Team Prenda Has A Very Bad Day In Court... And You Can Watch It All

from the make-sure-to-bring-lots-of-popcorn dept

It has been almost exactly two years since Judge Otis Wright released his blistering opinion of Prenda Law and the guys behind it, John Steele, Paul Hansmeier and Paul Duffy ("Team Prenda"). There have been various fights here and there since then, but the specific appeal in that case was finally heard yesterday and you can (and should) watch the whole damn thing (which runs almost exactly an hour and a half -- though if you're short on time, you can skip the Morgan Pietz part, and just focus on the first and last parts involving Team Prenda's lawyer, Daniel Voelker). If you follow a lot of appellate case or Supreme Court cases, you should know that it's generally not a good idea to read too much into any particular line of questioning, or even to assume which way judges are leaning. In this case, however, it would be nothing short of shocking if Team Prenda comes out of this story "winning" -- though, in an astounding bit of what appears to be cluelessness, Voelker said that Team Prenda would be perfectly happy having part of the case sent back to the lower court for criminal contempt sanctions. The three-judge panel seemed so shocked by this, that they asked him if he was sure, and one judge, Judge Tallman, pointed out:

"Do you understand that the maximum penalty for contempt is life imprisonment?"

In short, Team Prenda's own lawyer not only seemed completely unprepared and out of his depth in the hearing, he ended up arguing that rather than just pay $250,000, his clients would prefer to face criminal charges with the chance of life in prison (though, admittedly, such a sentence would be highly unlikely). From all indications, all three judges seem prepared to give Team Prenda what their lawyer appeared to be claiming they wanted.

There were many guffaw-worthy moments throughout the arguments, including Judge Tallman asking about the infamous Alan Cooper forgery, and Voelker playing really dumb, leading Tallman to ask if the "tooth fairy" made the document appear. Judge Tallman also repeatedly pointed out, in disbelief, that Voelker could assert that his clients had no idea how the document got forged when Cooper was Steele's "gardener" (actually housekeeper, but close enough).

All three of the judges seemed well aware of what Team Prenda was up to and how nefarious copyright trolling is. Judge Pregerson, who is 91 years old, talked about how his clerks explained to him how BitTorrent works, and then pretty clearly detailed how Team Prenda (and other copyright trolls) abuse the court system to "extort" settlements from end users. He concludes his description by saying, "Now that is just an ingenious... crooked, extortionate operation." Later he said, "They used our court system for illegal purposes -- to extort money." At least one of the other judges, Judge Nguyen referred to copyright trolling as "extortion" as well. The judges didn't refer to Prenda as a company or a law firm, but rather an "operation." It was a complete bloodbath. The judges also seemed well aware of other Prenda proceedings elsewhere in the country as well.

Basically, the judges seemed not just aware of, but very convinced by the evidence against Prenda's copyright trolling practices. Much of the opening part of the arguments consisted of the judges asking Voelker about those facts -- and Voelker dodging every one of those questions or responding that he didn't know, and then going back to procedural questions. The three-judge panel all found this completely unconvincing, and even where they were willing to grant potential procedural problems (mainly with the punitive sanctions on top of attorneys' fees), noted that if they rejected those, at the very least they were likely to (as mentioned above) just send the case back for criminal proceedings, which almost certainly would leave Team Prenda even worse off. Voelker's standard response: "They want their day in court." It sounds like they might get it.

There were two other really amazing tidbits, both from Judge Pregerson. First, right after describing the whole copyright trolling mess and (as noted above) calling it a "crooked, extortionate operation," he noted how historic this case was and how badly it was going to reflect on Voelker, even suggesting that Voelker may be implicated directly as well:

Pregerson: This is going to be written about for years and years, and you're probably going to be part of the story. They all will be. I don't know where this is going to end up. If they really want to have a trial on this... are you sure they want that?
Voelker: Absolutely your honor! They want a trial...
Pregerson: Is that what you want?
Voelker: Your honor, what I want is irrelevant. I'm just an appellate attorney. I'm not...
Pregerson: Well, you may be involved in this.
Voelker: I'm sorry your honor?
Pregerson: You may be involved!
Voelker: I don't believe so, your honor, with all due respect. I'm just the attorney.

And then that leads into this astounding bit of courtroom drama:

Pregerson: And you're a great lawyer.
Voelker: I really appreciate that.
Pregerson: That's what your ad says when you go on the internet, right? I wonder how many "super lawyers" there are in this country?
Voelker: There are a lot of them.
Pregerson: There are a lot of them. And a lot of them is BS too.

Ouch. It appears that Pregerson wasn't joking around either. From Voelker's website: Either way, I can't see how the hearing could have gone much worse for Prenda.

If you want another recap from someone who knows a hell of a lot more about how epically bad this went for Prenda, check out Popehat's take, which includes this:

I have never seen an oral argument go so badly for an advocate. The judges were immersed in the details of the record and plainly convinced that Prenda was a criminal operation that merited some sort of sanction. They clearly viewed the case not in isolation, but as part of a series of cases involving Prenda across the country — most of which are turning out very badly for Prenda. It seemed clear that they believed that Judge Wright had the power to impose some sort of sanctions, and that the record supported his doing so.

I know that many of the Prenda watchers among our readers here keep wondering how it is that Team Prenda is not yet in jail. There are a lot of reasons for that, frankly, but their appeal in the 9th Circuit may actually lead them much closer to being in jail, in part because their own lawyer effectively said that's what they wanted.

Filed Under: 9th circuit, alan cooper, copyright, copyright trolling, copyright trolls, daniel voelker, forgery, john steele, morgan pietz, paul duffy, paul hansmeier
Companies: af holdings, ingenuity 13, prenda, prenda law, steele hansmeier

Warner Bros. And Rightscorp Argue That Copyright Trolling Is Protected By The First Amendment

from the that's-one-way-to-look-at-it dept

Is the process of copyright trolling protected by the First Amendment? That appears to be the claim that both Rightscorp and Warner Bros. are making in response to a class action lawsuit filed against them.

Back in November, we wrote about a class action lawsuit filed against Rightscorp, by lawyer Morgan Pietz. Rightscorp, of course, is a company trying (and mostly failing) to make copyright trolling slightly more respectable by shaking down accused infringers (based on a questionable methodology) for somewhat lower amounts than traditional copyright trolls. Morgan Pietz, if you don't know, is one of the key lawyers who helped take down infamous copyright troll Prenda Law -- so his involvement was noteworthy.

Since November, when the lawsuit was initially filed, there's been some back and forth in the lawsuit (and even the main named plaintiff has changed). In the first amended complaint [pdf] that was filed last month with new lead plaintiff, John Blaha, the claims about violations of the Fair Debt Collection Practices Act have been removed, to focus mainly on violations of the Telephone Consumer Protection Act and abuse of process. The TCPA bans autodialing telemarketers, and Pietz is trying to argue that Rightscorp's autodialers fall under this law. The abuse of process claims focus on how Rightscorp got access to various people to shakedown, using DMCA 512(h) subpoenas. This is the process -- which courts have clearly rejected -- by which copyright trolls think they can issue subpoenas to ISPs about potential infringers, without first filing a lawsuit. Every few years, copyright trolls think they've newly discovered this loophole even though the courts have rejected it. The lawsuit has also added key Rightscorp clients, Warner Bros. and BMG, as defendants as well.

Last week, Rightscorp responded [pdf] by arguing that the case should be dismissed under California's anti-SLAPP law. Now, we've been huge supporters of California's anti-SLAPP law and believe that we need a similar federal anti-SLAPP law. Anti-SLAPP laws allow defendants to quickly get lawsuits dismissed when it's clear those lawsuits are nothing more than attempts to silence their public speech (SLAPP standing for "Strategic Lawsuit Against Public Participation.") However, I'm hard pressed to see how robocalling someone demanding they pay up or get sued is "public participation" in any way. Here's how Rightscorp makes its argument however:

The abuse of process claim should be dismissed under California’s anti-SLAPP statute, as Plaintiff’s attempt to recover damages from Defendants and enjoin them from making further subpoena applications impermissibly impairs Defendants’ free speech and petitioning rights. The imposition of the remedies Plaintiff seeks is prohibited as it would unduly burden Defendants’ efforts to invoke legal process to identify copyright violators who illegally distribute Rightscorp’s clients’ protected works. As the California courts have consistently held, claims attacking a defendant’s efforts to invoke the legal system are subject to being automatically stricken under anti-SLAPP.

