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Thu, 11 Jul 2019

Prenda's John Steele Gets 5 Years In Prison; Insists He's Really, Really, Really Sorry

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A month after his partner in crime Paul Hansmeier was sentenced to 14 years in prison, with scathing commentary from the judge in the case about Hansmeier and his copyright trolling scheme, John Steele has been sentenced to five years in prison in a sentencing that appeared to go quite differently than Hansmeier's. In front of the very same judge, a very different story was told. At the Hansmeier hearing, the judge said this:

"It is almost incalculable how much your abuse of trust has harmed the administration of justice," [Judge Joan] Ericksen said during the sentencing hearing in U.S. District Court in Minneapolis.
At the Steele hearing, after federal prosecutors apparently heaped praise upon Steele for confessing, and helping build the case against Hansmeier, Erickson gave Steele a chance to speak, at which point he at least put on a credible performance of contrition. He explained how he had met Hansmeier, how Paul had concocted the scheme and he joined in -- including lying to federal judges about what they were up to. From the Star Tribune's Dan Browning's excellent reporting:
First, he said, he enrolled at the University of Minnesota Law School at the age of 37 without any sense of mission other than making money. It was there that he met and befriended Hansmeier, which led to a second poor decision in April 2010.I'll never forget that day, Steele said, choking up. I received a call from Paul Hansmeier about an idea he had about seeding pornography content online.The third bad decision came when federal judges around the country began questioning Hansmeier's and Steele's methods of filing hundreds of lawsuits to identify the owners of computers that were used to download pornography so that they could pressure them to settle to avoid public humiliation.Steele said he could have told the judges the truth but opted to blame others and hide behind offshore companies that had technical ownership of the copyrights on the movies.
This is... a very different version of Steele. I remember the long interview he gave with Kashmir Hill where he boasted of the success he was having and mocked the idea that his copyright trolling, by threatening to expose people's porn habits, was unethical by saying:
People don't like to get caught doing anything wrong, he says. They should be embarrassed about the stealing.
Interesting quote. Or then there's the interview Steele did with Joe Mullin in which he did his usual bluster after a judge (Otis Wright) had first called him on his bullshit trolling scam. At the time, Steele seemed overly boastful of his ability to succeed:
It's not our job tothere was no evidence against us! I think everyone, even the people that dislike anti-piracy litigation, would agree that I don't have to answer questions if I don't want to. That's my right. The fact that people take the Fifth Amendment, against compelled testimony, is not allowed to be a negative inference.I have no involvement in this case. I've never made a misrepresentation [to the court], either me or Paul Hansmeier.This judge is completely biased against our type of litigation. Anyone who's researched this judge knows it. There have been some very harsh rulings by this judge against intellectual property plaintiffs. I think there were some errors made, and that's why we have appellate courts.I think the judge knows we're going to appeal. He wrote that the sanctions were designed to cost just less than [an effective appeal]. Look, you may hate me and the litigation that's gone on in the past, but most people have to be a little nervous when a judge puts out a number and says that.
In that interview, he insisted that he had "no involvement" with the shell companies AF Holdings and Ingenuity 13. Of course, part of the federal charges, which Steele admitted to in great detail in his guilty plea, was that he and Hansmeier set up AF Holdings and Ingenuity 13. In his guilty plea documents:
In or about 2011, defendants convinced R.R., theowner of Heartbreaker Productions, to transfer the copyrights to Sexual Obsession andPopular Demand to AF Holdings. In order to disguise their control over AF Holdings,defendants used the name of an acquaintance of STEELE--whose initials are A.C.--onthe copyright transfer agreement to purportedly sign on behalf of AF Holdings.Furthermore, defendants represented and caused to be represented to multiple courts thatAF Holdings was owned by a trust named "Salt Marsh" whose manager and solebeneficiary was M.L., a paralegal employed by STEELE and Hansmeier. In fact, and asdefendants knew, M.L. was nothing more than a figurehead who agreed to pose as theowner of AF Holdings in order to help STEELE and Hansmeier obscure their ownership and control over the company.
For long time Prenda watchers, you may recognize those initials. A.C. being Alan Cooper, a former caretaker for a cabin John Steele owned, whose name Steele forged on the various documents. Cooper, having no idea what was going on, later sued over the forged documents. M.L., of course is Mark Lutz, the "paralegal" who Steele and Hansmeier falsely tried to present as the real mastermind behind everything.This week, in court, Steele told a very different story.
He said he went back to building and rehabbing homes and began studying stoicism. He said for the past couple of years he has been working for one of his sisters in Phoenix.I'm trying to live a life of virtue, Steele said. All I can control is obviously the thoughts and actions now and in the future. I think it's important that I stand here today and look at you and apologize.
The Assistant US Attorney in the case heaped praise upon Steele for his cooperation, and contrasted Steele to Hansmeier in how they dealt with the charges -- including noting how much Steele's assistance helped in getting Hansmeier to plead guilty as well (though Hansmeier's was "conditional" based on some of his legal attempts to dump the case).Judge Ericksen still noted how abusive and serious the trolling operation was, but also noted that it appeared that Steele recognized how serious this whole thing was:
You abused the court system, as you say, for your personal ends, she said, adding that the courts are not a tool in the box for anybody's hustle.Even so, Ericksen agreed with prosecutors that given Steele's cooperation and efforts to turn his life around, five years in prison was eminently fair. ....I condemn the actions that you took in committing this crime. I congratulate you, however, on the actions you took in responding to the charges, Ericksen said.
The Judge had already order Hansmeier to pay back $1.5 million, and now put that on Steele too, making the two of them "jointly and severally liable" -- effectively meaning that the two of them together need to figure out how to come up with that cash to pay back.Given how vocal and how adamant (and, frankly, how sleazy and confident he was that he could talk his way out of any mess) Steele was over the years, consider me not totally convinced that he's really had a change of heart. It would be great if that were true, but it's going to take more than a single performance in court to convince most of us. Either way, five years in prison is still a significant prison sentence. And, now, it appears we can finally close the books on Prenda.

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posted at: 12:00am on 11-Jul-2019
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