otis wright – Techdirt (original) (raw)

Team Prenda Done Fighting Judge Otis Wright

from the govern-yourself-accordingly dept

Well, one of the big Prenda cases may finally be over. As you may recall, the first truly scathing legal ruling against Team Prenda came a little over three years ago when Judge Otis Wright basically lit Team Prenda on fire. If you haven’t read that whole decision in a while, it’s still a thing of beauty. Here’s just one paragraph:

Plaintiffs have demonstrated their willingness to deceive not just this Court, but other courts where they have appeared. Plaintiffs? representations about their operations, relationships, and financial interests have varied from feigned ignorance to misstatements to outright lies. But this deception was calculated so that the Court would grant Plaintiffs? early-discovery requests, thereby allowing Plaintiffs to identify defendants and exact settlement proceeds from them. With these granted requests, Plaintiffs borrow the authority of the Court to pressure settlement.

Since this was their first really major loss in court, Team Prenda still brashly insisted they would prevail on appeal, and that Judge Wright’s ruling would not last. At the time Prenda mastermind John Steele even insisted that this was the only time that they had lost:

But very few people can argue that these [sanctions] are allowed, legally. The overwhelming majority of courts have found in our favor in hearings. The only cases that stand out are Judge Wright.

Of course, since then, court after court after court after court after court has ruled against Steele (there are more, I just got tired of finding them all). And, of course, Steele is facing discipline from the Illinois Attorney Discipline Board and, quite possibly, criminal trials (where the investigation likely began following Judge Wright’s ruling, which passed along the info to law enforcement).

In the midst of all of this, Steele’s big appeal of Wright’s ruling, that he was so sure about, fell flat on its face back in June. For all of Steele’s talk about how Wright was totally off base and there was no basis for sanctions, the 9th Circuit didn’t buy it at all.

The district court did not abuse its discretion in ordering the Prenda Principals to post additional bond to cover Doe?s attorney?s fees on appeal. The district court had ample reason to do so. The Prenda Principals have engaged in abusive litigation, fraud on courts across the country, and willful violation of court orders. They have lied to other courts about their ability to pay sanctions…. They also failed to pay their own attorney?s fees in this case. Considering the Prenda Principals? tactics throughout this case, it was not an abuse of discretion to increase the bond amount to cover the projected cost of attorney?s fees on appeal.

Given all that, the case went back down to Judge Wright and, finally, it appears that this case is really over. Earlier this week, Judge Wright basically closed out the case after Steele and Hansmeier* agreed to settle rather than try to fight on, with the insurance company that had originally secured the bond they needed to get to cover the possible sanctions, SureTec, agreeing to pay out the money. (*Well, not really Hansmeier — since he filed bankruptcy, the bankruptcy trustee handled it for him instead).

Doe, Steele, and Hansmeier filed a stipulation and proposed order with the Ninth Circuit seeking to settle all issues that were the subject of the appeal, the relevant terms of which are as follows: (1) Doe shall be paid a total amount of 132,393.75,whichconsistsoftheoriginal132,393.75, which consists of the original 132,393.75,whichconsistsoftheoriginal81,319.72 sanction, 278.73ininterest,and278.73 in interest, and 278.73ininterest,and50,795.30 in costs and fees incurred on appeal; (2) Doe will move this Court for summary adjudication of SureTec?s obligation on the bonds in the amount of $132,393.75, which Steele and Hansmeier agree not to oppose; and (3) Doe, Steele, and Hansmeier agree not to file any further motions, appeals, or petitions for writ of certiorari on the issues adjudicated on appeal.

Judge Wright accepts the agreement and the case is basically, finally, over.

Filed Under: copyright, copyright trolling, john steele, otis wright, paul hansemeier, sanctions
Companies: ingenuity 13, prenda, prenda law

Appeals Court Trashes Prenda's Appeal, Affirms Sanctions

from the many-shoes-dropping dept

The shoes keep dropping for Team Prenda (now basically down to just Paul Hansmeier and John Steele). As it appears that the FBI is getting close to bringing a criminal action against the two, it’s big appeal in the 9th Circuit has fallen flat on its face. This was the appeal of Judge Otis Wright’s blistering opinion, slamming Team Prenda for all sorts of dishonest and sketchy actions, passing on their info to law enforcement (possibly kicking off the FBI investigation) and issuing $81,319.72 in legal fees and sanctions for the games they played with the court, involving copyright trolling, lying about who actually ran the “company” that was suing (Ingenuity 13) and otherwise general lying to the court.

Steele had insisted that they would win on appeal and that Judge Wright was impossibly biased against them, but when the case was heard over a year ago, it appeared to go very badly for Team Prenda. And that’s confirmed today with this short and sweet ruling by the appeals court upholding Judge Wright’s original ruling. The crux: all of the evidence basically showed that Wright was absolutely correct that Hansmeier and Steele (and Paul Duffy, who has since passed away) were up to no good:

Based on the myriad of information before it?including depositions and court documents from other cases around the country where the Prenda Principals were found contradicting themselves, evading questioning, and possibly committing identity theft and fraud on the courts?it was not an abuse of discretion for Judge Wright to find that Steele, Hansmeier, and Duffy were principals and the parties actually responsible for the abusive litigation. Similarly, it was not an abuse of discretion for Judge Wright to find that the Prenda Principals were indeed the leaders and decision-makers behind Prenda Law?s national trolling scheme.