But that's not true at all. It's hard to see how anyone can argue that merely filing a subpoena for information is protected free speech. There are plenty of situations where courts have ruled that such subpoenas are inappropriate -- including (as mentioned above) in nearly identical cases. It's not a free speech issue at all. But having gone down this path, Warner Bros. (Rightscorp's main client) has decided to chime in as well [pdf].

Specifically, Plaintiff’s claim impermissibly challenges Defendant’s petitioning conduct, which is protected under California’s anti-SLAPP statute.

While I'm not convinced that Pietz's class action will survive (for a variety of reasons), the idea that the lawsuit itself should be barred under California's anti-SLAPP law seems ridiculous. The lawsuit is not seeking to block Rightscorp's First Amendment rights. It's seeking to stop robocalls and illegal subpoenas that are used to allow Rightscorp to shakedown people for settlement money by bombarding them with demands to pay up to avoid being sued.

Filed Under: anti-slapp, california, class action, copyright, copyright trolling, dmca, first amendment, morgan pietz, process violations, robocalling, subpoena
Companies: rightscorp, warner bros.

More Sanctions Issued Against Team Prenda

from the get-those-appeals-warmed-up dept

Late last week we noted that Judge Edward Chen was becoming as suspicious of Team Prenda as Judge Wright, and so it didn't take long for Judge Chen to add to the pile of sanctions against the key players, this time ordering another $22,531.93 in legal fees to Joe Navasca. Judge Chen's order is short and to the point, making the case that the lawsuit itself was "frivolous and objectively unreasonable" on a variety of fronts:

• The forged signature of Alan Cooper: "the signature by Alan Cooper appears to have been a forgery, as Judge Wright concluded in his recent sanctions order." Chen notes that Prenda/AF Holdings denies this, but points out that their only argument against all of this is "sheer speculation.'
• The claim against Navasca "was not based on an adequate factual investigation." Chen points out how ridiculous it is that Prenda claimed Navasca was the likely culprit because he worked in tech support, noting "one does not need to be tech savvy in order to download information from a computer."
• "AF filed an emergency motion to compel... even though, at the time it filed the motion, Mr. Navasca's discovery responses were not even due yet."
• Judge Chen notes that Prenda/AF Holdings argued that the reason it tried to dismiss the case and get out of it was because of the Court's "undertaking ruling" against it, but if that were true, you'd think they would have asked the court to reconsider. Yet, as Chen notes: "AF filed an emergency motion to compel, see Docket No. 38 (motion), even though, at the time it filed the motion, Mr. Navasca's discovery responses were not even due yet."
• The whole argument about how Navasca spoliated evidence using CCleaner was a complete joke. Noting that Prenda "has offered no real support for this claim." And, worse, even though Prenda lawyers had been told by a judge to investigate "the purpose and effective of CCleaner" they, of course, did "not appear to have done anything" along those lines.
• The real kicker. Judge Chen notes the real reason that Prenda sought to dismiss the case: the absolutely devastating deposition of Paul Hansmeier in this Navasca case is what pushed Judge Wright over the edge in the central district of California, after Hansmeier put on a ridiculous performance and more or less cemented the clear point that Prenda was up to no good.

Given all that, it's not difficult for Judge Chen to add to the growing line of monetary sanctions against Team Prenda:

AF's motivation to bring suit is problematic given its apparent lack of standing. Furthermore, even if AF did have standing, the fact that someone may have illegally downloaded the copyrighted work does not justify AF's decision to sue Mr. Navasca specifically. As discussed above, the factual investigation done by AF prior to identifying Mr. Navasca as the alleged infringer was inadequate. Furthermore, as indicated by the findings made by Judge Wright in his case, AF does not appear to have been motivated to file suit in order to protect the copyrighted work at issue. Rather, AF's business model was to sue people for downloading pornography in order to coerce settlements.

For the above reasons alone, the "motivation" factor weighs strongly in favor of Mr. Navasca, and against AF. However, one final consideration has been offered by Mr. Navasca, which raises even more concern on the part of the Court with respect to AF's motivation. More specifically, Mr. Navasca has offered evidence – the Neville declarations – which indicate that persons affiliated with AF used the alias "sharkmp4" to post links on the Pirate Bay website to many of the copyrighted works in order to induce users to download the works so that they could then be sued for copyright infringement. This evidence corroborates Judge Wright's finding that the motivation for this and similar suits is to sue and coerce settlement.

As for Prenda swearing up and down that the Neville declaration is wrong, Judge Chen isn't buying it. If Neville is wrong, he points out, you'd think that Prenda would present some counter-evidence. But they don't, other than to try to attack Neville's reputation.

The Court acknowledges that AF has in its brief attacked the Neville declarations as unreliable on various grounds – for example, because the opinions contained therein are offered by an individual who has not been qualified as an expert; because the original declaration was secured by an attorney of purportedly questionable ethics; because the methodology employed is problematic; and because the opinions are qualified (e.g., finding it probable or likely that persons affiliated with AF were responsible). But notably, what AF has not done is offer any counterevidence such as a declaration from Mr. Steele in which he denies that he is "sharkmp4" or other evidence that AF did not take steps to induce users to download the subject works. This evidence could easily have been offered by AF as a part of its opposition brief. AF's failure to submit any factual denial under oath is telling.

The end result:

the Court grants Mr. Navasca's motion for fees and costs and awards fees in the amount of $19,420.38 and costs in the amount of $3,111.55. The total award is $22,531.93.

This is slightly lower than Navasca asked for. The court cut 5% off the amount requested, because of the possibility of some slight overlap with the work done by Navasca's lawyers, Nick Ranallo and Morgan Pietz, on other similar Prenda cases. Still, the bill for Team Prenda keeps rising.

Filed Under: edward chen, joe navasca, john steele, morgan pietz, nick ranallo, otis wright, paul duffy, paul hansmeier
Companies: af holdings, prenda, prenda law

Judge Wright Denies John Steele's Motion, Says Any Problem Is Steele's Own Fault, Directs Him To Legal Clinic

from the oh,-and-more-sanctions-on-the-way dept

Well, this hardly comes as a surprise, but after John Steele tried, via multiple motions and a disastrous in court appearance, to argue that his own due process rights had been violated because opposing attorneys Morgan Pietz and Nick Ranallo had not properly "served him" (and, further to have those lawyers sanctioned for such "fraud"), Judge Wright has denied the motion. The full filing is, once again, worth reading. He points out that this second motion doesn't offer anything new from the earlier motion, and explains why Steele failed, by any definition under the law, to meet the requirements for such a motion. But, that's only the warmup to Wright verbally benchslapping Steele for his ridiculous conduct once again. First, in response to the Fifth Amendment claims from Steele, Wright is direct and to the point:

Steele’s instant Motion for Reconsideration fails on every front. First, he does not assert a proper legal basis for reconsideration. Steele cites no law in his Motion. And during the hearing, Steele claimed that his basis for reconsideration was his Fifth Amendment right to due process. Exactly how this translates to a legal basis for reconsideration is anyone’s guess. Steele’s Motion offers nothing new for the Court to consider—he uses it only as a vehicle to rehash his earlier-rejected arguments.

As for the basic claims that Pietz and Ranallo somehow failed to serve Steele, Wright points out that, even if Steele was not properly served, it was solely as a result of his own mistakes.

