Does Prenda Believe In No-Win Scenarios? Because Judge Wright Just Gave Them One.

All of Popehat's Prenda coverage is collected here.

Watchers of the Prenda Law saga have been waiting for United States District Judge Otis D. Wright II to issue an order in the wake of his apocalyptic hearing on proposed sanctions against Prenda Law, its putative client entities, and its lawyers. During that wait, doubt has set in. Could Judge Wright's order, after all this drama, possibly live up to expectations? Could any dry memorandum capture the jaw-dropping antics that have come before?


This afternoon Judge Wright issued an annihilating, hull-breaching order against Prenda Law, its principals, and its plaintiff entities. How does a federal judge assure that an already-dramatic situation is even more popcorn-worthy for an internet obsessed with it? He starts it with a Wrath of Khan quote:

“The needs of the many outweigh the needs of the few.”
—Spock, Star Trek II: The Wrath of Khan (1982).

From there, the Star Trek references come fast and furious. ("As evidence materialized, it turned out that Gibbs was just a redshirt.") Clean up in Aisle Geek!

There are two important elements to the order. The first is what Judge Wright concluded. The second is the remedy he chose.

Never Will You Find A More Wretched Hive Of . . . Wait, Wrong Franchise

Judge Wright's order begins with what can be interpreted as a full salvo against not just Prenda Law, but the entire Bittorrent download litigation model:

Plaintiffs1 have outmaneuvered the legal system. They’ve discovered the nexus of antiquated copyright laws, paralyzing social stigma, and unaffordable defense costs. And they exploit this anomaly by accusing individuals of illegally downloading a single pornographic video. Then they offer to settle—for a sum calculated to be just below the cost of a bare-bones defense. For these individuals, resistance is futile; most reluctantly pay rather than have their names associated with illegally downloading porn. So now, copyright laws originally designed to compensate starving artists allow, starving attorneys in this electronic-media era to plunder the citizenry.

But from there, Judge Wright quickly begins to assault Prenda in particular:

It was when the Court realized Plaintiffs engaged their cloak of shell companies and fraud that the Court went to battlestations.

Judge Wright goes on to make specific findings of fact. When a trial judge makes findings of fact, as opposed to law, those findings are given more deference on appeal. In other words, appellate courts freely second-guess decisions of law, but are less likely to second-guess findings of fact. Judge Wright's findings are brutal.

Steele, Hansmeier, and Duffy (“Principals”) are attorneys with shattered law practices. Seeking easy money, they conspired to operate this enterprise andformed the AF Holdings and Ingenuity 13 entities (among other fungible entities) for the sole purpose of litigating copyright-infringement lawsuits. They created these entities to shield the Principals from potential liability and to give an appearance of legitimacy.

Judge Wright goes on to describe what he concludes about Prenda Law's strategy, and about the role of local counsel like the unfortunate Brett Gibbs, member of the worst away party ever:

The Principals have hired willing attorneys, like Gibbs, to prosecute these cases. Though Gibbs is culpable for his own conduct before the Court, the Principals directed his actions. In some instances, Gibbs operated within narrow parameters given to him by the Principals, whom he called “senior attorneys.”

And Alan Cooper? Judge Wright concludes he is a victim, like a miscellaneous green chick callously banged and then shoved into the line of phaser fire:

The Principals stole the identity of Alan Cooper (of 2170 Highway 47 North, Isle, MN 56342). The Principals fraudulently signed the copyright assignment for “Popular Demand” using Alan Cooper’s signature without his authorization, holding him out to be an officer of AF Holdings. Alan Cooper is not an officer of AF Holdings and has no affiliation with Plaintiffs other than his employment as a groundskeeper for Steele. There is no other person named Alan Cooper related to AF Holdings or Ingenuity 13.

What of Prenda's constant refrain that Cooper's signature doesn't matter, because he's signing for the assignee, not the assignor? Judge Wright makes short work of that. The fraud is material — that is, it has a capacity to make a difference — because it is part of a larger concealment of facts that, if disclosed, would have put the Court on guard and made it scrutinize Prenda's demands more closely:

Then there is the Alan Cooper forgery. Although a recipient of a copyright assignment need not sign the document, a forgery is still a forgery. And trying to pass that forged document by the Court smacks of fraud. Unfortunately, other than these specific instances of fraud, the Court cannot make more detailed findings of fraud.

Nevertheless, it is clear that the Principals’ enterprise relies on deception. Part of that ploy requires cooperation from the courts, which could only be achieved through deception. In other words, if the Principals assigned the copyright to themselves, brought suit in their own names, and disclosed that they had the sole financial interest in the suit, a court would scrutinize their conduct from the outset. But by being less than forthcoming, they defrauded the Court. They anticipated that the Court would blindly approve their early-discovery requests, thereby opening the door to more settlement proceeds.

Judge Wright also thinks that Prenda Law hasn't bothered with a proper scan before firing. Taking up his assertion that Prenda sued people without adequate inquiry into who actually downloaded content, he concludes:

Enter Plaintiffs and their cottage-industry lawsuits. Even so, the Court is not as troubled by their lack of reasonable investigation as by their cover-up. Gibbs argued that a deep inquiry was performed prior to filing. Yet these arguments are not credible and do not support Gibbs’s conclusions. Instead, Gibbs’s arguments suggest a hasty after-the-fact investigation, and a shoddy one at that.

But wait! I thought Brett Gibbs said Prenda conducted a good investigation!

Gibbs’s statement is a blatant lie. His statement resembles other statements given by Plaintiffs in this and their other cases: statements that sound reasonable but lack truth. Thus, the Court concludes that Gibbs, even in the face of sanctions, continued to make factual misrepresentions to the Court.

It's not a good thing for a lawyer's career to have a federal judge say that.

Finally, how does Judge Wright figure that all these people connect? Ultimately, he adopts Moargan Pietz' Prenda Org Chart, finding that Prenda's own deception precludes a clearer answer:

The Principals also obfuscate other facts, especially those concerning their operations, relationships, and financial interests. The Principals’ web of disinformation is so vast that the Principals cannot keep track—their explanations of their operations, relationships, and financial interests constantly vary. This makes it difficult for the Court to make a concrete determination.

Still, the Court adopts as its finding the following chart detailing Plaintiffs’ relationships. Though incomplete, this chart is about as accurate as possible given Plaintiffs’ obfuscation.

They're Screwed, Jim

So. What penalty does Judge Wright impose?

In the end he does many of the things I suggested he might.

  • Judge Wright declines to impose Rule 11 sanctions because Prenda dismissed the key case before he could issue his Order to Show Cause Re: Sanctions.  That's probably the right call.
  • However, using his inherent authority, he awards sanctions in the form of attorney fees to be paid to Morgan Pietz and Nicholas Ranallo:

Therefore, the Court awards attorney’s fees and costs in the sum of $40,659.86to Doe: $36,150.00 for Pietz’s attorney’s fees; $1,950.00 for Ranallo’s attorney’s fees; $2,226.26 for Pietz’s costs; and $333.60 for Ranallo’s costs. As a punitive measure, the Court doubles this award, yielding $81,319.72.5 This punitive multiplier is justified by Plaintiffs’ brazen misconduct and relentless fraud. The Principals, AF Holdings, Ingenuity 13, Prenda Law, and Gibbs are liable for this sum jointly and severally, and shall pay this sum within 14 days of this order.

"Liable jointly and severally" means that each is equally responsible for the whole sum, and can be pursued for it.

But we haven't gotten to the real action yet.

  •  Judge Wright says he is referring Steele, Duffy, Hansmeier, and Gibbs to their respective state bars and federal bars, and asks Morgan Pietz to identify those bars.
  • And then:

Third, though Plaintiffs boldly probe the outskirts of law, the only enterprise they resemble is RICO. The federal agency eleven decks up is familiar with their prime directive and will gladly refit them for their next voyage. The Court will refer this matter to the United States Attorney for the Central District of California. The will also refer this matter to the Criminal Investigation Division of the Internal Revenue Service and will notify all judges before whom these attorneys have pending cases.

Referring to the U.S. Attorney's Office and the IRS's CID is like siccing both the Klingons and the Romulans on Prenda, except that the Romulans have a somewhat better grasp of due process than IRS CID.

Now What?

This order is catastrophic to Prenda and its attorneys. It will be filed in every case in which they are fighting sanctions across the nation, and cannot help but have a galvanizing effect on those proceedings. The U.S. Attorney's Office will very likely launch a grand jury investigation, and the IRS CID will assist. Federal grand jury investigations are very slow, but represent experienced practitioners bringing almost unlimited resources to bear against their targets. State bars and federal bars will launch their own investigations. Prenda Law's principals will face dangerous, expensive, relentless attacks from all sides, and it is entirely possible they will face criminal charges if the feds agree with Judge Wright's conclusions.

Can they appeal? Certainly. That, too, will be protracted and expensive. An appeal filed this week might be briefed in October 2013 and heard by the Ninth Circuit in, say, May 2014. The other courts won't wait to rule on sanctions, and state and federal bars likely won't delay. The U.S. Attorney's Office and IRS CID certainly won't. They may take many months, or even years, but they grind. Oh, do they grind.

Judge Wright's order, with its Star Trek references, shows imagination. But all the imagination in the galaxy couldn't produce a much worse result for Prenda, Steele, Hansmeier, Duffy, and Gibbs.

If they are smart, they're talking to their lawyers about flipping on each other right now.

Edited to add: Several people on Twitter pointed to something I missed, something that illustrates how outraged Judge Wright is. Note he concluded that Prenda's model was to demand settlement "a sum calculated to be just below the cost of a bare-bones defense." In footnote 5, explaining the amount of sanctions he imposed, he says "This punitive portion is calculated to be just below the cost of an effective appeal." Daaaaayuuuum.

Last 5 posts by Ken White


  1. H_X_S says

    Excellent summation — and I see what you did there, sneaking in a "Kobayashi Maru" reference in your title (in keeping with Judge Wright's theme).

  2. Quantum Mechanic says

    I loved the footnote on the page announcing the monetary component of the sanctions — Wright notes that the amount is calculated to be just slightly less than the cost of an effective appeal. Zzzzzzzzzinnnnng!

  3. Gary says

    Ken – Is the address listed next to Alan Cooper's name his home address? If so, I'd recommend you remove it.

  4. says

    Holy crap.

    I know people have said that sort of thing about a lot of the earlier posts in this series, but this time….

    Holy crap.

  5. Myk says

    I think all that remains to be said is thank you, Ken, for all your work in amassing the information and deciphering it for us non-lawyerly folk, along with wit, grace and a certain, schadenfreude. And a great vote of thanks to Judge Wright for his considered, nuanced and complete dismantling of the Prenda racket.

  6. Quantum Mechanic says

    Here are the exact words: “This punitive portion is calculated to be just below the cost of an effective appeal”

  7. Joe Pullen says

    I get the vision of all of their problems continuing to multiply and taking over like a bunch of Tribbles. Couldn't happen to a nicer bunch of cupcakes.

  8. Matthew Cline says


    Judge Wright goes on to make specific findings of fact. When a trial judge makes findings of fact, as opposed to law, those findings are given more deference on appeal.

    I thought that judges made findings of fact and juries made findings of law. So under what circumstances do judges get to make findings of fact as well?

  9. Raul says

    Bravo Ken, bravo. A wonderful and informative cap to what has been an interesting copyright troll trajectory. Frankly I am surprised Prenda did not see this coming, anyone who closely followed their antics knew it would end in a train wreck at some point.

  10. Louis Nettles (@tmitsss) says

    Reading between the lines. Judge Wright: I can't impose a seven figure sanction,( but some court somewhere might be able).

  11. says

    Even if Wright were overruled on appeal and Prenda's affiliated characters managed to dodge criminal charges or bar sanctions, that Wright filled his order with Star Trek references assured that it will become a ruling of lore. So even if these guys escape otherwise unscathed, their reputations are destroyed forever.

    That's at least worthwhile justice after Prenda's lawyers used the threat of destroying reputations via the legal system as leverage in procuring settlements.

  12. Footnote says

    In an ironic twist, see footnote 5 to the amount of punitive damages
    Judge Wright imposed:
    "This punitive portion is calculated to be just below the cost of an effective appeal."

    HaHa! Gotcha!

  13. doeknob says

    Just think this needs to be quoted more:

    "Second, there is little doubt that that Steele, Hansmeier, Duffy, Gibbs suffer from a form of moral turpitude unbecoming of an officer of the court. To this end, the Court will refer them to their respective state and federal bars. "

  14. SaltMarshGhost says

    > The U.S. Attorney's Office will very likely launch a grand jury investigation

    Is there something that makes this more likely? I was under the impression from previous posts that there was some skepticism that the USAO would take this referral seriously.

    Also, the mere thought of Prenda being dragged before the Ninth Circuit is exciting. And if Kozinski writes the opinion (unlikely, I know)…

  15. Sebastien Bourgon says

    Do Judge's normally end these with "IT IS SO ORDERED." (caps and all?) because it really brings out the rage and anger in the order.

  16. Jim Tyre says

    Nice, Ken

    Properly,you focused on the Prenda specifics. But it's worth noting that Judge Wright laid a small part of the blame at the feet of statutory damages for copyright infringement:

    4. This nationwide strategy was highly successful because of statutory copyright damages, the pornographic subject matter, and the high cost of litigation.

    Many have tried to have reduced the statutory damages that are available. Whether this case, and specifically Judge Wright's shout out, will have an effect remains to be seen.

  17. says

    As an attorney who frequently represents lawyers who are accused of running afoul of the law and Bar Rules, I have dissected this order and welcome any call from the sanctioned lawyers so I can advise them that in addition to all that has been said here, they are totally $%&*(#&)% screwed.

  18. Palimpsest says

    So will the San Francisco case be the first aftershock from this judgment?

  19. Lucy says

    Judge Wright seemingly just "served" other judges collectively in a challenge to write judgements in a lively and insightful manner. That he called out the leveraging of loopholes in the system was beautiful. Hopefully this will cause for some reforms either in the shell game or troll game or both.

    Judge Wright has done a career marking move today for himself and for Prenda.

  20. Owen says

    Holy god. He referred them to the state bar, the USA for RICO charges, and the IRS CID. I haven't heard of that kind of punishment since Rasputin. It's enough to make my testicles retreat into the protective comfort of my abdomen.

  21. says

    "This punitive portion is calculated to be just below the cost of an effective appeal." – Loosely translated: "…And the horse you rode in on."

  22. says

    I anxiously await Prenda's counter-offensive. I'd give 3 to 5 odds that some part of it will come from a country with no extradition treaty.

  23. anonymous says

    No remedy will truly mete out justice so long as the 8th Amendment is not repealed. Torture, people. Brutal, unspeakable torture. Pain and Horror. This is what I want. Think of that blow torch scene acted out on John Steele.

