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Posts Tagged ‘copyright troll’

It has been almost a full day since yesterday’s historic Prenda flop where the attorney for Prenda Law Inc. (formerly, Steele|Hansmeier, PLLC and before that, Steele Law Firm PLLC) appeared to be woefully unprepared to overturn the sanctions that were ordered against Prenda Law and their team. (Flashback: “The 12 minute hearing and the end of Prenda Law Inc.” on 4/3/2013)

For those of you who missed it, you can watch the entertaining video here (fast forward to the tall guy).

As a quick recap, two years ago, Prenda Law was caught forging the name “Alan Cooper” on the copyright assignment documents which gave them the apparent authority to sue on behalf of their clients. The “real” Alan Cooper (John Steele’s gardener) who was the victim of identity theft hired an attorney, showed up at one of Prenda’s hearings, and served John Steele with his own lawsuit.

I don’t know how to explain what happened in a recap other than that the whole “house of cards” that was Prenda Law Inc. was unraveled — not because of the Alan Cooper forgery issue, but because John Steele couldn’t stay away from the cases when he successfully made the courts believe that he sold his Steele Hansmeier PLLC law firm to Paul Duffy. Shortly afterwards, he resumed making phone calls and openly running things himself, and he started showing up at hearings and speaking to the judges. This is what tipped off Judge Otis Wright to ask who the real parties in interest were in these lawsuits.

Personally, it jaded me a bit to see that after being caught (having their grand scheme exposed by good lawyers), the lawyers for Prenda continued their stories of misinformation by lying under oath in their depositions and in court proceedings. Further, I was annoyed when I learned about the scheme unfold in its entirety, including the creation of various offshore entities created to funnel settlement payments, and where Prenda peddled the blatant lie that Mark Lutz (the paralegal) was the mastermind behind the lawsuits.

Being behind the scenes when all this was happening, I was also hearing about issues of Prenda Law lying to, not paying, and in one notorious case, turning against their own local counsel who put their law licenses in jeopardy to file the lawsuits on Prenda’s clients’ behalf. Lastly, there were even more issues that I was privy to that never even made it into the courtroom, namely what appeared to be a credible accusation that Prenda Law Inc. was uploading and seeding their own clients’ content on the bittorrent networks — the same bittorrent swarms in which they sued the internet users for downloading the content they uploaded.

My own thought process was that the proper judicial response was 1) for the federal judges to serve as the “guardians of the gates” of the federal courts [e.g., to kill the copyright infringement cases as they are filed based on principles of improper joinder, etc.], and 2) to prevent the attorney(s) at this point from practicing law through the remedies of suspension and disbarment through their local bar associations. If the attorney persists, the attorney(s) should be charged with the unauthorized practice of law. Yet none of this happened. A lawyer (who for the purposes of this article will remain private) filed ethical charges against John Steele to have him disbarred, and in return, Steele filed ethical charges against him [a story for him to tell, not my secrets to tell].  Then, Steele at some point appeared to have voluntarily disbarred himself and retired from the practice of law, and his organization went inactive in the Illinois state registry. Yet his involvement in the cases persisted.

Thus, I was not surprised when Judge Wright wrote his order sanctioning John Steele, the Hansmeier brothers, and all those involved in the conspiracy. What surprised me was their hubris in that they continued fighting after they already lost. This is why I call the Prenda Law fiasco a “circus.” Everybody continues to argue in circles, but nobody goes to jail.

So, getting back to yesterday’s hearing (YouTube Link), there were THREE ITEMS that I took note of in what was perhaps the most entertaining 3-panel judge hearing I have ever seen.

ITEM 1) John Steele and the Hansmeiers were quite upset that Judge Wright implicated them as having broken criminal laws, and even though they were never charged for the violation of those laws (which I could only guess include identity theft [forgery], extortion, perjury, fraud, and perhaps even money laundering and/or racketeering). [NOTE: There were other acts allegedly committed, including the unauthorized practice of law, violation of countless ethical rules including compensating a non-attorney as a partner of the law firm, alleged tax evasion, and misuse of corporate structures after they were dissolved, etc.] Many of these acts if looked into could make the principles of the law firm personally liable for any charges without the protection of a corporate entity.