Also this:

The district court did not abuse its discretion in ordering the Prenda Principals to post additional bond to cover Doe?s attorney?s fees on appeal. The district court had ample reason to do so. The Prenda Principals have engaged in abusive litigation, fraud on courts across the country, and willful violation of court orders. They have lied to other courts about their ability to pay sanctions…. They also failed to pay their own attorney?s fees in this case. Considering the Prenda Principals? tactics throughout this case, it was not an abuse of discretion to increase the bond amount to cover the projected cost of attorney?s fees on appeal.

So, yeah, the grand appeal here has fallen completely flat. This is the second appeals court to do so, as the 7th Circuit did it a couple years ago too. At this point, it’s difficult to see how either Hansmeier or Steele will keep their law licenses (though both have been filing ADA trolling cases in the meantime), and depending on how the FBI case goes, things may get even worse for them.

Filed Under: 9th circuit, copyright, copyright trolling, fraud, john steele, otis wright, paul duffy, paul hansmeier
Companies: prenda, prenda law

DOJ Claims Judge Who Trashed 'Made Up Plot' Should Be Removed For Being 'Hostile' To The Gov't

from the because-the-doj-can't-lose dept

The self-assured nature of federal prosecutors can be quite insane. We’ve talked many times in the past about how the criminal justice system is completely rigged against anything remotely looking like fairness. From grand juries to plea bargains to sentencing guidelines, the entire system is designed to make anyone who enters it presumed guilty until their spirit is crushed and destroyed. In the last few years we’ve noted an even more disturbing trend: law enforcement creating their own plots, in which they lure (often gullible or marginalized) individuals into a convoluted criminal “plot” in which nearly all of the other players are fellow law enforcement folks (or informants). They then build up this big plot… wait until it’s about to go off (knowing it’ll never actually happen) and then arrest those they lured into it. It has happened over and over and over and over and over and over and over and over and over and over and over and over again. Courts have found that this is technically not “entrapment,” even though it sure appears to come close to it.

That’s why we were quite happy to see a federal judge finally call out one of these questionable plots. Earlier this year, we wrote about Judge Otis Wright (whose name you may recall from the beatdown he gave Team Prenda) calling out one of the ATF’s homegrown criminal plots for “outrageous government conduct” in creating a “made up crime.” Wright detailed how the government picked details of the entirely fictional plot at levels to guarantee felony charges, and also accused it of “trawling… poverty-ridden areas” in a “fishing expedition” dangling huge riches on people who have no money. He further noted that nearly all of the elements of “the crime” were done by the ATF:

But for the undercover agent?s imagination in this case there would be no crime. The undercover agent invented his drug-courier persona, the stash house, the 20 to 25 kilograms of cocaine supposedly inside the stash house, the two individuals supposedly guarding the stash, the need to use weapons, and the idea of robbing the stash house. He even provided the putative safe house and getaway van. Dunlap brought little to the table besides his sheer presence and perhaps the hope of being able to obtain some quick cash.

[….] …here, the undercover agent provided a getaway van, putative safe house, and?most important of all?the entire scheme and its fictitious components. He also alleviated Defendants? logistical and safety concerns when he ?proposed that he would be inside the stash house at the time of the robbery . . . .? …

So, how did the DOJ respond to this setback? Well, via Brad Heath, we see that the DOJ has gone to the appeals court to demand a new judge, accusing Judge Wright of being biased. Seriously.

Reassignment is warranted ?to ensure not only the existence, but the appearance, of impartiality,? such as when ?the district judge . . . may be viewed as having assumed the role of advocate.? … Here, as Dunlap himself has suggested…, the district court?s tone and actions have created the appearance of hostility to the government.

As set forth earlier, the court?s tone has not been one of impartiality. To be sure, a holding of ?outrageous? conduct necessarily entails strong language?condemnation is built into the very standard. But even so, the court?s comments are extreme: accusing the government of ?lead[ing] us into temptation?; of ?stoop[ing] to the same level as the defendants it seeks to prosecute? and ?creating crime?; of targeting people simply for being poor or for having bad thoughts; and of being ?cold-blooded and heartless.? Similar is the court?s refrain that the crimes of conviction were ?fake,? ?trumped up,? ?cut from whole cloth,? or ?made up??after all, it was Hudson who initiated contact, the defendants showed up with guns, one of which Whitfield boasted could cut a man in half…. Similar, too, is the court?s repeated criticism of the investigation as a ?trawling? expedition where bait was ?dangled? ?irresistibl[y]? before poor, ignorant defendants.

It is not just that the substance of the court?s accusations is wrong: merely erring is not grounds for reassignment. It is that the tone creates the appearance of hostility toward a government ?oppressor.? … And that tone is not limited to the court?s description of historical facts: it has been also dismissive to government counsel during hearings.

In short: because the judge called out the ATF and the DOJ for its outrageous behavior, that proves that the judge is biased and therefore unfit to hear the case. Only judges that accept our outrageous behavior are reasonable and should be allowed to hear our cases.

This is the attitude of federal prosecutors. The entire system is already rigged to support us, so if a judge somehow actually pushes back on something we did, then clearly he’s the problem, rather than our outrageous behavior.

Filed Under: atf, doj, entrapment, made up plots, otis wright, outrageous government conduct, own plots

Judge Otis Wright Slams 'Made Up' Government 'Plot' Designed To Ensnare Gullible Poor People

from the finally dept

For years now, we’ve been writing about the FBI’s now popular practice of devising its own totally bogus “terrorist plots” and then convincing some hapless individual to join the “plot” only to later arrest them to great fanfare, despite the fact that everyone (other than the arrested person) involved was actually an FBI agent, and there was no actual danger or real plot (or real terrorists) involved. In fact, we just had yet another such story. We’ve written about similar occurances over and over and over and over and over and over and over and over and over and over and over again — and, depressingly, it seems that courts repeatedly uphold this practice as not being entrapment. Many have been questioning why the FBI is spending so much time and money creating fake terrorist plots that don’t seem to protect anyone (but do give the FBI/DOJ lots of big headlines about “stopping terrorism!”), but the courts have basically let it go.

