Prenda copyright trolling activities (if you haven't been playing along, Prenda set up their own honeypots with their own films --which they pretended were some other company's, filed bogus CFAA charges to try to get IP addresses, demanded cash from people to drop lawsuits, lied in court multiple times and more...). Then, in December, the two main players: John Steele and Hansmeier were finally indicted and arrested. Then, just a couple weeks ago, Steele took a guilty plea, making it clear he's thrown Hansmeier under the bus and will testify against him (given the history of Steele throwing many others under rapidly approaching buses, this is no surprise).

So... that's not a really good position to be in. But it may be getting worse. As you may recall, in July of 2015, after a number of cases went against Prenda, and Steele and Hansmeier were told to pay large sums of money in opposing legal fees and sanctions, Hansmeier declared bankruptcy. Except, as with so much related to Hansmeier, that was a disaster too. It got so bad that Hansmeier's own lawyer admitted to the court that "he's a bad actor." As the bankruptcy process wore on, it became apparently worse. Turns out that he denied a certain trust fund was under his control, but that wasn't actually true. Oh and also more shell companies. Oh, and also $180,000 in cash hidden under his bed. As we noted all the way back in 2015, even before all of this came out, bankruptcy fraud is a bad idea.

And now, according to some of the latest filings in Hansmeir's bankruptcy case (also submitted in his criminal trial), Hansmeier admits that he's aware he's being investigated for bankruptcy fraud as well (ht: SJD):

Oh, and back in December it was reported that the FBI was also investigating his ADA trolling efforts. So that makes him indicted for Prenda and under investigation over more potential (serious) issues for doing more Prenda-like activities with the ADA and then also for bankruptcy fraud. As Paul Hansmeier himself once said in an angry threat letter: "welcome to the big leagues." Amusingly, that was in a letter to a critic threatening litigation for daring to suggest that Hansmeier had been involved in criminal activities.

Oh, and that's not all. Also via SJD, we find out that the trustee in the bankruptcy case, noting the indictment, has been asking Hansmeier to "waive his discharge" (effectively forcing Hansmeier to remain in bankruptcy, rather than being able to discharge his debts). The trustee (who is, somewhat amazingly, a former law school classmate of Hansmeier's) sent Hansmeier an email to this effect, noting that assuming Hansmeier would invoke the 5th Amendment in his criminal case, that will "allow the bankruptcty court to draw numerous adverse inferences against you."

Ouch. The document below, in which Hansmeier reveals the bankruptcy fraud investigation, is actually part of his effort to have the bankruptcy court to hold off on these proceedings while all this other stuff gets taken care of. But, even if he weren't facing criminal charges where his partner in crime has already admitted everything and agreed to testify against him, and even if he weren't also facing separate investigations over bankruptcy fraud and ADA trolling, it appears that Hansmeier's bankruptcy case is getting even worse than it was before. This is beyond big leagues. This is beyond the All-Star game. This is truly Hall of Fame material.

Filed Under: bankruptcy, bankruptcy fraud, doj, fbi, paul hansmeier
Companies: prenda, prenda law

Car-Freshener Wields Little Trees Trademark To Bankrupt Non Profit That Helped Ex-Cons And Recovering Addicts

from the nice-job-assholes dept

Back in August, Mike wrote about a trademark case between Car-Freshner Corp., the company that makes those ubiquitous tree-shaped air-fresheners, and Sun Cedar, a tiny non-profit that made real-wood fresheners while employing at-risk folk in the form of the homeless, ex-cons and recovering addicts. It was a strange case for any number of reasons, including the dissimilar appearance between the product of the two companies, the wide delta of size of the two companies, and the very nature of the work Sun Cedar was attempting to do as a social good. Sadly but unsurprisingly, Car-Freshner trotted out the excuse that it had to sue this small non-profit or risk losing its trademarks.

And now it seems like, rather than working out some other kind of arrangement that would have allowed Sun Cedar's good work to continue, the trademark dispute has resulted in the end of the non-profit entirely, at least in its current iteration. Even with an attorney agreeing to represent the non-profit for free, the costs of taking on the suit in far-off NYC simply killed the whole operation.

Mediation efforts between Sun Cedar and Car-Freshner were unsuccessful and last month Sun Cedar filed for Chapter 7 bankruptcy. Its shop, a converted garage, now sits idle. The equipment Adams purchased will be sold to pay off Sun Cedar’s debts.

