The Ninth Circuit Offers Prenda Law A Brusque Bench-Slap

The notorious gang of crooked fraudsters and copyright trolls Prenda law — documented extensively here — continues to face bad fortune. Last month we learned that the FBI is investigating them. Now, the United States Court of Appeals for the Ninth Circuit has affirmed the apocalyptic sanctions order that marked their turning point — Judge Wright's geek-reference-laden death blow sanctions order.

We shouldn't be surprised, as the Ninth Circuit oral argument more than a year ago went very badly for Prenda. The Ninth Circuit's languidly decided opinion is worse. You can read it here. It's unpublished, suggesting that the judges didn't view it as presenting sufficiently novel issues to merit publication. It's also relatively brief and informal, suggesting the panel didn't think that any of it presented a close call. It accepts Judge Wright's conclusions as well-supported by the record and repeats them to brutal effect:

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

. . .

The Prenda Principals have engaged in abusive litigation, fraud on courts across the country, and willful violation of court orders. They have lied to other courts about their ability to pay sanctions.

Prenda's dead. The courts are bouncing the rubble and the FBI is ambling out to slit the throats of the wounded.

Good riddance.

FBI Actively Investigating Prenda Law Team For Fraud

The Federal Bureau of Investigation's Minneapolis office is conducting an active investigation of the principals of Prenda Law, the notorious team of crooked copyright trolls that I've spilled so much e-ink over here.

Today I spoke with two sources who confirmed receiving a letter from the FBI inquiring about their experiencing with Prenda and seeking information about Prenda's activities. The letter — which I have reviewed — has been sent out on a large scale to attorneys who have represented targets of Prenda's litigation. Here's what the letter reveals:

  • The FBI is looking at the various entities Prenda Law used, including Steele Hansmeier PLLC, LW Systems, Livewire Holdings, AF Holdings, Ingenuity13, and Guava LLC.
  •  Though the letter does not name individual targets, the context makes clear that the FBI is investigating the principals of Prenda Law (with the exception of Paul Duffy, I suppose).
  • The FBI has devoted substantial resources to soliciting victim impact in a systematic way, and based on its questions about availability to testify is contemplating prosecution.
  • The FBI is focusing on "a fraudulent scheme known as 'trolling'" — which may indicate that the FBI has concluded that Prenda Law principals themselves uploaded their pornography to BitTorrent sites in order to sue people who downloaded it.

Based on my 21 years in the federal criminal justice system, I believe the letter reflects an active, determined investigation in its later stages.  The letter represents an abandonment of operational security and confidentiality; it suggests the FBI no longer sees a need for stealth.  That, in turn, suggests that the FBI believes it's already developed the evidence it needs to prove the substance of its case (that Team Prenda committed wire and/or mail fraud) and is just identifying as many victims as possible for potential witnesses and to establish the amount of damages.   Bear in mind that under the Federal Sentencing Guidelines, the more money wrongdoers made, the more time they're facing.

I'll report more as I learn more.  But as I often say — the wheels turn slowly, my friends. But they turn. Team Prenda needs federal criminal defense attorneys, and needs them right now.

Prenda Law And The Terrible, Horrible, No Good, Very Bad Appellate Argument

It's time for an update on the exploits of Prenda Law, that team of crooked, bumbling copyright trolls that's been stomped by judges nationwide.

Today, the United States Court of Appeals for the Ninth Circuit heard oral argument in a Prenda case. Prenda's principals have appealed Judge Wright's catastrophic May 2013 sanctions order against them. It was worth the long wait for court-watchers — though probably not for Prenda.

Judge Wright faced complex problems: given that Prenda had dismissed its copyright-trolling case, what sort of sanctions power did he retain, and what sort of due process did he have to extend to the Prendarasts to invoke that power? On appeal, Team Prenda argues that Judge Wright's sanctions and attorney fees award exceeded his power because (1) Team Prenda's inviduals — like John Steele and Paul Hansmeier — were not properly before the court, and (2) Judge Wright effectively levied criminal sanctions, triggering procedural rights that he did not extend to Team Prenda. John Doe — the defendant who triggered this whole escapade, successfully represented by Morgan Pietz — argued that the bizarre and extreme facts supported all of Judge Wright's order under applicable law.