  24. David M. Nieporent says

    The Star Trek references are cutesy, and certainly appeal to the geek in me, but they seem particularly ill-advised in this context. It's Avery serious matter, but the references make it seem as if Judge Wright was having fun with this. Not really the message to send to the Circuit Court in the event of appeal.

  25. says

    Of all the copyright trolls I have known, Prenda was the most… humorous.

    @Matthew Cline – IANAL, But I believe judges make both findings of fact and law in civil cases.

  26. David Lang says

    > I thought that judges made findings of fact and juries made findings of law. So under what circumstances do judges get to make findings of fact as well?

    normally Judges make findings of Law (what is the law that applies to this situation) and Juries make findings of fact (did this person do that act or not)

    In this case there was no Jury

    I don't know all the situations where a Judge makes findings of Fact, but I know that they do happen.

  27. Nicholas Weaver says

    Wow, Wright really wanted to make this one remembered.

    And referring things to the IRS CID? Now, thats just franchise-jumping mean. I mean, the judge is siccing a Shadow planetkiller on these guys now…

    And the Prendarists are going to have a real problem fighting this when it appears in every remaining Prenda case (e.g. Sunlust, I'm looking at you.), especially with the "I plead the 5th" (uhh, Steele, we saw your filings before they got stricken…)

  28. Bob Brown says

    They're Screwed, Jim

    OK… I admit I stole seven of your words, but please don't do that when I have a mouthful of wine. (Yes, I did read the entire post, not just the headings. Honest!)

  29. Nicholas Weaver says

    David M. Nieporent: IANAL, but I disagree. The Star Trek references all thick and heavy ensure that this will be remembered and be memorable. Thus it will stick with the Prendarists: their identity will forever be assimilated with "Judge Wright's Star Trek order".

  30. Sami says


    By which I mean: oh shit son Prendateers you are fucked.

    I am in awe of Judge Wright's Star Trek references, though, because they're not embarrassingly overdone, from what I can see. (I haven't read the full order yet.)

    I applaud his rigour in upholding the principles, as well as the particulars, of justice and the standings of officers of the courts.

  31. Jim Tyre says

    The Star Trek references are cutesy, and certainly appeal to the geek in me, but they seem particularly ill-advised in this context. It's Avery serious matter, but the references make it seem as if Judge Wright was having fun with this. Not really the message to send to the Circuit Court in the event of appeal.

    David, my friend,

    The Ninth Circuit won't ding him for that, they'll look at his analysis, period. Besides, Alex Kozinski, the Chief Judge of the Ninth Circuit, has a long and wonderful history of far more "cutesy" stuff.

  32. Jober says

    Does Judge Wright have, like, t-shirts I could buy? Maybe from an Etsy store or something? I want to show my appreciation for him in classic internet-geek fashion, for clearly we are brothers.

    Are the Prendarists on suicide watch tonight?

  33. Paul E. "Marbux" Merrell, J.D. says

    Wow! He threw everything and the kitchen sink at them.

    I was wrong in my prediction. I thought he'd forego everything but the criminal referral and an award of attorney fees. Instead, he threw all the mud he could at the wall in the expectation that at least one mud patty would bear fruit.

    I'd guess that Steele, Hansmier, and Duffy are likely to hand in their Bar licenses to avoid further investigation from that quarter, immediately after dismissing every copyright case they've got. With a criminal investigation hanging over their heads, they really can't defend Bar complaints without papering the hallways with evidence that can be used against them in the criminal proceeding.

    But with every judge they've got a case before being notified of this order, they're facing the same problem in defending later sanctions motions. No alternative but to plead the Fifth.

    Amazing. I've never seen a judge land on attorneys for misconduct this hard.

  34. James says

    Mr. Spock, court clerk, noted that every conclusion reached was entirely logical. Live long and prosper Judge Wright.

  35. Analee says

    To paraphrase the immortal words of Montgomery Scott: They cannae take much more of this, Captain!

  36. anonymous says

    Just for the heck of it I called the number for Duffy Law Group listed on his latest LW systems demand letter. The man himself (Paul Duffy) answered, and he was in no mood for idle chit chat.

  37. Michael says

    Is there some database of cases that can be called up for reference? Those cited in Judge Wrights order seem to me to be very specific. Surely, (no,I won't complete the joke) no one can keep all of the necessary citations in organic memory.
    Thank you, Ken and all the other law types for a most educational reading experience. You will pardon me if I hope I never have to call on you professionally.

  38. Norahc says

    So what happens if Steele and company turn in their bar licenses and continue on as "actual copyright owners" instead of lawyers pretending to be copyright owners?

  39. Steve says

    Does anyone else think that the order should have closed with MAKE IT SO rather than IT IS SO ORDERED?

  40. Wick Deer says

    To reference another franchise: Judge Wright nuked them from orbit. It was the only way to be sure.

  41. says

    What crosses me over and over about guys like Prenda Law and IsAnybodywhatever is that they just can't stop. It's not enough to find what they think is a loophole in the law they can exploit for fun and profit, they always have to go just a bit further with fake lawyers or whatever into doing things that no one would ever think were legal. It's as if the thrill isn't enough until they have more obviously violated the law.

    There's a life lesson here, but I'm too tired to think of it.

  42. says

    The first duty of every Starfleet officer is to the truth, whether it's scientific truth or historical truth or personal truth! – Capt. Jean-Luc Picard, "The First Duty," TNG season 5

    And it appears to be the first duty of Federal judges as well.

    I don't think we could have gotten a better verdict even from a Cardassian court (in which, of course, the sentence is pre-determined before the trial starts – see "Tribunal," DS9 season 2).

    Is it too early to draft Judge Wright for President? Maybe for Federation President? :-)

  43. That Anonymous Coward says

    *falls over laughing*

    To restate what I said over on Ars…

    Oh and to Steele, my little pookie… you screwed with the wrong people.
    Welcome to the big leagues, govern yourself accordingly, and when you screw with the internet sometimes you get the horns ya big BittorrentBull.

    Preemptive… OHAI SJD! We can has party now?

  44. says

    Shields are down, hull breached, warp core off-line.

    That's it for them then, nothing left but the feeding frenzy when they turn on each other for deals now, but that could be fun too.

  45. Nicholas Weaver says

    This really shows how badly Hansmeier and Steele screwed the pooch on this. Everything but the referral to the US attorney and (AHHHH) the IRS CID they could shrug off, pay perhaps $100K in miscellaneous fees, and retire to some Caribbean island.

    But by making Judge Wright mad, they got the full Hulk Smash…

    I wonder if they were badly advised by their ace malpractice attorneys or just ignored the advice of their ace malpractice attorneys.

  46. sorrykb says

    Steve asked:

    Does anyone else think that the order should have closed with MAKE IT SO rather than IT IS SO ORDERED?

    After reading the rest of the order, I thought it just might. I guess Judge Wright had to draw the line somewhere. (And now I've got Captain Picard in my head shouting, "The line must be drawn HERE!")

  47. Jim Tyre says

    An order replete with cultural references is not typical, but is certainly not unheard of.

    Ken, pop cultural references by Judge Kozinski were foreshadowed by his first fifteen minutes.

  48. That Anonymous Coward says

    @Norahc SharkMP4 will come to even more light, if it doesn't burst forth before then during the investigations of the firm, shells, and themselves.

    SharkMP4 is suspected of being the source of the files posted online… and there were the beginnings of connecting the dots back to our favorite former lawfirm. While the evidence isn't cut and dried, it is at least as good as a snapshot of an IP address or anything offered forth by Prenda and its agents.

    Unclean hands is a naughty thing, and facilitating an alleged crime to profit from it… yeah…

  49. Wick Deer says

    Nicholas asked

    I suspect that they told their ace malpractice attorneys something less than the truth. Some folks just can't stop lying.

  50. That Anonymous Coward says

    @Nicholas Weaver – I thought a firm representing them had already run like hell before the implosion.
    I get so confused sometimes.
    This would have been the firm repping them in the FL case IIRC…

  51. Wick Deer says

    My Bad, Let's try again:

    Nicholas said:

    I wonder if they were badly advised by their ace malpractice attorneys or just ignored the advice of their ace malpractice attorneys.

    I suspect that they told their ace malpractice attorneys something less than the truth. Some folks just can't stop lying.

  52. Norahc says

    I forgot about SharkMP4, but my question was orientated more towards what happens if they come back in a year as non-lawyer litigants hiring law firms to sue downloaders. Nothing I have seen so far would prevent that.

  53. John Work says

    The whole thing does smack of RICO. Incidentally, the "enterprise" element of RICO has sometimes triggered Star Trek references in the past. One wonders if that triggered the Judge's (rather excellent) Trekkie barrage upon Gibbs et al.

  54. Mark says

    So, is the petition asking Obama to nominate Otis Wright for the next Supreme Court vacancy up yet? And if not, could someone with a better grasp than me of the proper phrasing get that ball rolling?

  55. Bob Brown says

    I have a mental image of AUSAs calling FBI SACs to say, "Go find out where these fuckers are and make sure they're still there tomorrow."

  56. Dictatortot says

    Curious how often we humans manage to obtain that which we do not want.

  57. Kat says

    @Mark: YESSSSS. Someone make it so, that way you can be Number One!

    Spat my tea out when I saw this had been formally referred to the IRS. That should be reeeeeeally interesting, and I'm glad my macroeconomics class starts next week 'cos it's taught by my intro to accounting instructor. He should be interested in hearing about it.

  58. Lurker W says

    Ken, I looked up RICO and only found the maximum fine/jail time. It's popcorn-worthy but sets expectations too high from what you've said. Think you could break down the likely sentencing if they're charged with racketeering, as you've done in the past with other federal cases?

  59. says

    God is perfectly just — do what you like.
    God says…

    12:4 And they said, Thou hast not defrauded us, nor oppressed us,
    neither hast thou taken ought of any man's hand.

    12:5 And he said unto them, The LORD is witness against you, and his
    anointed is witness this day, that ye have not found ought in my hand.
    And they answered, He is witness.

    12:6 And Samuel said unto the people, It is the LORD that advanced
    Moses and Aaron, and that brought your fathers up out of the land of

  60. That Anonymous Coward says

    @Norahc – Unless they land in jail, there would be nothing stopping it.
    Other than not being able to find a lawyer to file on their behalf.

    As with nearly every copyright case filed nowdays, there are many eyes watching. It would be difficult to attempt to file a case unseen.
    Once it was determined it was them behind it, one could enter into evidence their conduct in the past. Acquiring copyrights, the content "magically" showing up online when no one can seem to find it for sale at any price, and lawsuits seeking names to engage in "settlement" negotiations.

  61. Dave Ruddell says

    Dang, blockquote didn't work. I meant to ask if the "Yeeeeop." was an Archer reference.

  62. Shay says

    As the t-shirt says, it is usually true of former Marines: maybe not so lean or green, but still pretty damn mean.

    Fuckin' A, your Honor.

  63. says

    Good. God. DAMN.

    I could feel that hammer come down all the way over here on the East Coast. I think it's pretty safe to say that Prenda is done, their goose is cooked, the jig is up, the fat lady has sung, etc.

    Or, to mix one of my favorite fantasy series with Star Trek:

    "Set phasers to balefire. Burn the bastards back to last week."

    (bonus points for anyone who gets the second reference)

  64. George William Herbert says

    The IRS referral only has teeth if they have been tax-evading the proceeds of this enterprise.

    If they have not, then they get audited, they show their books, the IRS goes home unhappy that they don't get to apply thumbscrews.

    We will see what the future holds.

  65. Peter H says

    Just out of curiosity, why has every comment about IRS CID left people quaking in their boots. I (fortunately) have no experience with them or any other federal investigative agency, but what makes them so much worse than say, the FBI?

  66. Lucy says

    Judge Wright draws negative reference from the fifth calling it a civil case. They tried to claim it was criminal because accused them of bad things, so he wouldn't draw negative reference. Any predictions on an $79,000 appeal arguing this point?

    Judge Wright plainly stating that fact faintly smells of baiting them to try. (In an amusing way)

  67. Daniel Neely says

    The purists might object to my mixing popcorn and Glenfiddich; but I couldn't unpop the former and the latter is all I have available to salute Judge Wright.

  68. Jasmine says

    I'm a bit confused about why the judge referred them to the IRS. What kind of tax laws would Prenda have violated?

  69. AlphaCentauri says

    Judge Wright awarded attorney fees, but what about popcorn reimbursement? That would run six figures, easily.

    I also have trouble imagining these guys accepting this well-deserved smack-down and surrendering their high-maintenance lifestyle after the dust settles. Can they really restrain themselves from launching another scam? And when The Gang That Can't Stop Lying tries to start up their next swindle, what fake names will they use? Maureen Estuary? Michael Carbide? Otis Wright?

    And if you can be sued for use of the term "Space Marine," the Prenderasts are probably already trying to figure out how to sue Judge Wright on behalf of the Star Trek franchise for using its terminology.

  70. eigenperson says

    I think you wrote earlier that there's nothing scarier than an angry federal judge.

    …Well, I'm convinced now.

  71. Lucy says

    Apologies for the poor grammar in my last post. It's a few hours past my bed time in the EST.

  72. Krono says

    @Peter H

    The IRS CID is the ones that put Al Capone away for tax evasion. The whole shell game Steele and company have been playing with companies and legal leave a very large question mark as to where the money they've been getting has been going, and has it been properly taxed. Unless Prenda have been very good about financial record keeping, they're likely to be in a world of hurt.

  73. Daniel Neely says

    @jasmine They're believed to have extorted millions of dollars from their victims. They haven't paid taxes on it.

    Al Capone is spinning in his grave over these scumbags being tarred with the same brush that finally got him.

  74. RessyM says

    I find it quite ironic that Judge Wright's fines are "jointly and severally" as that's how their victim's defaults all were.

    Judge Wright has a great sense of humor.

  75. Rob says

    I meant to ask if the "Yeeeeop." was an Archer reference.

    I thought it was too, but then I realized it might be the alarm bell for the USS Enterprise.

    "Set phasers to balefire. Burn the bastards back to last week."

    (bonus points for anyone who gets the second reference)

    MC beat me to it, but yeah, WoT reference.

  76. cyberpenguin says

    I'm guessing the IRS CID referral is based on the finding of fact that "These settlement funds resided in the Principals’ accounts and not in accounts belonging to AF Holdings or Ingenuity 13.
    No taxes have been paid on this income."

  77. Canonical says

    I'll hurry back and read the rest of the comments, but I'm sure I'm not the first to want to buy His Honor the beverage of his choice. Well played, sir; well played, indeed.

  78. JD says

    This is what happens when you f*ck with a Federal judge, people. He'll not only blow up your life, he'll do it while quoting Star Trek.

  79. Another anonymous NAL says

    Wow. Just wow. Sounds like someone needs to come up with a "Prenda Away Team" shirt (available in red only; ball and chain optional).

