Illinois Attorney Discipline Board Finally Moves Against Prenda Mastermind John Steele

from the going-down dept

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The misconduct here included:

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

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

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

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

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

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

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

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

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

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

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

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