It's foolish to bet on specific outcomes based on oral argument. But that's the kind of fool I am. I predict that the Ninth Circuit will uphold part of Judge Wright's sanctions order — the part that represents a civil sanction — and send the case back to the trial court for a more complete hearing on criminal sanctions.

That's not good for Prenda.

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Another Hammer Drops On Prenda Law

All of Popehat's Prenda coverage is collected here.

Last month I used up all the ones and zeroes in order to describe the trouble Prenda Law and the Prendateers are in across America. Could it get worse? Of course it could get worse. Today it did.

As you may recall, United States Magistrate Judge Franklin L. Noel reopened several closed Prenda cases in the United States District Court for the District of Minnesota to explore whether Prenda had committed fraud at the court. After a hearing that will render Thanksgiving dinners at the Steele household forever awkward, Team Prenda attempted to disqualify Magistrate Judge Noel based on extravagant accusations of bias. You know, because that worked out so well for them with Judge Wright.

Today Magistrate Judge Noel dropped another hammer on Team Prenda. Unlike Judge Wright, he didn't dress up his order with Star Trek references. Team Prenda probably wishes he had.

The order is here. It's ugly for Team Prenda. After reciting the procedural history — and noting the growing array of judges that have sanctioned Team Prenda — Judge Noel made factual findings:

 

  • He "expressly disbelieves [John] Steele’s testimony" that Steele heard Alan Cooper give Mark Lutz permission to sign Cooper's name to copyright assignments.
  • He found that even though he had ordered Team Prenda to produce someone who could testify directly that the copyright assignments were valid — that is, whoever signed them —  that they "failed to produce an officer who was capable of testifying to the authenticity of each copyright assignment agreement."  He noted "the recent pattern of Lutz failing to appear when he is scheduled to testify under oath."
  • He described Alan Cooper's testimony — that Cooper never gave anyone permission to sign his name, and that Cooper didn't know his name was being used – and concluded that he "finds Cooper’s testimony credible."

This will be extremely difficult for Prenda to attack. A judge's evaluation of the credibility of witnesses at a hearing is entitled to great deference on any appeal.

From there, Magistrate Judge Noel made conclusions of law:

The copyright-assignment agreements attached as Exhibit B to each complaint in each of these five cases are not what they purport to be. Alan Cooper denies signing either agreement and also denies giving anyone else the authority to sign them on his behalf. AF Holdings failed to produce any credible evidence that the assignments were authentic. The Court has been the victim of a fraud perpetrated by AF Holdings, LLC. The Court concludes that the appropriate remedy for this fraud is to require AF Holdings to return all of the settlement money it received from all of the Defendants in these cases, and to pay all costs and fees (including attorneys’ fees) incurred by the Defendants. After all settlement payments are returned and other fees are paid, all five cases should be dismissed on the merits, with prejudice. [emphasis added]

Echoing Judge Wright, Magistrate Judge Noel left the rest up to other authorities:

The Court further concludes that, once all of the ill-gotten gains are fully disgorged from AF Holdings, it would not be a wise use of the Court’s limited resources to sua sponte attempt to fully untangle the relationship between Hansmeier, Steele, Duffy, Dugas, Lutz and Prenda Law, on the one hand—and the Plaintiff, AF Holdings, LLC., on the other. Such investigation can more effectively be conducted by federal and state law enforcement at the direction of the United States Attorney, the Minnesota Attorney General and the Boards of Professional Responsibility in the jurisdictions where the attorneys involved in this apparent scheme are licensed to practice law.

The judge also denied Mr. Cooper's motion to intervene in the case (as his decision rendered it moot) and denied as meritless the motion to disqualify him.

Savor this, from the ending summary of action ordered:

3. The Clerk of Court shall send a copy of this order to the following individuals and entities for the purpose of further investigation:

A. The United States Attorney’s Office for the District of Minnesota. ATTN: John R. Marti, Acting United States Attorney. Address: U.S. Courthouse, 300 S. 4th St., Suite 600, Minneapolis, MN 55415.