    Anyone know if Duffy and Lutz are still sending out demand letters and making calls? Last I saw they were still doing so throughout all of April. I have this image in my head of them continuing their shenanigans from a prison pay phone. Although, as the final episode of TNG put it, "All Good Things…"

    For Judge Wright, although it isn't from ST (heresy in this post, I know) this clip sums it up.

  80. says

    I'm wondering what happened up in San Francisco. Today was the (revised) deadline for Duffy to produce the original of the document signed by "Salt Marsh".

    Also, I wonder how Brett Gibbs' new bride feels about her hubby getting stuck with a piece of the $81K sanction. What a thing to come home from your honeymoon to find.

    The hits just keep on coming!

  81. Matt says

    *Is waiting to see who, if any, first cracks and says "It's a nice ship, boys, I think you should go down with it"*


    Thus, the Court concludes that Gibbs, even in the face of sanctions, continued to make factual misrepresentions to the Court.

    Ouch. I'm betting Gibbs was starting to think after the last round or so that he might be let off with a letter of reprimand, but he may be lucky to only get 30 days in the brig and busted down a grade…

  82. Erik Carlseen says

    Judge Wright has informed them of their final posting aboard the USS Butthurt.

  83. Scott says

    I'm usually content to just read the posted summaries of legal documents, but in this case it was worth reading Judge Wright's entire 11 page order. My attention never lagged, it was easy to follow for a non-legal practitioner. And other than the reference to "eleven decks up" the references were all very tastefully done.

    The real problem with facing the IRS, as I understand it, is that the burden of proof is on Steele, Hansmeier et. al. to show they've properly complied with the US Tax code. This is different than in a court of law. 80K may not even begin to cover their attorney costs if the IRS decides to pursue this.

  84. Ted K. says

    @Peter H + Jasmine
    The IRS's CID operates on a presumption of guilt. If you have ANY errors in your income statements they can assess draconian penalties. Since Prenda's principals may have off-shored some of the loot then they have substantial financial exposure (potential seizure of bank accounts, investments, real property, etc.). Also, even if all monies remained in the U.S. but were routed through an improper trust then the CID agents can seize the trust AND assess penalties against the Prendies.

  85. Dave K says

    @Peter H

    Not an expert, but from looking at their wiki-article two things stand out. The first is that they're not so much your garden variety auditors but instead forensic accountants with the authority to follow every penny and press criminal charges if you're not following the tax code to a t or engaging in other financial crimes.

    The second is that they apparently have never fallen below a 90% conviction rate of those they find in violation.

    So, if you're doing anything… questionable with your finances, they're probably not the guys you want looking at the books.

  86. Paul says

    All Judge Wright needed was a "Welcome to the Big Time" reference to put a bow on it.

  87. Myk says

    Is it too early to define "The Wright Effect"? I submit: The sensation of the judiciary kicking your ass so resoundingly it gives the sensation of having your sphincter sliced into washers.

  88. Jim Tyre says

    I'm wondering what happened up in San Francisco. Today was the (revised) deadline for Duffy to produce the original of the document signed by "Salt Marsh".

    No, the deadline is in a week, on May 13.

  89. Orville says

    Beautiful, just beautiful.

    Like a bird of prey, Judge Wright swooped in and blew holes in their whole enterprise. Prenda could of kept following their prime directive if they had followed the rules of acquisition, but instead they gorn and landed in a whole heap of tribble.

    I'm not in the neutral zone on this one. I am happy that playing fast and loose with the law got the principal's cardassians kicked. Their names have been dragged through the mudd and the effects of this ruling are likely to klingon them for some time to come.

  90. says

    Gibbs’s statement is a blatant lie. His statement resembles other statements given by Plaintiffs in this and their other cases: statements that sound reasonable but lack truth. Thus, the Court concludes that Gibbs, even in the face of sanctions, continued to make factual misrepresentions to the Court.

    About a year ago I gave Gibbs a nickname — Pinocchio.

  91. Frankzzz says

    In Ken's previous article on what all the judge could do, he said:

    "The allegations against Prenda Law amount to penny-ante stuff compared to the high-dollar fraud that usually concerns federal prosecutors. But a direct referral from a federal judge carries very substantial weight. If Judge Wright refers the case, the U.S. Attorney's Office will allocate resources to start a grand jury investigation."

    That sounds like there's a pretty good chance the USAO will do it.

  92. He really said that...?!? says


    Regarding your statement: "Unless Prenda have been very good about financial record keeping, they're likely to be in a world of hurt."

    I'm sure they have all that covered in "the spreadsheet". :)

  93. Bruce H. says

    Wright is a very paragon of temperance and mercy. I don't see the words "stripped naked in open court and beaten with rods" anywhere in the order.

  94. Canonical says

    "Destruct sequence engaged" (from the original series. You'll have to imagine it in a badly-done 'computer' voice.).

    The Judge's comments to Gibbs had a very, "C'mon now, son. There's a train a-leaving the station and it's the train of righteousness, but you're running mighty late. You better hurry and catch it while you still can. Spill what you know and the conductor will be all-mighty glad to punch your ticket. Keep mum and, well…" sort of ring to it.

  95. says

    A funny comment posted on my blog came to mind:

    I tested this number. A lady answered: “LW Holdings … do you want to talk to anyone in particular?” I said “if Matk Lutz is not in jail yet, I want to talk to him.” She couldn’t suppress a giggle and transferred me to Lutz, who picked up.

  96. Frank Rizzo says

    I haven't had a chance to review Judge Wright's order, but it seems to meet expectations in most areas.

    I must however express my disappointment that Judge Wright apparently failed to include the cultural reference which I had hoped to find in his order. I had thought that in bringing the hounds of justice upon the Prendarasts that the judge might reference a particular Frank Zappa's masterwork which first appeared on Sheik Yerbouti.

    I presume that this did not happen, as others would have probably already observed this reference. Very few times do I expect to see this referenced, and this was one of those times. I am a brokenhearted Frank Rizzo tonight.

  97. Jim Tyre says

    For those who may be wondering, the Prendanistas have thirty days from today in which to file a Notice of Appeal.

    But it's just a notice that sets the appellate process in motion. Actual briefing will not begin until much later.

  98. Brett Middleton says

    So, what are the chances that Pietz and Ranallo are going to see dime one of their fees and costs? Doesn't Prenda already have an undertaking or two that they have to cover? Seems like they're going to end up so broke they won't even be able to afford to live under a bridge somewhere.

  99. Frankzzz says

    Wouldn't an appeal be only for the fee award?
    I don't see an appeal being able to take back or stop any of the referrals to the state and federal bars, DOJ, and IRS, much less stop any investigation any of them may have already started.

  100. bkd69 says

    I, for one, am not terribly impressed with the referral to IRS CID. After all, as long as they've been diligent in their record keeping, and transparent with the moving of their earnings,


    Sorry, I tried. I just couldn't keep a straight face trying to sell that.

  101. MouseTheLuckyDog says

    @Sebastion Buorgon

    That is another Star Trek reference. In the later series, the Captains when ordering something, say "plot a course to Rigel 5" , would order the command executed by "Make it so."

  102. Anonymous says

    By the Sword of Kahless, how about the Judge's chart with "Salt Marsh" identified (by picture) as an actual salt marsh? Or his use of Google to identify the "mansion" as a tract house?

  103. GrimGhost says

    IRS guys to John Steele: "Resistance is futile. All your assets will be assimilated."

  104. Frankzzz says

    Too many comments already.
    Whoever it was that asked about the "11 decks above" reference, Judge Wright is referring to the US Attorney's Office that is actually in the very same office building as his courtroom, and I'm guessing 11 floors above him.

  105. MrEye says

    Scott: "And other than the reference to "eleven decks up" the references were all very tastefully done."

    Can't figure what's not tasteful? I figure decks are floors. This is Wrights floor at 312 N Spring St Los Angeles, CA 90012:

    District Judge Wright, Otis D., II Western – Spring, 11 – Spring St. Floor

    This is the US Attorney Offices floor…

    United States Attorney's Office
    Central District of California
    312 North Spring Street
    Suite 1200
    Los Angeles, California 90012

    I suspect suite 1200 is on the 12th floor. And that it's 11 floors above Judge's Wrights office.

  106. Charlotte says

    That was worth waiting for. KA-BOOM. Referring them to IRS CID is a nice touch. "So, Mr. Steele, those millions you were bragging about to Forbes? Let's see your books."

  107. Treeguy says

    The Lord's mercy will have to be directed to their souls, for their bodies now belong to the IRS. Every. Last. Sphincter.

    This is easilythe most amazing judgement I have ever seen. Usually justices are reluctant to bandy the f-bomb or the c-bomb willy nilly (fraud and conspiracy) but he just goes for it.

    And the Star Trek…so much win there.

    After this little effort these jokers are going to have to change their names if the want to re-enter any form of business life because their current names will be googlebound to this atrocity until the end of time.

  108. Anonymous says

    Does this mean Rosing should shit her pants the next time we read a report that Lutz is still making settlement calls?

    I think at this point it would be really stupid to be on staff as Prenda's consigliere if they keep it up after this ruling.

  109. SharonA says


    I'm a bit confused about why the judge referred them to the IRS. What kind of tax laws would Prenda have violated?

    There are two main ones (and some minor), with the first being the biggie:

    1) Tax evasion: The settlement money paid by people that Prenda accused is taxable income to the copyright holding company (Prenda's "client"). The judge believes that the (reported) millions of dollars in settlement payments have not been properly reported to the IRS and taxes paid.

    2) Disclosures of control or beneficiary of non-US investments (like the trusts that Prenda claims owns the copyrights). Because trusts and overseas investments are so often used for tax evasion (see #1), there are requirements that you disclose information about those entities that you are involved in.

    #1 is where a finding of the "Copyright holder is shell for Prenda" is disastrous. It's no longer merely an issue of violating that rule about "attorney can't represent a company he has an interest in" and getting your cases thrown out of court. It's now a case of "attorney is personally responsible for all of the taxes due on the money he's collected in the client's name".

  110. Mew says

    I have to say, this has easily made my day.

    Can we start substituting fuck with Prenda?

    Don't Prenda it up!

  111. Palimpsest says

    So if Gibbs is nailed as telling a blatant lie about the mansion, does it count as perjury as well as attorney misconduct? Is there an implied oath in Lawyer statements to the court?

  112. That Anonymous Coward says

    @Brett Middleton – No they whined about the undertakings and tried to dismiss those cases.

  113. James Pollock says

    I'm picturing Judge Wright as Kirk, and the Prendanauts as Nomad.

    Malfunction! Malfunction! Maaaaalfffffuuuuuu….

  114. Ygolonac says

    Raul: "Frankly I am surprised Prenda did not see this coming, anyone who closely followed their antics knew it would end in a train wreck at some point."

    Oh, they saw the train coming, but were unswerving in their belief that they could tapdance out of the way.

    The success of that, well, I'll just quote Library Nachos' link:

  115. MarkH says

    anonymous said:
    No remedy will truly mete out justice so long as the 8th Amendment is not repealed. Torture, people. Brutal, unspeakable torture. Pain and Horror. This is what I want. Think of that blow torch scene acted out on John Steele.

    Good gravy! And risk sending them to the Divine Treasury prematurely?!?! Far better to take our time and try to send them on a nice long honeymoon to the Vault of Eternal Destitution.

    let's face it, our Ferengi friends sell their females into the sex trades for profit and increased trade ability (Check!). Obsession with Profit (Check!!). 285 unique Rules of Acquisition designed to avoid irritating ethical and legal issues (check!!). A strongly "upwardly mobile" social system based on profits generated, or downward social status in their cult for losses (check!).

    Prenda law, in my personal opinion (not stating a legal opinion here), are fine examples of peckerheads known as Ferengi. When I picture them opening up the ruling they are sitting in a small shuttle just as a spontaneous wormhole appears and sucks them in.

    I think the IRS CID is the perfect first contact group for our Ferengi friends.

  116. Anonymous says

    Oh my.

    Prenda has a defamation case pending against Cooper, his attorney, and The Internet in IL… With Prenda Law as the plaintiff. I assume that since Prenda is the plaintiff that case will be included in the courts and judges informed of this ruling.

    I suppose the same may happen to Duffy v. Godfread, though maybe not because that was brought on behalf of Duffy personally?

    In any case, good luck trying to get a judge to take their self-righteous indignation seriously after this. And with criminal investigations looming, I doubt Duffy will be in the mood to say anything at all in the prosecution of his own case. Since the defendants filed counterclaims, he can't dismiss and run as per the usual Prenda playbook, so I think I see a default in their future.

    Wouldn't this also be an ideal opening for a class action lawsuit on behalf of aggrieved Does? Or for individual aggrieved Does to file suits against Prenda? With everyone at Prenda afraid to say anything for fear of giving prosecutors ammunition, it ought to be easy to bully settlements from them as they have bullied settlements from others.

    Even after all this, I have trouble believing they were stupid enough to file those defamation suits.

  117. BearGriz72 says

    My roommate just had an interesting idea.

    Along with whatever tokens of respect we might want to send Judge Wright (I myself am leaning towards the Star Trek section of ThinkGeek), that me may want to send Steele, the Hansmeiers, Duffy, & Lutz, et al some Lube, you know, for the buthurt…

  118. AnonymousDoe says

    Posting in the most epic thread about the most epic ruling of all time.

    I fucking hate star trek, but I grinned from ear to ear while reading that order.

  119. Incongruent says

    "There's a time for sneaking around, my brother, and a time for droppin' an attack chopper full of pissed-off 19-year-olds in full body armor on somebody."

    "And we have reached that appointed hour."

  120. ThadCo says

    I said it in an earlier post. Their entire operation was pure racketeering and probably is prosecutable under RICO. The only difference is they used the unwitting courts as muscle instead of actual thugs. They are so gonna have to work out a plea deal eventually.

  121. says

    Just a friendly reminder that CID/IRS isn't the "we'll suck every penny you hold" division.

    It's the "we're gonna send you to FPMITAP" division.

  122. Sellew says

    Man it's getting tough to find Star Trek references that haven't been used yet, but I'll go with Judge Wright as Kirk and the Prenda folks as Landru, going "Help me! Help me! Help me! Help me!" as explosions and smoke billow out.

  123. Clownius says

    Just wow…


    Im going to read the Order later but OMFG!!!11 The RICO comment is the killer. He didnt just bench slap these guys. He went for the damned throat……..

    Suck to be in any way involved in Prenda Law or associated entities right now.

  124. Anonymous says

    On that note, if this is investigated as a RICO, could culpability spill over to Prenda's old, real clients and the local counsel who were perhaps really clueless (like Gibbs pretended to be)?

    There are some posts from John Steele and Steve Lightspeed on (adult webmaster forum) where they discuss the scheme and basically joke about how it's blackmail (try the google search query – "johnsteele"). So it is possible that some of the early client studios were well aware of Steele's tactics.

