MINNEAPOLIS — John Steele, the former Prenda Law partner who allegedly made millions of dollars suing hundreds for illegally downloading adult films, pleaded guilty today to conspiracy to commit mail fraud and wire fraud, as well as conspiracy to launder money.
Admitting to federal prosecutors in Minneapolis that Prenda Law’s operation was a scam, Steele brokered a deal that calls for him to cooperate in the prosecution of others involved, presumably his only co-defendant — Prenda Law partner Paul Hansmeier.
Hansmeier, who is suspended from practicing law and earlier filed for bankruptcy, has denied similar charges and awaits trial in Minneapolis.
In exchange for Steele’s plea, prosecutors agreed that they will dismiss 16 other charges against him, including mail fraud, wire fraud and conspiracy to commit and suborn perjury.
Steele, with the deal, could be sentenced to 8 to 10 years in prison if approved by U.S. District Judge Joan Ericksen. Without a deal in place, the statutory maximum sentencing on the charges is about 40 years.
According to the plea agreement, Steele and Hansmeier launched a scheme in 2011 “to fraudulently obtain copyright lawsuit settlements by deceiving state and federal courts throughout the country.”
Prosecutors said Steele and Hansmeier used sham business entities to acquire copyrights to adult movies, some of which they filmed themselves.
The Chicago attorneys posted the movies to file-sharing websites where others could watch them, then filed suits against unnamed John Does who anonymously downloaded the movies.
Later, they sought court approval to issue subpoenas to ISPs to identify possible defendants.
When Prenda Law filed suit against the Does they “used extortionate tactics to garner quick settlements,” the plea agreement said. Those settlements averaged about $3,400 per defendant.
“When these individuals did fight back, the defendants dismissed the lawsuits rather than risk their scheme being unearthed,” the agreement said.
According to the agreement, Steele and Hansmeier, or counsel they hired, filed 200 fraudulent copyright infringement lawsuits around the country seeking the identities of the subscribers behind more than 3,000 IP addresses. In total, between 2010 and 2014, Prenda Law collected more than $6 million in settlements.
When judges began questioning their tactics, Steele and Hansmeier “repeatedly lied and caused others to lie” in an effort to hide their operation, the agreement said.
Pictured: John Steele