B. The Minnesota Attorney General’s Office. ATTN: Lori Swanson, Attorney General. Address: 1400 Bremer Tower, 445 Minnesota St., St. Paul, MN 55101.

C. The Minnesota Lawyers Professional Responsibility Board, Office of Lawyers Professional Responsibility. Address: 1500 Landmark Towers, 345 St. Peter St., St. Paul 55102.

D. The Attorney Registration and Disciplinary Commission of the Supreme Court of Illinois. Address: 130 E. Randolph Dr., Ste. 1500, Chicago, IL 60601-6219.

The wheels turn slowly, friends, but make no mistake, the wheels turn. The wheels are grinding down Team Prenda, and doing so faster and faster every month. With two different federal judges referring the matter to state bars and the U.S. Attorney's office, the probability of bar investigations and federal grand jury investigations approaches certainty.

All Across The Country, Prenda Law's Rubble Is Getting Bounced

All of Popehat's Prenda coverage is collected here.

It's been two months since I wrote about Prenda Law. Since then its fortunes — and the fortunes of its principals — have been on the wane. Prenda, John Steele, Paul Hansmeier, Paul Duffy, and Mark Lutz have been suffering devastating blows across the country. Any one of these developments would be grave for any normal lawyer or legal enterprise. Combined, they represent a swiftly accelerating rout. Each development makes it more and more plausible that Judge Wright's referral of Prenda's principals to federal prosecutors will yield a grand jury investigation and, eventually, federal criminal charges. To one side, career and financial ruin loom as multiple courts issue brutal and reputation-destroying sanctions; to the other side, the door to federal prison yawns open.

So what's been going on? Let's look at updates state by state, and then turn to last Thursday's big development in Los Angeles. Brace yourself; this is a long post.

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Team Prenda Is A Classy, Classy Bunch

All of Popehat's Prenda coverage is collected here.

It really can't be easy to be on Team Prenda these days. Hordes of detractors scrutinize your every legal filing. Mean bloggers say embarrassing things about you. The threat of sanctions always looms. A tangled web of legal proceedings across the country complicates your efforts and constantly generates new evidence and assertions.

So, I guess I can see how a Prendarast could lose his cool on occasion.

Take Jacques Nazaire. Nazaire has found the waters in the Prenda lagoon to be unstill and unpleasant. Craigslist court appearances never generate such negative attention. It's enough to make a man go off on a rant about a witness or launch an ill-conceived detour about gay marriage or rend his garments and bewail how posts by mean blogers "lead to anger."

So: when Mr. Nazaire asked a Georgia federal judge to quash some subpoenas calculated to uncover facts about Team Prenda, it is perhaps understandable that he indulged in a little dig at his detractors:

In addition to the facial defects of the subpoenas, these subpoenas should be quashed because the “Google” and “Comcast” subpoenas are issued for the sole purpose of gathering information of third parties and the undersigned and putting them in display on such websites as “techdirt”, “dietrolldie” and “Popehat”.

Actually, I suspect that the purpose of the subpoenas is to gather evidence to test the theory that Team Prenda, far from being a victim of piracy of pornographic videos, deliberately posted the videos on piracy sites to attract downloaders in a scheme to manufacture copyright violation claims. Watch this space for a discussion of the legal significance of that theory.

Anyway, Mr. Nazaire's gripe was banal and unsurprising — but also rudely exclusionary. How could he have forgotten the site Fight Copyright Trolls, one of the most steadfast foes of Team Prenda? The proprietor of Fight Copyright Trolls wanted to know, too. So he wrote Mr. Nazaire, and got a response. And such a response!

Dear Mr. Nazaire,

In 2:12-cv-00262-WCO Document 68 (filed 08/26/13) you wrote:

10. In addition to the facial defects of the subpoenas, these subpoenas should be quashed because the “Google” and “Comcast” subpoenas are issued for the sole purpose of gathering information of third parties and the undersigned and putting them in display on such websites as “techdirt”, “dietrolldie” and “Popehat.”

