Two lawyers who were sanctioned by a US District Judge in Los Angeles in 2013 for their roles in the now-defunct Prenda law firm, were indicted last month on fraud, perjury, conspiracy to commit wire fraud, conspiracy to commit mail fraud, and conspiracy to commit money laundering charges for their roles in a wide-ranging copyright lawsuit scheme that played out in federal courts around the country.
According to the indictment, John Steele of Florida and Paul Hansmeier of Minnesota are accused of manufacturing copyright infringement claims in order to collect millions of dollars through settlements.
Prosecutors allege that Steele, Hansmeier and Paul Duffy, who is now deceased, created pornographic films, then turned the copyright over to sham holding companies that were established outside of the United States, and that have no employees or other assets. The trio then uploaded the films to file-sharing sites including BitTorrent to encourage illegal downloads of the films.
The attorneys then used legal entities they’d created, and that used multiple other attorneys not named in the current indictment, to file bogus copyright infringement lawsuits against individuals who downloaded the films. Once the lawsuits were filed, the lawyers sought discovery from ISPs to identify subscribers who had downloaded the films, while threatening sanctions for non-compliance, and threatening to “out” subscribers who had downloaded the films. Once they knew the identity of the individuals, they would then offer to settle the case for about $4,000. The settlement money was deposited directly into accounts belonging to the principals, rather than into accounts belonging to the holding companies. The attorneys did not pursue defendants who chose to litigate rather than settle.
In addition, the lawyers named in the indictment directed a paralegal to pose as the owner of the firm that held copyrights in legal proceedings, including court hearings and depositions. This misdirection is the basis of the perjury claims against the two lawyers. The paralegal is not charged in the incident. As part of the ruse, they also misappropriated the identity of an employee, whom they identified as an officer of one of the sham companies. In reality, the employee was a groundskeeper and had no knowledge of the use of his identity in the scam.
Federal Fraud Lawyer
If you’ve been accused of fraud in Los Angeles, or in any federal jurisdiction, your first move should be to hire an experienced federal fraud lawyer like Robert Helfend. Mr. Helfend has practiced federal criminal defense for more than 30 years and will work tirelessly to defend your rights and freedoms in court.
Contact Robert Helfend or call toll-free at (800) 834-6434, (310) 456-3317, (818) 591-2809 or (805) 273- 5611 for an immediate consultation on your Los Angeles County fraud case.
Photo Credit: David Wees, via Flickr.com