They appear to have hired attorney Daniel Voelker for the sole purpose of disputing the $200K+ in sanctions awarded against them because Judge Wright implicated them in a lawsuit which they tried their darnedest to keep at an arms length through the use of legal structures, funneling money into offshore entities, using the paralegal as the “fall guy,” and through the use of local attorneys. But rather than arguing against the sanctions award on the merits of whether it was proper to award the sanctions, they appear to have been offended by the implication of having broken criminal law in what Judge Pregerson called “an ingenious extortion fraud [scheme].” Thus, they instructed attorney Voelker to request that the court REMAND (meaning, return to the lower courts as a “do over”) the case to the U.S. District Court so that they can properly defend the insinuation that they committed one or more crimes while running what was — at the time — the most successful copyright trolling extortion scheme in existence.

ITEM 2) Attorney Daniel Voelker appeared to be woefully unprepared for the hearing. When asked about the details of the various copyright troll lawsuits filed by Prenda Law Inc. / Steele Hansmeier PLLC / Steele Law Firm, PLLC, he was unaware of anything other than what was the subject of the appealed case. This was surprising to the judges, it was surprising to me, and I am sure it was surprising to the hundreds of “fans” who were watching the hearing live and streamed over the internet. How could this attorney not be aware of the hundreds of other filings that his client took part in?!?

I also want to point out that YET AGAIN, STEELE, HANSMEIER, AND MARK LUTZ THE PARALEGAL WERE NOTORIOUSLY ABSENT FROM THE PROCEEDINGS.

ITEM 3) Simplifying the discussions of damage multipliers and other damages issues that were discussed, the jist of what the judges needed to decide were 1) whether to uphold the sanctions award against Prenda Law and company, and 2) whether to remand the case so that the questions of criminal conduct could be hashed out.

IN MY OPINION, again, this whole Prenda Law fiasco is a circus. John Steele and his buddies have been “gaming” the system since they began, and even when their whole scheme came tumbling down around them, they turned to lying, cheating, and misdirection in order to get around the rules.

Nothing will right the wrongs that were inflicted on tens of thousands of internet users except seeing each of these attorneys disbarred and jailed for criminal conduct. Yet I cannot see this happening because notorious criminals today too often go uncharged. Judges too often find the “lazy” alternative of slapping an attorney with sanctions, and then not following up on their order when the attorney weasels their way out of paying those sanctions. This is a sign of a corrupt system, and as much as I have faith in the law, I do not have faith that the judges will inflict stern judgement (“fire and brimstone”) against a bunch of lawyers who look more like a**clowns in the courtroom.

Thus, it is my best guess that the sanctions will not only be upheld, but they will be strengthened and perhaps multiplied. However, as for the criminal prosecution of the clowns who perpetrated this grand heist of an extortion scheme, their activities will go unpunished. Maybe they’ll lose their law licenses (noting that in part, this has partially happened to some of them). Maybe they’ll be held personally liable without the shielding of the corporate entities they tried to use to hide their involvement in these cases. Maybe one or more of them will need to continue to hide their money indefinitely and file for bankruptcy. Maybe one or more of them will need to move out of the country and live out their days on a beach somewhere.

I don’t see orange jumpsuits in anyone’s future here. Not in today’s lawless society.

 

USEFUL ARTICLES ON YESTERDAY’S HEARING:

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As a quick recap, the Dallas Buyers Club, LLC piracy lawsuits started in Texas and Ohio, and like a cancer, over the past year they have metastasized into the federal courts of Illinois, Florida, Oregon, Washington, Colorado, Michigan, Indiana, Wisconsin, and even Hawaii.  Copyright lawyers employed by Dallas Buyers Club have even moved their copyright enforcement activities offshore into Canada, Australia, Finland, Denmark, and Japan.

Regardless of where they go, their business model is the same — Voltage Pictures, LLC or Dallas Buyers Club, LLC files a peer-to-peer lawsuit alleging copyright infringement against multiple John Doe Defendants (generally referred to by plaintiffs as “pirates”), they convince a federal judge to rubber-stamp a subpoena demanding that the ISP turn over the contact information of the accused account holders unless the accused account holders file what is known as a “motion to quash.”  The target of the subpoena is almost always the account holder, implying that the account holder is the actual downloader or infringer who downloaded the Dallas Buyers Club (2013) movie.  The plaintiff attorney then sends one or multiple settlement demand letters to the accused downloaders in each case threatening that each will be “named and served” as a defendant in the lawsuit unless they pay a settlement of thousands of dollars (settlement requests average $3,500 to $6,500 [and in one case, $14,000, really?] depending on the state in which the lawsuit is filed).