“A disappointing aspect to me about this case was that this could not have been achieved through coexistence, that we couldn’t resolve this through the parties just talking and settling this,” [attorney] Schwimmer says.

The post then goes on to trot out the aforementioned preferred excuse for this kind of trademark bullying: Car-Freshners had to torpedo this small non-profit employing the otherwise unemployable, because otherwise it might lose its trademark rights. This isn't true. And, to the post's credit, it goes on to quote Cheryl Burbach, a trademark attorney not involved in the case, thusly:

“I have a friend who always says infringers are just business partners you haven't met yet. I can’t take credit for that, but I think it’s a very apt statement,” Burbach says.

Of course it is! Car-Freshners could have looked at the good work Sun Cedar was doing and chose to make them a business partner, rather than a corporate ghost. It could have cheaply licensed Sun Cedar's production, even working out an arrangement to promote them via the license, building some good-will with the public on the back of Shine Adams' philanthropy. And, even that wasn't necessary, because as was explained in the original post on this case, it's pretty clear that (1) Sun Cedar didn't infringe and (2) Car-Freshener's trademarks very likely are invalid. But, Car-Freshener has a history of trademark bullying and it kept it up here. Instead of letting this non profit continue doing good work, Sun Cedar is bankrupt and, according to its website, desperately trying to start all over again, thanks to a view in the trademark realm that sees attack as the only option.

This, because a non-profit tried to get ex-cons and recovering addicts to make tree-shaped wood air fresheners. Great.

Filed Under: bankruptcy, car fresheners, little trees, trademark
Companies: car-freshener, sun cedar

Gawker Files For Bankruptcy, Begins Process Of Auctioning Itself Off

from the peter-thiel-gets-a-notch-in-his-belt dept

No matter what you think of Gawker, this is unfortunate news. The company has officially filed for Chapter 11 bankruptcy and begun the process of auctioning off its assets. Chapter 11 is an attempt to restructure debts (which include -- mostly -- the ~$130 million owed to Hulk Hogan after venture capitalist Peter Thiel funded Hogan's questionable lawsuit against Gawker). You can read the bankruptcy petition, but this is the main thing you need to know: Yeah, that's the beginning of the list of their 20 largest creditors and it starts with Hogan's "disputed" $130 million... and second place is some lawyers for $115k. So we're talking a pretty big difference from the number 1 creditor to the number 2 creditor. Of course, as with many Chapter 11 bankruptcy filings, this is more about process than substance. The filing potentially lets Gawker stop the process on some other things and explore the various alternatives, including a fairly likely sale to another player. It doesn't mean that the company is shutting down. Update: Apparently the plan is for Ziff Davis to buy Gawker, though others could potentially get into the bidding.

Either way, this is still unfortunate. Even if you believe the Hogan case was justified (and I think you're wrong about that), we should still be concerned when a billionaire basically sets out to destroy a media organization through a variety of lawsuits (many of which appear to be extremely questionable).

What if the next billionaire who gets upset about coverage targets a publication you do like? And don't say that it won't matter if that publication doesn't do anything wrong. Just the lawsuits alone can kill a company. And, even worse, the threat of lawsuits may create a massive chilling effect on what companies publish and how they go about their reporting. And disagree with Gawker's decisions and tactics all you want, the company did break a ton of important news stories. While this does not mean the end of Gawker, it's certainly the crippling of Gawker, and that should be a concern for anyone who believes in a free and open press.

Filed Under: bankruptcy, chapter 11, free press, hulk hogan, lawsuits, nick denton, peter thiel
Companies: gawker

Prenda's Paul Hansmeier Continues To Win Enemies, Influence Legislators With His ADA Trolling, Hiding Of Assets

from the too-bad-he-can't-monetize-the-hate-he's-earned... dept

Everyone behind the failed clown school that was Prenda Law deserves what's happening to Paul Hansmeier. Unfortunately, it appears Hansmeier is taking the most damage from the fallout of Prenda's disastrous copyright trolling… or at least he's the one doing most of his suffering in public.

Of course, it's his own fault. Rather than get out of the trolling business, Hansmeier doubled down. He swapped porn stars for wheelchairs, pursuing small businesses for Americans with Disabilities Acts violations. Fronting as a public interest, Hansmeier's "Disabilities Support Alliance" is every bit the serial litigant Prenda was.