However, it finally appears that one judge thinks these kinds of things go too far — and it happens to be Judge Otis Wright, whose name you may recall from being the first judge to really slap down Prenda law for its obnoxious copyright trolling practices. Reader Frankz alerts us to the news Wright has dismissed a case involving the Bureau of Alcohol Tobacco and Firearms (ATF) for a similar “made up crime” and completely trashed the government for doing these kinds of things. As with his order in the Prenda case, I urge you to read his full dismissal which is granted for “outrageous government conduct.” Judge Wright, it appears, is not one to hide his opinions about those who abuse the legal system. The ruling kicks off with a hint of where this is heading:

“‘Lead us not into temptation,’” Judge Noonan warned. United States v. Black, 733 F.3d 294, 313 (Noonan, J., dissenting). But into temptation the Government has gone, ensnaring chronically unemployed individuals from poverty-ridden areas in its fake drug stash-house robberies. While undoubtedly a valid law-enforcement tool when employed to target or prevent demonstrated criminal enterprises, reverse stings offend the United States Constitution when used solely to obtain convictions.

This case didn’t involve “terrorism” like the FBI cases, but rather a similar “reverse sting” in which an ATF agent pretends to be a cocaine courier, tells some dupes about a “stash house” he knows about and then pushes them to rob the house. The ATF agent convinced a couple of guys, Cedrick Hudson and Joseph Whitfield, to take part, and they eventually brought along a third guy, Antuan Dunlap, after the ATF guy kept asking them to bring along associates. The group, lead by the ATF agent’s detailed plan, agreed to rob this house and then were all arrested. It’s the third guy, Dunlap, who argued that the government was engaged in outrageous conduct. The government claims that Dunlap bragging about being involved in past robberies means that it was perfectly reasonable to arrest him here, but Wright isn’t having it:

the Court finds that the Government’s extensive involvement in dreaming up this fanciful scheme—including the arbitrary amount of drugs and illusory need for weapons and extra associates—transcends the bounds of due process and renders the Government’s actions outrageous.

Wright is not persuaded by the fact that Dunlap apparently bragged about his criminal past to the ATF agent, noting the reality of the situation:

It makes little sense to justify the Government’s capricious, stash-house scheme at its inception by what Thompson later learned about Dunlap. In a situation where an apparently experienced cocaine courier is boasting to some small-time crooks about the chance to hit the mother lode, it is only human nature that the individual is going to try to impress the courier with wild tales of past criminal conduct. In this case, there is no evidence that Dunlap actually robbed a Western Union or Nix. But even if he did, Thompson did not learn about Dunlap’s alleged past crimes until after Dunlap joined the doomed-to-fail crew. The Government cannot bootstrap this post hoc knowledge to justify the scheme from the beginning.

Those commercial robberies also bear little upon the fictitious stash-house scheme or the home invasions the ATF sought to eliminate. In fact, when Dunlap was bragging about this past exploits, he disavowed any connection to drugs:

[Dunlap]: Keep my ass clean. I never touch dope. I’m just saying though.

[Whitfield]: He’s a jack boy, he don’t know nothing about no drugs.

So contrary to the Government’s contention, Dunlap’s “admissions” only served to demonstrate that he had no propensity to commit drug crimes—the entire subject of the reverse sting.

Judge Wright clearly sees how allowing this kind of activity is going to lead to serious problems, especially as law enforcement can prey on desperate individuals, coax them into various plots, and then arrest them:

Allowing after-the-fact knowledge to mitigate the Court’s concerns in a situation like this also creates a perverse incentive for the Government. It encourages the Government to cast a wide net, trawling for crooks in seedy, poverty-ridden areas—all without an iota of suspicion that any particular person has committed similar conduct in the past. And if the Government happens to get it right and catch someone who previously engaged in crime, the courts will place their imprimatur on the whole fishing expedition.

The Court declines the invitation to endorse this nab-first-ask-questions-later approach. While this situation is a win-win for the Government, it is really only lose-lose for the unwitting individuals unlucky enough to fall into the Government’s net. If they have never committed criminal activity in the past but agree to participate in the fake robbery, they go to prison—unless they can surmount the Everest-like hurdle to establish an entrapment defense.

This is important, because many people try to fight back against these kinds of cases with claims of entrapment, but Judge Wright correctly notes that (unfortunately) the bar to meeting an entrapment claim is ridiculously high. However, it’s pretty obvious that there is no crime here absent the government’s own intervention:

But for the undercover agent’s imagination in this case there would be no crime. The undercover agent invented his drug-courier persona, the stash house, the 20 to 25 kilograms of cocaine supposedly inside the stash house, the two individuals supposedly guarding the stash, the need to use weapons, and the idea of robbing the stash house. He even provided the putative safe house and getaway van. Dunlap brought little to the table besides his sheer presence and perhaps the hope of being able to obtain some quick cash.

…. Despite the Supreme Court’s admonition, the ATF manufactured this entire crime. It did not infiltrate an ongoing criminal enterprise, as there is no indication that Hudson, Whitfield, and Dunlap had any previous criminal affiliation between them.

Furthermore, Judge Wright notes that the government encouraged the activity, even if it wasn’t to the level of entrapment, it was still quite clearly the key driver of the entire “crime” and that’s what makes it “outrageous.”