Second, assuming this is a proper motion for reconsideration, the Court finds that any failure by Pietz and Ranallo to serve papers to Steele was caused by Steele’s own incompetence. On May 16, 2013, Steele filed his Request for Approval of Substitution of Attorney, where he requested to represent himself in place of his attorney Thomas Mazzucco. (ECF No. 143.) But in the Request and the accompanying forms, Steele entered his address incorrectly—not once, but four times. And because the Clerk of Court entered on the docket Steele’s address as shown, it is very likely that correspondence sent via mail since May 16, 2013, never reached Steele. Nevertheless, it is Steele’s duty to ensure that the Court has his proper address. See L.R. 41-6 (authorizing the Court to dismiss an action for a pro se party’s failure to update his address with the Court). And Steele has a duty to provide the Court with not only his current address, but also his telephone number, fax number, and email address. See id.; L.R. 83-2.7. Steele cannot skirt this duty merely because he is in pro se—the Local Rules apply whether a party is represented by an attorney or in pro se. L.R. 1-3 (“Persons appearing pro se are bound by these rules, and any reference in these rules to ‘attorney’ or ‘counsel’ applies to parties pro se unless the context requires otherwise.”).

You may remember that, during the hearing, Judge Wright pulled up that Request for Approval of Substitution of Attorney and asked Steele about it -- leading to what multiple people present noted was an extremely uncomfortably long silence. That silence, of course, was likely Steele's brain coming to terms with the fact that he'd painted himself into a total corner.

Furthermore, Wright points out that contrary to Steele's suggestion that he had no idea what was going on in the case and had not even looked at the document -- a highly unbelievable claim in the first place -- the actual evidence, including Steele's own statements, showed the exact opposite.

Fourth, although Steele seems to contend that this lack of service prejudiced him, because he was nonetheless involved in the motions filed by his cohorts through his joint and several liability for the Court-ordered sanctions, evidence suggests that Steele had actual knowledge despite any failure by Pietz and Ranallo to properly serve him. Pietz presents an email chain suggesting that Steele was centrally involved in the entire supersedeas bond issue, with Steele commenting, “Philip [Vineyard], Great motion.” (Pietz Decl., Ex. 2.) Moreover, Steele’s intimate knowledge of the case docket—in sufficient detail to point out the documents that have not been served— further suggests that he had actual knowledge of the papers filed by Pietz and Ranallo. (See e.g., ECF No. 197, at 2.) This raises the question how Steele was able to do this given his assertions at the hearing that he did not log onto CM/ECF or otherwise see the case docket.

Oops. It looks like, as expected, Steele's inability to stop himself from trying to talk his way out of his situation has meant that he's been caught out by his own words again.

Judge Wright also notes that it's also clear that Steele is still working closely with the rest of Team Prenda, despite denials. This was rather obvious from the fact that Steele, both Hansmeiers and Lutz all filed motions making the same argument on the same day -- including the formatting, footers and other bits of the filings being identical. In the courtroom, Wright had asked about this, leading Steele to try to tapdance around it, and then get angry and yell at the judge (leading to the quick end of the hearing).

Finally, the Court notes that the Prenda parties (John Steele, Paul Duffy, Paul Hansmeier, Peter Hansmeier, Mark Lutz, AF Holdings LLC, Ingenuity 13 LLC, and Prenda Law, Inc.) continue to act in concert. Philip Vineyard’s email chain, addressed to a number of these Prenda parties, confirms this. Also, the similarities in the substance, formatting, footers, and service list of the three Notices to the Court, filed by Mark Lutz, Paul Hansmeier, and Peter Hansmeier, in relation to Steele’s instant Motion further indicate that at least the four of them are in cahoots. (ECF Nos. 201– 204.) The concurrent filing of their papers are another indication of their relatedness. Even without these indicia, the Court has already determined that the Prenda parties have a history of conspiring together—there is nothing to suggest that they have stopped.

The end result is not just a dismissal, but Judge Wright declaring the motion "meritless and frivolous" and then says that because it was frivolous, Pietz and Ranallo can seek Rule 11 sanctions against Steele for making them go through the whole process of dealing with those motions (including having to hire a lawyer of their own to defend against the accusations of fraud on their part).

And, as a final kick in the pants, Judge Wright adds this little kicker to the end of the order:

Steele is advised that the Federal Pro Se Clinic is located in the United States Courthouse at 312 N. Spring Street, Room G-19, Main Street Floor, Los Angeles, California 90012. The clinic is open on Mondays, Wednesdays, and Fridays between the hours of 9:30 a.m. to 12:00 p.m. and 2:00 p.m. to 4:00 p.m. The Federal Pro Se Clinic offers free, on-site information and guidance to individuals who are representing themselves in federal civil actions. Steele is encouraged to visit the clinic for advice concerning his case.

Of course, in most cases, a pro se party is a non-lawyer, so it might be reasonable to direct them to a clinic to learn a bit about the judicial process. In a situation like this, where Steele is (amazingly, I know) an actual bar-certified lawyer (though not in California) suggesting he visit the Federal Pro Se Clinic for "advice concerning his case" is about the nicest ways possible for Judge Wright to John Steele "you are a really, really, really bad lawyer."

Oh, and that wasn't the final piece of business for Judge Wright on the Prenda matter either. There was also the issue of the bond for the money they already owe in sanctions. Wright responded to Paul Duffy's request for an order allowing a cashier's check, rather than a bond (apparently, they're having trouble getting a bond), by noting no such order is necessary, but also pointing out that Team Prenda -- as per usual, waited until the last minute, and did not pay on time, and thus, extra sanctions have been added:

The Court recognizes the difficulties that the Prenda parties are encountering in trying to obtain a bond. Nonetheless, the Prenda parties have missed their July 15, 2013 deadline, which the Court previously extended. Prenda’s characteristic last-minute scramble once again falls short. Having fallen short, they once again seek relief. But none will be given.

The Court hereby sanctions each of the following persons or entities $500 per day, per person or entity, retroactive to July 16, 2013: John Steele, Paul Duffy, Paul Hansmeier, Ingenuity 13 LLC, AF Holdings LLC, and Prenda Law, Inc. This sanction must be paid to the Clerk of Court at the same time the cashier’s check is deposited. Thus, if the Prenda parties deposit the cashier’s check on Friday, July 19, 2013, then they must also pay a sanction of $12,000 to the Clerk of Court. If they deposit the check on Monday, July 22, 2013, the sanction rises to $21,000.

It feels like there needs to be a "Judge Wright is not impressed" meme...

Filed Under: due process, john steele, morgan pietz, nicholas ranallo, otis wright, pro se, sanctions
Companies: af holdings, prenda, prenda law

Team Prenda Keeps Trying To Convince Judges That The Lawyers Who Exposed Them Are The Real Scammers

from the nice-try,-guys dept

We've discussed in the past how Team Prenda loves to use the "I know you are, but what am I" defense, in which they accuse opposing counsel of doing all sorts of nefarious things to game the legal system -- something that they themselves have been accused of by multiple judges. In the past few days, two more examples popped up. The same day that John Steele was getting reamed by Judge Otis Wright, Steele submitted his latest "reply" to opposing attorneys Morgan Pietz and Nick Ranallo, arguing in vehement language that those two need to be sanctioned. Not surprisingly, Judge Wright didn't bother with that one at all, because it's ludicrous. The focus of the hearing made it clear that Steele's attempts to pretend that Pietz and Ranallo are concocting some sort of fraud is not convincing anyone. Still, it's hilarious:

The extent of the fraud that has been committed on this Court by Respondents [Pietz and Ranallo] is slowly, but steadily, emerging. The first category of fraud--failing to serve any of the pro se persons with any of the papers they have submitted over the course of this entire proceeding--has been definitively established by the papers before the Court; Pietz and Ranallo do not dispute they engaged in this fraud.

It goes on and on. Of course, it's almost all entirely bogus. Pietz and Ranallo do dispute that they engaged in fraud, because they didn't. They explained, quite clearly, that Steele clearly had knowledge of what was going on, and then proceeded to do a variety of things -- including deleting his email account -- to claim that he was not being served and was somehow unaware of the proceedings.

Meanwhile, in the Navasca case in Northern California -- where a similar set of events appears to be playing out for Team Prenda, as judge Edward Chen seems to be recognizing what Team Prenda is trying to pull -- Paul Duffy has filed a similar attack on Pietz and Ranallo, once again trying to argue that it's those pesky lawyers who should be sanctioned. This is the case where, as we'd mentioned, Brett Gibbs filed a deposition to show that Mark Lutz was lying about the claim that Gibbs sent him documents, which Lutz signed as "Salt Marsh" (if you don't know what this is about, click the link to dig into the details).

