Prenda Law, also known as Steele|Hansmeier PLLP and Anti-Piracy Law Group, was a Chicago-based law firm that ostensibly operated by undertaking litigation against alleged copyright infringement. However, it was later characterized by the United States District Court for Central California in a May 2013 ruling as a "porno-trolling collective" whose business model "relie[d] on deception", and which resembled most closely a conspiracy and racketeering enterprise, referring in the judgment to RICO, the U.S. federal anti-racketeering law. The firm ostensibly dissolved itself in July 2013 shortly after the adverse ruling although onlookers described Alpha Law Firm LLC as its apparent replacement. In 2014, the ABA Journal described the "Prenda Law saga" as having entered "legal folklore".
In the 2013 civil ruling, Prenda Law and three named principals, John Steele, Paul Hansmeier, and Paul Duffy, were found to have undertaken vexatious litigation, identity theft, misrepresentation and calculated deception (including "fraudulent signature"), professional misconduct and to have shown moral turpitude. The principals were also deemed to have founded and been the de facto owners and officers of the shell company which plaintiff and their alleged "client" created to "give an appearance of legitimacy".
The firm and its principals were fined; the matter was also referred to the United States Attorney for Central California (for criminal indictment consideration) and the IRS Criminal Investigation Division (for tax fraud consideration). A fourth attorney, Brett Gibbs, was also sanctioned, fined, and referred to a disciplinary committee by the court for false statements and his part in the subsequent cover-up, though described as their employee. (Gibbs' monetary sanctions were later vacated after turning whistleblower as part of his appeal.)
Other federal courts in various states later ruled in a similar manner against the firm and others linked to it, including a ruling of fraud upon the court in a Minnesota court review of five closed cases and "relentless willingness to lie" in an Illinois court. Criminal prosecutor referrals also occurred or were suggested in other jurisdictions.
In 2019, Steele and Hansmeier both pleaded guilty in federal court to a range of criminal charges related to and including extortion and fraudulent conduct, with substantial sums of their criminal proceeds to be reimbursed. Steele received a reduced sentence of five years due to his cooperation and Hansmeier, who had not cooperated, was sentenced to 14 years.
Modus operandi As described in the ruling and media coverage, the firm's modus operandi was to threaten individual members of the public with litigation (hence public exposure) over allegations that they breached copyright during pornographic downloads (based, according to the court, on a "statistical guess"). The firm would then offer to settle the case (silently) for a little below the cost of an active legal defense, in what was described by the court as an "extortion payment". Cases with robust defendants and non-profitable cases were dropped. At times the firm acted for client corporations whose filed papers contained discredited signatures and identities found false by the courts—commenters characterized the firm's plaintiffs as often (though not always) being shell companies operated for the firm and/or attorneys' own benefit. A federal district court described Prenda's principal attorneys in 2013 as "engaging [a] cloak of shell companies and fraud", and comments of "shocking" and apparent "shell game activity" by Seventh Circuit Court of Appeals judges at the inability or refusal to describe relationships between the law firms, "clients" and principals. An expert witness (see also: ) affidavit stated that IP addresses linked to Prenda's Minnesota and Florida offices and John Steele, had themselves been identified in 2013 as the initial "seeders" (sharers) of some pornographic media, tagged for "fast" sharing on file-sharing networks, which would be followed up by threat of legal action, with Prenda as the pornography producer or copyright purchaser, file sharer (offeror), plaintiff, and plaintiff's attorney; the suspect IP, linked to unauthorized media distribution, was confirmed as Steele and Hansmeier's by Comcast. In some cases hacking was alleged, or claims that the defendant was one of hundreds or thousands of "co-conspirators" for whom non-party subpoenas and discovery were sought; in one case the defendant testified he was in effect offered an ultimatum to act as a "sham" defendant and collusively agree to be sued.
Commentators writing for Salon, Law360, JETLaw, Forbes, The Consumerist, and The Register described the business as a copyright troll or as "notorious" for trolling, while tech website Ars Technica described the judge as coming at the firm and its principals "like a tornado".