…here, the undercover agent provided a getaway van, putative safe house, and—most important of all—the entire scheme and its fictitious components. He also alleviated Defendants’ logistical and safety concerns when he “proposed that he would be inside the stash house at the time of the robbery . . . .” …

Thompson also goaded Defendants to acquire weapons. He repeated several times over the course of the two-month ruse that “at least one of the individuals [guarding the nonexistent stash house] always carried a firearm.” … (“SA Thompson asked if HUDSON and WHITFIELD’s associates could handle it if something happened during the robbery (referring to someone getting shot).”); … (“SA Thompson asked if they could get him something (referring to a firearm), and WHITFIELD indicated he could get SA Thompson a little .380.”); … (“SA Thompson asked about WHITFIELD getting him a little ‘strap’ (referring to a firearm that was previously discussed) and SA Thompson offered to cash him out (meaning pay him for the firearm). WHITFIELD indicted [sic] he could get SA Thompson something.”); … (“SA Thompson next mentioned that there was always two individuals in the stash house and at least one of them was always armed, but as far as he knew, both could be armed.”); … (“SA Thompson later indicated that the occupants of the stash house may not go down very easy.”); … (“Like I said the one fool he is always strapped, but the other dude I think he might be, I just don’t know.”).) With Thompson continually sounding the war horn, it is not surprising that Defendants showed up to the final meeting with two weapons.

The undercover agent’s continued participation, assurances, and suggestions over the course of the two-month period made him “a partner in the criminal activity” rather than a mere “observer.” See Black, 733 F.3d at 308. His input was likewise “necessary” for Defendants to carry out their doomed plan, since but for Thompson’s imagination, there would have been no fictitious stash-house robbery to begin with— let alone the need for guns and extra associates.

Judge Wright points out that the government’s attempt to brush all of this away by noting the guys were willing participants is bogus, since they’re effectively preying on the extremely poor with promises of easy money. And, given the situation, the government can manipulate all the factors to basically nab anyone.

In these stash-house cases, the Government’s “participation in the offense conduct” is what makes them particularly repugnant to the Constitution. Everything about the scheme—and therefore almost everything bearing upon a defendant’s ultimate sentence—hinges solely on the Government’s whim. Why were there not 10 kilograms in the stash house? Or 100? Or 1,000? Why were the guards allegedly armed—necessitating that Defendants bring weapons along with them? All of these factors came down to the ATF and the undercover agent alone. That sort of arbitrariness offends the Constitution’s due-process demands.

In fact, Judge Wright notes that all of these choices by the ATF were not accidental. The push to get them to bring drugs, the amount of cocaine being discussed, each help the government pile on charges and potential time in jail. And while the government claims that defendants can argue a lack of intent in their own defense, Judge Wright notes that very few of these cases ever go to trial, because with the huge number of years in jail that people face, they almost always take a plea deal.

With the capriciously selected amount of drugs, a defendant has the proverbial Sword of Damocles hanging over his head. He is not likely to let it fall and face the considerable prison time that surely awaits him if he loses at trial—especially when the Government has spent, like in this case, months recording conversations inculpating him in the trumped-up conspiracy.

Judge Wright notes the absurdity of sentencing guidelines based on a crime that is entirely made up by the government:

But the Government’s rationalization is hopelessly circular. The Government seeks to prosecute Dunlap for a fake crime it cut from whole cloth. To justify the serious sentence Dunlap faces as the result of its imagination, the Government attempts to use its creation of the crime, including the need to establish the undercover agent’s credibility, as the validation for the amount of drugs. The amount of drugs then justifies the sentence. But since the Government created each necessity and justification, the sentence no longer bears a proportional relationship to the defendant’s culpability—just the Government’s imagination. Something more than mere bootstrapping is needed for the Government to take 15-plus years away from Dunlap’s life.

The Government’s argument also proves the problem with this whole scheme. The Government asserts that it dreams up these stash-house robberies to catch people inclined to commit home invasions. But the Government must make the robbery scheme tempting enough to nab a potential criminal. The Government thus sets the drug amount at a level apparently it knows that no poverty-ridden individual could pass up. So the Government essentially admits that this ruse is not meant to simply skim off those individuals likely to commit similar crimes; rather, it is designed to never fail. And the high number of fake stash-house convictions the Government has attained confirms this strategy.

Judge Wright doesn’t mince words about the impact of this case:

Zero. That’s the amount of drugs that the Government has taken off the streets as the result of this case and the hundreds of other fake stash-house cases around the country. That’s the problem with creating crime: the Government is not making the country any safer or reducing the actual flow of drugs. But for the Government’s action, the fake stash house would still be fake, the nonexistent drugs would still be nonexistent, and the fictional armed guards would still be fictional…. Instead, the Government comes close to imprisoning people solely because of their thoughts and economic circumstances rather than their criminal actions.

Society must question whether the astronomical cost associated with prosecuting fake crime is worth it.

So, the whole operation does nothing to take drugs off the street or stop any real crime. Instead? It just costs us all money:

But these stash-house cases do cost someone money: federal taxpayers. As of the date of this Order, there are 215,566 inmates in federal detention…. According to the Bureau of Prisons, the average cost to incarcerate a federal inmate in 2011 was 28,893.40….Infictitiousstash−housecases,theATFusuallyseeksa15−yearsentence….Thesefakerobberiesthereforecostfederaltaxpayersapproximately28,893.40…. In fictitious stash-house cases, the ATF usually seeks a 15-year sentence…. These fake robberies therefore cost federal taxpayers approximately 28,893.40….Infictitiousstash−housecases,theATFusuallyseeksa15−yearsentence….Thesefakerobberiesthereforecostfederaltaxpayersapproximately433,401 per defendant in incarceration costs alone—not to mention investigative, prosecutorial, defense, and judicial resources.

