Alan Cooper

TorrentLawyer: Thoughts about the effects from Monday’s sanctions hearing.

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A number of interested readers have wondered what my opinion was about Monday’s sanctions hearing against Prenda Law Inc., Brett Gibbs, John Steele, Paul Hansmeier, and the others [Case Cite: Ingenuity 13 LLC v. John Doe, Case No. 2:12-cv-08333, in the California District Court (Case Documents “Recap’d” here)]. Quite frankly, I read the #Prenda Twitter stream throughout the day just as many of you did.

Up front, there were some pretty good articles on the event, and as far as I am concerned, there is nothing substantive that I can add to what has already been written. I advise anyone affected by the AF Holdings, LLC cases (or any of Prenda Law Inc.’s so-called “trusts”) to read the following articles:

IN ORDER OF APPEARANCE:

In sum, it is my opinion that whatever the result, there was a lesson taught — that copyright trolls are not “above the law,” so to speak. As far as the effect of Monday’s hearing, we will not know the effect until we read Judge Wright’s order (which we do not expect to see for a few days). However, as for the applicability, the ruling will apply nationwide, and no doubt every court which hears their cases will probably receive a copy of the order.

There is a lot of mention of “trusts” when it comes to the Steele|Hansmeier organization.  I have a “love-hate” relationships with trusts. They form a wonderful legal alter-ego function when it comes to protecting assets and benefiting third party beneficiaries. However, in scenarios like this, I believe they are tools to break the law and hide from responsibility. The problem here is that I’m not so sure Steele and Co. could pull off having a trust without it being broken by the courts.

From what I have read, it is my opinion that there is too much involvement in the trust by all parties, and putting it simply, keeping the classic definition and rules of a trust, I’m not sure they’ve done it in a way which could withstand scrutiny. For example, I’m not sure who the grantor is, who the grantee (receiver of assets) is, and for which beneficiary or purpose was the trust formed. Are there any documents relating to the formation of the trust?  Are there any filings anywhere relating to the trust?  Also, who is the trustee who is in charge of directing and managing the funds of the trust? I would be worried of the parties mishandling the movement of the funds (the trust assets), and this is where they may get busted for playing the trust game… not to mention that I hear that nobody has filed taxes on this income and all the members are U.S. citizens? I can’t believe no taxes have been filed or paid, because if not, the IRS would be after them for tax evasion (and I have heard nothing of the sort happening).

As far as the Hansmeier deposition that nobody gets paid and that every lawyer gratuitously works for free without receiving an income, I call BS on that statement. It appears to me that he is playing semantics with the term “income” according to the tax code, and he can get in trouble the way he has maybe misused the term. No lawyer, as wonderful as any of them might be, would work for “no income.” Even Brett Gibbs. I assume there is some foreign trust account set up for each of them into which funds get deposited on a regular basis. And, those “offshore trusts” need to pay taxes just like any other legal entity.

My sadness from Monday’s events stem from the fact that Steel/Hansmeier/Duffy clan staying out of court was a very smart move. By staying as far away from the court as possible, Judge Wright was unable to swear them in, and he was unable to take their [what would likely have been incriminating] testimony. If he sanctions them, if he orders a bench order for their arrest (not likely), or if he does something to them, from a distance [and out of jail], they can easily appeal any order the judge makes, essentially eviscerating any legal authority Judge Wright may show.

I mentioned to a few other lawyers how queasy attorneys get when a judge speaks strong words. However, we all have been watching these cases for almost THREE YEARS NOW (come June), and I have never seen a judge do any damage to a copyright troll. Even Evan Stone, the prolific copyright troll out of Dallas, Texas — for sending subpoenas out before the judge gave authorization to do so, he was only sanctioned $10,000 (essentially one day’s income for Steele, according to Alan Cooper’s testimony, or three of Evan Stone’s settlements).

At the end of the day, unless the result of this hearing is a state bar disciplinary hearing (or more seriously, a criminal investigation if there was indeed “fraud” in the legal sense), and unless some lawyers lose their licenses, there will be no deterrence from Prenda Law Inc. (or any other copyright troll) thinking twice about their actions, and copyright trolling lawsuits will grow exponentially until enough people cry out, “this must be stopped!”