Duffy is arguing that this is all some scam by Pietz and Ranallo to pay off Gibbs to lie to get Team Prenda in trouble.

There are however, two aspects of Defendant’s Motion that are highly troubling and suggest that if any sanctions are appropriate they should be imposed upon Defendant’s counsel [Pietz and Ranallo]. First, counsel has produced a declaration of former Plaintiff attorney Brett Gibbs (the “Gibbs Affidavit”) that Defendant’s counsel appears to have procured through a quid pro quo, in which Defendant’s co-counsel would assist Gibbs financially in the matter under appeal from the Central District of California before Judge Wright in exchange for Gibbs’ agreement to provide the Declaration. Leaving aside for now the many ethical infirmities arising from an attorney who offers a declaration against his own client, disclosing privileged communications and confidences, for his own personal gain, Defendant’s counsel knows, or should know, that statements in the Gibbs Declaration are, at a minimum, directly contrary to Gibbs’ sworn statements in other proceedings. Defendant’s counsel fails to notify the Court of that fact. Defendant’s counsel has also failed to inform the Court that, the Monday after Gibbs dated his Declaration, he and his co-counsel in the Central District filed in the Central District of California a motion seeking to relieve Gibbs of the obligation for a sanction in the amount of approximately $101,650 for which he was jointly and severally liable. (A true and correct copy of that as Exhibit “A” hereto and made a part hereof). The only purpose of counsels’ otherwise-inexplicable stipulation in the Central District is that they agreed to file it with that Court in exchange for a declaration that suits their interests in this matter. Indirect payment for testimony, and counsel’s failure to point out that Gibbs’ current declaration directly contradicts his prior statements, is conduct that the Court should sanction, at minimum, by denying the Motion in its entirety.

Duffy also goes on to attack the EFF, as if a court -- in Northern California, no less -- is unfamiliar with the EFF or thinks of it as some sort of "vigilante group" as Duffy claims. I realize that Duffy is from Chicago, and perhaps isn't that aware of the EFF or its reputation, but pretending they're some crazy vigilantes just makes you look silly. Even folks who disagree with the EFF, for the most part, recognize the group's reputation and legal prowess. And, I'd imagine that goes doubly for judges in Northern California, EFF's home turf.

Defendant’s Motion is a dizzying accretion of conspiracy theories, invective and inadmissible evidence that betrays a motive on the part of his counsel other than representation of the Defendant. Indeed, Plaintiff is informed that Defendant’s counsel is a panel attorney for the Electronic Frontier Foundation (“EFF”), an anti-copyright vigilante group whose panel attorneys have filed dozens upon dozens of similar filings throughout the country. The EFF panel attorneys have taken to attaching mass numbers of filings and transcripts of other court proceedings as exhibits to their filings, apparently in an attempt to lend the appearance of legal and factual gravitas otherwise missing from their arguments.

The motion goes on to suggest, strongly, that Pietz and Ranallo (a) effectively "paid off" Gibbs and (b) tried to pressure Duffy/Prenda into a settlement by claiming that it would file Gibbs' deposition claiming Lutz lied if they didn't. According to Duffy, this was a form of professional misconduct in trying to "induce a settlement."

Oh yeah, in the middle of all that, he also tosses in a bit claiming that Gibbs' deposition -- which shows that Duffy's client flat out lied to the court -- is "not credible." The "proof"? Gibbs, in the deposition, claimed that he believed Salt Marsh was a person, yet in Paul Hansmeier's now infamous deposition in this same case, Gibbs represented Hansmeier, where Hansmeier denied that Salt Marsh was a person. Of course, this ignores the timing of all this. The "Salt Marsh" signature came well before that deposition. To get around this, Duffy claims that it's somehow incredible that Gibbs believed Salt Marsh was a person -- though, anyone who's been following this case knows that's not incredible at all. Hansmeier and Steele insisted to him that Salt Marsh was a person, according to Gibbs, and (as has since come out), Steele's sister's boyfriend was named Anthony Saltmarsh. So, why is it so crazy? Duffy then tries to claim that if Gibbs had (a) believed that Salt Marsh was a person back when the ADR was submitted, and then (b) heard Hansmeier claim otherwise months later, then Gibbs "had an obligation to do something" to "correct any misunderstanding." Of course, Duffy is now using pretzel logic, suggesting that Gibbs had a duty to sabotage his own side (at the time) by publicly stating that he had filed falsified documents. Yeah, that's not going to happen.

Basically, Duffy's filing shows just how obnoxious Team Prenda is. From all of the information and details from Judge Wright's order, it appears that Steele, Hansmeier and (to a lesser extent, Duffy) had Brett Gibbs handle all the dirty work, insisting that various things were legit, when it turns out they weren't. Now that it's come out that things weren't legit, Steele, Hansmeier and Duffy are effectively blaming Gibbs for taking their word on the documents it seems likely they falsified. Talk about chutzpah. "Your honor, we didn't commit fraud on the court, but if we did, the real blame should go towards the guy we used to commit the fraud, for not telling the court about the fraud he was a part of." Yes, that appears to be the basic argument.

These guys really are quite incredible.

Filed Under: brett gibbs, edward chen, john steele, morgan pietz, nicholas ranallo, otis wright, paul duffy, salt marsh
Companies: prenda, prenda law

John Steele Shows Up In Judge Wright's Court; Bet He Wishes He Hadn't

from the so-you-made-it? dept

While John Steele insisted he only "just" found out about the hearing in Judge Wright's courtroom today, and insisted that it would be nearly impossible to make it, with Judge Wright quickly rejecting Steele's request, it appears that Steele somehow found a way to get to the courtroom on time this morning. And, while I'm sure that not showing up would have been a really bad decision, that doesn't mean that being present was a particularly enjoyable experience. Adam Steinbaugh was in the courtroom and has a detailed writeup of the continually no-nonsense Judge Wright's latest opportunity to respond verbally and in-person to John Steele's nonsense.

If you don't recall, the specific hearing was in response to Steele's motion for sanctions against Morgan Pietz for supposedly violating Steele's due process rights in "not serving" him the documents in the case since Steele began representing himself ("pro se"). As pretty much everyone who has been following the case has noted, the idea that Steele was not actually aware of the filings is pretty close to nil, and the decision to play more "playing dumb" games in front of Judge Wright -- who has made it abundantly clear that he is not impressed with John Steele's games -- is looking increasingly bad.

Steele appears to be betting heavily that arguing that his due process rights were violated is his best chance to somehow emerge from the deep pile of trouble that he's in. He's going to have a rather difficult time making that case, though, he must (at the very least) have to know that Judge Wright was going to shred him to pieces today -- and then hope he can make some progress in the inevitable appeal. That's still going to be a long shot, and I imagine that Judge Wright is going to do everything possible to make it abundantly clear to the judges handling the appeal just how ridiculous Steele's claim is -- starting with the details of today's hearing.

Judge Wright walked in promptly at the scheduled time. The first thing he noted is that Steele and other Prenda affiliates had kept submitting last-minute documents to the court, as late as this morning. Paul Hansmeier, for instance, had filed a motion to appear by telephone—“for what, I don’t know,” mused Wright, as Hansmeier’s motion was not the subject of the hearing.

He didn't like all the new filings, either. Among them were thick complaints from Mark Lutz and John Steele, to the California State Bar concerning former Prenda lawyer Brett Gibbs. “Why do I care?" snapped Wright. "You assumed I needed more paper?”

Defense lawyer Pietz was working with Gibbs, said Steele. Therefore, Gibbs' misdoings were part of a "pattern of fraud" by Pietz. Wright tossed it aside: the hearing today was about Steele's knowledge of particular filings, he said.

You get the feeling that Wright long ago had more than enough of Steele's bullshit, and Steele either doesn't realize that or simply can't stop. From there, the focus was on Steele's claims that he was unaware of what was happening in the case. Wright came prepared to have Steele explain how he could have possibly not known what was happening in the case -- including with suggestions that Steele was now actively trying to set things up so he could claim he was not being served.