Where the settlement demand letters blur the line of ethics is that many plaintiff attorneys employ scare tactics, making the John Doe Defendant believe that the lawsuit has already been filed against them personally.  Various attorneys have sent accused downloaders “waiver of service” forms and questionnaires along with their settlement demand letters suggesting that the not-yet-named-defendants answer these questions voluntarily, or that they waive service effectively negating the need for the plaintiff attorney to name and serve them as a defendant.

What bothers me is that because Dallas Buyers Club is not an “adult film” copyright infringement lawsuit (but rather, a “real” movie with a valid copyright and without the stigma of being an adult film), the federal judges are giving them leeway to move in and out of the federal courts to “enforce” their copyrights.  In U.S. copyright law, there is a legal presumption of validity, which means that a judge will initially lean towards favoring the copyright owner until that copyright owner has been shown to be abusing the legal process through a pattern of abuse.  Attorneys for copyright holders who represent the plaintiff generally (in our blog and in the eyes of the courts) get increased scrutiny because they have represented other copyright holders in similar lawsuits employing the same strategy of “sue and settle, but try not to name and serve [and if you do, bluff to the judge that you are prepared to go to trial on the merits of the case].”

These lawyers who file Dallas Buyers Club lawsuits (these are those who sue defendants, NOT those who defend defendants) include a growing list of attorneys, such as: Keith Vogt (Texas), Michael Hierl (Illinois), David Stephenson Jr. (Colorado), Eric Osterberg (Connecticut), Richard Fee (Florida), Paul Nicoletti (Michigan), Carl Crowell (Oregon), Leon Bass (Ohio), and Gregory Ferren (Hawaii).

Many of these names are familiar to those who have followed our “copyright troll” / bittorrent lawsuit blogs over the years, and we often see these names representing one copyright holder after another in the same fashion.  Regardless of who the lawyer is, be aware of the motivation of the Dallas Buyers Club lawsuits — to create a ‘windfall’ profit for the company by pursuing those who download the movie without authorization, and to scare and intimidate the accused downloaders into paying large settlement amounts to avoid defending the claims against them in court.

Related: Dallas Buyers Club launches post-Oscar copyright salvo, sues 615 Does (ArsTechnica)

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After my “Dallas Buyers Club, LLC is a modern-day Icarus Story (TXSD)” article on August 13th, I called Keith Vogt, the plaintiff attorney for Dallas Buyers Club. In our call, I ascertained his motivations regarding how he plans to approach Judge Hughes here in Texas, and what he plans to do with the other cases (duck and run, or push forward).

As I suspected, he expressed no “duck and run” mentality (not even privately), as we have seen in similar past cases with other past “copyright troll” plaintiff attorneys. In fact, Vogt appeared to be undeterred considering the outcome of the case, mentioning that he has NINE (9) other cases alive and well in the Southern District of Texas, seven of which were in their INFANT STAGES and all current cases are assigned to judges other than Judge Hughes.

Below is a list of those new cases:

Dallas Buyers Club, LLC v. John Does 1-25 (Case No. 4:14-cv-02119)
Dallas Buyers Club, LLC v. John Does 1-25 (Case No. 4:14-cv-02120)
Dallas Buyers Club, LLC v. John Does 1-25 (Case No. 4:14-cv-02121)
Dallas Buyers Club, LLC v. John Does 1-25 (Case No. 4:14-cv-02124)
Dallas Buyers Club, LLC v. John Does 1-25 (Case No. 4:14-cv-02217)
Dallas Buyers Club, LLC v. John Does 1-25 (Case No. 4:14-cv-02219)
Dallas Buyers Club, LLC v. John Does 1-25 (Case No. 4:14-cv-02220)

and of course, the two older cases:

Dallas Buyers Club, LLC v. John Does 1-31 (Case No. 4:14-cv-00248)
Dallas Buyers Club, LLC v. John Does 1-45 (Case No. 4:14-cv-00815)

Each of the newer cases were filed on either 7/24 or 8/2 (before Vogt’s problems with Judge Hughes surfaced). I have been watching these cases, and the judges in most of them have granted permission for Dallas Buyers Club, LLC to send subpoenas to the ISPs to ascertain the identities of the John Doe Defendants. These people will be receiving letters from their Comcast Xfinity Subpoena departments in the coming days and weeks.