    Is there some basic level of exposure everyone can expect, like say bare minimum they will be getting subpoena's for records, or will some of these parties on the fringes never know this happened?

  125. Anony Mouse says

    Both the post and the ruling itself is well worth the read. The ruling especially as it does a great job of breaking down just what in the hell was going on here. Judge Wright must have been sick of the smoke and mirrors because he brought an industrial fan and a sledgehammer.

  126. says

    Did y'all see this part?

    In addition to Gibbs’s misrepresentations, there is the matter of the ignored Court Order vacating early discovery. (ECF No. 28.) The evidence does not show that the Order was ignored because of miscommunication among Plaintiffs. The Order was purposely ignored—hoping that the ISPs were unaware of the vacatur and would turn over the requested subscriber information"

    How do you say "busted" in Klingon

  127. Michael Chandra says

    ♫ Gonna call the president ♪ Gonna need myself a private eye ♪ Oooh gonna need the IRS ♪ Gonna get the FBI ♫
    ♫ Gonna make it a federal case ♪ Gonna wave it right down in your face ♪ Read it baby with your morning news ♪ With a sweet hangover and the headlines too ♫

    ♫ There's not anymore that I can do… ♫

  128. Ken Mencher says

    I just have to post…

    Wow…no, really, wow…

    I'm trying really hard not to laugh while reading this…and failing.

    Thank you, Ken, for keeping us up to date on all this and providing the analysis…and thank you, Judge Wright, for the beatdown…

    You were right…the wheels grind slowly, but they grind…The last folks you want investigating you are IRS CID…I knew someone who worked there…he has no sense of humour, and a massive love of numbers…and is utterly merciless

  129. Austin says

    How much cover and/or mitigation will Wright's finding that Gibbs was directed by Steele et al? While understanding Gibbs is culpable for his own actions as an officer of the court, I was really hoping his attempting to distance himself and his actually providing testimony would result in a lesser punishment for him. If the result is disbarrment for everyone, it seems that dodging hearings and taking the Fifth was the "correct" course of action.

  130. James says

    A number of people have asked what is so bad about the IRS CID, so let me summarize. These are not normal IRS employees but rather a crew of the most misanthropic sociopaths that our government has to offer (and I have a grudging respect for most of the fine people who work at the service). And they are armed. To misquote Eddie Murphy from "48 Hours": I am your work f***ing nightmare, I am an accountant with a badge".

    The real bitch is the jeopardy, termination, and transferee rules. This is not the "I will take copyright trolling for $200 Alex" kind of jeopardy, but this kind:

    Bottom line, if the IRS thinks that SOMEBODY has cash that could be used to pay taxes and that this cash is at risk of disappearing, say into an offshore trust, they can freeze it by sending a notice to any bank, stock broker, real estate agent, or any other financial intermediary. The freeze can apply to spouses (welcome back Mrs. Gibbs, honeymoon is over), uncles, children, African kinship associations, and any other related party if the IRS suspects hanky panky. The IRS needs some scintilla of evidence to proceed with such draconian measures, but findings of fact from a federal judge that taxes have not been paid and that the principals are secret owners of offshore trusts with hidden beneficiaries should do the trick.

    This can happen quickly. As in today. As in without an audit. As in John Steele might find that using his ATM card this afternoon a exercise in futility. He can fight this, of course, but it might be hard to raise the cash for a retainer until he settles with the IRS first. And did I mention that IRS special agents carry guns with real live bullets?

    Plot a course to Bank of America Mr. Sulu, warp factor 3.

  131. says

    So, referred to the US Attorney and the IRS CID. Tell me, Ken, have your criminal defense lawyer hormones kicked in yet? Are you starting to feel sorry for them?

  132. EvanMinn says

    Brett Gibbs is pretty much a sure bet to turn on the others – it's about his only defense.

    The question is will Paul Duffy turn on Steele and Hansmeier?

    S&H realized that Steele Hansmeier PLLC left them too personally exposed so they had Prenda Law created and convinced Duffy to be the face of it so the S&H could shield themselves and try to remain in the shadows.

    But since Duffy is the one with his name all over this, he is the one that appears to be most on the hook. Based solely on filings, his name appears the most often and thus makes him to be the mastermind.

    His choices appear to be:

    1) Stick to the story or plead the fifth and take the biggest fall.


    2) Come clean about who is really directing things in hopes that his punishment will be lessened.

    I suspect the Steele and Hansmeier are right now pumping Duffy full of 'Ah, this is nothing. We can beat this.' in the hopes that he will continue to be the patsy for them.

    If he were smart (which is questionable given some of his actions), he will not listen to them but hire a competent attorney. That attorney would probably advise him to stop protecting them and start looking out for his own skin.

  133. Kelly says

    I may stop laughing…in a year or two. Is it wrong of me to imagine Judge Wright as Picard as I read the full file? I can just imagine him shaking his head as he was writing it thinking 'Unsuccessful deployment of red shirts.'

  134. Matt says

    Upon further pondering, I think that it becomes obvious that this is how Judge Wright felt after that second hearing:

  135. Clownius says

    Well i read the order and im still just at the WOW stage. he really went for the jugular by sicking the IRS onto them didnt he.

    Sanctions yeah
    Bar Associations why not
    US Attorney im feeling nasty
    IRS. Boys i hope you have plenty of Lube handy they dont feel the need for any.

  136. ericball says

    I think we can assume that any pending lawsuits associated with Prenda are dead. However, does this order have any bearing on similar lawsuits? i.e. will other courts take the hint and require more due-diligence before approving early-discovery requests?

  137. Mike says

    I was wondering if Judge Wright's findings re Alan Cooper might operate to doom Prenda&co in their various lawsuits with Cooper under the doctrine of collateral estoppel, which prevents parties from relitigating issues that have been decided in another proceeding (essentially Judge Wright's findings re the forgery would be binding in the other cases).

    The requirements: (1) the issue sought to be precluded must be identical to that decided in the prior proceeding; (2) the issue must have been actually litigated in the prior proceeding; (3) it must have been necessarily decided in the prior proceeding; (4) the decision in the former proceeding must be final and on the merits; (5) the party against whom preclusion is sought must be the same as, or in privity with, the party to the former proceeding.

    I think #2 might be in some question (or at least Prenda will say so) if Prenda argues that Wright's findings were based on inferences drawn from the 5th invocation.

  138. Mike says

    @ ericball it can be cited as persuasive authority in other cases, although it is not binding precedent. I know California state and federal courts allow citation to unpublished district court decisions. Not sure about other jurisdictions.

  139. Stephen says

    Would a notice of appeal be enough to prevent them from having to come up with the $81k right now? Or do they still have to pay it and it is put in escrow pending the outcome of the appeal?

  140. Basil Forthrightly says

    "So is it legal to torrent porn now?"

    No. All this ruling means is that the lawyers and businesses who go after torrenters are going to be more likely to follow the law, which makes it somewhat harder and more expensive, and some might stop doing so. In other words, folk collecting porn via torrents are still playing the "sue me" lottery, but their odds of not being sued are probably improving.

  141. Mike says

    @ Stephen Notice of appeal will not stay order. They will have to get a stay either from Wright (ha!) or the 9th Circuit. They will have a hard time meeting the stay requirements, which off the top of my head include a likelihood of succeeding on appeal and irreparable harm

  142. Rusty says

    James said: "Bottom line, if the IRS thinks that SOMEBODY has cash that could be used to pay taxes and that this cash is at risk of disappearing, say into an offshore trust, they can freeze it by sending a notice to any bank, stock broker, real estate agent, or any other financial intermediary. The freeze can apply to spouses (welcome back Mrs. Gibbs, honeymoon is over), uncles, children, African kinship associations, and any other related party if the IRS suspects hanky panky."

    No, it's worse than that – they can not only freeze the funds, they can seize them via a jeopardy assessment. And then send a notice of the assessment after the fact. If Prenda peeps have any client funds that they have control over, the IRS can seize those too as partmofmthe jeopardy assessment.

    The referral to CID is likely the end of the line for the Prenderasts, especially in light of: a) the offshore entities designed to obfuscate ownership – Treasury is on the warpath against offshore entities big and small, and b) the probable criminal nature of the activities (the RICO referral in Wright's order). Everyone is afraid of CID – they're comfortable with a certain insouciant ambiguity about what is and isn't outside the lines.

    The joint and several language of the sanctions is a nice touch and if the new Mrs Gibbs learns of this, she'll probably wet herself.

  143. BTCG says

    Of COURSE there are more Star Trek references. I'm surprised nobody has written this one up yet:

    "Harcourt! Harcourt Fenton J. Steele, have you been filing Doe suits again? You miserable sot!"

    "Jane Doe, shut up!"

    "Harcourt! You've been drinking again, and sending settlement letters…"

    "Harcourt! You've been making harrassing phone calls again…"

    "Five hundred! Judge Wright, you can't DO this to me. It's inhuman!"

    And so we leave Steele, marooned on an asteroid, surrounded by Does, all modelled after Judge Wright, bent on criticizing his every legal move.

    —"I, Mudd"

  144. Bill C. says

    The IRS CID…I suppose an actual kick in the groin would have been more humane.

    And as a layman I'm sitting here going "So, how many Rules of Acquisition did these guys adhere to…?"

  145. Nicholas Weaver says

    Stephen: The fine is largely irrelevant beyond making sure Pietz gets paid for his work. Watching them try to duck out of it will be amusing, but its just that, amusement. To be honest, the money is really just a little salt-in-the-wounds, especially since Steele has claimed so much all the others on the hook are just going to try to get Steele to pay, which gets the others off the hook.

    Far more devastating to the enterprise are the "A federal Judge says moral turpitude" to every Bar association (and tasks Pietz kindly with making sure they all get copies. Something I bet Pietz is relishing). If anything can get a bar suspension, its these magic words from a sitting federal Judge.

    Then there is the findings of facts, which are being forwarded to all active Prenda related cases, which is one heck of a photon salvo launched from Judge Wright's bench. It would be hard for any Prenda case to survive this strike.

    And finally there are the criminal investigations. Any IRS CID agent who reads both Hansmeier's deposition and Steele's Fortune article is going to start salivating like a hungry Targ, knowing that a feast awaits, as it is almost inconceivable that entities collecting millions in settlements yet doing accounting on a spreadsheet is properly paying its taxes.

  146. Canonical says

    @Mike I'm not a lawyer/attorney/solicitor and may well be totally wrong, but isn't the question of adverse inference(s) taken from invoking the Fifth covered by Judge Wright's citation of, "Baxter v. Palmigiano, 425 U.S. 308, 318 (1976)"?

    Reading the syllabus for the citation, it says, "(b) Permitting an adverse inference to be drawn from an inmate's silence at his disciplinary proceedings is not, on its face, an invalid practice, and there is no basis in the record for invalidating it as applied to respondent in No. 74-1187. Pp. 425 U. S. 316-320." (bolding added) It seems as if His Honor covered himself nicely, but again, as a not-a-lawyer, I may well be wrong.

  147. Sub-Commander T'lal says

    "…the Romulans have a somewhat better grasp of due process than IRS CID."

    Is that humor? I can never tell.

  148. Dave says

    Missed the announcement because of a funeral, but dayum, what a way to brighten my mood.

  149. Ronald Pottol says

    I do wonder why people don't flee. A month ago, I'd have made ready to flee the county, by today, I'd read the decision on line, and stay gone, with my assets. It beats prison, and after disbarment, how are you going to earn a good living anyways?

  150. says

    And boom goes the dynamite.

    As someone particularly interested in the "justice" aspect of the case, the most exciting parts of the order are around the impact it will have on the other ongoing cases. It's easy for us to forget the reason we're wolfing down all this popcorn in the first place is the injustice Prenda is perpetrating on thousands of innocent (or not-guilty-enough) Americans. This makes us angry, because it's Not Ok to make a bunch of money by bleeding out the masses for no reason.

    It's like chumming the water now. I'd have to guess a fair number of defendants in those cases are represent pro bono or close to it, such as friend-of-family. Now all the counsel in those cases is faced with the tough decision of "Draft this 3-page motion and staple these awesome exhibits on to get a crack at fees and even damages"… or not.

    Yeah, boom.

  151. Mike says

    @ Canonical Judge Wright was fine to do what he did, and the citation supports that. I was going off on a bit of a tangent about what his findings of fact might mean for the various Prenda v. Alan Cooper cases. Because Wright found that the signature was forged, I raised the question of whether Alan Cooper can take that finding and use it against Prenda under a legal doctrine called collateral estoppel.

    Collateral estoppel essentially means that if one party loses in court on a factual issue in one case, they are stuck with that factual finding in any other case where that fact is relevant. For example, suppose I file a lawsuit against a theme park and say that I got injured on one of their rides. Let's say that the judge or jury ultimately decides that I wasn't actually hurt on the ride. If I then try to go sue the ride manufacturer, I don't get a do-over. Rather, if all the elements I described in my post above are met, then the ride manufacturer can assert collateral estoppel as to the fact that I was not injured on the ride.

    My comment about Judge Wright's adverse inferences was that Prenda may claim that the issue of Alan Cooper's signature was never actually litigated because Wright made the finding based on the 5th amendment invocations, and thus collateral estoppel shouldn't apply. I think this argument would be ignoring the fact that there was hot and heavy briefing about the Cooper signature, but when has Prenda ever been shy about ignoring troublesome facts and law?

    Still, a judge might be hesitant to apply collateral estoppel where Prenda really only partially defended itself in a OSC proceeding.

  152. LT says

    Judge Wright, legal badass. I feel like sending flowers to his office. Or maybe some Trek memorabilia. His ruling was beautiful. Oh, I hope they

    Someone want to play the bagpipes for Prenda before they get shot out into space? Something along the lines of 'Loser'?

  153. LT says

    … It got cut off. I was going to say I hope they dig into sanctions through RICO- the whole Prenda scam looked just like a racketeering act.

  154. Damon says


    In line with the whole star trek theme…is there any move to make other than warping out to DS9 and leaving the Alpha quadrant via the wormhole and hoping the Dominion take you in?

    Otherwise these guys are going to get grown down into paste.

  155. says

    So, now, here's a question.
    Prenda law, or some other troll, gets someone to pony up (sorry for any PST that phrase might cause, Ken) money to their protection racket. ("Nice reputation you got here. Shame if you'd get a court record saying you downloaded Midget Bukkake VI.") Later, the scheme is found to be illegal — those cases which did go to court were thrown out as invalid. Can the person who paid up then sue, as he was basically threatened with an invalid lawsuit? (I see it like this: I send you a message saying I'm with the bank, and I can repossess your house, but if you agree to a loan restructure that ends up costing you tens of thousands more in the long run, I won't repossess. Later, the law I claimed to be operating under is nullified, and found to have never been valid… it had just never been tested because most people chose to refinance. Can the target then sue, because I got the money under threat of an action that, it turns out, I wasn't legally empowered to take?)

