MINNEAPOLIS – Paul Hansmeier and John Steele, who face criminal charges that they fooled judges into helping them extort $6 million from pornography watchers, found favor in the court of St. Clair County Circuit Judge Andrew Gleeson.  

Gleeson ordered internet service providers to disclose subscriber identities to Hansmeier and Steele, on behalf of plaintiffs that prosecutors now describe as sham clients.  

Steele
Steele

Judges of the 20th judicial district chose Gleeson as chief judge last month.  

Grand jurors in Minnesota district federal court indicted Hansmeier and Steele on Dec. 14, on charges of wire fraud, mail fraud, money laundering and perjury.  

Hansmeier, Steele and Paul Duffy started filing copyright infringement suits against John Does in 2010, through the firm of Steele Hansmeier in Chicago.  

They later changed the name to Prenda Law Inc.  

Duffy died last year.  

The Minnesota indictment alleges that Hansmeier and Steele “fraudulently procured permission from courts to send subpoenas to internet providers.”  

U.S. Attorney Andrew Luger wrote that their sham clients “purportedly owned copyrights to pornographic movies or operated computer systems associated with pornographic movies, but which they in fact owned and controlled themselves.”  

They “concealed their role in distributing the movies, as well as their significant personal stake in the outcome of the litigation,” Luger wrote.   

He wrote that after receiving the information, they threatened subscribers with financial penalties and public embarrassment.  

They “used extortionate tactics to garner quick settlements from individuals who were unaware of the defendants’ role in uploading the movie, and often were too embarrassed or could not afford to defend themselves,” Luger wrote.  

He showed sample payments ranging from $1,200 to $2,400.

“When these individuals did fight back, the defendants dismissed the lawsuits rather than risk their scheme being unearthed,” he wrote.  

He wrote that Hansmeier and Steele produced many short pornographic films at conventions in Chicago, Miami, and Las Vegas.  

“Hansmeier and Steele did not publicly distribute or commercially release the movies they filmed,” he wrote. Instead, they instructed an employee to upload the movies to file sharing sites in order to catch people downloading them, he wrote.

He wrote that they colluded to infringe their own copyrights.  

In St. Clair County, retired judge Michael O’Malley acted as their local counsel.  

O’Malley moved for early discovery on behalf of Lightspeed Media in December 2011, and Gleeson immediately granted it.  

Gleeson wrote that plaintiffs could immediately serve subpoenas for names, addresses, telephone numbers and electronic mail addresses of John Does.  

Fifth District appellate judges reversed Gleeson in August 2012, finding he should have notified providers and held a hearing.  

Lightspeed then amended its complaint to add claims against AT&T, Comcast, and other providers, and the providers removed the action to federal court.  

At some point Hansmeier and Steele switched strategies, seeking the same information but alleging that subscribers hacked their system.  

Duffy filed a hacking suit against John Does and Comcast in St. Clair County in November 2012, on behalf of Guava LLC.  

John Doe stepped up and called it a thinly disguised copyright suit.  

John Doe moved for sanctions against Duffy and attorney Kevin Hoerner of Belleville, who had replaced O’Malley as local counsel.  

John Doe claimed that a notarized statement carried a bogus signature, and he connected Prenda to a fraudulent affidavit in a separate case.  

John Doe recommended six months incarceration for Duffy and Hoerner.  

Gleeson jailed neither Duffy nor Hoerner, who withdrew from Prenda cases.  

Gleeson held a hearing in February 2013, and wrote that, “All Doe objections to the disclosure of identifying personal information are overruled and denied.”

“The identifying personal information shall be limited to cases involving Guava LLC, and shall be limited prospectively,” he wrote.

Hansmeier and Steele filed about 200 suits in all, involving more than 3,000 addresses, but their luck ran out.  

In May 2013, 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.  

District Judge John Darrah of Chicago quoted Wright a month later in denying a motion from Guava to expedite discovery.  

Other judges quickly turned against Hansmeier and Steele.  

U.S. District Judge Patrick Murphy of East St. Louis imposed sanctions in the Lightspeed case that Gleeson had handled in 2011.  

Fifth District appellate judges reversed Gleeson in the Guava case.  

In October 2013, Ken White of website Popehat wrote that Prenda suffered devastating blows in Massachusetts, Georgia, Illinois, Minnesota, and California.  

“Each development makes it more and more plausible that Judge Wright’s referral of Prenda’s principals to federal prosecutors will yield a grand jury investigation and, eventually, federal criminal charges,” White wrote.  

Three years passed, but the prediction proved accurate.  

U.S. attorney Luger wrote, “In total, between 2010 and 2013, defendants and their entities received more than $6 million in copyright infringement settlements.”  

Luger wrote that Hansmeier, Steele, and their employees made 14 false statements.  

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

Seven misconduct charges remain pending against Steele at the Illinois Attorney Registration and Disciplinary Board.

Administrator Jerome Larkin accused him of suing under fictional names, abusing discovery, and other acts of contempt and deception.

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