In December 2016, Steele and Hansmeier were arrested by federal authorities and charged with 18 counts of running a multimillion-dollar extortion scheme between 2011 and 2014. (Duffy had died before that date)
In December 2016 Steele was indicted by a federal grand jury in Minneapolis for his role in the scheme. The following March, he pleaded guilty to federal charges of conspiracy to commit mail and wire fraud and conspiracy to launder money "from his role in an alleged shakedown scheme allegedly designed to entrap and extract millions of dollars in settlements from those accused of illegally downloading internet porn". He was subsequently disbarred by the Illinois Supreme Court in May 2017. In July 2019 he was sentenced to five years in prison and ordered to pay, jointly and severally with Hansmeier, restitution in the amount of $1,541,527.37.
Hansmeier initially pleaded not guilty, on the ground that a plaintiff was entitled to file a claim for damages, even on slim grounds, provided actual grounds might exist, and see if a court agreed or disagreed on its validity (hence arguing that his conduct had been within the law), but later changed his plea to guilty. On June 14, 2019, U.S. District Judge Joan Ericksen sentenced him to fourteen years in prison. In February 2021, the Court of Appeals for the Eighth Circuit upheld Judge Ericksen's order denying Hansmeier's motion to dismiss and to pay restitution in the amount of $1,541,527.37.
History
Prenda first came to prominence through the practice of identifying the IP addresses of Internet subscribers who, it claims, downloaded copyrighted pornographic videos or "hacked" into pornography-related clients. The firm would file copyright infringement lawsuits in federal court, in which it requested "up front" early discovery via "over-broad" subpoenas against the respective Internet service providers (ISPs), upon sometimes-deceptive grounds and at times with falsified signatures on key documents These discoveries were used to obtain names and addresses of hundreds or even thousands of subscribers said to be infringers or "co-conspirators" in some cases.
The subscribers concerned—who might have had no responsibility for any alleged download due to Prenda's lack of care over innocent targets—were then written to, and accused of copyright infringement or computer misuse, and threatened with over $150,000 in statutory penalties or told of the possibility of higher damages if the matter was decided in court, and that refusal to pay would cause the recipient's name, together with the names of alleged pornographic videos, to be entered on public court documents, publicly exposing the subscribers' supposed pornographic interest and trial for alleged downloading. That is, the recipient would be stigmatized and identified to the public (e.g., to friends, employers, spouse, children, coworkers, etc.) as someone who had illegally downloaded specific pornography titles on the internet, and been sued in court for doing so. At times, what were sometimes seen as veiled threats were also made, that household members, neighbors, and visitors to the household would be formally asked if they had been responsible for the download of the pornographic material on the defendant's network, as part of their investigation, if they continued not to pay. The letters then offered to make the case go away "silently" for a fee—$4,000 was the price of silence offered to some. The amount demanded was usually slightly less than a typical attorney would charge to defend the case on its merits (as alluded to in the ruling on Ingenuity 13 (below)), so under the "American rule" for legal costs even the completely innocent would have a strong incentive to pay what Los Angeles-based U.S. District Judge Otis D. Wright II called an "extortion payment".
Alan Cooper claimed in his 2013 testimony, that an attorney ruled to be one of Prenda's principals had stated to him that "his goal was $10,000 a day, to have a mailing of these letters. ... [t]hat he would just send out a letter stating that if they didn't send a check for a certain amount, that he would make it public to these people's family and friends what they were looking at".
It was later testified and ruled in various courts that many (although not all) of the firm's purported "clients" or "plaintiffs" only appeared to exist as shell companies or "fronts" for the principals themselves, and that in effect the principals had been litigating on their own behalf. Signatures and representatives purported to be of clients, were ruled to be falsified, with at least one identity "stolen" and one purported "representative" excluded from court. In a 2013 Minnesota review of five closed cases, none of the documents used to show standing were ruled to be credible. At times the law firm itself was also alleged to have been behind sharing of previously undistributed pornography on well-known video "piracy" websites – an apparent effort to induce litigable downloading.
The rewards reaped by what Judge Wright called the "porno-trolling collective" ran into the millions. Steele told Forbes magazine that his firm had filed over 350 lawsuits against more than 20,000 people, resulting in "a little less than $15 million" in settlements. Brett Gibbs testified in 2013 that based on documents shown to him, the firm's revenue from settlements was around $1.93 million in 2012, of which around 80% was ultimately distributed to the principals or their joint companies, rather than purported clients.
Alleged file downloader litigation cases
"Ingenuity 13" case