  156. Jon says

    Question: What happens if they don't pay the fine? Can the defendant levy their assets? Can the judge hold them in contempt?

  157. John O. says

    The Destruction of Carthage was never this complete. Judge Wright just dumped an entire ocean's worth of salt on the big smoldering cratered remains of Prenda.

  158. Hulinut says

    Excuse me, I think I need to go shove my head in the freezer until I stop cackling with glee…

  159. says

    Jim Tyre: Yes, I see that I got a bit ahead of myself. The May 6th date in the San Francisco was when Brett Gibbs was supposed to return from his honeymoon, and May 13th is the date Duffey is supposed to produce the document with Salt Marsh's signature.

    I'm betting that he will try the old "the dog ate my homework" ploy, or possibly the "previous attorney has vanished" one. I don't think either one would make the judge real happy.

    With all these cases all across the country, it is difficult to keep track of significant dates and deadlines. It would sure be nice if someone would make a calender of what is happening when and where.

  160. Black Betty says

    Well. That was unexpected. I really didn't think he would go that far. I do have a question though. Who called the IRS?

    I mean, there were tweets and comments on blogs about the IRS agent sitting in the courtroom during that epic 12 minute hearing, but why was he there? Someone had to have reported Prenda to the IRS. Agents just don't go around monitoring civil cases. So somebody turned them in. And not just that. They handed the IRS something that got them interested enough to show up in court. Which means the IRS was already investigating Prenda prior to that hearing. Payback's a bitch.

  161. RessyM says

    Feel bad for any of the legitimate family law clients of Prenda (if they still have family law clients following the mess with Prenda the last few months), as their monies will get seized with the money from the copytrolling – per depositions, all the copytrolling money is sitting in Prenda's trust account.

  162. naught_for_naught says

    So, how many others watched Star Trek II: The Wrath of Khan on Netflix last night?

    Me: +1

  163. RessyM says

    Black Betty:
    I do believe there have been multiple 'torpedos' sent off to various governmental agencies, whether from,, as well as others who couldn't stand that Prenda was making a mockery of the court system.

  164. Canonical says

    @ Mike

    Ah! Gotcha. My misunderstanding, she contains multitudes. Or perhaps I'm thoroughly charmed by the word, "estoppel". :)

    I obviously need to do some more reading, but, in a case such as this, how much of a "do-over" is granted by the withdrawal of a case? If I bring a frivolous suit, get my fingers mildly smacked in court and drop it, am I free from sanctions? Generally speaking, I mean; I understand that much would depend on the circumstances. I get in this case that the judge declined one series of possible sanctions due to Prenda dropping the matter, but that others were possible because of Prenda et alia's actions. If I bring in a suit that should be wearing bells and motley, but drop it at the first signs of judgely disapprobation, am I pretty much free and clear?

  165. Black Betty says


    Do those blogs know that if/when Prenda is convicted of tax evasion or whatever, that they qualify for a portion of the IRS's receipts on the case? Food for thought.

  166. Canonical says

    Apologies for the quicky-double-post, but…

    @LT Oddly enough, I play the bagpipes. The best tune to fit, in my humble opinion, is "Ass in the Graveyard", although Michael Grey's "Legal Repercussions" might also work. Fittingly enough, it's a reel which is likely what the Prendanauts are doing about now.

  167. Frankzzz says

    @Black Betty
    The mention of an IRS agent in the audience for the 12 minute hearing, could have been a referenece to the 3rd Hansmeier brother, who is supposedly an IRS agent. idk, could just be rumor.

  168. Mike says

    @ Canonical generally speaking, yes unless you are like Prenda and have filed tons of jesters and the court knows it.

    @ Jon This "what will happen if they don't pay" is where people who just assume they'll move the assets and be free are really missing the boat. If they don't get a stay (and to get a stay they will probably be required to post a bond for the $81k) and they don't pay up in time, I suspect Judge Wright will consider holding them in civil contempt. Civil contempt can include jail time (think of those reporters who are always getting jailed for refusing to give up their sources for grand jury leaks). As the Principals and Gibbs are jointly and severally liable, each of them could face civil contempt until the whole $81k is paid.

    Given the cracks that were already beginning to show, do you think these guys are going to trust each other and hold firm with an eye on the long play? Hell no.

  169. Mark says

    A great judgement, all it missed was replacing "It is so ordered" with

    Make it so, Number One!

  170. Quote of the Day says

    @AlanF "I'm betting that he will try the old "the dog ate my homework" ploy, or possibly the "previous attorney has vanished" one. I don't think either one would make the judge real happy."

    Please note that Judge Chen has very carefully NOT entered a final judgment in that case. The next step in the event of canine involvement would be yet another 'Order to Show Cause" hearing. In such, full Rule 11 sanctions for continuing failure to comply, fraud upon the court etc. can be used. (Note Judge Wright's regret that Rule 11 sanctions were not available to him.)

  171. Canonical says

    Ta very much, Mike! I think a stop at the local library is in my near future in order to further my education. The RICO proceedings, should things progress that far, will be a little easier to follow; we dissected the George V. Janovich case in college since it was both local and (at the time) current.

  172. says

    "Ensign Gibbs, go see what's behind that rock."

    Love this. Love it! RICO Predicate Acts aplenty, shimmering clouds of engulfing felonies descending upon these Prenda Law crooks, ending with all the blackmailing assholes sitting the next episode out in the brig. Love it!

  173. mcinsand says

    Anyone know if Gibbs' newly-minted spouse has filed for annulment, yet? How will we know what minute of today she finishes with the paperwork?

    As for the Prenda crowd, I wonder how it feels to know that any person with any decency is cheering at your defeat, munching popcorn and smiling with each new detail.

    Although the judge used Star Trek, this last season of 'Justified' would have worked well, too. This was like the scene where Mickey got what he deserved; he was sitting in a car that ended up being thoroughly lead-infused.

  174. Blaise Pascal says

    What happens to Prenda if, before they pay the sanctions and fines (within the 14 day period given to them) the IRS CID freezes all their assets?

    Do they go back to Judge Wright and say "we can't pay, because our assets are frozen, can we have a stay?"? Does Judge Wright say "Tough, pay or be in contempt."?

  175. says

    Let me make a couple of predictions. First, there will be an indictment against at least some of the participants. A prosecutor who couldn't find an indictable offense in this dog's breakfast of facts isn't much of a prosecutor.

    Second, when the criminal case is finally brought it will be low numbered to the calendar of . . . . wait for it . . . the Honorable Otis Wright. Defense counsel will truly be earning their pay.

    Completely off point, Ken, do you have some magic beans that allow your appeals to be heard by the Ninth Circuit in 12 months. If you do, I would be happy to purchase some.

  176. Wally B says

    Ken, I do have a question about this ruling. with judge Wright's reference to the only enterprise that Prenda resembles is a RICO enterprise, with my limited knowledge of RICO, wouldn't that open Prenda up to lawsuits for treble damages from every single person that settled with them, ie fell victim to them?

  177. Nicholas Weaver says

    Roscoe: I doubt #2. Judges are randomly assigned, and even if luck would have it, Wright would recuse himself from any potential criminal case, since he wouldn't want to get the prendarists grounds to appeal.

  178. says

    Nicholas – Cases are randomly assigned, however related cases are routinely assigned to the same judge. I have had this happen to me even when one case is civil and the other is criminal.

    As for recusal, Judge Wright does know that the defendants are bad guys. However this isn't because of any personal bias, but is due to his involvement with the civil case. This isn't the sort of bias that (in my humble opinion) would justify a recusal.

  179. James says

    @Jon There is something the winning party can file called a "judgment lien" that puts a lien on any property the winner can find and it stays in place until satisfied. So none of our upstanding lawyers can sell their house (for example) so long as the lien is in place. There are a host of technical details involved in getting a lien put in place and keeping it in place that are highly jurisdiction specific, but it can be done fairly easily if you know what you are doing. Foreclosing on the lien is another matter, but since statutory liens carry not very favorable interest rates some are happy to get the lien in place and then they sell it at a discount price to people who specialize in torturing the souls of miscreants. This frequently happens if the value of real estate is far above the outstanding mortgages.

    The IRS has a lot more power to levy and they are not shy about using it. I figure, at a minimum, our Prenda friends are on the hook for unpaid income tax at rates of 39.6%, plus FICA at about 14% (if self-employed, more if they are paid through a sham corporation), plus state income tax at various rates, plus 25% penalty, plus interest, plus fines for not revealing signature authority over a foreign bank account, plus . . . well, you get the idea. All of this happens only if they keep the tax issues a purely civil matter, if it goes criminal then start there and add on criminal penalties and potential for incarceration. FYI, there is no statute of limitations on most tax cases like this since a fraudulent return (or no return at all) does not start the running of the limitations period.

    Not sure who the biggest idiot is in all of this but Prenda has been hoist by its own retard.

  180. Black Betty says

    @Roscoe, so what happens if the IRS freezes Prenda's assets before they can pay the sanctions? At that point, what does Wright do to them?

    We're talking about offshore holdings here, so there's a good chance that the IRS will move quickly if they get a request from a judge. I assume Wright can issue an order to the IRS to release the judgment amount to the defendant, correct?

  181. Kevin says

    Could somebody lawyer-ish possibly try to explain in layman's terms the significance of "jointly and severally"?

  182. Rachel says

    i've been waiting for this decision since they first started filing these cases when i was in law school. but wow…who ever thought…*happy dance*

  183. Rachel says

    @Kevin- it means that even it doesn't matter whether one of them pays or all of them pays. so at the same time it doesn't matter whether one or all of them have the money to pay because only one of them needs to have the money…or the property. This judgment can be taken to another state and can be used to force the sale of physical property that someone owns in that state.

    Does that help?

  184. says

    Betty – I don't think that Judge Wright would have jurisdiction over the IRS in that context.

    Judge Wright could use his civil contempt power to force the defendants to pay the sanctions. If he finds they have the ability to pay the sanctions and are willfully refusing he can jail them under this contempt power. However if the defendants make a sufficient showing that they can't pay the sanctions because the IRS has their assets frozen, I don't see him doing that.

  185. Rusty says

    The bad news for Prenderasts from the IRS angle isn't simply the income tax problems, it's the foreign bank account problems. From what little could be gleaned from the Hansmeir abortion of a deposition, it didn't sound like any of them were all that diligent about paperwork, since the whole point of the Nevis structure was to avoid everything: disclosure to the Court, defendants, etc, probably including those pesky FBAR and FATCA requirements. FBAR is a bitch – the penalty for willfully failing to file is 50% of the account balance if it's > $100k. And the income would still be reportable. Sadly (for Prenderasts) the FBAR penalty wouldn't be deductible. FATCA has a similar but equally depressing regime of requirements and penalties. And they would both apply here.

    As to how the IRS ended up at the hearing, probably someone called them, but between Steele's Forbes article and the posts in Popehat, there's no reason that some agent didn't just show up on his own. They're IRS agents, but they're human (probably) and susceptible to the charms of a well turned Popehat phrase as much as the next person.

  186. LT says

    @Canonical- I had to Google 'Ass In the Graveyard'. You're right- it is quite fitting. It has that tone of "Well, you're gone and that's sad… but you were a f*ckup and it was coming to you, and it was fun watching you go down the tubes. So long and thanks for all the lulz."

  187. Mike says

    @ Kevin The significance is that each individual person or entity is liable for the full $81k until it is paid. Just because there are 7 of them liable for the $81k doesn't mean that any one of them can simply pay his 1/7 share and be free. Instead, his liability isn't extinguished until all $81k is paid, even if he has to pay the full amount himself and then go after the others for their share.

  188. hamjudo says

    Prenda will pay the $81k promptly. If they fail to pay, Judge Wright would get another opportunity to compel them to come to his court for a talk about their finances. Morgan Pietz would get a chance to bring evidence that they have money. If Prenda doesn't challenge anything, and instead pleads the Fifth, then the IRS is free to make inferences.

    Lawyers don't normally plead the Fifth in civil cases, but Prenda's did. They may have been correct in their assumption that talking would have been even worse. What they got is pretty bad. Likewise, it isn't usually an option to plead the Fifth in an IRS hearing. If any of the Prenda pals get themselves to that point, it means they are opting for the evil behind door number one.

  189. says

    And while they await the awful weight of the state and federal hammers about to drop they can practice the phrase they will utter for the rest of their working lives: "Would you like fries with that?"

  190. Nicholas Weaver says

    Alwin: Nah, they should sell peanuts and beer at the ballpark. That way, they can retain their skills….

    The ability to say welcome to the big leagues

  191. JLA Girl says

    I actually have a bag of popcorn on my desk. I'm looking forward to to some lunchtime reading but the anticipation is killing me!

  192. Kevin says

    Via the #prenda hashtag on twitter, here's a fundraiser to build a statue of judge Wright. Personally, I think they should model the statue on this

  193. mcinsand says

    Alwin Hawkins,

    >>…for the rest of their working lives: "Would you like fries with that?"

    Yikes, but that has me cringing. I certainly wouldn't want scum like that preparing my food.

  194. says

    So, as an illustrator who likes to follow these sorts of things for fun…can anyone get the good Judge's permission to do a T-Shirt? And possibly a better picture than the one on Wikipedia?

    I would love to do an illustration of him in a Star Trek uniform. Possibly with a subtitle like "United States District Judge Otis D. Wright II: Justice is the Prime Directive"

  195. Black Betty says

    One more bit of pain for Prenda…

    Today is the day that John Steele and Paul Hansmeier (Sunlust Pictures v. Tuan Nguyen) have to file with the court in Tampa, Florida showing proof of new counsel. Plus they have 7 days from the date they obtained new counsel to file an opposition to sanctions. Otherwise the judge (Mary S. Scriven) will rule in favor of the defendant.

    This just gets better and better.

  196. Jon says

    I don't think anyone ever confirmed the presence of IRS agents in one of the hearings; I think that was just someone's wishful thinking, or speculation based (as mentioned earlier) on Hansmeier's relative.

  197. Dan Weber says

    Just for the heck of it I called the number for Duffy Law Group listed on his latest LW systems demand letter. The man himself (Paul Duffy) answered, and he was in no mood for idle chit chat.

    Don't do that.

    I wonder if they were badly advised by their ace malpractice attorneys or just ignored the advice of their ace malpractice attorneys.

    Sometimes letting them blow up three-quarters of the ship is preferable to the alternative. Just because they got slammed doesn't mean their lawyers didn't do their best.

  198. Colin says

    @Canonical 'Oddly enough, I play the bagpipes. The best tune to fit, in my humble opinion, is "Ass in the Graveyard", '

    Ah, but with only a very minor change, the chorus in Beck's "Loser" begins "Soy un Prendador…"

  199. says

    Steele just does not know how to shut up…

    XBiz reports:

    Steele on Tuesday told XBIZ that he plans on appealing Wright's order with the 9th U.S. Circuit Court of Appeals.

