Paul R. Hansmeier has pleaded guilty to fraud and money laundering charges in Minnesota for his part in the Prenda Law “copyright troll” extortion scheme. The plea comes over a year after his remaining co-conspirator, John Steele, pleaded guilty last year to similar charges. The third perpetrator of the scheme, Paul Duffy, died of complications from alcoholism in 2015.
In September 2010, Hansmeier, along with John Steele and Paul Duffy, began to represent pornography producers against alleged copyright infringement online.
They monitored activity on Peer-to-Peer (P2P) file-sharing networks that use the bittorrent protocol — then sued IP addresses they alleged contributed to the downloading and sharing of their clients’ films. They obtained the identities of the alleged infringers through court subpoenas and sent settlement demand letters to thousands of defendants.
Many defendants were intimidated by the letters they received. Hansmeier and his associates saw BitTorrent downloads as a powerful money-making scheme. They created shell companies such as AF Holdings, Ingenuity 13, Guava, and LW Systems, to seemingly insulate themselves from the exposure. They produced their own adult films and uploaded them to BitTorrent networks to encourage their download and sharing.
They then sued the very people who downloaded and shared their movies.
Hansmeier and Prenda Law did not disclose to the courts that they owned the companies they were representing or that they purposefully shared their films through BitTorrent to entice more downloaders. Through this scheme, Hansmeier defrauded defendants of millions of dollars in settlements.
Through the diligence of several defense attorneys, the Minnesota Attorney General’s Office, and the FBI Cybercrimes Division, the Prenda Law extortion machine was brought to a screeching halt in
Although Prenda Law and their deceptive lawsuits have been stopped, their legacy is one that current mass-filers of file-sharing lawsuits, such as Strike 3 Holdings and Malibu Media, must account for. With every lawsuit, they must be prepared to prove they are not copying the deceptive and extortionist tactics of Hansmeier and his associates.
If you ever paid a settlement to Prenda Law or their related businesses (e.g., AF Holdings, Ingenuity 13, Guava, and LW Systems) for alleged BitTorrent downloads, I encourage you to contact the Minnesota Attorney General’s office and ask about restitution for your settlement payment. As a defense attorney for file sharing lawsuits, I am grateful for the work of law enforcement and investigators to expose this scheme and hold Hansmeier and his associates accountable.
Some copyright Plaintiffs are still very active, filing lawsuits by the hundreds. If you have received a notice in a case like this, please read this guide and contact me as soon as you can. I’ll be able to advise you on what you’re facing and what can be done.
Leonard French, Esq.