Judge Wright concludes with a stinging rebuke of the federal government and how it has confused law enforcement with “crime creation.”

The time has come to remind the Executive Branch that the Constitution charges it with law enforcement—not crime creation. A reverse-sting operation like this one transcends the bounds of due process and makes the Government “the oppressor of its people.” …. In this case, the Constitution will not tolerate subjecting an individual to prosecution for an imaginary crime subject to a very real punishment—a punishment which rests entirely on ATF agents’ whims.

It is entirely likely that the DOJ will appeal, but for now, once again, we send out kudos to Judge Wright for seeing a true scam for what it is and for not being afraid to actually use his power as a judge, who is in charge of upholding the Constitution, to push back on clear abuses of the Constitution.

Filed Under: atf, entrapment, government plots, made up plots, otis wright, own plots

Oops: Brett Gibbs Releases Spreadsheet Showing 70% Of Prenda Proceeds Went To Steele & Hansmeier

from the seems-dark-down-there-under-the-bus dept

If John Steele and Paul Hansmeier didn’t realize they were in serious trouble already, things just got a lot more difficult for them. As you may recall, Steele and Hansmeier have been bending over backwards to insist that they had nothing whatsoever to do with Prenda Law, and that they got no money from any of the settlements. Courts haven’t been buying this argument, and earlier this week we wrote about Judge Chen in Northern California noting that he was convinced that Steele and Hansmeier really were Prenda. But the evidence just got a lot stronger. It appears that Steele and Hansmeier’s attempt to throw lawyer Brett Gibbs under the bus has just come back to haunt them. Gibbs has just made a filing in the Judge Otis Wright case in the Central District of California (the first case to directly state that Hansmeier and Steele were clearly behind Prenda) that might be Steele and Hansmeier’s worst nightmare: because it reveals a spreadsheet showing how most of the Prenda settlement money went to them.

Ostensibly, the filing from Gibbs is an attempt to get out from Judge Wright’s order which lumped in Gibbs with Steele, Hansmeier, Duffy and Lutz as “principles” of Prenda, making them all responsible for the attorneys’ fees. Gibbs has been trying to distance himself from the Prenda crew for a while, but with this filing he reveals the real meat: it seems that there was a Dropbox account that was shared between Gibbs, Hansmeier and Steele, and in it was a spreadsheet revealing the payouts from Prenda settlements. And while Steele and Hansmeier have told courts that they are not associated with Prenda and not making any money from the cases, the documents… show otherwise.

Steele and Hansmeier have repeatedly claimed that they have no ownership interest in Prenda Law, AF Holdings or Ingenuity 13 and that all settlement proceeds are held in trust accounts for use in future litigation. For example, in the bar complaint filed in this Court, Steele stated “I have never had an ownership interest in Prenda Law Inc”; “I have never had an ownership interest in AF Holdings LLC or Ingenuity 13.” (Id. at pg. 83). In his deposition, Hansmeier testified that he had “no ownership interest [in AF Holdings] whatsoever” and that proceeds from settlements went into an attorney’s trust account and were withdrawn only to pay expenses of litigation. (ECF No. 69-1 at pgs. 9-13).

The truthfulness of these and similar statements is severely challenged by two documents which Prenda Law sent to the Dropbox account on Gibbs’ computer in early 2013: “Prenda Law Profit and Loss Detail, January through December 2012” and “Prenda Law Balance Sheet Detail.” (See Exhibits E and F). The receipt and disbursements shown in these spreadsheets directly contradict the oft-repeated statements of Steele and Hansmeier that they have no financial interest in Prenda Law or its litigation.

According to the Prenda Law Profit and Loss Detail, in 2012 alone, Prenda made “Payments to Old Owners”—Hansmeier, Steele and Under the Bridge Consulting (their jointly-owned company)—equal to almost 70% of Prenda’s total revenue. Hansmeier received 645,821.29(645,821.29 (645,821.29(185,321.28 directly and 460,500.00throughUndertheBridge).Steelereceived460,500.00 through Under the Bridge). Steele received 460,500.00throughUndertheBridge).Steelereceived660,915.94 ($200,415.94 directly and 460,500.00throughUndertheBridge).ThisdoesnotincludetensofthousandsofdollarsinadditionalpaymentstooronbehalfofSteeleandHansmeierfortravelandentertainment,meals,creditcardcharges,andmiscellaneousreimbursements,orpaymentstoSteel’swife,KerryEckenrodeSteele.Italsodoesnotincludepaymentstotaling460,500.00 through Under the Bridge). This does not include tens of thousands of dollars in additional payments to or on behalf of Steele and Hansmeier for travel and entertainment, meals, credit card charges, and miscellaneous reimbursements, or payments to Steel’s wife, Kerry Eckenrode Steele. It also does not include payments totaling 460,500.00throughUndertheBridge).ThisdoesnotincludetensofthousandsofdollarsinadditionalpaymentstooronbehalfofSteeleandHansmeierfortravelandentertainment,meals,creditcardcharges,andmiscellaneousreimbursements,orpaymentstoSteel’swife,KerryEckenrodeSteele.Italsodoesnotincludepaymentstotaling37,069.56 to Duffy or Duffy Law Group, also classified as “Payments to Old Owners.” Judging from the documents it appears that neither the Profit and Loss Detail nor the Balance Sheet Detail show any payments to AF Holdings, Ingenuity 13 or other Plaintiffs represented by Prenda.

