Prenda Law
However, it was later characterized by the United States District Court for Central California in a May 2013 ruling as a "porno-trolling collective"[4]: 2 whose business model "relie[d] on deception",[4]: 8 and which resembled most closely a conspiracy[4]: FOF.1 p.3 and racketeering enterprise,[4]: p.10 referring in the judgment to RICO, the U.S. Federal anti-racketeering law.
[4]: p.10 The principals were also deemed to have founded and been the de facto owners and officers of the shell company which plaintiff and their alleged "client" created to "give an appearance of legitimacy".
[4]: p.10–11 A fourth attorney, Brett Gibbs, was also sanctioned, fined, and referred to a disciplinary committee by the court for false statements[4]: p.6–8 and his part in the subsequent cover-up,[4]: p.7 though described as their employee.
[18] An expert witness[14] affidavit stated that IP addresses linked to Prenda's Minnesota and Florida offices and John Steele, had themselves been identified in 2013 as the initial "seeders" (sharers) of some pornographic media, tagged for "fast" sharing on file-sharing networks, which would be followed up by threat of legal action,[14][19][20] with Prenda as the pornography producer or copyright purchaser, file sharer (offeror), plaintiff, and plaintiff's attorney; the suspect IP, linked to unauthorized media distribution, was confirmed as Steele and Hansmeier's by Comcast.
[37] In February 2021, the Court of Appeals for the Eighth Circuit upheld Judge Ericksen's order denying Hansmeier's motion to dismiss and to pay restitution in the amount of $1,541,527.37.
Prenda first came to prominence through the practice of identifying the IP addresses of Internet subscribers who, it claims, downloaded copyrighted pornographic videos or "hacked" into pornography-related clients.
The firm would file copyright infringement lawsuits in federal court, in which it requested "up front" early discovery via "over-broad"[40]: p.5–6 subpoenas against the respective Internet service providers (ISPs),[4]: p.5 Item 11 [22]: p.2–5, 7 [41]: p.3 upon sometimes-deceptive grounds and at times with falsified signatures on key documents[4]: p.5 [41]: p.3 These discoveries were used to obtain names and addresses of hundreds or even thousands of subscribers said to be infringers or "co-conspirators" in some cases.
[11] At times the law firm itself was also alleged to have been behind sharing of previously-undistributed pornography on well-known video "piracy" websites – an apparent effort to induce litigable downloading.
[47] Brett Gibbs testified in 2013 that based on documents shown to him, the firm's revenue from settlements was around $1.93 million in 2012, of which around 80% was ultimately distributed to the principals or their joint companies, rather than purported clients.
[48]: p.7, 11–12 Taken together, the circumstances caused Pietz to question to the court[53] whether the claims and client relationships presented by the plaintiff were truthful,[49]: p.3 whether the plaintiffs were engaging in a fraud,[54] and to collate and present his research into Prenda and its affiliates that "detail[ed] mysterious signatures, company addresses that appeared to belong to Steele's family members, and one entity that appeared to be run by a friend of Hansmeier",[49]: p.3 and which overall suggested "possible systemic fraud, perjury, lack of standing, undisclosed financial interests, and improper fee splitting".
[54] On February 7, 2013, the court instead ordered plaintiff's attorney Brett Gibbs to attend a hearing, to answer questions concerning the firm's conduct in the case.
This may include a monetary fine, incarceration, or other sanctions..."[54] As well as the plaintiffs and Gibbs as their attorney, Steele, Hansmeier and his brother (who acted as a Prenda forensic investigator), Duffy, Lutz, and Cooper were also among those ordered by the court to attend.
[54] On March 11, 2013, Judge Wright's courtroom manner was described by attorney-blogger and past prosecutor Ken White on Popehat, who had followed the case, as "a federal judge who was furious, intimately familiar with the case, and consummately prepared for the hearing... [and] made it explicitly, abundantly, frighteningly clear that he believes the principals of Prenda Law have engaged in misconduct – and that he means to get to the bottom of it.