Then the court's flat-screen monitors popped up with a copy of Steele’s substitution of attorney form. Had Steele ever seen this document, Wright demanded to know?

Steele sat for an awkwardly long period of time staring at the monitor before answering. "I'm sure I did at some point," he said. Wright asked if the address was correct, and Steele said that it was not.  The incorrect address was listed twice on the form, said Wright—and it was never corrected.

Next method of contact? Steele's e-mail address, which was sending bounce-backs to lawyers who tried to contact him. Steele said that he shut it down because of “spam and hacking and attempts to mess up not only my e-mail but websites.” At some point, he “literally could not open” his e-mail account, he said. He had used an auto-responder to tell people about his alternative address until June, he said.

Wright asked Steele if he had another e-mail address. "I have an old one,” Steele responded.  “Were you planning on letting anyone else in on it?" Wright asked, noting that the court’s Local Rules require litigants to provide an e-mail address if they have one.

Steele tried to flip the story over to his "due process" claims, and Judge Wright shut him down sarcastically. Steinbaugh's recounting is worth reading so head on over to get all the details of that part of the exchange. It includes Wright telling Steele it's "laughable" that Steele is claiming that opposing attorney Pietz is the one who has shown a "pattern of fraud." Either way, Steele's insistence that his due process rights are being violated, and that he knows he has to go through this process just to get to the appeal become quite clear:

Steele also had trouble identifying any legal authority for the motion to reconsider. He kept invoking the Fifth Amendment, saying that alone was the authority.

“How? You got this from the Fifth Amendment? This is absurd," retorted Wright. "Last time I let you assert [the Fifth Amendment], and let you go right back to the airport!"

"That's a different Fifth Amendment right," responded Steele. The court's actions here amount to an illegal "taking," which wasn't right. "My rights... I get them no matter what,” he said. His June motion had not been argued or heard, he said, as it was denied “within minutes.”

“You’re getting all the due process you can stand!” said Wright. Steele’s arguments had been made—by Steele. Steele, growing audibly and visibly frustrated, replied, “If Your Honor doesn’t care, [then] this is an appellate issue.”

Judge Wright also is well aware that it appears that Steele has been working closely with the rest of Team Prenda on all of these efforts, and called Steele out on that:

Wright had only a few more questions. “Who typed your papers?” he asked. Steele sheepishly responded: “I typed part of it," and some was typed by others.

“I couldn’t help but notice [that] Peter Hansmeier’s notice, Paul Hansmeier’s notice, Mark Lutz’ notice, and your motion... all followed the exact same format,” said Wright. They even had the same footer. "They're almost indistinguishable. No way they were not typed by the same person."

“It’s called cutting and pasting!” Steele bellowed.

"Raise your voice again and I’m going to introduce you to the United States Marshals," said Wright. "Get out.” Wright stood and walked off the bench.

It's not too difficult to guess how this is going to end up, and, like so many things that John Steele seems to do in court these days, it seems fairly likely that his plan is going to backfire in a big bad way. While Steele seems to be betting on a happier outcome at the appellate level -- and, is possibly even baiting Judge Wright to try to use the emotional and sarcastic responses in his own favor on appeal -- there's so much overwhelming evidence piling up against Steele, that it would be somewhat amazing if the appeals court doesn't end up with the same conclusion as Judge Wright concerning which parties are involved in questionable behaviors here.

Filed Under: john steele, morgan pietz, otis wright, pattern of fraud, sanctions
Companies: af holdings, prenda, prenda law

Bad Lawyer Tricks, By John Steele

from the not-a-good-idea dept

Last week, we wrote about a bunch of the members of Team Prenda submitting separate filings with Judge Otis Wright, who has been the most vocal in calling them out for their questionable legal shenanigans, trying (once again) to go on the offense and accuse their accusers. John Steele, Paul Hansmeier, Peter Hansmeier and Mark Lutz all filed motions claiming that the lawyers representing the John Doe defendant in the case, Morgan Pietz and Nick Ranallo, had failed to serve each of them with updated filings concerning the case. Incredibly, they tried to suggest that it was Pietz and Ranallo who were acting fraudulently and should be sanctioned. It's the classic John Steele move of "I know you are, but what am I" any time anyone calls him on his activities.

Pietz and Ranallo, having now been ridiculously accused of fraudulent activity, have hired another lawyer, Lawrence Heller, to represent them on this silly tangent, and Heller submitted quite a response, focused on John Steele's motion. The filings from the other three are dismissed in a footnote:

Mark Lutz, Paul Hansmeier and Peter Hansmeier have filed what they call "Notices to the Court," which are unsworn pleadings which attempt to evidence that they have not received certain pleadings since going pro se. Among numerous other defects, these "Notices" are neither verified, nor sworn under penalty of perjury and, to the extent they have any evidentiary value at all, should be struck or at least wholly ignored.

But the arguments against Steele's filing are much more serious. As you may recall, this was actually Steele's second attempt at making this argument, with the first one getting rejected by Judge Wright in less than an hour. The claims that Steele and the others were somehow taken by surprise by the filings in this case and were unaware of them are hard to support, and Heller makes that point excessively clear. First, Heller points out that Steele's claim that Pietz and Ranallo had submitted "scores of papers" without serving him, and that those papers were "requests for relief" was entirely bogus. Steele was represented by counsel for quite some time, and after he went pro se (representing himself) Pietz and Ranallo had only filed two documents, both merely opposing specific motions from Team Prenda.

Furthermore, Heller points out that the only one actually violating the court's rules are the members of Team Prenda who failed to properly notify a change in contact information, leading to the lack of direct service. Most seriously, Heller says that the email "evidence" that Steele submitted with his filing, which he claims is "proof" that Pietz knew he wasn't serving Steele, has been doctored. And, finally, Heller points out that this all just seems par for the course for Team Prenda in playing word games rather than facing up to the fact that they're in deep trouble:

Although already sanctioned by this court, it is clear that neither Steele nor his contingent have learned their lesson. As frivolous as Steele's motion is, Pietz and Ranallo were compelled to retain outside counsel to defend it. Pietz and Ranallo should be compensated for having to respond to this baseless motion through the court's issuance, on its own initiatve, of an OSC re: Sanctions or, alternatively, through the court's setting of a hearing date for Pietz and Ranallo to have their Rule 11 sanctions motion heard...

It must be said: finally, enough is enough!

As for Steele's "evidence," Heller points out, as is clear from the email itself, that rather than an admission of a failure on the part of Pietz, Pietz's email is actually an attempt to stop Steele from avoiding service, by noting that Pietz is happy to send Steele copies of the filing, by whatever means are most appropriate -- and that this wouldn't have been an issue if Steele had properly kept everyone informed of his correct contact information, as is clearly required by the court. Separately, they point out that plenty of evidence, including some submitted by Steele himself has clearly established what his email address is, which is also where Pietz sent copies of the filings that Steele claims were never given to him.

Moreover, Steele himself has submitted evidence to this Court definitively establishing that he maintains at least the email address: johnlsteele@gmail.com. Specifically, in his "Amended" Motion For Reconsideration (ECF No. 205, pp. 6-7), Steele for, the first time attaches as Exhibit 1 the email which be omitted from the original Motion for Reconsideration (ECF No. 201), and which he swears, under penalty of perjury, that he received at the said email address. Steele's submission of the June 23rd email confirms that he does in fact have an email account he has used recently, and that he is therefore in violation of L.R. 41-6 and L.R. 83-2.4, for failing to provide that email address to the Court and to all parties. Similarly, Steele's Illinois ARDC page lists a phone number; so he has one of those too, which he has also neglected to provide to the Court or the parties. There can be little doubt that he also has a fax number he failed to disclose. In View of Steele's violations of the local rule designed to facilitate service of process, the instant motion is clearly brought in bad faith.