Two interesting items to note: Plaintiff attorney Vogt has roughly 175 potential defendants, each of whom will likely be asked for a settlement of thousands of dollars. He has also not filed any new cases since the August 13th debacle with Judge Hughes, likely understanding that they will be assigned over to him, and this may or may not be a fight he wants to instigate just yet. On a more concerning note, on Thursday, Vogt named and served eight (8) John Doe Defendants in his 4:14-cv-00815 case. This is one of his older cases, and I understand that he needed to do so because Judge Gray Miller was pressuring him to do so before the upcoming hearing. Instead of posting the names of the named and served defendants, I have pasted a screenshot of the docket which lists the named defendants — you can see the named defendants referenced below in Documents 21 & 22.

Named and Served Dallas Buyers Club, LLC defendants

Dallas Buyers Club, LLC attorney Keith Vogt names and serves defendants in the 14-cv-00815 lawsuit.

In sum, on August 13th, I commented to a friend that I did not think the judges in Texas spoke to each other. I am still of the opinion that federal court judges appear to lord over their court as if their court is their own sovereign territory. It would be nice if one judge poked his head into another courtroom once in a while.  If he or she did, they would notice that the proper answer to cases such as these is CONSOLIDATION.

In a perfect world, Judge Hughes would consolidate all of the Dallas Buyers Club, LLC cases into one case, since all of the cases relate to the same common questions of fact.   Doing this would prevent contrary rulings from neighboring judges, and it would create a common rule of how to handle, facilitate, and ideally to dispense with all forms of “copyright trolling” cases in the federal courts.

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Dallas Buyers Club, LLC Texas-based lawsuits in my opinion tell a modern story of Icarus who flew too close to the sun with wings of feathers and wax and got burned. The reason for this is because these cases have caused one Texas federal judge to rule against their fictitious name “John Doe” lawsuits.

There was news today that affects the Dallas Buyers Club, LLC cases filed here in the Southern District of Texas (TXSD). The news is not only a black eye for the Dallas Buyers Club, LLC attorney, but as a result of today’s news, Dallas Buyers Club, LLC might never again file here in Texas.

Dallas Buyers Club, LLC cases have been rather docile here in Texas. Until ten days ago, they only filed two cases:

Dallas Buyers Club LLC v. Does 1-31 (Case No. 4:14-cv-00248), and
Dallas Buyers Club LLC v. Does 1-45 (Case No. 4:14-cv-00815).

Strategically, until now, the plaintiff attorney did not have local counsel, and it was almost certain that he would not fly down to Texas to appear for the hearings, so there was really nothing to talk about with these cases. Yes, of course he could have appeared by telephone, but I’ve been at those hearings, and they almost never end well for the absent attorney.

However, here the plaintiff attorney did hire local counsel and ten days ago, they filed Dallas Buyers Club, LLC v. Does 1-25 (Case No. 4:14-cv-02218); the case was assigned to Judge Lynn Hughes.

Now I’ve seen Judge Hughes rule in a number of cases. While many Texas judges typically allow bittorent cases to sit on their dockets for months at a time, I don’t think Judge Hughes had any interest in allowing this case to sit for any length of time. My understanding is that Judge Hughes was very aware of the copyright trolling problem from the previous copyright troll adult film cases we were fighting back in 2011-2013, and the new filings by Dallas Buyers Club, LLC across the U.S. was a problem that threatened to turn into a Malibu Media, LLC problem.