Now, it's falling apart. As is Hansmeier himself. He's currently facing possible disbarment for his participation in Prenda's fraudulent behavior. He just lost one of his lawsuits against a Minnesota landlord for bogus ADA violations -- one out of more than 100 lawsuits he's filed against small businesses in the area. If Hansmeier's asked to cough up legal fees, one wonders where he'll find the money.

I suppose he might find some cash in the "trust" he claims handles his finances without his direct intervention. (Court filing via Fight Copyright Trolls)

According to the Trust Agreement:

a. the beneficiaries of The Mill Trust are Hansmeier’s parents, siblings, future spouse and any future descendants;
b. The Mill Trust is an irrevocable trust;
c. the trustee, Browne, had the sole discretion, subject to Hansmeier’s right to veto, to distribute the assets of The Mill Trust for the benefit of the beneficiaries; and
d. the Trust Agreement is executed by Hansmeier as “grantor” and Browne as “trustee” on December 28, 2010.

"Browne" is Padraigin Browne, Hansmeier's wife. Browne has apparently been moving money out of bank accounts and into this trust -- supposedly to handle "personal expenses." Quite obviously, the moves are being made to keep money from being rerouted to pay off judgments from Prenda's misdeeds and debtors seeking compensation. Hansmeier recently filed for bankruptcy, hoping to shield his assets from being seized/sold to pay Prenda judgments.

So, his cash -- sitting in bank accounts where it could be seized -- is being moved to his trust. (Hansmeier is also apparently using a Scottrade account and a shell entity ["Alpha Law Firm"] to keep his funds from being seized to pay off ~$400,000 in judgments. The "Monyet" name attached to the Scottrade account is another shell company.)

After Hansmeier had transferred $175,000 into the TCF Bank account held solely in Browne’s name (the “TCF Account”), Browne contacted TCF Bank and made arrangements for a TCF Bank branch to have $150,000 of cash on hand so that Browne could make a $150,000 cash withdrawal. Browne then went to the bank on December 13, 2013 and withdrew $150,000 in cash from the TCF Account.

[...]

On February 7, 2014, Hansmeier transferred an additional $70,000 from the Monyet Scottrade Account to the TCF Account.

Browne, after checking with TCF Bank to see what would be an appropriate amount that the bank branch would have “on hand” without making pre-arrangements, began to withdraw additional cash from the bank in $2,000 increments.

In the months of February-March, 2014, Browne withdrew at least $28,000 in cash from the TCF Account. She had also withdrawn $2,000 in cash from the TCF Account in November of 2013.

What Hansmeier refers to as "The Mill Trust" is actually something commonly utilized by small-time drug dealers and the lower rungs of the mob's organizational chart.

Those cash withdrawals, when added to the $150,000 in cash already hidden at Browne and Hansmeier’s home, resulted in a total of approximately $180,000 in cash hidden in a box at the home shared by Hansmeier and Browne.

The court has been unimpressed with Hansmeier's behavior so far. The following order was issued before his Cardboard Box In A Closet Trust came to light. (This opinion also provided by Fight Copyright Trolls.)

The debtor further argues that if he succeeded on the merits of the Claim Objections he would have been in a position to confirm a plan that paid 100% to general unsecured creditors, with interest. The deadline for filing claims is April 22, 2016, so there is no way of knowing at this point what the total claims will be in the case. To date a total of $2,493,510.17 in claims have been filed. Of that amount, $1,612,731.94 was the subject of the Claims Objections. Assuming for purposes of this motion only that the Claim Objections were sustained,2 the total claims would be reduced to $880,778.23.3 The debtor offered no evidence that he would have had non-exempt cash to fund an immediate payment of claims in full at the time of the conversion. Thus, the debtor would have to pay the claims over time with interest through his plan. The debtor is currently the subject of a disciplinary proceeding, the result of which could result in the suspension of his license to practice law or disbarment. The debtor has offered no evidence as to how he would fund plan payments if he is no longer licensed to practice law, which is his source of income.

The debtor asserts that the court’s decision to convert was based on prepetition conduct, a desire to punish the debtor for that prior conduct and an attempt to deny him a fresh start. While the court did recite rulings by numerous courts across the country that have found the debtor engaged in serious misconduct before those courts, and had been sanctioned for that conduct, those rulings merely established the background for the court’s finding that the debtor has continued his pattern and practice of being untruthful. The debtor’s misconduct did not stop when he filed his bankruptcy petition. Rather, the court found that the debtor had filed misleading or false documents in this case and provided potentially false testimony at his Rule 2004 examination.