And then we get to the funny stuff. The email "evidence" that Steele submitted to the court was an email that Pietz sent, but when he sent it, it bounced back, saying that there was no such email address. That leads to one of two possibilities, neither of which look good for Steele:

In view of Mr. Steele's sworn assertion that he actually did receive the June 23rd email from Pietz, it is thus surprising that the email in question, which was sent to immediately bounced back to sender from that address. (See Pietz Dec'l., Exhibit 1). In light of the bounce-back, there are only two possibilities: either Steele has somehow configured his Gmail account to automatically respond with false "Delivery to the following recipient failed permanently" messages to all emails he receives, even though he actually does receive the messages; or (ii) as seems more probable, Steele did not receive the June 23rd email directly, but rather it was forwarded to him by one of his cronies who was also included on Pietz's email chain. A close look at the top of Steele's Exhibit A shows partial text remnants. Moreover, the email is of an abnormally small size. Both of these facts strongly suggest that a header has been cutoff at the top of the email to conceal how it was received. It seems apparent that Steele has purposefully omitted an email header, which would presumably show one of his co-conspirators forwarding the June 23rd message from Pietz to whatever new email address Steele is using nowadays.

Since Steele's motion, as well as his sworn affidavit, tacitly rely upon the premise that he has not been in close contact with Paul Hansmeier, Paul Duffy, and counsel for Prenda Law, Inc., about the bond issue since going pro se, one can certainly understand why he may have been tempted to cut out the header showing him communicating with these people. In other words, in what would seem to be a truly staggering--and foolish--bit of chutzpah, Steele appears to have once again tried to slip a doctored document past this Court in the hopes of getting his way.

Further, given that the johnlsteele@gmail.com email address was used by "someone" to register certain Internet domain names to "Alan Cooper" at a Phoenix residence where Steele's sister lived with Anthony Saltmarsh, there can be little question as to why Steele might have been tempted to discontinue using that account. Using that email address potentially links Steele to criminal identity theft activity. However, thanks to his recent filing. Mr. Steele has now sworn under penalty of perjury, that he has recently received email sent to johnlsteele@gmail.com even though that may be perjury.

You get the feeling that John Steele is stupendously bad at chess, while simultaneously believing that he could beat Kasparov and Deep Blue in concurrent matches. The more he talks, each time believing he's found the magic "out," the deeper he seems to dig his own hole. This is a different kind of digging than, say, a Charles Carreon, who would just keep fighting. Steele acts as if he really thinks that he has the whole system beat, when the reality is each time he tries to "beat" the system, he's just piling up another potential problem for himself.

For example, there's also more evidence that Steele is making claims to the court that are not just bogus, but where Steele's own actions show that they are bogus:

However, through what may have been an inadvertent slip-up, there is compelling evidence that Steele was actually aware, or should have been aware of ECF No. 175 (Pietz's opposition to Duffy's motion to approve the initial bond) since at least June 14, 2013. On May 23, 2013, Paul Duffy filed his motion to have the bond he posted on behalf of all Prenda parties other than Gibbs approved by this Court (ECF No. 171). On June 3, 2013, Pietz filed a response asking that the bond be conditionally approved, subject to certain conditions, and subject to the posting ofan additional bond (ECF No. 175). It is this document, ECF No. 175, from early June, which Steele would later say he was denied an opportunity to respond to. On June 6, 2013, the Court entered the proposed order submitted with the response, conditionally approving the bond, as requested by Pietz (ECF No. 176). On June I 1, 2013, Prenda Law, Inc. through associate Philip Vineyard of the Kleindinst Firm, announced by email to all parties (including to johnlsteele@gmail.com) that they would be appealing the Court's order on the bond (i.e., appealing ECF No. 176) and filing an emergency motion seeking relief from the Ninth Circuit on that issue. (Pietz Dec'l., Exhibit B.)

By itself, the email from Philip Vineyard to Steele et al. Would have been sufficient to put Steele on notice of the fact that proceedings were underway in the District Court on the bond issue. See id. at pp. 1-2. The fact that Prenda was appealing the issue would also have put Steele on notice that the bond proceedings had not gone as his similarly situated counterparts may have hoped. However, that is not all that happens on the email thread.

On June 14, 2013, at 9:54 AM, Mr. Vineyard circulated to all parties what he styled a "pre-executed version of Prenda Law's emergency motion to the Ninth Circuit" on the bond issue. Id. at. p. 11

About a half hour later, at 10:20 AM, John Steele wrote back to Mr. Vineyard, copying Pietz, saying,

"Philip,
Great motion. On page 5, I want to take issue with the bottom of the page, right before footnote 23. No one that I am aware of (on our side) stated that Prenda or anyone else had a policy of demanding a settlement amount just low enough to avoid legal action. This is something the bad guys always claim." Id. at 14.

Vineyard then wrote back a few minutes later saying "Thanks, John. I shall amend the motion to reflect this." Both the "pre-execution" version Vineyard circulated, which Steele apparently reviewed and provided guidance on, as well as the final version ultimately filed with the Ninth Circuit, extensively discuss Pietz's opposition to Duffy's motion to the approve the bond (ECF No. 175). Clearly, Steele reviewed Vineyards motion on June 14, 2013, and Vineyard's motion discusses at length the opposition (i.e., ECF No. 175) to which Steele states he was denied an opportunity to respond because he was unaware of it. There can be no question that Steele had every opportunity to respond to Pietz's opposition, despite his false claims, which form the basis of his motion, to the contrary.

Further, Steele has known that there would be a dispute about the amount and conditions of the bond since at least May 20, 2013. See ECF No. 175-2, pp. 1-5 (meet and confer email from Pietz to Prenda parties, including to johnlsteele@gmail.com, which was ignored by all of them, except for some nonsensical ramblings from Mr. Duffy).

In view of all this evidence, it seems that Steele was just about as "shocked" about the bond issue before this Court as Captain Renault was to find that gambling was going on at Rick's Cafe Americain.

Here's a basic tip: if you're going to claim to a court that you have no idea certain documents are being filed, probably don't (a) use the same email address that the very same documents were mailed to and (b) don't send the counsel you're accusing of not informing you of documents filed in the very case in question -- that you insist you're not paying attention to -- email evidence that you're not only very much paying attention, but actively involved in the drafting, review and approval of filings in the case.

In a footnote, the filing also notes that this is more evidence that Steele has a leading role in Team Prenda's legal strategy, despite his claims to have absolutely nothing to do with any of it:

This obviously begs the question of why counsel for Prenda Law, Inc., whose "sole principal" is supposedly Paul Duffy is taking their marching orders from Steele, a party with which Prenda likely has a conflict (particularly in view of Hansmeier's deposition testimony that obtaining the Alan Cooper signatures was all Steele's doing).

This case just gets more and more and more entertaining.

Filed Under: john steele, morgan pietz, nicholas ranallo, notifications, otis wright, service
Companies: af holdings, prenda, prenda law

Team Prenda Plays Dumb In Central California, As Brett Gibbs Says They Lied In Northern California

from the have-fun-guys dept

It was a busy day for Team Prenda yesterday, as summarized by Joe Mullin. Down in Central California, in the case overseen by Judge Otis Wright -- who famously called out Team Prenda on their scam -- four of the members of Team Prenda all sent coordinated filings, attacking the opposing lawyers, Morgan Pietz and Nick Ranallo, claiming that they should be sanctioned for failing to serve the various members of Team Prenda concerning the additional filings in the case. John Steele, Paul Hansmeier, Peter Hansmeier and Mark Lutz all claim that they've been blissfully unaware that anything was happening in the case. Yeah, seriously. Lutz's is the funniest of the bunch:

I am Mark Lutz and two attorneys named Morgan Pietz and Nicholas Ranallo are filing motions asking this court to issue orders without notifying me! I apologize to the Court for my anger, but I have never had a chance to fight any of their motions! The Constitution gives me the right of Due Process, which means that the courts can't take something from me without first giving me a chance to contest that decision. Just so I am as clear as I can be, I have never been served with any paperwork by either attorney Pietz or Ranallo. EVER.