My guess is that Judge Hughes immediately identified the “John Does” copyright infringement case [filed by an out-of-state attorney] on his docket as a cookie-cutter copyright troll lawsuit. The complaint even read almost identical to the pornography cases we tried against Prenda Law Inc. and their local counsel Doug McIntyre just two years before this.  Within four days, Judge Hughes ordered the plaintiff to identify the defendants, I assume because he was not about to tolerate yet another “John Doe” lawsuit against fictional characters and putative defendants on his docket for months while the attorney shook down each putative defendant for thousands of dollars a piece.

The problem is that the plaintiff did not yet have the names of the putative defendants from the ISPs, and so when ordered to remove the fictional “John Doe” character names, he could only identify them as “Internet User (IU) subscribers having a particular IP address” thinking that would satisfy the judge. It didn’t.

For the rest of the story details, I invite you to read Sophisticated Jane Doe’s article on the case. What I can contribute, however, is that as a result of this case, any Dallas Buyers Club, LLC case filed in this district is ordered to be assigned to Judge Hughes, which suggests that it will die upon arrival. Similarly, moving forward, I suspect that the plaintiff attorney will likely be dismissing all cases which are assigned to Judge Hughes, which will no doubt raise suspicions of not “forum shopping,” but rather, “judge shopping,” a tactic that Prenda Law Inc. got in trouble for exploiting years back.

In sum, starting in 2010 with the Larry Flynt Production (LFP Internet Group, LLP) cases in the Northern District of Texas, and now ending with the Dallas Buyers Club, LLC cases in the Southern District of Texas, it is becoming apparent that Texas judges no longer tolerate copyright troll bittorrent-related cases.

On a personal note, I understand that this most recent Dallas Buyers Club, LLC filing was supposed to be one of many more cases to be filed here in Texas. And, just as Icarus flew too close to the sun, it was inevitable that this copyright holder would stumble upon a judge who dealt with the predatory bittorrent pornography cases we dealt with a few years ago. It was just a matter of time.

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ID-100157775Image courtesy of @artur84 / FreeDigitalPhotos.net

Much of the bittorrent world is saddened by the leaked news reports of the recent “Bellwether” case in the Eastern District of Pennsylvania (Malibu Media v. John Does, Case No. 5:12-cv-02088) where at least one defendant is reported to be facing close to $112,500 in damages plus attorney fees for the peer-to-peer downloads he is said to have taken part in. The plaintiff attorneys, along with Keith Lipscomb and others who have a vested interest in seeing bittorrent cases against internet users succeed are drinking champagne and celebrating their victory.

It is both my professional belief and my personal conviction that copyright trolling lawsuits are wrong, and while there is nothing illegal in suing a defendant for copyright infringement, doing so in my opinion is unlawful and morally corrupt. These lawsuits are nothing more than a STAGE SHOW to permit a behind the scenes SHAKEDOWN of accused interent users, whether or not they actually participated in the accused infringement. For G-d’s sake, the “guilty” so-called “criminal” defendant merely clicked on a link, and downloaded a title that was openly shared with thousands of other downloaders. To hit that defendant with a shock lawsuit where they face $150,000 statutory damages for a video that could have been purchased for a few bucks is a disproportionate punishment for the “crime” of downloading copyrighted films. Rather, instead of suing downloaders and letting the piracy continue, why not just end the piracy problem by issuing a DMCA take down notice to the bittorrent tracker? The alternative of sitting in bittorrent swarms and employing tracking software to track the IP addresses of who is downloading to me just seems like an abusive step to what would otherwise be a simple problem of making the torrent files go away so that unsuspecting downloaders couldn’t click on the links.

It is my conviction that copyright infringement lawsuits are wrong because it is simply immoral to shake down EVERY John Doe Defendant (yes, each one) with the threat of having to defend a lawsuit in federal court unless they cough up tens of thousands of dollars for downloads that the John Doe Defendant often did not even take part in. I have personally seen copyright trolls such as Malibu Media, LLC take large sums of money from defendants who did not do the download, but who were pressured into settling simply to avoid being named in a lawsuit. It is no secret that defending a case is sometimes significantly more expensive than settling a case.

Yet even with the pending resolution of this lawsuit, accused defendants across the U.S. in their own lawsuits should understand that this ruling will not be binding on other federal courts in other federal districts. Each federal court makes their own rules as to what constitutes copyright infringement, and what evidence is required to prove a defendant guilty when the so-called infringement happens via a bittorrent download. This is our job as attorneys — to know which districts have rules in favor of bittorrent users, and to know which districts have ruled in favor of the copyright holders. No doubt, the Eastern District of Pennsylvania will now become a favored spot to sue internet users accross the U.S. for copyright infringement.