I cannot express the extent of emotional distress this paragraph caused to the undersigned. You mentioned three of the major resources that cover Prenda, but failed to include my “fightcopyrighttrolls.” FYI, while my blog is not the oldest, it has the most extensive coverage of the Prenda soap opera: if you navigate to the “Prenda” tag (http://fightcopyrighttrolls.com/category/clans/prenda/), you will find 122 posts, not to mention numerous informative pages. Thus, not including “fightcopyrighttrolls” where it belongs is offensive and scandalous.

Please govern yourself accordingly and refrain from hurting my feelings in the future.

Very truly yours,

SJD

Quoth Mr. Nazaire in response:

I like your Mom. She's a nice lady but not so good in the sack. I guess she has too much mileage on that poon.

Tsk Tsk Tsk. All worn out.

You think that you are funny, huh?

How's that for funny?

Now, insulting somebody's mother is a venerable rhetorical device. It can be a stylized vehicle for creativity, as in a yo' momma competition, where it's not actually about any real person. (The geeky ones are the best. "Yo momma so fat, her patronus is a Ding Dong.") It can be delivered to inflame with some degree of style. ("I wrote a paragraph about your blog, SJD, but I left it on your mother's nightstand.") But it can also fall flat and just sound creepy and angry and needy. So it has here.

For someone who spends so much of his time angry, you would think that Mr. Nazaire would be better at it.

A Brief Prenda Interlude: In Which I Am Accused Of Causing Embarrassment

All of Popehat's Prenda coverage is collected here.

It's been three months since I wrote a substantive Prenda Law post. Frankly, covering the well-deserved downfall and destruction of Prenda and its various agents can get tedious. I'll be posting a cross-country update sometime in the next few weeks.

For now, consider one small incident.

I previously described an AF Holdings case in Georgia, where Attorney Jacques Nazaire, representing AF Holdings, indulged in some ridiculous rhetoric in opposing sanctions. For example:

10. The defendant should realize that California has different laws than Georgia, a different Governor than Georgia; a different legislative body than Georgia, different business needs than Georgia and different views than Georgia and as such all of its decisions cannot serve as a mandate for Georgia.

11. For example the California Courts have legalized gay marriage. Perry v. Schwarzenegger 704 F.Supp.2d 921 (N.D. Cal., 2010);Certified question, 628 F.3d 1191 (9th. Cir.); Answered 52 Cal.4th 1116 (2011) Affirmed, 671 F.3d 1052 (9th Cir.) Such a decision cannot serve as a mandate on Georgia Courts to legalize gay marriage as well.

Yeah.

Anyway, since then, things have continued to go badly for Prenda, AF Holdings, and Mr. Nazaire. The Georgia court gave the defendant leave to take discovery into Prenda Law's operations in aid of the defendant's motion for sanctions. The court also denied Mr. Nazaire's motion seeking to limit that discovery. Now, undaunted, Mr. Nazaire has asked again for a protective order on behalf of AF Holdings, complaining that the defendants' inquiries into Prenda Law are simply too voluminous and intrusive. As part of that motion, Mr. Nazaire attaches comments to various blog posts discussing his client, including the comments to my post, and complains as follows:

9. Additionally, the Plaintiff is respectfully requesting that any future filings in this case may be filed under seal. This case has generated much unneeded attention on the internet. Please see Exhibits N-S. While the writers listed in exhibits N-S have the right to post these articles, unfortunately, these articles and blogs have created an embarrassment, misleading characterizations and perhaps an unsafe environment for plaintiff’s counsel and third parties. As such, plaintiff is respectfully requesting that all future filings be permitted to be made under seal.

10. Plaintiff 1) understands that the articles attached hereto have not been authenticated and apologizes to this Court for the same. In such a short notice of time, it is difficult to authenticate these press releases and postings; however, a search on any search engine will prove these articles and postings to be real; and 2) Plaintiff is not criticizing the authors of the press releases and postings and realizes that the attached postings were meant to be humorous and not spiteful; nevertheless, those not familiar with this case may misinterpret said postings. This may lead to anger by those not quite familiar with the case but yet familiar with the captions. As such, it may be best for the court to allow sealing further filings (which may include addresses and personal information of the parties and counsels herein).