    "Obviously we don't agree on the ruling," Steele said. "Judge Wright based his order on an eight-minute hearing where there was no testimony, no evidence introduced. Clearly Judge Wright does not like this type of litigation and he's no fan of intellectual property law."

  200. James says

    "Obviously we don't agree on the ruling," Steele said. "Judge Wright based his order on an eight-minute hearing where there was no testimony, no evidence introduced.

    No testimony or evidence? You think that had anything to do everybody present invoking the 5th amendment?

    Anyway, the referrals to the IRS and DOJ are not subject to appeal. Once a federal judge has outed you for being bad boys it is very difficult to put that particular genie back in the bottle.

  201. Anonymous says

    Think about it. The IRS. Say it again, slowly. The I. R. S.

    Not even The Joker is insane enough to screw around with them:

  202. Nigel Declan says

    Dear "Prenda Law" (if that is your real name):

    All your client are belong to you, hence all your ass are belong to Feds.


    The Internet

  203. RessyM says

    While the 3rd Hansmeier brother may be an IRS agent, if he was there he wasn't the only IRS agent in attendance. The person who convinced the IRS agent to attend the hearing, was also at the hearing and confirmed the "IRS Agent from L.A. Anti-Money Laundering Unit" attendance.

  204. Jim P. says

    If you are at *all* sloppy with your books, you do *not* want forensic accountants on your doorstep armed with federal powers. :)

    I used to provide tech support for a team of such. Nicest bunch of (mostly) women I have ever worked with but they have the tenacity of a pit bull with a boil on its bottom once they get their teeth into the data.

    Just the formal notice of pending inspection sent to a company could result in "overlooked" payments materializing, sometimes on the order of seven figures.

  205. Canonical says

    @ Colin

    *briefly curses mixolydian scale* I don't think I could do Loser justice on the pipes. *sad eyes* You and LT are right, though; tis fitting and meet. I can't even do the theme from Star Trek, though the main theme of Star Wars is doable.

  206. Anonymous says

    IANAL and have no idea how the timeframe of a criminal referral works, but is it possible that grand jury investigation(s) have been underway, the feds have boxes of subpoenaed documents, and their pleading the fifth was partially motivated by the knowledge that they would have to fight criminal charges?

    Given the breadth and depth of their shenanigans, I thought it was strange that their lawyers insisted this was a criminal matter, almost as if they were trying to call Wright's bluff. With Wright being as angry as he was at the first hearing, the Hansmeier deposition basically admitting they were evading taxes, and Cooper's testimony suggesting fraud and forgery, it seemed like a dubious tactic to draw a line in the sand and say "Neener, neener, you can't hold the fifth against us because this is criminal! Suck it!"

    So Prenda's attorneys asked for criminal proceedings and that's what they'll get, which seems monumentally stupid, unless the criminal investigations were underway and they had nothing to lose. And obviously, with a few cases still ongoing and for strategic and PR purposes, it would not have been in their interest to disclose the fact that they were already being investigated.

    I love that Steele will comment for XBIZ; I don't know who he thinks he needs to impress with PR these days, but since he got himself this far, I can actually believe he thinks he has a plan to make this go away and is even too stupid to realize that with all the criminal referrals any victories on appeal will be Pyrrhic (John's favorite type of victory, incidentally).

  207. Canonical says

    No testimony or evidence? You think that had anything to do everybody present invoking the 5th amendment?

    Prenda Law: The Bugblatter Beast of Litigation.

  208. RessyM says

    @Jim P.
    That used to happen here in Canada as well.. Mainly however because CRA (Canada's version of IRS) paid a higher interest rate on installments/payments, than banks were paying – made more sense to 'lend' money to CRA.

    Also meant they paid less in interest and penalties if the gov agency already had the money sitting in the account once the audit was done.

  209. Charles Buckley says

    Does this apply to state courts also? Prenda has been filing some very suspicious suits in state courts lately trying the same sort of stuff they tried in federal court with the addition of some actions that look a lot like collusion between the plaintiff and defendants.

  210. jfb says

    "Obviously we don't agree on the ruling," Steele said. "Judge Wright based his order on an eight-minute hearing where there was no testimony, no evidence introduced.

    Interesting: could Steele et al. have decided ahead of time that they knew Wright would sanction them, and pled the 5th specifically to claim to an appeals court that Wright had insufficient cause to sanction them?

    Would such a strategy work?

  211. Anonymous says


    Steele conveniently ignores the part where Wright also based his ruling on the previous, 2+ hour hearing where Alan Cooper testified that Steele stole his identity and forged documents, plus the deposition where Paul Hansmeier admits the shell game was set up to evade taxes, plus Gibbs lack of investigating prowess and lying to cover it up.

    I supposed if he had bothered to show up for the first hearing instead of ditching it and trying to use last-minute procedural tricks to evade responsibility, he would be a little more clued in (although he could have read about it on Popehat, Fight Copyright Trolls, PACER, Ars Technica, etc.)

    I doubt the appeals courts will be so oblivious but I do hope he tries. I almost hope he has a successful appeal, it'll be too late to stop the USAO and IRS, and there would be something deliciously satisfying about John Steele crying about the injustice of being pursued criminally even though he won his appeal.

  212. says

    Hmmm…I have an idea…I want to thank Judge Wright for providing us with so much fine entertainment. I make pens as a hobby, and occasionally make them from very nice materials. What sort of material would be appropriate to make a nice fountain pen for him with? I'm thinking cocobolo or some sort of other really neat-looking wood.

    Of course, there are also kits to make pens out of circuit boards. That might be slightly more apropos. Choices, choices…

  213. Nicholas Weaver says

    I love how John Steele just can't shut up. I suspect that, hull breach or no, the Prenda ship is going to be entertainingly-sucking-vaccume for a long time to come.

  214. says

    @Nicholas Weaver: Though I have no formal training in psychology, based on many hours of reading random articles on Wikipedia, Steele appears to me to at least have narcissistic tendencies, if not full-blown narcissistic personality disorder/histrionic personality disorder.

    In any event, I concur with your opinion 100%: Prenda, et al. ain't going anywhere.

  215. Nicholas Weaver says

    Oh, stupid question for the lawyers: The Prendarist's ace malpractice attorneys in California are special appearance, right? How easy is it for their malpractice attorneys to go:

    You know, I'm not much on speeches, but it's so gratifying to… leave you wallowing in the mess you've made. You're screwed, thank you, bye.

  216. James says

    Interesting: could Steele et al. have decided ahead of time that they knew Wright would sanction them, and pled the 5th specifically to claim to an appeals court that Wright had insufficient cause to sanction them?

    Would such a strategy work?

    Sure it COULD work, but I would not call it a strategy to deliberately incite the wrath of Khan a federal judge, invite sanctions, risk having highly unfavorable findings of fact placed on the record, and bet that the 9th Circuit will overturn the whole mess on a point of law. They give better odds in Vegas.

    As noted further up the thread, appeals courts almost always overturn cases on misapplication of the law, and they only revisit findings of fact when the lower court has clearly abused it discretion in evidentiary matters.

  217. Mike says

    @ Anonymous Steele isn't conveniently ignoring it. Their main defense was that they were not properly parties to the first hearing and didn't have any opportunity to cross-examine, object, or challenge the evidence presented there. This will be a major thrust of their appeal. Thus their position is that evidence couldn't be used against them, and thus there was no evidence or testimony presented at any hearing where they were present.

    No need to argue with the above to me; I am only relaying their position.

  218. Raul says

    One question… This is only one of the bad guys going down. Another particularly smelly culprit the comes to mind would be Siegel and his CEG-TEK operation.

    Is there any implications for them or am I counting Romulans with my Klingons?

  219. Mike says

    I think it is entirely reasonable to believe at some point that team Prenda and their malpractice attorneys decided that Judge Wright had made up his mind against them and nothing they could say would change his mind. With that reality in mind, many litigants simply turn to damage control, including preparing a record for appeal. As talking may only make things worse, pleading the 5th was chosen to limit other liability and to test/hinder Wright in light of his article 3 limitations (he can only handle the cases and evidence in front of him). From there you either hope he throws up his hands at his limited options or makes a misstep that is reversed on appeal.

    Just because the strategy doesn't have much chance of success doesn't make it a bad one if all the other options are even more hopeless.

  220. Dave says

    There's a phrase that keeps echoing in my head… what is that again… oh, yeah, "Welcome to the big leagues!" :)

  221. htom says

    Jumping to Buffyverse, Judge Wright has pounded Prenda with Olaf the Troll God's Enchanted Hammer. How fitting. /Buffyverse.

    I've got more popcorn. This is becoming an epic.

    Thank you, Ken and others.

  222. MarkH says

    I would assume that an appeals court would not be too eager to endorse tax fraud, fraud on the court, forgery, and so on.

    And, didn't Prenda already appeal previous rulings and fail?

  223. Palimpsest says

    So, does the latest ice Steele announcement mean that the ace malpractice attorney has left the building? I assume she would have told him to shut up.

  224. Treeanon says

    I think this whole thing about Prenda getting in even more trouble for merely pleading the Fifth, instead of answering the judge's questions

    may be the only cognizable example of where keeping your mouth shut may not have been the most advantageous move.

  225. says

    You guys have all missed THE money quote in the Order: "It is simply
    not economically viable to PROPERLY prosecute the illegal download of a single copyrighted video."

    [Actually, I haven't read all 273 comments, so I'm just assuming.]

  226. says

    Holy cow! Did the judge really include a Google map of a porn defendant's house, replete with the address and a picture of his house, in his order?

  227. nlp says

    @Ben E.,
    The first clip you linked was awesomely perfect. I not only got the Princess Bride clip, I also got an ad for the next Star Trek movie.

    I bet those lawyers in Florida who dropped Prenda as a client are breathing huge sighs of relief that they managed to escape the debacle.

  228. That Anonymous Coward says

    @EvanMinn – IIRC, and if I am wrong someone correct me (so tired of ass covering about defamation), Duffy will be the most likely to crack due to multiple judgements against him. It could be part of the reason he was sending out letters from a closed business trying to shake cash from the trees.

    @Christopher L. Jorgensen – that depends on if the porn was released under Creative Commons or not.

    What this ruling does mean is that 70 yr old grandmothers are less likely to get letters threatening their good name for allegedly having downloaded porn, and only backing away from that claim once the media started asking questions and suddenly they locate the "right" person and never apologize for harassing an innocent person.

    It is less likely that someone will send a letter or make the claim that even if you didn't do it, your responsible because you had a duty to secure your wifi point so just cut them a smaller check or get dinged in court for $10K (or $25K depending on the troll).

    It is less likely that many of the games being played currently will be allowed to continue, that courts will take a dim view of the methods being employed. That out of the around 300,000 people "named" in these suits only a few have ever gone to court, and when you remove the possibly dead, possibly not served, those without a deal to open the door to discovery of limitless others, you end up with a small list of people and IIRC that small list is heavily weighted towards the trolls deciding to pay off the people they were pursuing to avoid the case moving forward and anyone getting discovery about the business.

    Steele talking to xbiz… ROFLS. I expected no less. Am surprised he didn't take out a full page ad in a paper somewhere.

    @Raul – There are plenty of other icky little monsters in the troll bucket to pick from. One hopes that what happened here slows down the me too! firms who are trying to cash in on craptacular flops so that the focus can be more on the porn trolls. The porn trolls are the most vile breed of troll and need to be wiped out.

  229. Xploder says

    Damn sure couldn't have happened to nicer guys. Now what happens to the paralegal.

  230. James says

    @Mike OK, I entirely get that when you are in such a deep hole the wise thing may be (emphasis on may) to quit digging and paper the record for an appeal. Does that do our newlywed Mr. Gibbs any good?

    He was at the hearings, he did appear before the judge, he did file pleading about the "gated property" that Google satellite image proved untrue. What are the grounds for appeal in his case and, since the judge asked pointed questions to poor counselor Gibbs as to the identity of his true client and the details of Alan Cooper, isn't he pretty much screwed?

    I also get the Article 3 issues, but the instant case WAS before this judge and there were arguably fraudulent representations made. While it might be a stretch to reach Steele and Hansmeier, I think Prenda, Duffy, Gibbs, and the off-shore entities are entirely fair game no matter what. Joint and several liability is a bitch.

  231. ChrisTS says

    This is so satisfying – and, yet, with the delicious promise of more to come.

    What happens to Lutz?

  232. Sami says

    IANAL, obvs, but I get the distinct impression that it doesn't even entirely matter any more if Steele and/or anyone else can find a way to dodge out of any exact sanctions directly imposed by Judge Wright.

    Because they've been keeping some spectacular financial records hidden out of sight while they pay scrupulous taxes, then Steele, no less than anyone else involved, is absolutely fucked sideways, because forensic accountants are a strange, terrifying breed and they will track every penny you have ever touched.

    Not even out of personal malice, not out of any love for taxation or the principles of justice, but because there is a war going on, between the forces of righteousness and improper numbers, and the improper numbers will not stand so long as forensic accountants draw breath.

    Playing shell games with trusts and accounts and poor documentation amount to harbouring the improper numbers – giving aid an comfort to the enemy. It's war profiteering, it's sedition, it's treachery and treason all at once. They will bring forth their accountancy and smite as with the fury of the Lord, because all who distort and shadow the numbers must burn in the cleansing fire of righteousness.

  233. Mike says

    @ James – Gibbs is I think a good example of what I was talking about. He showed up and testified, but yet he received the same fate as Duffy/Steele/Hansmeier. He therefore has very little grounds for appeal. He can't argue the same things the others can. He's sorta the most concretely stuck.

    As for Wright's article 3 limitations, these cases before him didn't (to my understanding) involve any known settlements. Thus the millions Prenda made in other cases are not actionable by Wright, but instead only serve as evidence of Prenda's business model in the particular cases before him. Rule 11 sanctions were barred because the cases were dismissed before Wright acted. And with the Prenders pleading the fifth, his ability to get much more information was limited. He thus didn't really have the meat to justify a 6-figure or 7-figure sanction, and such a sanction would've been vulnerable to reversal on appeal.

  234. Kes says

    @John Kindley Yes, he did, because it's material to the issue at hand. The argument that Prenda made was that the defendant lived on rather palatial, gated, grounds, and it would be unlikely that anyone could have stolen his wifi to torrent, etc. Wright's posting of the modest suburban tract house the defendant actually lived at was to show that that argument was complete and utter BS.

  235. Anonymous says


    No joke, at the first hearing Wright told Gibbs he used Google maps to look at the address himself and determine that Gibbs' characterization was inaccurate. Gibbs was reduced to bumbling that when he used Google maps he got a different map with a street view or something and not an aerial view and it totally looked like it wasn't a track house. And this was after Gibbs had clearly only tried to justify their "investigation" retroactively when it was clear that there was no investigation and they just tried to bully the subscriber into a settlement without attempting to identify an actual copyright infringer.