Lastly, on a personal note, this case does not change the way a lawyer handles copyright infringement cases. At least in our Cashman Law Firm, PLLC, there is no silver-bullet approach — some defendants choose to settle, and many do not. Considerations as always involve 1) whether the download actually happened and the circumstances surrounding the accused activities, 2) the accused defendant’s willingness to fight and defend a copyright infringement lawsuit, 3) the accused defendant’s aversion to risk of having their name become public knowledge in a court proceeding, and 4) the accused defendant’s financial ability to take each of the various pathways we suggest.

In sum, not all guilty defendants settle, and not all non-guilty defendants fight.  It is simply a calculation and a risk assessment that is based on the client’s desires, the federal district in which the lawsuit is filed (taking into consideration past bittorrent cases filed in that jurisdiction), the judge who assigned to the case (taking into consideration his past rulings), and the plaintiff attorney (or more frequently, the local counsel’s) proclivity towards naming, serving, and taking defendants to trial balanced with their willingness to negotiate an amicable settlement should we decide to go that route.

Bittorrent cases [in their current form] have now been around for three (3) years, and now we have a verdict where a case has been taken to trial — by Malibu Media, LLC surprisingly enough.  When we started, there were no cases taken to trial, and now there is one.  Before the appearance in 2010 of the bittorrent cases, all we had to go on were the old Napster and Grokster cases, combined with the various lawsuits filed by the RIAA / MPAA and miscellaneous copyright infringement files dealing with the internet. Up until now we have been developing case law surrounding peer-to-peer downloads as each case matures. Now we are starting to get some clarity as to the law surrounding bittorrent use.

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houstonlawy3r:

Sometimes there are no words other than silence to best express the thoughts I have about Judge Wright’s order essentially referring John Steele and the Prenda Law Inc. gang to the IRS’ Criminal Investigation Division (CID) for all the settlements on which no taxes were paid. There is one police agency that a criminal organization does not want to be contacted by, and that is the CID.

The $81K in sanctions essentially funds the lead attorneys who spent time on this case. And, the referral to the bar associations means that the principals at Prenda Law Inc. may no longer have their law licenses shortly.

In sum, there is not much for me to comment here, except to be silent, because the judge’s order itself says all it needs to. Copyright trolling may seem profitable for the attorneys filing the lawsuits, but no money can compensate for the loss of freedom that one experiences when what was once a multi-million dollar law practice lands the principles in prison for tax evasion. This should be a lesson to all other copyright trolls out there. Judge yourselves accordingly.

Originally posted on Fight Copyright Trolls:

We have been waiting for this moment for a long time. Congratulations to everyone involved, especially Morgan and Nick.

Media coverage

View original 428 more words

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A number of interested readers have wondered what my opinion was about Monday’s sanctions hearing against Prenda Law Inc., Brett Gibbs, John Steele, Paul Hansmeier, and the others [Case Cite: Ingenuity 13 LLC v. John Doe, Case No. 2:12-cv-08333, in the California District Court (Case Documents “Recap’d” here)]. Quite frankly, I read the #Prenda Twitter stream throughout the day just as many of you did.

Up front, there were some pretty good articles on the event, and as far as I am concerned, there is nothing substantive that I can add to what has already been written. I advise anyone affected by the AF Holdings, LLC cases (or any of Prenda Law Inc.’s so-called “trusts”) to read the following articles:

IN ORDER OF APPEARANCE:

In sum, it is my opinion that whatever the result, there was a lesson taught — that copyright trolls are not “above the law,” so to speak. As far as the effect of Monday’s hearing, we will not know the effect until we read Judge Wright’s order (which we do not expect to see for a few days). However, as for the applicability, the ruling will apply nationwide, and no doubt every court which hears their cases will probably receive a copy of the order.

