MINNEAPOLIS – John Steele, who shared in a $6 million gain from representing sham entities in courts including St. Clair County, pleaded guilty of mail fraud, wire fraud and money laundering in U.S. district court on March 6.  

He admitted that he enticed individuals to download pornographic movies, sued them for copyright infringement, and extorted settlements around $3,000.  

Steele
Steele

Steele’s plea agreement set a range of sentences from eight to 10 years, and a range of fines from $30,000 to $300,000.  

It also provided for an order of $3 million in restitution.   

Steele’s partner, Paul Hansmeier, pleaded not guilty to the same charges.  

They once operated as the firm of Steele Hansmeier in Chicago, but they changed the name to Prenda Law Firm in the midst of their scheme.  

Steele’s plea agreement implicated Hansmeier, stating that they obtained copyrights to movies and uploaded them to file sharing websites.  

It stated that they fraudulently induced courts to give them power to subpoena internet providers and identify subscribers.  

St. Clair County Circuit Judge Andrew Gleeson, who presided over the local cases, granted such power to sham entities Guava and Lightspeed.  

The plea agreement stated, “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.”  

It also stated that they garnered quick settlements from individuals who were too embarrassed to defend themselves or couldn’t afford to do it. In 2011 and 2012, Steele and Hansmeier filed at least 200 suits throughout the country seeking information on more than 3,000 addresses.  

Steele and Hansmeier hired actresses and filmed movies in Chicago, Las Vegas, and Miami, not for commercial distribution but for trapping viewers, the plea agreement states.  

Their scheme began to unravel in 2013, when U.S. District Judge Otis Wright of Los Angeles sanctioned them for brazen misconduct and relentless fraud.  

“Plaintiffs borrow the authority of the court to pressure settlement,” Wright wrote.  

He referred them to the Department of Justice for criminal investigation.  

The Lightspeed case from Gleeson’s court wound up in federal court, where former District Judge Patrick Murphy sanctioned Steele and Hansmeier.  

The Guava case wound up at the Fifth District appellate court, which reversed Gleeson’s discovery order.  

Grand jurors indicted Steele and Hansmeier last December, charging mail fraud, wire fraud, money laundering and perjury.  

U.S. attorney Andrew Luger wrote that Steele, Hansmeier and their employees made 14 false statements to courts.  

He wrote that employee Mark Lutz falsely swore that his unborn children were sole beneficiaries of a trust that held membership in a sham entity.  

When Steele’s copyright infringement litigation business ended, he opened a firm in Chicago that specialized in threatening suit against business for alleged violations of the Americans with Disabilities Act.

The model for the ADA suits was similar to that of the porn hacking suits in that Steele would send demand letters to business owners who were purportedly not compliant with the federal law.

Margot Sersen, owner of Chicago’s LaSalle Flowers, received such a letter from Steele’s Accessibility Law Group in 2015.

Sersen’s shop, a building typical of its River North neighborhood, was built in the 19th Century, with a front entrance abutting the public sidewalk, leaving no room for a permanent ramp.

When Sersen received a letter from Steele, asserting that his client, Chicago resident Mary Mizerk, couldn’t maneuver her wheelchair up the 5-inch stoop, she thought she would be safely “grandfathered in” from any litigation.

But Sersen soon learned the ADA does not acknowledge such a defense. Any physical barrier, even those created prior to the ADA’s adoption, can be cause for a discrimination suit.

Sersen finally settled, paying $2,500, plus the cost of a removable aluminum ramp, which was approximately $150, she said.

Seven misconduct charges are pending against Steele at the Illinois Attorney Registration and Disciplinary Commission.  

The commission’s website shows Steele is not currently registered.  

It shows Hansmeier never held an Illinois license.

A third member of the Prenda firm, Paul Duffy, died of heart- and alcohol-related conditions on Aug. 10, 2015, a date by which he and Steele had been ordered to pay a discovery obstruction sanction in federal court in East St. Louis.

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Twentieth Judicial Circuit of Illinois
Belleville, IL 62220, United States
Belleville, IL 62220

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