Exhibit E shows that Prenda received income from “Pirates” of 1,931,977.09in2012,andmade“PaymentstoOldOwners”of1,931,977.09 in 2012, and made “Payments to Old Owners” of 1,931,977.09in2012,andmade“PaymentstoOldOwners”of1,343,806.78 or 69.6% of its total receipts. Considering other payments to or for Steele, Hansmeier and Duffy, the total distributed to them likely exceeded 80% of receipts, even though these distributions left Prenda with a 2012 loss of $487,791.20. These figures do not include payments to Steele and Hansmeier from other Prenda accounts, or settlements that may have bypassed Prenda completely.

In an affidavit, Gibbs points out that Hansmeier had told him earlier that Steele and Hansmeier had setup “Under the Bridge Consulting” (nice troll reference guys, very subtle) and each had a 50% stake. As Gibbs points out, this very strongly supports Gibbs’ earlier claims and reinforces that idea that Steele and Hansmeier are both the powers that be behind Prenda and that they directly lied in the past concerning their involvement. While the spreadsheets do say “old owners,” Gibbs’ filing correctly notes that (1) this suggest they at one time did own Prenda and (2) getting more than 70% of the revenue going to “old owners” certainly doesn’t suggest that those two were no longer involved in the business.

Separately, in the filing, Gibbs notes that Hansmeier called him after Wright’s original ruling, trying to get him to sign a document that would require him to lie, and also to indemnify both Hansmeier and Steele, in order to be included under the bond that Duffy, Hansmeier and Steele were organizing as required by Judge Wright’s order. Basically, Hansmeier offered Gibbs a terrible deal: to get in on the bond that we’re getting, you have to lie to the court and then basically accept any and all liability that may come down because of all this. Gibbs, quite reasonably, rejected the deal, leading to this filing now:

After receiving the May 6 Order, Hansmeier telephoned Gibbs in an attempt to persuade him to work with, not against, the Principals as they appealed the Order. Over several conversations, Hansmeier conveyed to Gibbs exactly what he would have to do to be covered by the superseadous bond which the Principals were arranging to purchase. Knowing that Gibbs would not be able to post sufficient collateral to buy a separate bond, Steele and Hansmeier made six demands which Gibbs would have to accede to before they would add him to their bond: (1) Gibbs pay $3,000 to Hansmeier and Steele to reimburse them for the entire cost of the bond; (2) Gibbs sign a unilateral Release and Settlement Agreement releasing any and all claims he might have against Duffy, Steele, Hansmeier, Prenda Law, Steele Hansmeier PLLC, and Alpha Law Firm” (See Exhibit A); (3) Gibbs agree to sign a declaration stating (falsely) that Steele had no involvement in a Florida copyright case; (4) Gibbs represent AF Holdings and Ingenuity 13 in their appeal of the May 6 Order; (5) Gibbs sign an agreement that would create a fiduciary relationship between Gibbs and both Steele and Hansmeier;2 and (6) Gibbs sign an agreement indemnifying Steele and Hansmeier

> against any and all claims, demands, actions, suits, losses, costs, charges, expenses, damages and liabilities whatsoever which [they] may pay, sustain, suffer or incur by reason of or in connection with the appeal of the May 6, 2013 order issued by Judge Wright in Case No. 2:12-cv-8333-ODW (JCx) including, without limiting the generality of the foregoing, all costs and expenses (including legal expenses) incurred in connection with any such loss or damage. (See Exhibit B).

The unilateral release and the indemnity agreement proposed by Steele and Hansmeier would have made Gibbs solely liable for the full amount of the monetary sanctions imposed on all of the parties in the May 6 order, as well as the costs and attorneys’ fees incurred in appealing the order. Steele and Hansmeier were also trying to force Gibbs to testify dishonestly or remain silent with regard to the Principals’ fraudulent activities. Gibbs rejected their offer and was not included on the bond.

It’s quite incredible that Hansmeier apparently thought Gibbs was so stupid as to accept such a terrible deal. There’s a bunch more in the filing worth reading, but these are the highlights — and ones that I’d imagine are about to be refiled in a number of other Prenda-related cases around the country. My only question, however, is why Gibbs waited until now to file this…

Still, assuming that this information turns out to be legit, and there’s no reason to think it isn’t, Steele and Hansmeier may be in for a world of trouble. Everyone knew something like this was coming eventually, but I can’t see how the two of them will tap dance around this one.

Filed Under: brett gibbs, john steele, otis wright, paul hansmeier
Companies: af holdings, ingenuity 13, prenda, prenda law

Judge Decides The Prenda Buck Should Stop With John Steele And Paul Hansmeier

from the another-shoe-drops dept

The latest ruling in the AF Holdings v. Navasca case has come out with Magistrate Judge Nador Vadas completely slamming Team Prenda, focusing mainly on John Steele and Paul Hansmeier, whom he thinks should clearly be directly liable for the attorneys’ fees already ordered on AF Holdings in the case, but which haven’t yet been paid (of course). This is in response to the hearing from a few weeks ago, in which Judge Vadas had made it clear that he wanted AF Holdings/Prenda to answer some very specific questions. Paul Duffy, representing AF Holdings, did not answer most of the questions, and the Judge noticed. He also noticed that AF Holdings did basically nothing to actually respond to most of the issues, other than trying to attack Brett Gibbs or Navasca’s lawyer Nick Ranallo.