There is a lot of mention of “trusts” when it comes to the Steele|Hansmeier organization.  I have a “love-hate” relationships with trusts. They form a wonderful legal alter-ego function when it comes to protecting assets and benefiting third party beneficiaries. However, in scenarios like this, I believe they are tools to break the law and hide from responsibility. The problem here is that I’m not so sure Steele and Co. could pull off having a trust without it being broken by the courts.

From what I have read, it is my opinion that there is too much involvement in the trust by all parties, and putting it simply, keeping the classic definition and rules of a trust, I’m not sure they’ve done it in a way which could withstand scrutiny. For example, I’m not sure who the grantor is, who the grantee (receiver of assets) is, and for which beneficiary or purpose was the trust formed. Are there any documents relating to the formation of the trust?  Are there any filings anywhere relating to the trust?  Also, who is the trustee who is in charge of directing and managing the funds of the trust? I would be worried of the parties mishandling the movement of the funds (the trust assets), and this is where they may get busted for playing the trust game… not to mention that I hear that nobody has filed taxes on this income and all the members are U.S. citizens? I can’t believe no taxes have been filed or paid, because if not, the IRS would be after them for tax evasion (and I have heard nothing of the sort happening).

As far as the Hansmeier deposition that nobody gets paid and that every lawyer gratuitously works for free without receiving an income, I call BS on that statement. It appears to me that he is playing semantics with the term “income” according to the tax code, and he can get in trouble the way he has maybe misused the term. No lawyer, as wonderful as any of them might be, would work for “no income.” Even Brett Gibbs. I assume there is some foreign trust account set up for each of them into which funds get deposited on a regular basis. And, those “offshore trusts” need to pay taxes just like any other legal entity.

My sadness from Monday’s events stem from the fact that Steel/Hansmeier/Duffy clan staying out of court was a very smart move. By staying as far away from the court as possible, Judge Wright was unable to swear them in, and he was unable to take their [what would likely have been incriminating] testimony. If he sanctions them, if he orders a bench order for their arrest (not likely), or if he does something to them, from a distance [and out of jail], they can easily appeal any order the judge makes, essentially eviscerating any legal authority Judge Wright may show.

I mentioned to a few other lawyers how queasy attorneys get when a judge speaks strong words. However, we all have been watching these cases for almost THREE YEARS NOW (come June), and I have never seen a judge do any damage to a copyright troll. Even Evan Stone, the prolific copyright troll out of Dallas, Texas — for sending subpoenas out before the judge gave authorization to do so, he was only sanctioned $10,000 (essentially one day’s income for Steele, according to Alan Cooper’s testimony, or three of Evan Stone’s settlements).

At the end of the day, unless the result of this hearing is a state bar disciplinary hearing (or more seriously, a criminal investigation if there was indeed “fraud” in the legal sense), and unless some lawyers lose their licenses, there will be no deterrance from Prenda Law Inc. (or any other copyright troll) thinking twice about their actions, and copyright trolling lawsuits will grow exponentially until enough people cry out, “this must be stopped!”

UPDATE (3/14/2013):

SJD reports that Judge Wright has ordered the Steele|Hansmeier gang to appear on 3/29/2013 based on “their pecuniary interest and active, albeit clandestine participation in these cases” (emphasis added).  He continues that “Not only does [their motion not to appear] lack merit, its eleventh-hour filing exemplifies gamesmanship”  (emphasis added).  Wow.  Further, the judge expanded his inquiry to impose sanctions not only to the original masterminds of these lawsuits, but to the so-called entities who are supposed to be separate and apart from their operation (they’re not).  He called Livewire Holdings LLC, and 6881 Forensics, LLC to be present at the hearing.  Now if these entities will be represented by the same Steele / Hansmeier / Duffy / Lutz characters (Hansmeier’s deposition already pegged paralegal Lutz as the CEOs of a number of these entities), this will look very bad for them.

NOTE: A commenter referred to this article (or me) as a “buzzkill,” and that got a good laugh out of me.  If you knew how much my reporting on these blogs represented how dull I sometimes am in real life, the humor of that comment is pretty on-point.  On this note, however, if you read Judge Wright’s order carefully, again, he’s only threatening sanctions.  Even if he imposes $1 million dollars in sanctions, I cannot imagine Steele and the others would pay it.  After all, they technically don’t “own” that money that is in the various trusts (#sarcasm).

Also see:

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