[45]: p.93–94 [46][55] On April 2, 2013, when Steele, Hansmeier and Duffy attended, the scrutiny of the court run by Judge Wright – who had sat on around 45 previous Prenda cases[49]: p.3 – had therefore long moved to "getting to the bottom" of the firm, rather than the specific case,[49]: p.3 and Wright opened by stating, "It should be clear by now that this court's focus has now shifted dramatically from the area of protecting intellectual property rights to attorney misconduct[,] such misconduct which I think brings discredit to the profession.
However, the latter then chose to fall back upon their legal right to avoid self-incrimination under the Fifth Amendment,[49]: p.3 [57]: p.7–9 rather than answer questions of fact from the judge about the ownership, operations, and finances, of Prenda and its affiliates.
[56] Ken White, who had followed and documented the case, commented on April 2, 2013:[56] Their invocation of their Fifth Amendment rights in the face of that order is utterly unprecedented in my experience as a lawyer.
[49]: p.4 On May 6, 2013, Judge Wright sanctioned Prenda Law and its "principals" Steele, Hansmeier, and Duffy, along with Gibbs, whom he termed "attorneys with shattered law practices", $81,319.72 (of which half was punitive)[4]: p.10 for "brazen misconduct and relentless fraud", "vexatious litigation", "[stealing] the identity of Alan Cooper", and "representations about their operations, relationships, and financial interests [that] varied from feigned ignorance to misstatements to outright lies".
[4]: p.10 note 5 Wright's order was replete with Star Trek references: It was when the Court realized Plaintiffs engaged their cloak of shell companies and fraud that the Court went to battlestations... As evidence materialized, it turned out that Gibbs was just a redshirt... [Though] Plaintiffs boldly probe the outskirts of law, the only enterprise they resemble is RICO (a reference to federal criminal statutes regarding 'racketeer-influenced and corrupt organizations'[5]).
On October 17, 2013, Brett Gibbs offered a sworn statement, an unsworn motion, and alleged documents and claims concerning Prenda and its principals as part of an appeal against his sanction.
[70] The Ninth Circuit held that: "The district court did not abuse its discretion in finding bad faith and sanctioning the Prenda Principals under its inherent power.
[75][76]: p.4 (1c) After the events of early 2013 in Ingenuity 13 v. Does (above), Prenda and AF Holdings sought dismissal of "numerous cases" in Californian Federal courts, including Navasca.
[77]On July 4, 2013, defense attorney Nicholas Ranallo filed a motion seeking an award for costs and legal fees against John Steele and Paul Hansmeier personally, rather than against Prenda or the plaintiffs.
[79] On June 3, 2013, in another Florida case (First Time Videos v. Oppold), the defense filed a declaration by expert witness Delvan Neville which accused Prenda Law of "seeding" its own content (which was not otherwise available) in an effort to induce copyright infringement.
[21] In November 2013 (Minnesota v. Does), Prenda apparent shell AF Holdings was directed to repay settlements obtained from four alleged downloaders, in a ruling that stated there was no evidence the claims made were truthful, the copyrights described were held, authentic, or legally assigned by correct signature, and that "The copyright-assignment agreements [for] each complaint in each of these five cases are not what they purport to be.
[41]: 7–11 [83] In July 2013, following an appearance by BitTorrent news site TorrentFreak's lead researcher, Andrew Norton as a defense expert witness; a Georgia Federal court ordered discovery for both parties in a November 2012 case filed by AF Holdings, in which the plaintiff's attorney stated he was of counsel to Prenda Law and offered the law firm's telephone number and Brett Gibbs' email.
[87] In February 2013, Prenda Law, Steele and Duffy filed three similar lawsuits with identical titles in state courts in Illinois and Florida, each alleging defamation.
[4]: p.8 Federal courts in the United States seek to procure the orderly, just and timely resolution of genuine controversies and disputes, which limits the purpose for which legal processes can be used, and their manner of use.
In "Righthaven LLC v. Hill" (Colorado federal court, with no connection to Prenda Law), a company had acquired legal rights for the sole purpose of obtaining income by suing copyright-breaching individuals.
The court ruled that: Plaintiff's business model relies in large part upon reaching settlement agreements with a minimal investment of time and effort...
Area Transit Authority" (Washington federal court), expedited discovery had been sought, additionally only a short time was offered for defendants to respond.