    So, no big surprise that Wright keeps rubbing Gibbs' nose in the map.

  236. Jon says

    <blockquote cite="…the Court finds Pietz’s expenditure of 120.5 hours at an hourly rate of $300 reasonable…[a]lthough many of these hours were spent after the case was dismissed, these hours were spent in connection with the sanction hearings—time well spent."> (emphasis added, though probably incorrectly)
    This little jab made me laugh a lot.

  237. Trebuchet says

    I'm picturing the real Cooper, the guy who used to take care of Steele's house, ending up owning it. I'm enjoying that picture.

  238. Gary says

    Okay, we need to stop with the references to "even The Joker wouldn't want to cross the IRS". The Joker in those cartoons was voiced by… Mark Hamill. Don't cross the franchises!

  239. Jim Tyre says

    For those interested, EFF's Mitch Stoltz puts the ruling into a broader copyright law/reform perspective:

    MAY 7, 2013 | BY MITCH STOLTZ
    Prenda Law Is The Tip of the Iceberg

    The Internet is rejoicing with news that notorious copyright troll Prenda Law, and its attorneys John Steele, Paul Hansmeier, Paul Duffy, and Brett Gibbs, received a stinging sanction from federal judge Otis D. Wright, II – over $81,000 in attorney's fees and a referral to federal prosecutors. Using no fewer than twelve Star Trek references, Judge Wright accused Prenda Law of using "the nexus of antiquated copyright laws, paralyzing social stigma, and unaffordable defense costs" to "plunder the citizenry." He referred the matter to "the federal agency eleven decks up" – the U.S. Attorney's Office – which is "familiar with their prime directive and will gladly refit them for their next voyage." Popehat, Wired, Techdirt, and many others have great summaries of the order.

    We can rightly celebrate that Prenda Law has been rebuked and its practices exposed. Prenda (under various names) has filed hundreds of suits against thousands of Internet users, and their fall should discourage others from pursuing this business model. But the problem remains. Copyright is a broken system, biased in favor of copyright owners at the public's expense, prone to harsh punishment and ruinous damages, steeped in the misleading and unhelpful rhetoric of "theft" and "piracy." A system so out of balance is a natural haven for lawsuit abuse. [….]

  240. 7thsealord says

    This is great.

    Yet another geek-ish reference seems especially appropriate for Prenda:

  241. Charlotte says

    @Palimpset – Steele isn't (and wasn't) Heather Rosing's client. She was (maybe still is) representing Prenda (Inc.), Duffy, and Van der Hamel. Whatever else is happening, her clients aren't talking to the press.

    I suspect Steele's lawyer wants to fire him as a client, if it wasn't just a "special appearance". Holy cow.

  242. Jim Tyre says

    I suspect Steele's lawyer wants to fire him as a client, if it wasn't just a "special appearance". Holy cow.

    In context, "special appearance" means that Steele's lawyer was not waiving Steele's assertion that the court did not have personal jurisdiction over him.

    I've no idea if that lawyer represents Steele today, but at various times after the hearing, he filed various objections to evidence, or joinders in objections to evidence by other lawyers. So clearly he remained as Steele's lawyer for at least some amount of time after the hearing.

  243. KronWeld says

    @Gary – "Star Trek" is not the same as "Star Wars." I've never heard of Mark Hamill being associated with "Star Trek" in anyway shape or form.

  244. Michael S. says

    Steele keeps doing interviews…saw this quoted over at Ars:

    […] Steele told AVN that it is his understanding that Livewire Holdings, one of the entities identified by Judge Wright—by way of an actual Prenda relationship chart included in the order—as being a member of the Prenda family, “is filing multiple new cases this week."

    “Hopefully,” he added defiantly, “the pirate that got away in this matter will be caught and brought to justice down the road.” […]

    Someone's gonna have a bad time…

  245. Yoritomo says

    I just sent a mail of praise to the Court; I hope they forward it to Wright (I couldn't find an email address for Wright himself).

  246. Jim Tyre says

    Add the Los Angeles Times:

    One of the lawyers in the case, John Steele, said he intends to appeal the judge's ruling.

    "We have appellate courts for a reason. Nobody's perfect. In this case, I think the judge was misled by others," Steele, 42, said by phone from Miami. "There's going to be a lot of egg on people's faces."

    He denied that he had an ownership stake in the firm or the related companies, Ingenuity 13 and AF Holdings. Other lawyers named in the order, Paul Hammier, Paul Duffy and Brett Gibbs, could not be reached for comment.,0,1738507.story

  247. Jim Tyre says

    “Hopefully,” he added defiantly, “the pirate that got away in this matter will be caught and brought to justice down the road.” […]

    Wow. Who knew that, among his many talents, Steele could channel OJ.

  248. Anonymous says

    I hope for once Steele isn't bluffing. I didn't think he had a way to make this even better, but if he doubles down on filing cases with the shells this is going to be amazing.

    It may also make it a bit harder for the parties involved to get their defense counsel to stick around, I doubt many lawyers will be eager to risk becoming complicit in an ongoing criminal enterprise.

    I think Steele also has a naive and optimistic view, at least of the IRS, when he says:

    "I am confident that agencies like the IRS and the Illinois State Bar require actual evidence before taking action against someone."

  249. AlphaCentauri says

    Wow, I thought they'd at least wait until they're out of this mess before resuming their scams. Unbelievable.

    People have mentioned how unfair it is that innocent Does capitulated out of court in the past and can't request a do-over now that more facts are known. If Steele told Forbes they made huge amounts of money and now Prenda says they're just breaking even, it becomes a question of whether they were lying then or lying now. If the Does who already paid provide assistance to the feds by coming forward with cancelled checks and other documentation of the money that flowed to Prenda, could those Does be entitled to a portion of any money the government extracts from Prenda as a result?

  250. KJ says

    I'm looking forward to a future post from Ken that describes how Prenda's principals might be treated under the Federal Sentencing Guidelines.

  251. Trent says

    Personally I think the IRS referral is what will ultimately be the most damning. The problem with creating all those shell companies and offshore accounts is that you'll need full time accountants to make sure all the proper IRS forms and paper work is being filed. Depending on how the shells are structured, cash transfers between the shells could results in owed taxes. Each bounce between a shell could be income and taxable and disbursements are also taxable. Given the number of shells and the foreign accounts/trust they would have needed at least one full time experienced accountant just to track and file all the required forms. I leave it to the reader to lay odds on whether they did so. The problem will be that not filing those forms is not a "mistake" it's criminal. Tack in Wrights RICO assertion and you get IRS CID agents pursing you like you are Al Capone. If all the required IRS paperwork hasn't been filed there are very good odds the principals could end up in jail and if the federal prosecutor pursues the RICO charge and gets a conviction all the IRS criminal actions get multiplied as well. A successful RICO prosecution and criminal tax evasion with a significant figure could get you prison sentences in the decades. Low level players should be hiring lawyers and offering evidence and testimony for leniency. The IRS plays dirty.

    And as a suggestion to Popehat: A Poll of the readers on which Penderast will roll over on the others first. After all the first one to roll over on the others to the Feds and IRS will have the best odds of suffering the least amount of damage.

    And finally, if the rumors are true of IRS attendance at one of the hearings are true, there are two possibilities, someone called it in or there is an IRS agent that reads one of the blogs that covers the case. Keep in mind you are entitled to up to 20% of the uncollected tax if you report a delinquent situation, provide evidence (could be small, the Deposition by Hansmeier might qualify) and the IRS action is successful. If there is a million dollars owed and you turned them in you could net $200K of the collection. This is another one of about a million reasons you don't mess with the IRS, anyone can turn you in for a share of the back taxes. The more you owe the more incentive there is for someone to turn you in.

  252. Another anonymous NAL says

    Now that I've read all these comments about what the Prendateers might do, and the AUSAs might do, and the IRS CID might do, the real question I have now is…

    What will Heather Rosing do?

    After this epic Trek-infused ruling, the interviews Steele keeps giving to the press, the ongoing letters and calls from Duffy and Lutz….is she really continuing to defend them, doomed appeal and all? Or is she gonna say, "ya know, I was just thinking….screw it, you're on your own"?

  253. Anonymous says

    Keep collecting her share of the loot as long as they keep paying their bills would be my guess. They have bragged about raking in a lot of money, and with their freedom and fortunes at stake they will be motivate to pay whatever it takes.

    Unless Steele is not bluffing when he says they will be filing a new round of cases this week; then maybe Klinedinst starts to get nervous about the crime-fraud exception to the attorney-client privilege.

  254. Another anonymous NAL says

    @Anonymous (12:42):

    Unless Steele is not bluffing when he says they will be filing a new round of cases this week; then maybe Klinedinst starts to get nervous about the crime-fraud exception to the attorney-client privilege.

    And….that's the fly in the ointment, isn't it? Rosing doesn't represent Steele, but if he's planning to get help from her clients to continue the trolling, I doubt she's going to go along with that. It's bad enough if Duffy, who is her client, spent much of April continuing to send out demand letters under "Duffy Law Group" letterhead, despite the firm being involuntarily dissolved.

  255. riesling says

    […] Regarding the referral for sanctions imposed by Judge Wright, Steele said, “As far as the referrals to the various Bar associations, the Illinois Bar is well aware of this type of litigation. I have had inquiries from the office of the Illinois State Bar and have satisfied their requests in the past. I am confident that agencies like the IRS and the Illinois State Bar require actual evidence before taking action against someone.

    “Most importantly,” he added, “hundreds of judges across the country have ruled on these same cases and have thrown out the crazy conspiracy theories of people like Mr. Pietz [Morgan Pietz, a defendant’s attorney in the case] and groups like the EFF (Electronic Frontier Foundation). Content producers are still winning the vast majority of hearings in piracy cases, but it is inevitable that an anti-piracy attorney would have a case in front of a judge such as Mr. Wright.”

    […] Steele told AVN that it is his understanding that Livewire Holdings, one of the entities identified by Judge Wright—by way of an actual Prenda relationship chart included in the order—as being a member of the Prenda family, “is filing multiple new cases this week."

    “Hopefully,” he added defiantly, “the pirate that got away in this matter will be caught and brought to justice down the road.” […]

  256. Nobody says

    > Wow, I thought they'd at least wait until they're out of this mess before resuming their scams. Unbelievable.

    Maybe they're low on free cash? The Ferengi Liquidators, err, I mean the IRS CID are likely to be paying them a visit any time now.

  257. mcinsand says

    Could Steele's public comments be targeted towards a different audience? Could his remarks have been an attempt at his own signal in the sky?

    >>Clearly Judge Wright does not like this type of litigation and he's no
    >>fan of intellectual property law.

    Forget that, on the face of it, he sounds like the Patriot Act advocates that suggested that those that were concerned about losing constitutional protections were pro-terrorist, as opposed to being supporters of what makes us a country that the terrorists hate. Forget that for a minute.

    Could Steele have been trying for RIAA or MPAA attention by trying to paint this as a matter of intellectual property rights instead of abusive litigation and fraud? Maybe, now that he has suffered footgunitis inflicted by a phaser on kill, he is hoping for one of the big boys to rescue him.

  258. mcinsand says

    Oh, to hell with it. Although I got the html right, something happened when cutting and pasting the shirt images :(( Mod, feel free to delete my shirt post (If I am allowed to do that, I am overlooking just how.). If you do delete that one, this one oughta go, too ;)

  259. Ken Mencher says

    Apparently John Steele didn't listen to Ken's advice "SHUTUPSHUTUPSHUTUP" (not going to bother posting all the links where he says this) regarding his interview with AVN….

    He needs to let his attorney do the talking, and filing new suits probably isn't the best thing right now, since Judge Wright's order is going to get attached to them immediately, I suspect.

  260. mcalex says

    Gibbs appears to be governing himself accordingly.

    From the LA Times: The Mill Valley, Calif., telephone number Gibbs listed with the court is disconnected. His email account sent an automatic response: "I am pursuing new ventures and no longer working with Prenda Law Inc."

  261. AlphaCentauri says


    Perhaps Steele considers the MPAA and RIAA his brothers in arms, but I'm sure they wish they could send Big Louie with a baseball bat to his house for some quality time together. The notoriety of this case will make it harder to pursue legitimate piracy cases. Judges and ISPs will be more suspicious of discovery requests, perpetrators (and their parents) will think they will be able to fight their own cases successfully and stretch out settlement attempts, and any case that goes before a jury is likely to have a defense attorney attempting to lump the plaintiffs into a "copyright troll industry" full of scammers and off-shore shell corporations.

  262. James says

    Wow. Who knew that, among his many talents, Steele could channel OJ.

    If the bit does not fit, then you must acquit. Mr. Steele's problem is that Judge Wright cleverly went with the Star Trek meme thereby foreclosing any attempt by Prenda to invoke the Chewbacca defense.

    My personal vote is for Gibbs to become the canary that sings the loudest. Unless he was lying in court about his compensation for the fees, the vast majority of income in these cases went elsewhere. The minor players like Gibbs and Lutz got the financial crumbs and a Form 1099 which means they have precious little to fear from the IRS. Lutz's recent sworn declaration about the Nevis trust being established for his future children will not be helpful to him although if he is not in constructive receipt of any funds from the trust then he will owe no tax.

    Gibbs, having been thrown under the bus and then repeatedly backed over and driven over by said bus, is somebody I would worry about.

  263. Howard says

    A question:

    Even though Prenda forged Alan Coopers signature on the assignment document, does that mean that Prenda signed over ownership of the copyright to Mr. Cooper at that time? If so, does that mean that any lawsuits brought after that document was submitted to the court should have no standing because Prenda did not in fact represent the copyright holder?

    Another thought. Is there any way to determine the initial seeder of the bit torrent files in question? If there is, what are the odds that the file was started from an IP address associated with Prenda?

  264. mcinsand says

    @AlphaCentauri, Perhaps Steele has mistaken himself for Spock of the stranded shuttle episode. By flinging off this last burst, as Spock made an effective flare with the remaining fuel, Steele might be signaling to his brothers in arms; if he fails, then the xxAA IP prosecution efforts will weaken, although, if he succeeds, it is only decency and ethics that suffer.

  265. rsteinmetz70112 says

    Steele isn't done yet.

    According to the LA Times

    "We have appellate courts for a reason. Nobody's perfect. In this case, I think the judge was misled by others," Steele, 42, said by phone from Miami. "There's going to be a lot of egg on people's faces."

  266. Dr.Tom says

    From the LA Times article:
    ""We have appellate courts for a reason. Nobody's perfect. In this case, I think the judge was misled by others," Steele, 42, said by phone from Miami. "There's going to be a lot of egg on people's faces.""