So: Mr. Nazaire seeks to hide not only exhibits and documents (which might be a reasonable request if they contained private information), but court pleadings discussing the merits and progress of the case — to spare "embarrassment."

O Mr. Nazaire. To the extent these paragraphs refer to my post, you are correct that I did not mean to be spiteful, and correct that I try to employ humor, but you leave out that I intended to convey disgust for your client's nationwide campaign, which at least one judge has already concluded constitutes a criminal enterprise. Of course, I represent people accused of crimes all the time; everyone is entitled to a vigorous defense. However, your arguments on behalf of your client were ridiculous, and so I ridiculed them, and will continue to do so. Some of your arguments are contemptible, and I hold them in contempt, and invite others to do so.

Mr. Nazaire, you will not find many people sympathetic to your belief that vigorous coverage of this case — of all of Prenda Law's cases — is "unneeded." In fact that coverage is quite needed — it is essential to assuring that justice is done and to exposing structural flaws in our judicial system.

Truly, Mr. Nazaire, I have feelings about you or anyone associated with AF Holdings — including but not limited to Mark Lutz' hypothetical unborn children — experiencing "embarrassment." To explain those feelings, I invite you to consider Prenda Law's recent extortionate threats to contact the neighbors of the targets. Are you experiencing more or less embarrassment than your client contemplates inflicting there, Mr. Nazaire?

Oho! You may protest. That letter was sent by Paul Duffy! I work for AF Holdings, controlled by Mark Lutz, laboring for the benefit of a trust that benefits children yet ungotten and unborn!

Why yes, Mr. Nazaire, that was Mr. Duffy. May I assume that's the same Paul Duffy who — according to metadata — drafted your most recent motion for a protective order complaining about embarrassment?

I can understand how you might prefer not to answer that question, Mr. Nazaire, being sensitive to posts that "lead to anger."

My dear Mr. Nazaire. Are you quite sure you have considered all of your options?

Prenda Law: The Sound of One Shoe Dropping

All of Popehat's Prenda coverage is collected here.

There have been many small-to-medium developments in the Prenda Law saga. I'm preparing for trial, so I won't be covering them any time soon. But I will leave you with one: a consequence for a Prenda Law lawyer in the Ninth Circuit.

You may recall that Prenda figure Paul Hansmeier has dabbled in representing people objecting to proposed class action settlements. Apparently Mr. Hansmeier was seeking admission to the bar of the Ninth Circuit in order to represent an objector on the Groupon class action. The Ninth Circuit, having seen Judge Wright's order, is less than welcoming in an order by an appellate commissioner:

On April 5, 2013, attorney Paul R. Hansmeier entered his notice of appearance as counsel of record for Objector-Appellant Padraigin Browne. At that time, Hansmeier’s application for admission to the bar of the Ninth Circuit was pending.

On May 15, 2013, the court ordered that Hansmeier’s application for admission be held in abeyance pending the outcome of his referral to the Minnesota State Bar and the Central District of California Standing Committee on Discipline in Ingenuity 13 LLC v. Doe, No. 2:12-cv-8333-ODW(JCx) (C.D. Cal. May 6, 2013) (Order Imposing Sanctions). See In re Hansmeier, No. 13-80114.

Because Hansmeier’s application for admission to the court’s bar cannot be approved at this time, he cannot represent parties in this appeal. See Fed. R. App. P. 46(a); 9th Cir. R. 46-1.2. Accordingly, within 14 days after the filing of this order, Hansmeier shall withdraw from this case. Hansmeier’s notice of withdrawal shall contain proof that he has informed Browne that Hansmeier cannot represent him in this court and that Browne may obtain new counsel or represent himself. Hansmeier’s notice of withdrawal shall also contain contact information for Browne unless a notice of substitution of counsel has been filed by the time Hansmeier files his notice of withdrawal.

Failure timely to comply with this order may result in sanctions.

In other words: no, Paul, you can't have admission to the Ninth Circuit until this is cleared up, and we won't let you represent a client before us in the interim.

Actions have consequences.

(Thanks to a tipster for word of this order)