Even after the excoriating decision Judge Wright issued in Ingenuity 13, and the troublesome findings Judge Chen made in his order awarding attorneys’ fees to Navasca, AF chose not to oppose the majority of the arguments in Navasca’s motion for sanctions. Instead, AF introduced immaterial issues in its opposition, attacked its former counsel Gibbs, and attacked Navasca’s counsel…. AF addressed the “Salt Marsh” issue and the working relationship between AF’s former counsel Gibbs and its CEO/manager/sole employee Lutz…. However, AF failed to oppose Navasca’s arguments that Steele and/or Hansmeier (1) manufactured Cooper’s involvement in AF and forged his signature; (2) were in cahoots with the computer forensic experts who identified the alleged illegal downloaders that AF then sued; and (3) themselves uploaded the Video to Pirate Bay to induce others to download the Video. AF failed to offer any evidence to rebut Navasca’s evidence establishing these points. AF’s counsel attacked the affidavit of Delvan Neville, who explains how he determined that John Steele or someone with access to Steele’s GoDaddy account uploaded the copyrighted works that form the basis of AF’s lawsuits to BitTorrent swarms in order to induce infringement…. But AF did not actually rebut the evidence Neville presents. Instead of grappling with these admittedly difficult accusations, AF “respectfully request[ed] that to the extent the Court deems one or more to be relevant in any respect, that it identify those matters and allow Plaintiff opportunity to respond and present evidence to contradict them.” …. AF’s counsel is apparently not familiar with the rules of federal procedure, or with basic principles of motion practice

That last sentence? Ouch. Later, the Judge restates the three straightforward questions he’d ordered Duffy and AF Holdings be prepared to answer, and then notes “AF chose not to present any witness at the evidentiary hearing, continuing its campaign of obfuscation.”

From there, the Judge notes that Judge Wright’s initial findings against Team Prenda were compelling and adopted in this case. He finds that Gibbs’ testimony concerning John Steele and Paul Hansmeier was convincing, and notes that Paul Duffy presented little evidence to counter any of it. The Judge also faults Steele and Hansmeier for claiming that they haven’t had “a full and fair opportunity to litigate these issues,” noting that’s not at all true, going back to the opportunity before Judge Wright.

The key point of all of this is to see if John Steele and Paul Hansmeier could be made personally liable to pay the attorneys’ fees ordered by Judge Chen in this case, and Judge Vadas is clearly convinced. Still, he notes that he’s unable to do so under some of the proposed theories. He can’t use the court’s inherent powers, since neither Steele nor Hansmeier technically appeared as attorneys in the case (even if Hansmeier was deposed as a corporate representative). Still, the court notes that there’s tons of evidence that Steele and Hansmeier deserve sanctions, but since they’re not officially part of the case, there’s just no jurisdiction.

However, that doesn’t let them off the hook. The court finds that it can add Steele and Hansmeier personally as debtors to the original judgment, noting that they are basically an “alter ego to the original debtor.” It then goes into a fair amount of detail about why this makes sense, highlighting the evidence that Steele and Hansmeier really controlled the lawsuit, that they had a financial interest in the ruling, and, most importantly, their near total failure to refute any of the evidence against them, despite multiple opportunities.

The evidence adduced at the August 28, 2013 evidentiary hearing confirms Judge Wright’s findings. AF’s failure to refute that evidence with any of its own also speaks volumes. Although the undersigned ordered AF to be prepared to explain at the hearing the money trail and provide an accounting of the funds it received from copyright infringement actions or settlements, AF failed to present a witness who could do so or documents that might shed light on these issues. During the evidentiary hearing, Duffy represented to the undersigned (but did not testify) that it was his belief that the settlement or litigation proceeds were held in IOLTA trust accounts by AF’s attorneys (including Prenda Law, formerly known as Steele Hansmeier). Duffy also represented as a “fact” to this court that a settlement check in another matter was written to Prenda Law…. However, no witness testified regarding whether any of the funds ever left Prenda’s trust account(s). Thus, there is no evidence before the undersigned that any settlement or litigation proceeds ever reached AF.

The end result is that Vadas has sent the case back to Judge Chen with a recommendation for yet another Order to Show Cause why Steele and Hansmeier shouldn’t be added as debtors to the original award for attorney’s fees. In short, Hansmeier and Steele now get to argue why they shouldn’t personally be liable for this debt. I’m sure their filings will be highly entertaining.

As a post script to this story, elsewhere we had noted that Mark Lutz had failed to show up at the hearing, despite Paul Duffy insisting that he knew Lutz was in town and would be present soon. A week later, Duffy finally filed with the court stating that Lutz had a good excuse, but wanted it to remain secret from the public. The court rejected two separate attempts to explain secretly why Lutz did so, and then just before Vadas’ ruling filed a statement from Lutz that claims he was detained at the airport for the entire day by federal officials and unable to contact anyone, including his lawyer. He does not explain why he was detained, other than that it “was not for any actions I took at the airport and had no way of knowing that I was going to be detained on that day until it happened.”

There are a number of oddities in this explanation, including the earlier claims from Duffy that he knew Lutz was apparently in town, when he wasn’t, as well as the claim that he was unable to contact his lawyer during the entire 16.5 hours that Lutz claims he was detained. That’s an awfully long time to be detained without access to one’s lawyers. It also doesn’t explain why it took Duffy a week to file anything with the court about this absence.

Filed Under: alan cooper, brett gibbs, edward chen, joe navasca, john steele, liability, mark lutz, nador vadas, nick ranallo, otis wright, paul duffy, paul hansmeier, sanctions
Companies: af holdings, ingenuity 13, prenda, prenda law

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:

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 19,420.38andcostsintheamountof19,420.38 and costs in the amount of 19,420.38andcostsintheamountof3,111.55. 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

Bad News Is Contagious For Prenda

from the for-the-weekend dept

Well, might as well leave some folks for the weekend with some more bad news for Prenda as covered by Joe Mullin at Ars Technica. Yesterday there was another hearing in the case in Northern California, in the case where Judge Edward Chen appears to be a few steps behind Judge Otis Wright in understanding what Prenda is up to, but is catching up fast. This is the Navasca case, and Paul Duffy is so busy dealing with the collapse (and potential further problems) with Prenda that he apparently forgot the hearing was on at all. When the court reached him by phone, he was apparently confused, saying he thought the hearing had been cancelled. But the key point was that the Judge clearly is realizing that Prenda/Duffy are making claims that don’t make much sense.