Add to this the fact that Minnesota legislators -- backed by the small businesses Hansmeier has pursued for dubious ADA violations -- are now attempting to shut down Hansmeier's new money train.

Rowland, who says her restaurant was in compliance with the disability access requirements, says she eventually settled the lawsuit for $8,500 to avoid paying even more in legal fees.

“This is someone taking advantage of a very big loophole in our legal system,” Rowland said. She testified before state lawmakers Thursday as lawmakers introduced a law that seems to be aimed directly at attorneys like Hansmeier.

One lawmaker even joked, “The suggestion was made that we make this the Paul Hansmeier Act.”

The Minnesota Chamber of Commerce worked on the bi-partisan legislation with the Minnesota State Council of Disability and the Human Rights Department.

“We're really just trying to limit some of the litigation lawsuit abuse that's been occurring,” Chamber of Commerce Vice President Beth Kadoun said.

The legislation would give businesses at least 30 days to respond to lawsuits, shift the burden of proof in some cases to those filing the lawsuit and restrict attorneys from demanding immediate settlements.

Hansmeier appears to be hiding the assets he does have and presumably is attempting to pay off his debts by intimidating small businesses into lowball settlements. If he's disbarred -- or if the legislation passes -- his sole revenue stream will dry up. Then what?

The first step is already in place. Hansmeier has been ordered to liquidate his assets. His appeal motion to stay Chapter 7 conversion pending appeal has failed and the judge presiding over his bankruptcy case is no more receptive to Hansmeier's actions than the judges presiding over the tail end of the Prenda debacle.

The debtor has refused and continues to refuse to disclose complete and accurate financial information. The debtor has dissipated over $80,000 in estate assets since the case was filed. Other courts have already found that the debtor exhibits a “serious and studied disregard for the orderly process of justice” and “a relentless willingness to lie to the court on paper and in person.”

There's certainly more to come in the next few months. Hansmeier hasn't shown any interest in scaling back his trolling efforts and seems to be hellbent on pissing off every judge he appears in front of. He's likely going to end up without a license to practice law -- which appears to be his only marketable skill. And it's a skill he can't wield without being abusive and dishonest.

Might as well fire up another batch of Orville Redenbacher's Schadenfreude-Flavored Gourmet Popping Corn and settle in. For a steady stream of updates, I wholeheartedly recommend following Sophisticated Jane Doe and the Minneapolis Star-Tribune's Dan Browning, from whom much of the above has been sourced. For additional entertainment, Hansmeier himself has rather belatedly joined Twitter, although most of his posts are just self-interested hashtag ADA lawsuit spam.

Filed Under: ada, bankruptcy, hiding assets, padraigin browne, paul hansmeier, trolling
Companies: alpha law, mill trust, monyet, prenda, prenda law

After Even His Own Lawyer Admits Prenda's Paul Hansmeier Is A 'Bad Actor,' Bankruptcy Court Liquidates His Assets

from the found-jesus? dept

It's not been a good year for Paul Hansmeier, the Prenda attorney-turned-"ADA Champion." He's been hit with counter-claims on his Americans with Disabilities Act (ADA) lawsuits which claim thousands in damages from local companies despite no actual issues. This was followed in May by an appeal hearing on Judge Wright's infamous Star Trek order where after summing up the Prenda business model 9^th circuit Appeals Judge Pregerson called it an "Ingenious crooked extortionate operation."

Then in August, one of the three central figures in the Prenda saga, Paul Duffy, died, moving the focus more squarely onto Hansmeier and Steele. Finally, just over two weeks ago, the Minnesota Law Board started proceedings to disbar him, meaning his ability to continue as a lawyer at all would be in jeopardy.

Amongst all that, in July Hansmeier filed for Chapter 13 bankruptcy (RECAP docket), seeking to repay his debts (many of which are damages and costs from various Prenda cases nationwide) totaling $2.43 million via installments. Under US Bankruptcy law, a person owed money by someone in Chapter 13 proceedings cannot start or continue collection proceedings, so for Hansmeier, it would have been a neat way to push payment of these debts down the road, while paying them off at a fraction of their value. (His proposed plan would have paid off a maximum of $161,400 in monthly installments of $2,690 across 5 years legal maximum at which point all debts would be discharged and considered paid.)