People's faith in the law rests on the belief that attorneys who break the rules don't get away with it. I place my trust in this Court to make sure that these attorneys will be held accountable for their actions. Here the record is obvious that Pietz and Ranallo have been breaking the rules. I therefore ask the court to strike all pleadings filed by attorneys Pietz and Ranallo that do not have a proof of service filed with them. I also ask that any orders that were entered by this court against AF Holdings, Ingenuity 13 or me be vacated. These guys are total fraudsters

The other filings are similar, if only slightly more professional. Steele had actually filed a similar filing a week earlier, which Judge Wright rejected within an hour. It seems unlikely that he'll be any more open to these latest claims as he's made it clear that he's very much onto Team Prenda's usual tactics of denying everything, trying to talk their way out of any hole they've dug, and when caught, attacking those who caught them. This latest is straight out of their playbook. The question of whether or not these four guys are being served is an important one, but as Judge Wright made clear in his initial ruling, Steele and Paul Hansmeier are considered by the Court to be principals of Prenda, so as long as Pietz and Ranallo are serving Prenda itself, in the form of Paul Duffy (who, you'll notice, is the lone member of the "Team" as defined by Judge Wright and who did not file one of these statements), it probably covers those three. The situation may be different with Lutz and Peter Hansmeier, but even then, I'll wait on Pietz's and Ranallo's reply, since nearly every statement from Team Prenda ends up proving to be less than fully accurate later on.

On a related note, earlier in this same case, we discussed how Team Prenda had done everything to try to hide from being served during an earlier round of filings. Their efforts to avoid service may become fairly relevant should this issue get any further.

Of course, on the same day this happened, something even more interesting was happening up in Northern California, in the AF Holdings v. Navasca case. That was the case where Judge Edward Chen had ordered Team Prenda to produce a copy of the supposed "Salt Marsh" signature, which Mark Lutz insisted he could not find (as did Paul Duffy). Lutz tried to brush off everything, saying that Brett Gibbs regularly asked him to sign various things and he would do so on behalf of the mysterious Salt Marsh trust. While this argument was an odd one, Judge Chen accepted it and was ready to close the case.

However, Ranallo has now asked Judge Chen for sanctions against a variety of the members of Team Prenda for their actions and statements in the case, and has presented a tremendous amount of evidence that Steele, Hansmeier and Lutz have been flat out lying. And, some of that evidence comes in the form of a damning deposition from former Prenda lawyer Brett Gibbs. Gibbs, it appears, has finally realized that Steele and Hansmeier were throwing him under the bus. While Gibbs had already given one deposition against Steele and Hansmeier, it was fairly tame compared to this latest one, in which he points out that Lutz's claims are clearly untrue:

I have reviewed the Affidavit of Mark Lutz filed in this case on May 13, 2013 (Doc. #80). I believe that the information provided in the fifth paragraph of that affidavit regarding my interactions with Mr. Lutz is not an accurate description of those events. I did not "from time to time" send certificates for Mr. Lutz to sign on behalf of the Salt Marsh Trust. I did not have the alleged conversations with Mr. Lutz. In fact, I did not know that Mark Lutz was directly affiliated with these companies, as an owner or otherwise, until months after filing the ADR Certification in this case.

Instead, I was specifically told by Mr. Hansmeier that Salt Marsh was the owner of AF Holdings, and that he, Salt Marsh, had read and understood the ADR handbook, and that I could go ahead and file the ADR Certification with the electronic signature of Salt Marsh. Again, I never spoke with Salt Marsh directly. Through my conversation with Mr. Hansmeier, I was under the impression that the Salt Marsh was an individual who had in fact complied with the Local Rule and that his original signature existed on a document that was being held by my then employer, Prenda Law, Inc. Given that information, I proceeded to file the ADR Certification on that basis.

After I filed this case, I learned through a separate case filed in Minnesota that the assignment agreement may have been invalid because there was a dispute whether a signature on the agreement was in fact forged. Once alerted to this, I immediately discussed this matter with John Steele and Paul Hansmeier. They assured me that it was a valid signature, that the allegations were mere "conspiracy theories," and that I should have no concern in continuing to prosecute this and other AF Holdings' cases. I believe I was diligent in my factual and legal investigation of this matter.

Of course, one could argue that Gibbs' credibility is less than perfect (though, still better that Steele/Hansmeier/Lutz). But, even without Gibbs' deposition, Ranallo has pretty strong evidence of the typical shenanigans from Steele/Hansmeier here, in that he actually shows that Steele and Hansmeier's own statements in two different cases, directly contradicts each other.

AF Holdings' first attempt to explain this assignment came on February 19th, when Paul Hansmeier appeared as AF Holdings' 30(b)(6) deponent in this action. In a clearly rehearsed explanation, Mr. Hansmeier stated that Mark Lutz, paralegal for Steele Hansmeier, Prenda Law, and the Anti-Piracy Law Group tasked his boss, John Steele, with arranging a "corporate representative" to acknowledge the assignment in this case (Hansmeier Dep. at 121:11-128:12).

We are to believe that Mr. Steele did this as a favor to his paralegal, because the paralegal was himself too busy to personally sign his own name on behalf the company he supposedly runs. It is unclear how Mr. Lutz saved any time this way, since it undoubtedly took at least as long to arrange for the "representative" as it would have to sign his own name, but nonetheless, we are told that efficiency was the motivation. See Hansmeier Dep. at 127:22- 128:8 ("...Mr. Lutz is an individual. There are a certain number hours in a day and for him to accomplish everything he's going to accomplish in a given day, or for anyone in any capacity in any business, you rely on third parties to aid you to accomplish tasks.")

According to Mr. Hansmeier, Mr. Steele then sought out his property caretaker in Minnesota, Alan Cooper, to serve as "corporate representative" to acknowledge the assignment. Hansmeier Dep. at 122:5-11. According to Mr. Hansmeier, Mr. Steele was therefore the sole individual that could shed any light on the circumstances surrounding the execution. Hansmeier Dep. at 122:11-126:21. Specifically, Mr. Hansmeier testified that

"Mark Lutz spoke to Mr. Steele and said, Well, I understand that there's an issue with this Alan Cooper and asked Mr. Steele point-blank, Is the signature a forgery. Mr. Steele said the signature is not forgery. And he asked him, Is the— is the signature authentic. Mr. Steele says, yes, the signature is authentic..." and, "...all I can say is that AF Holdings – the only person who knows who this Alan Cooper is is John Steele...". Hansmeier Dep. 122:11-18 and 126:10-127:2.

Mssrs. Steele, Hansmeier, and Duffy were each given a chance to forward their own explanation(s) for the Cooper assignment on April 2, 2013 at a hearing in the Central District of California. Rather than testifying under oath (and subject to cross examination), however, each invoked their Fifth Amendment right. Ingenuity 13 v. Doe, 2013 WL 1898633 at * 2 (C.D. Cal., May 6, 2013).

Mr. Steele later decided to address this issue in the form of an affidavit– safe from cross-examination - in response to yet another Order to Show Cause regarding sanctions in the District of Arizona. A copy of the Arizona Order to Show Cause is annexed hereto as Exhibit K , AF Holdings response is annexed as Exhibit L, and Mr. Steele's affidavit in support is annexed hereto as Exhibit M. Mr. Steele's affidavit is wholly inconsistent with Mr. Hansmeier's version of events, and Mr. Steele cannot bring himself to even claim that Mr. Cooper actually executed the assignment. What Mr. Steele does say, however, contradicts Mr. Hansmeier's testimony and various publicly available documents. See, e.g. Exhibit M... Specifically, Mr. Steele describes the Alan Cooper circumstances as follows:

"8. ...I agreed to help him set up a company for him and help him out in getting started with his business.
9. Shortly thereafter, Alan told me that he could not put any time into the project and I believe that he never ended up following through with getting his new company off the ground. As a less time intensive alternative, I suggested that if Alan wanted to learn more about the adult industry, I could connect him to a new company that was run by Mark Lutz.
10. I informed Alan that one way to get his name established would be to serve in a corporate representative role, which would let him gain exposure to the types of deals Mr. Lutz was doing and see if that was something that appealed to him.
11. My understanding is that Alan took me up on the offer and participated in a limited number of transactions in 2011 with Mr. Lutz’s companies. I am not aware of any post-2011 transactions in which Alan participated.” Steele Aff. at 8- 11.

