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.