However, petitions by the creditors (those who are owed money) pointed out in motions leading up to a December 3rd hearing at the United States Bankruptcy Court for the District of Minnesota that he had shown he was not trustworthy. "The argument that somehow there's going to be a payment in full, your honor, just doesn't ring true," Michael R Fadlovich, the attorney representing the Bankruptcy Trustee is reported to have said.

Even Hansmeier's lawyer admitted "he's a bad actor," but claimed "he'd found Jesus," although given the number of Does filed against, it's entirely possible Jesus was found by their speculative invoice letters. She also claimed that the sale of Hansmeier's downtown Minneapolis condo for $1.2 million would have provided a rare chance to have his debts mostly paid off, despite figures submitted by the trustee that indicate less than $90,000 would be realized by the sale.

Nevertheless, U.S. Bankruptcy Judge Kathleen H. Sanberg was not swayed, converting the proceedings from Chapter 13 to Chapter 7, and requiring a liquidation of assets to pay, while any money left from the sale of the condo goes towards the debt fund. However, the court is not yet finished with Hansmeier. Numerous lawyers (representing creditors) highlighted a number of suspicious money transfers, possibly to hide assets, as other judges have already discovered. At issue was his constant dishonesty with courts, in this proceeding and others, which the judge sided with. While further actions are coming, Hansmeier has to now be very careful, as bankruptcy fraud is an imprisonable offense, and investigated by the FBI who are presumably already well aware of Mr. Hansmeier courtesy of Judge Wright.

It seems that Hansmeier's 'luck' has just about run out.

Filed Under: bankruptcy, chapter 13, chapter 7, fraud, liquidation, paul hansmeier
Companies: prenda, prenda law

Virginia Court Says Domain Names Are Not Property

from the so-can-they-be-seized? dept

There's an interesting blog post by Venkat Balasubramani about a little noticed ruling in Virginia from last year concerning a bankruptcy proceeding, which came to the conclusion that domain names are not property, but rather a contractual right. The ruling is somewhat specific to the bankruptcy context, but basically says that phone numbers and domain names are not really property:

Although the Fourth Circuit has not specifically addressed this issue, it is well-settled that the contours of the property interests assumed by the trustee are determined by state law.... Accordingly, Appellant cites the Virginia Supreme Court's relatively recent decision in Network Solutions, Inc. v. Umbro International, Inc. for the proposition that a judgment debtor has no property right in its telephone numbers and web address. In Network Solutions, the Virginia Supreme Court held that a web address and telephone number could not be garnished by a judgment creditor because the debtor lacked a property interest in them... (stating that "a domain name registrant acquires the contractual right to use a unique domain name for a specified period of time" and that a domain name is not personal property, but rather "the product of a contract for services").

In the absence of controlling Fourth Circuit precedent, this Court refers to Network Solutions to define a debtor's property interest in its web address and telephone numbers in Virginia. Although ACG argues that Network Solutions is distinguishable because it relates to a garnishment proceeding rather than a bankruptcy, the garnishment context does not change the Network Solutions court's holding that the use of a domain name is a "contractual right" that does "not exist separate and apart from [the provider]'s services that make the domain names operational Internet addresses." ... While telephone numbers and web addresses are important branding tools and certainly have value to those who use them, that subjective value does not equate to ownership under Virginia law. The Virginia Supreme Court confirmed in Network Solutions that neither telephone numbers nor domain names were wgarnishable personal property because "neither one exists separate from its respective service that created it." ... Therefore, because Virginia does not recognize an ownership interest in telephone numbers and web addresses, neither were property of Alexandria International's estate and neither were subject to sale by the trustee (nor would they be subject to sale in any future proceeding).

Venkat looks at what this means from a bankruptcy context and concludes probably not that much... But I'm wondering what it means when it comes to domain name seizures done by Homeland Security and its ICE division. Those were all based on laws concerning the ability to seize property supposedly used in the commission of a crime. Yet... if domains aren't property, can they be seized in this manner? While this ruling only applies to the state of Virginia, since .coms are registered via VeriSign, and VeriSign is based in Virginia, an argument can be made that all .coms are not "property" under this ruling. That, potentially, leads to a whole host of other problems, so I wouldn't jump to the conclusion that this is automatically a good thing. But it conceivably leads to another way for cites that are seized by the US government to fight back.

Filed Under: bankruptcy, domain names, property, virginia