Several things are notable about Mr. Steele's version of events. First, and most conspicuously, is his purported ignorance regarding the Alan Cooper transactions, notwithstanding Mr. Hansmeier's testimony that Mr. Steele was the only one with information. In contrast to Mr. Hansmeier's testimony, which makes it clear that Mark Lutz specifically tasked Mr. Steele with finding a corporate representative for the purpose of acknowledging AF Holdings' assignments, Mr. Steele implies that this was a favor for Mr. Cooper, wholly unrelated to any specific task. Moreover, Mr. Steele disclaims any personal knowledge regarding the "limited number of transactions" that Mr. Cooper was involved in, and disclaims any knowledge that would allow him to reassure Mr. Lutz and Mr. Hansmeier that the relevant assignments were not forgeries, as he apparently did. Indeed, Mr. Steele's affidavit seems to indicate that Mr. Lutz would himself have all the necessary information regarding the assignment, and there would be no reason for Mr. Lutz to go to Mr. Steele for confirmation regarding the validity of the assignments.

Secondly, AF Holdings response and Mr. Steele's affidavit simply do not square with documented reality. AF Holdings' response to the OTSC indicates that "At some point in early 2011, Steele and Cooper discussed how a friend of Steele's was exploring opportunities related to purchasing and marketing adult content. Cooper expressed interest in learning more about these opportunities, and Steele offered to help him learn more...Cooper ended up not moving forward with the ideas Steele proposed to him..." See Exhibit N at 6.

This explanation does not square with history. Indeed, John Steele began misappropriating Mr. Cooper's identity before "early 2011," in connection with VPR, Inc., and other entities. As previously described in ECF No. 55, 55-1, and 55-5, VPR, Inc., was formed and registered with the Nevada Secretary of State in late 2010 and identified Alan Cooper as the president, secretary, and all other relevant positions in the entity. As previously described, the corporate address identified by the Nevada Secretary of State is 4532 East Villa Theresa Drive ("the Villa Theresa Address"), an address previously shared by John Steele's sister and Anthony Saltmarsh. See ECF Nos. 55-1, 55-3 and 55-4.

VPR, Inc. cannot be the entity that never came to fruition, as described in Mr. Steele's affidavit, as it has filed copyright lawsuits against more than a thousand Does, through its counsel, Steele Hansmeier.

Believe it or not, there's much more in there, but that selection of using Steele's claims against Hansmeier's claims is really quite classic. This is, of course, what happens when you dig yourself a giant hole and then try to bullshit your way out of it. Sooner or later you're going to contradict your own claims.

Filed Under: brett gibbs, copyright, copyright trolling, edward chen, john steele, mark lutz, morgan pietz, nicholas ranallo, otis wright, paul hansmeier, peter hansmeier
Companies: af holdings, prenda, prenda law

Prenda Law Claims Its Winding Down Its Operations; Very Angry About Having To Pay Bond

from the keep-trying dept

With Judge Otis Wright telling Team Prenda to pay significantly more on the bond to cover Morgan Pietz's legal fees in the big case in California where Prenda got called out for what the judge suggested were racketeering violations, Paul Duffy and Prenda are fighting back in typical fashion. They've gone to the appeals court to whine about why they shouldn't have to pay, why Pietz shouldn't get any money and about all the reasons they think Judge Wright is wrong. But there's also an interesting tidbit in Duffy's affidavit:

Prenda Law is currently winding down its operations and is in the process of dismissing its remaining cases pursuant to the instructions of its clients.

It later says that Prenda Law has not filed any new copyright infringement cases in several months. Of course, this completely ignores the fact that Duffy and what appears to be basically the same crew of people immediately flipped the switch to a new firm, called the Anti-Piracy Law Group, which has continued to do the same basic shakedown game, even as they were being hit with sanctions and more for the same game under the Prenda label. Funny how Duffy leaves that part out...

Filed Under: bond, john steele, morgan pietz, paul duffy, paul hansmeier
Companies: af holdings, prenda, prenda law

Morgan Pietz Objects To Duffy's Bond In Prenda Case, Points Out More Typical Prenda Tricks

from the check-for-john-doe dept

We were a bit surprised that Prenda Law's Paul Duffy actually filed a bond to cover the amount that Judge Otis Wright ordered Team Prenda to pay in legal fees for their shenanigans. To date, Team Prenda seems to go out of its way to play games and to avoid doing what the court is actually asking, so it seemed like a bit of a departure to see them actually file a bond (if a few days late, and with some protest). But, apparently, we should never underestimate Prenda's game-playing.

The lawyer opposing them, Morgan Pietz, has responded to the bond asking the court not to accept it until a variety of changes are made, and which highlights the type of petty activity that Prenda is well known for engaging in. The most brazen, perhaps, is the fact that Duffy made the bond be in the name of "John Doe" for the unidentified client, but Pietz points out that, given that's not the Doe's real name, it's possible that they may get a check that can't be cashed. That's the kind of thing that has Prenda's name written all over it -- doing something that pretends to be helpful, when inside they're laughing about the "trick" they pulled on people.

That's not all. Duffy, in his filing, had said that Pietz had not been cooperative in having a "meet and confer" to agree on what the bond amount should be. But Pietz tells a very different story, and provides the email evidence.

The first undersigned counsel heard about a bond, or payment, from any Prenda party (with the exception of Mr. Gibbs; his motions will be addressed by separate response) was on Monday May 20, 2013, when Paul Duffy sent a short email on the subject, offering to post a bond in the amount of 125% of the amount awarded in the Sanctions Order. Undersigned counsel dutifully responded later that day (to all parties), outlining a number of concerns about the amount and conditions that should attach to a supersedeas bond, reiterating concerns raised in the appellate response papers regarding no stay of the non-monetary aspects of this Court’s order, and requesting that Prenda respond with their views on the substantive topics raised. Exhibit 1.

On May 21, 2013, this Court issued an Order Denying Ex parte Application for Stay of Enforcement ; Order to Show Cause Re Attorney’s-Fee Award. ECF No. 164. The next day, after close of business on May 22, 2013, still not having heard anything regarding payment or a bond, undersigned counsel again emailed all Prenda parties in another attempt to meet and confer regarding appeal bond details. Exhibit 1. In response to the May 22 query attempting to spur further discussion on the several points raised by undersigned counsel previously on the bond issue, Mr. Duffy wrote back “You had no substantive points. If you think of some and can articulate them coherently I would be glad to consider them. Thanks for thinking of me.” Id. Shortly after receiving Mr. Duffy’s foregoing email, undersigned counsel pointed out to everyone that such a response was not very helpful, and invited the rest of the Prenda parties to respond in substantive fashion. Nobody did. Mr. Duffy, however, did write the whole group one more time, in nonsensical and vaguely threatening fashion, to indicate that has apparently made a conscious decision to send undersigned counsel’s email messages to the SPAM folder. Exhibit 1

In case you can't look at the exhibit, the email that Duffy wrote back to Pietz -- which was clearly not an automated response -- was the following:

Thanks for your message Sir/Madam! Unfortunately, due to your inappropriate language and messages, which are within the access of my young children, I must place you in my "spam" filter. Unfortunately, I delete such messages daily without reading them. I wish you a speedy recovery, and make it a GREAT day!

Among the other problems with the bond, is that only Duffy has signed onto it, and as Pietz points out, since there are many different parties, each appealing separately, it's not at all clear as to what happens if some are exonerated, while others are found guilty. And, of course, Pietz argues that the amount is way too low, because it should take into account the likely cost of the appeal as well. Oh, and Pietz also wants it to be clear that Team Prenda can't get out of paying the bond by declaring bankruptcy.

Basically, it looks like Team Prenda simply can't resist playing its games -- once again, seeming to think that it's so much smarter than everyone else, that it can run verbal rings around those exposing their efforts.

Update: And... Judge Wright has just basically agreed with Pietz, conditionally granting the bond, but only if Duffy makes a bunch of changes to deal with the claims that Pietz brought up, and also says they need to add another bond for $135,933.66, to get the total up to $237,583.66 which is the amount Pietz argued was proper given the circumstances.

Filed Under: bond, john steele, meet and confer, morgan pietz, otis wright, paul duffy
Companies: af holdings, prenda, prenda law