    From Miami…. did they mean Miami International Airport? On his way to catch a flight?

  267. mcinsand says

    Mr. Steele, as if the white hot focus of a federal judge wasn’t enough, here is another welcoming into the Big Leagues. Forgive if someone has beat me to this, but Morrison & Foerster getting involved has to make any of us smile. What is Steele’s hometown? I’d be willing to bet that, if he has the cognitive ability to understand what is now happening, the stores are running short of incontinence products. The attorneys at MoFo are everything that Steel fails at pretending to be; thorough, intelligent, and competent.

  268. Blaise Pascal says


    My understanding is that the forged signature was on a copyright transfer agreement between a third party and one of the shell companies controlled by Prenda, with Alan Cooper "signing" on behalf of the shell company. If the document is considered a legit transfer, despite the forgery of Alan Cooper's signature (as per Prenda Law's argument), the the copyrights go to the shell company. If the forged signature (or the questionable legitimacy of the shell company) undermines the legitimacy of the transfer, then the original copyright holder would still have the copyrights.

    I can't see a way for Alan Cooper to end up with the copyrights.

  269. MrEye says

    I see people want to fund a statue for Judge Wright. he obviously won't be able to accept this.

    I have a different idea to honor him. There's the Stresiand Effect and the Kobayashi Maru how about "The Wright Way".

    Here's James definition of what it is:
    "If the bit does not fit, then you must acquit. Mr. Steele's problem is that Judge Wright cleverly went with the Star Trek meme thereby foreclosing any attempt by Prenda to invoke the Chewbacca defense."

    There are probably better ways to define The Wright Way, any thoughts?

  270. Nicholas Weaver says

    Since Steele, Hansmeier, and Duffy all have different special appearance lawyers in LA, Steele's refusal to just shut up must be infuriating the hell out of Hansmeier and Duffy.

    Especially since an appeal doesn't do any good: Its the findings-of-fact torpedoing the other Prenda cases and the happy notes to the state bars and criminal authorities that are the damage. Who care about some $80k at this point? Especially since Judge Wright indeed made sure that it was less than the cost of an effective appeal.

    And the publicity does no good: Bar association committees aren't going to look favorably on this grandstanding, and the Armed Accountants from the IRS don't give a fig.

    But every statement Steele makes is undoubtedly being scrutinized in the IRS CID, which is probably already salivating after reading Hansmeier's transcript.

    As for the other question, I expect Gibbs to squeal like a pig: if he can get off with a <1 year suspension from the CA state bar, plus immunity for testifying to the CID/DOJ, its a best-case scenario for him.

    Likewise, if Duffy has a good attorney, his attorney is probably advising the same thing, especially if the sale to Prenda was a rightshaven-ish "no sale sale".

  271. CliveStaples says

    This punitive portion is calculated to be just below the cost of an effective appeal.

    That seems a little despicable, no? "You abused pricing of settlement offers, so we'll abuse pricing of damages!"

    Doesn't it seem much worse for a judge to abuse the pricing of damages awarded in a case than for a plaintiff to abuse the pricing of settlement offers, in the same way that it would be a greater abuse for a judge to plant evidence than for a plaintiff to plant evidence?

  272. mcinsand says

    I'm really wondering about what CliveStaples has written. If I had been victimized by Prenda et al, I would be ticked off if the judge thought I deserved more, but calculated the award based on what the perps might do. In this case, since this settlement looks to be petty change to what Prenda's Perps will have to pay in handling other cases. To put it in a way that might be more relevant to the thread, why use an appeal to bolster the rear deflective shields when every hostile from the Star Trek universe is dead ahead?

  273. Matt says

    Will • May 8, 2013 @8:09 am

    Why didn't he say "resistance is useless"?

    Because he's quoting the Borg, not the Vogons :D

    Blaise Pascal • May 8, 2013 @7:58 am

    then the original copyright holder would still have the copyrights.

    In which case, Prenda has no standing for bringing suit, correct? Also, would this be retroactive to prior cases (or provide a basis for those seeking to recoup previous settlements)?

    Mind you, I'm not holding my breath on this being enough to for sure invalidate the copyright transfer.

  274. says

    CliveStaples said,

    Doesn't it seem much worse for a judge to abuse the pricing of damages awarded in a case than for a plaintiff to abuse the pricing of settlement offers, in the same way that it would be a greater abuse for a judge to plant evidence than for a plaintiff to plant evidence?

    I don't quite see it that way. I don't think the judge intentionally set the amount to be there. If you read through that portion, he very carefully outlines where each bit of the award comes from, down to the penny, then doubles it as a punitive measure (which he is within his inherent power to do).

    Personally, I think that footnote is more of an extra twist of the knife at Prenda than an actual statement of the judge's reasoning in setting the amount of the settlement. I could be wrong, but based on Judge Wright's previous statements, I don't think that's too likely.

  275. Anonymous says

    @Another anonymous NAL

    And Steele's statements reinforce suspicion that the attorneys are the clients and Steele is the glue that holds it all together.

    What legitimate company in its right mind would continue to work with attorneys that just got themselves and several of their clients referred to the USAO and IRS-CID? Livewire escaped sanctions but they were ordered to appear at the earlier show cause hearings, and are certainly bound to be caught up in the investigations.

    OK, so if Livewire was a legitimate copyright holder, an innocent bystander in all this, and determined to enforce their rights, then yes I can see them pressing on with their litigation campaign even if it seems destined to drown them in horrible PR and credibility problems.

    But if they continue with Prenda, Duffy, Hansmeier, Steele, or some combination as their attorneys… Well that will be a whole new dimension of stupid.

  276. Canonical says


    Oh, what the heck…

    Why? What happens if we cross the franchises?

    It would be…bad. ;) back.

  277. Dr. Wu says

    "We have appellate courts for a reason. Nobody's perfect. In this case, I think the judge was misled by others," Steele, 42, said by phone from Miami.

    Good heavens, I think that man is drowning! Someone throw him an anchor!

  278. N. Easton says

    In reference to some of the Principal's recent statements to the press, isn't a really bad idea to say that the judge "doesn't like IP law?" If I recall correctly, the various codes of professional responsibility have some things to say about accusing judges of bias.

  279. Death from above says

    Amazing that nobody quoted Falling Down (1983)

    Bill Foster: [to The Golfer that is having a heart attack] Yeah. And now you're gonna die, wearing that stupid little hat. How does it feel?

  280. says

    Steele also called the judge "Mr. Wright" in one of the interviews interview. Question to lawyers: how offending is it to call a judge this way by an attorney?

  281. Anonymous says

    @N. Easton

    If you like that have a look at Prenda's motion to disqualify Judge Wright, from a few months before the OSCs. It was signed by Gibbs but we assume it was ghost written by Steele and/or Hansmeier, or a team effort.

    Here are samples from the opening and closing; you can start to imagine why Wright was not in a lenient mood once there was evidence these clowns were actually defrauding the courts. Of course the appellate court has to follow the rules when they review Wright's ruling, but Prenda is not exactly working towards gaining the respect of the judiciary and the benefit of the doubt.

    The story Plaintiff now sets forth is rather simple: Honorable Judge Otis D. Wright, II simply abhors plaintiffs who attempt to assert their rights with respect to online infringement of pornography copyrights. Honorable Judge Wright’s abhorrence of such assertions of right under the Copyright Act has risen to a level such that a neutral observer would have reasonable grounds to question Honorable Judge Wright’s impartiality. Indeed, in light of Honorable Judge Wright’s conduct, Plaintiff contends that it would be impossible to convince a neutral observer that Honorable Judge Wright regards this particular type of case impartially.

    The only way in which Honorable Judge Wright’s conduct, as described herein, would be acceptable is if pornography copyright holders were subject, ab initio, to a completely different standard than other plaintiffs in the court system. A cursory inspection of the Copyright Act indicates no such differing standard. As such, Honorable Judge Wright’s determination that all parties attempting to protect pornography copyrights are engaged in extortion is unambiguously indicative of a degree of bias that is simply not allowed under the purview of 28 U.S.C. § 455.

  282. That Anonymous Coward says

    @mcinsand the **AA's want nothing to do with this at all.
    6 Strikes works on the concept of even if you didn't do it, your responsible for your connection… and owe a duty to unknown parties to do more to protect them.

    The Copyright Act has nothing in it, a Judge told us so, to allow for penalties of negligence – there is no duty to protect a 3rd party.
    These cases of Steele's et al. rely on we saw your IP do it, and we are holding you responsible… except there needs to be proof they did something.
    If the **AA's filed a single piece of paper, the door would open allowing a smart lawyer to argue that the **AA's are doing basically the same thing as copyright trolls and working outside of copyright law to do so. They want the public to embrace 6 Strikes as something only used against bad people, while forcing people to take on more burdens than required by law. Funny the ISPs and Cartels don't have to go the extra mile, but they can force everyone else to?

    Drawing attention to themselves to protect the poster child for abuse of copyright law seems like a stupid play, so there is still a 50-50 shot of them doing it going by their previous work.

    I'm going out on a limb and calling Duffy the first main player to crack, IIRC he has all sorts of judgements against him and owes quite a bit of money. He can't afford to find something new to do, and would be more than happy to throw the others under the bus to save his own ass. I doubt he has much to offer up other than pointing at the others saying they did it because he was always conspicuously absent even in cases where he 'represented' the 'plaintiff'.

    In the meantime true believers… wait until the nuke hits in a FL courtroom, where the Judge has more options than Judge Wright did…

  283. mcinsand says

    @TAC, I didn't think the **AA's would jump in, but I was wondering if Steele was hoping they would. A better theory might be that Steele is trying to keep up the appearance that the scam money train is still running for the sake of his own hide. That is, if he is in bed with someone that is insistent on still getting a cut of the take. Not that I'm actually proposing this; I'm just struggling for some reason Steele isn't supergluing his lips together.

  284. Charlotte says

    @Dr. Tom, I was thinking "said he was in Miami but was really somewhere offshore".

    @Nicholas Weaver – excellent analysis (tl;dr: the appeal is the least of John Steele's worries right now) although I would not be horribly surprised if one of Rosing's clients pipped Gibbs to the post. They should hurry though if they want to beat him to it. I suspect the first one to talk will get the best deal with los Federales.

  285. OngChotwI says

    KatAttack: How do you say "busted!" in Klingon?

    Perhaps wI'ang Da'ongnep (we reveal you cunningly lie to them)? Keep in mind I don't have this conjugated properly, and working with the limited vocabulary in Okrand's dictionary makes it a challenge to express normal English.
    bIghHa'Daq yIghoS (Go to jail!) could work here, too. :)

    Anyone else notice Infoworld's article on Prenda?

  286. That Anonymous Coward says

    @mcinsand – If they are still making calls and sending out letters he HAS to make a giant spectacle of himself.
    The "business model" (SCAM in my opinion) relies on keeping people scared.
    What are the search hits for Prenda right now?
    Why were there letters going out under the new name, and the dissolved companies name?
    Because they aren't that tainted yet.

    Steele needs to play the this is just a speed bump and not real.
    Just a Judge out to get us like those terrorist EFF a**holes!
    He thinks he can manipulate the net to his favor… o_O
    Didn't he fail at that once already? Oh yeah…

    I have a feeling they will be taking settlements until someone from CID pulls their CC swipe from their grimy little hands. I sure hope their previous targets who settled keep an eye on the CC bills… if I was an evil mastermind with very little to lose…

  287. anonymous says

    Does Labor Code 2800 and 2802, which requires employers to indemnify its employees, basically mean Gibbs is off the hook for paying the monetary sanctions? Or, does Prenda's and Gibbs's smartaleckness in trying to insulate Prenda by designating Gibbs an "of counsel" independent contractor make these code sections inapplicable?

  288. NickM says

    Miami is a short boat ride from a number of other countries. I wouldn't be surprised if John Steele is never seen again in the U.S.

  289. James says

    @anonymous On labor law it is pretty simple; either you are an employee or you are not. While the IRS view of "employment" does not always align with other legal concepts of employee-employer relationships, it usually does.

    Normally though employers are not obligated to pay for fines as there is no job where breaking the law is part of the legal description (think speeding tickets for taxi drivers). Such costs also not tax deductible as legitimate business expenses. I am not sure if sanctions would be interpreted as equivalent to fines, but probably so.

  290. Matthew Cline says


    I'm just struggling for some reason Steele isn't supergluing his lips together.

    He's an arrogant moron who still thinks he's going to get away with it?

  291. Michael Antoniewicz II says

    There may be a bit of the Schlock'verse that leaked in also.

    When Judge Otis D. Wright II wrote; "… Gibbs’s behavior in the porno-trolling collective was controlled by several attorneys, under whom other individuals also took their orders…." it brought to mind the 'Partnership Collective' in how they operate and are are named.

  292. Jim Tyre says

    Many folks here are familiar with the Righthaven copyright troll cases, even though they don't involve pr0n. This morning, the Ninth Circuit Court of Appeals (the court which will hear the appeal, if any, from Judge Wright's Order) issued a consolidated decision in two Righthaven cases: Hoehn, in which the Defendant is represented by Randazza; and DiBiase, in which the Defendant is represented by EFF.

    The Court affirmed the lower court ruling that the purported copyright assignment to Righthaven was bogus (a legal term of art) and thus Righthaven had no standing.

    The Court said "make it so" twice in the first graf, but it was using a more traditional source than Star Trek:

    CLIFTON, Circuit Judge:

    Abraham Lincoln told a story about a lawyer who tried to establish that a calf had five legs by calling its tail a leg. But the calf had only four legs, Lincoln observed, because calling a tail a leg does not make it so.1 Before us is a case about a lawyer who tried to establish that a company owned a copyright by drafting a contract calling the company the copyright owner, even though the company lacked the rights associated with copyright ownership. Heeding Lincoln's wisdom, and the requirements of the Copyright Act, we conclude that merely calling someone a copyright owner does not make it so.


    Decision at

  293. Kurt says

    Great article, Ken. Sorry to mix metaphors here, but in Lord of the Rings: Return of the King, when the riders of Rohan appear on the plains below Minas Tirith, no one doubts what's about to happen to Sauron's army. Judge Wright's order was as satisfying and pleasurable to read as that scene is to watch.

  294. Jim Tyre says

    Yesterday, Paul Hansmeier, through his attorney Phillip Baker, filed a request to represent himself pro se in place of Baker.

    This morning, both Paul Duffy and Angela Van Den Hemel, through their attorneys Heather Rosing et al, filed separate requests to represent themselves pro se.

    Rosing still has another client, Prenda Law LLC. I believe (but am uncertain) that an LLC cannot represent itself pro se, so it may be interesting to see what (if anything) Prenda does. So far, Steele has not made a similar request.

  295. Kaio says

    On footnote #5: Guess the judge showed them he knows how to do some trolling of his own… mad respect for this man. Standing Ovation.