“Frankly I don’t see why fees should not be awarded here, given the findings obtained in this court as well as other courts, including Judge Wright’s,” he said. “This case proceeded without proof of standing. There were also questions about identifying Mr. Navasca as an infringer without sufficient investigation. Other assertions, like improper spoliation, were never proven or supported. Then there’s the whole question of motivation. There’s a serious question raised about the whole business model here… [about whether] this is a business model to generate income through coerced settlements. If there’s a case that warrants fee shifting, this certainly seems to be one of them.”

Duffy tried to talk his way out of all of this, insisting (yet again) that Navasca “engaged in spoliation of evidence” — a claim that’s been tried by Team Prenda multiple times and failed — in large part because it’s silly. Navasca had a registry cleaner, CCleaner, installed on his computer, since well before the whole Prenda thing, and the app serves to keep a computer running efficiently and keep it from getting bogged down. Beyond having the app, there’s no evidence that it was used to delete any form of evidence. The court has already rejected it, but Duffy couldn’t let it go. But that’s a pretty weak thread to hang from.

When asked about a variety of other things, Duffy did the usual “deny, deny, deny” move. In particular, Chen pointed out the whole lack of standing given the likelihood of Alan Cooper’s signature being forged:

“Here AF [Holdings] didn’t even prove standing,” said Chen. The judge was referring to the disputed copyright assignment at the root of the case. It was signed by Alan Cooper, a former property caretaker for John Steele, the man pointed to as a key Prenda player. Cooper later denied having signed the papers.

“That’s very much in dispute,” said Duffy. “It’s a ‘he said, he said’ about the individual who signed AF Holdings’ [assignment]. The individual did not challenge the signature until Mr. Steele ejected him from his property, then all of a sudden repudiated his signature. There is a factual issue about whether the person who signed it actually signed it. We believe he did.”

“I’ve not seen a case yet where AF Holdings has been able to prove to any court’s satisfaction that this was not a case of either identity theft or forgery or something of that nature,” said Chen. “I know you dispute this on behalf of your client. Is there a case where you have prevailed on this issue?”

“There’s not a case where we have not prevailed,” insisted Duffy,

When in doubt, go for the double negatives, I guess… Anyway, there’s a lot more at that link. Duffy also tried to attack the credibility of Delvan Neville, the computer expert who presented incredibly compelling testimony that John Steele or someone closely associated with him was uploading the files Prenda was suing over themselves. As the judge pointed out, however, Duffy failed to actually file anything in any case that factually disputes Neville’s statements. All he did was whine about Neville as a person and his credentials. The judge appears to find the lack of any such factual filings noteworthy.

“You take on his declaration… you argue about it. You say his opinions are worthless, et cetera, et cetera, purely conjectural, they don’t make logical or economic sense. [But] I don’t see any factual matter submitted. You had a full two weeks to respond.

We eagerly await Judge Chen’s ruling.

Of course, there was also another Prenda hearing today down in Arizona, where Judge G. Murray Snow has also been expressing quite a bit of skepticism. There, Prenda red shirt Steve Goodhue filed “answers” to some of the questions Snow asked, which we’ve embedded below, but as of this writing no other details of the hearing have come about. I’m sure we’ll find something out in the next week or so…

Meanwhile, back in St. Clair County, Illinois, where Prenda had focused a bunch of their state court actions, Charter Communications is now asking the judge to award it $5,000 from Team Prenda to pay for the costs of having to deal with Prenda’s invalid subpoenas in one of the LW Systems (another shell) cases.

Charter attorney Robert Sprague of Belleville wrote in a motion July 11 that the company has asked for reimbursement from plaintiff attorney Paul Duffy of Chicago after Gleeson ruled June 6 that the subpoena was invalid, but that its requests have been ignored.

Sprague’s motion also claims that Duffy has not provided notice that customer information Charter inadvertently provided due to the invalid Jan. 31 subpoena has been destroyed.

“Charter customer information, including name and address information, is ordinarily confidential and subject to the protection under the Cable Act,” the motion states. “Customer information cannot be produced absent a valid court order requiring Charter to provide it.

It may be slow, but it seems like the world may finally start to be closing in on Prenda…

Filed Under: edward chen, g. murray snow, john steele, otis wright, paul duffy, steve goodhue
Companies: af holdings, ingenuity 13, lw systems, prenda, prenda law

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 500perday,perpersonorentity,retroactivetoJuly16,2013:JohnSteele,PaulDuffy,PaulHansmeier,Ingenuity13LLC,AFHoldingsLLC,andPrendaLaw,Inc.ThissanctionmustbepaidtotheClerkofCourtatthesametimethecashier’scheckisdeposited.Thus,ifthePrendapartiesdepositthecashier’scheckonFriday,July19,2013,thentheymustalsopayasanctionof500 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 500perday,perpersonorentity,retroactivetoJuly16,2013:JohnSteele,PaulDuffy,PaulHansmeier,Ingenuity13LLC,AFHoldingsLLC,andPrendaLaw,Inc.ThissanctionmustbepaidtotheClerkofCourtatthesametimethecashier’scheckisdeposited.Thus,ifthePrendapartiesdepositthecashier’scheckonFriday,July19,2013,thentheymustalsopayasanctionof12,000 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