Prenda's John Steele Pleads Guilty, Admits To Basically Everything

Legal Issues

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

Remember all the bravado behind John Steele and his copyright porn trolling? I’ve noted in the past that Steele reminded me of some guys I knew in college who believed that they were so smart that they could do whatever they wanted, and talk their way out later if they got into trouble. And, for many years, it seemed that Steele was fairly successful in doing exactly that. Remember all his big talk right after Judge Otis Wright referred Steele and his partners to law enforcement over his copyright trolling efforts? At the time, he yelled and screamed about how it was unfair and unprecedented, and insisted loudly that he would prevail.

I?and others involved?have been in front of hundreds of judges. This is the first judge that has ever sanctioned anybody involved with Steele Hansmeier, Prenda Law, or whatever.

He also continued to insist that he barely had any role at all in the grand scheme, involving shell companies, forged documents, faked honeypots and more:

I work part-time with Livewire Holdings, one of the entities that Lutz owns. My role is on the business side. I acquire other adult content companies and deal with expanding the holding company. The main goal is to handle a lot of content and websites and to be involved in the adult space. For that, I’m paid a flat fee. I won’t say how much, but it’s a modest flat sum.

Anyway, fast forward a few years, and as you’ll recall, Steele and his partner Paul Hansmeier were arrested late last year, and on Monday Steele pled guilty in court in a deal where he basically admits to everything that many of us covering the Prenda saga had suggested he was doing over the years. It’s all in there. The summary (though even more is in the full document):

Beginning in about 2011 and continuing until about 2014, defendant John L. STEELE and co-defendant Paul Hansmeier executed a scheme to fraudulently obtain millions of dollars in copyright lawsuit settlements by deceiving state and federal courts throughout the country. The defendants–both lawyers–used sham entities they controlled to obtain copyrights to pornographic movies, some of which they filmed themselves. The defendants then uploaded the movies to file-sharing websites hoping to lure people into downloading their movies. When STEELE and Hansmeier ensnared someone in their trap, they filed false and deceptive copyright infringement lawsuits that concealed their role in distributing the movies, as well as their significant personal stake in the outcome of the litigation. After fraudulently inducing courts into giving them the power to subpoena internet service providers and thereby identify the subscriber who controlled the IP Address used to download the movie, the defendants used extortionate tactics to garner quick settlements from individuals who were unaware of the defendants’ role in uploading the movie, and often were either too embarrassed or could not afford to defend themselves. When these individuals did fight back, the defendants dismissed the lawsuits rather than risk their scheme being unearthed. After courts began limiting the number of people STEELE and Hansmeier could sue in one lawsuit, they changed tactics and began filing lawsuits falsely alleging that computer systems belonging to certain of their sham clients had been “hacked” and recruited ruse defendants to fraudulently obtain authority from courts to subpoena internet service providers. Furthermore, when courts began questioning the defendants’ tactics, the defendants repeatedly lied and caused others to lie to courts in order to conceal the true nature of the scheme. The defendants also caused interstate mailings and wire transmissions to be conducted in furtherance of the scheme to defraud.

All that and more are in the document that Steele has now signed, confessing to it all. Now, as I’ve discussed in the past, it does pay to be at least somewhat careful around believing what’s in plea bargains, as the pressure put on people who’ve been indicted to sign such an agreement is massive — usually involving an agreement to agree to less time in prison in exchange for an easy plea. However, as Ken “Popehat” White notes in his thorough write up of the case, in this case, it doesn’t appear that the “plea bargain” is much of a bargain at all for Steele. He isn’t agreeing to much of a “lesser” charge to get off easy. He’s agreeing to all the key things, and then hoping maybe that the judge will go on easy on him later, because he’s also agreed to roll over on Hansmeier:

Steele and the government have stipulated to factors yielding an anticipated guideline range of 97-121 months of imprisonment. Yes, up to ten years in federal prison. This is not a highly favorable plea agreement ? Steele isn’t getting any killer deal (yet) for pleading guilty. The feds made him plead to both mail fraud and money laundering ? a “good deal” would drop the money laundering. In addition, the feds made Steele agree to just about every Guideline enhancement I can think of, rather than leaving those enhancements open to argue. Steele has truly hurled himself on the sword here….

[….]

I’ve seen a lot of plea agreements in a lot of federal cases, and I don’t recall another one that so clearly conveyed the defendant utterly surrendering and accepting everything the government demanded, all in hopes of talking his sentence down later. Trusting your ability to talk your way out of it later is typical of a sociopath and a con man, of course.

Ken, of course, has a bunch of more insightful thoughts on this as well, so go over and read it if you haven’t already.

Of course, now this means that Hansmeier is in even deeper shit than Steele. The feds have no reason to cut a deal with him to roll over on Steele, and Steele has now agreed to testify against Hansmeier. They may still cut a deal, but it certainly appears that the final chapter concerning Prenda isn’t ending well for either Steele or Hansmeier. Of course, in the meantime, after my last post, people noted that Hansmeier’s wife has picked up on Hansmeier’s “encore” act of doing ADA trolling — a very similar legal scheme in which they find some sort of minor technical violation of the Americans with Disabilities Act, and then try to shake down small businesses into paying up. You’d think that maybe after seeing how the copyright trolling has ended up for her husband, Hansmeier’s wife might reconsider doubling down on the family business. Remember, last we’d heard, the FBI was also looking into Hansmeier’s ADA trolling activities. So we may not be able to retire the “Prenda” tag just yet…

Filed Under: ada trolling, copyright trolling, doj, john steele, money laundering, paul hansmeier, plea deal
Companies: prenda, prenda law