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UPDATE (3/14/2013):

SJD reports that Judge Wright has ordered the Steele|Hansmeier gang to appear on 3/29/2013 based on “their pecuniary interest and active, albeit clandestine participation in these cases” (emphasis added).  He continues that “Not only does [their motion not to appear] lack merit, its eleventh-hour filing exemplifies gamesmanship”  (emphasis added).  Wow.  Further, the judge expanded his inquiry to impose sanctions not only to the original masterminds of these lawsuits, but to the so-called entities who are supposed to be separate and apart from their operation (they’re not).  He called Livewire Holdings LLC, and 6881 Forensics, LLC to be present at the hearing.  Now if these entities will be represented by the same Steele / Hansmeier / Duffy / Lutz characters (Hansmeier’s deposition already pegged paralegal Lutz as the CEOs of a number of these entities), this will look very bad for them.

NOTE: A commenter referred to this article (or me) as a “buzzkill,” and that got a good laugh out of me.  If you knew how much my reporting on these blogs represented how dull I sometimes am in real life, the humor of that comment is pretty on-point.  On this note, however, if you read Judge Wright’s order carefully, again, he’s only threatening sanctions.  Even if he imposes $1 million dollars in sanctions, I cannot imagine Steele and the others would pay it.  After all, they technically don’t “own” that money that is in the various trusts (#sarcasm).

Also see:

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    shalta book now cta

    Prenda Law Inc. sues the anti-troll internet community.

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    “Oh what a tangled web we weave, When first we practise to deceive!”
    – Sir Walter Scott, Marmion: Canto VI. (1771 – 1832)

    My greatest effort in this blog is not to decide what to write about, but what NOT to write about. I’ve been very aware of John Steele’s issues in Minnesota (where he made an appearance for one of his cases, and was served by Paul Godfread’s process server on the Alan Cooper identity theft issue). I’ve also been aware of the issues as to whether AF Holdings, Guava, (and we won’t mention Ingenuity 13, or the older MCGIP lawsuits) are in fact entities or whether there is an bit of sham involved in their formation and/or the enforcement of the intellectual property they appear to hold. I have also noticed the clear trend from the smarter lawsuits where Steele moved from suing hundreds of John Doe Defendants to him suing smaller numbers of John Does (20-75) in smaller “under-the-radar” lawsuits, and then finally to the “John Doe” individual lawsuits, some of which ended up with named defendants who were not served, others where the defendants were actually served, and finally others where a defendant and his attorney agreed to allow Prenda to add hundreds of unrelated defendants to the lawsuits as potential co-conspirators.

    Then when even the individual lawsuits looked to no longer be fruitful for him, I noticed the move from copyright enforcement to absurd tactics, some of which involved having Mark Lutz pose as a representative for a production company.  I noticed when Prenda had their own local counsel (Joseph Perea) shift titles to avoid unauthorized practice of law issues (e.g., in Florida), and I noticed when local counsel Brett Gibbs ended up as “of counsel” for Prenda Law Inc., only to later disavow association from the firm when federal Judge Otis Wright mentioned the word “jail.” These absurd tactics have gone even farther, most recently with the creation of the Livewire Holdings, Inc. entity (see, Part I; Part II) using fake pictures on their website for their so-called “partners,” and reports that Mark Lutz (Prenda Law Inc.’s former paralegal, now pictured as “partner” in the Livewire Holdings, Inc. site) is back at it, calling dismissed defendants using a fake name.  I almost fell off my chair when I read local counsel Brett Gibbs’ most recent declaration [under oath] that [he has been informed that] Mark Lutz was the CEO for AF Holdings, LLC (p.4, paragraph 7), and that he was also the CEO for Ingenuity 13, LLC (p.4, paragraph 8).  Really?!?

    All of this drama (including the Minnesota lawsuit and the so-called fake Alan Cooper issue) are topics I have purposefully chosen NOT to write about for the sole reason that they do not help my clients or potential clients understand the issues surrounding the copyright infringement lawsuits they face when they receive a subpoena notice from their ISP in the mail.

    Behind the scenes, as owner of the Cashman Law Firm, PLLC, I and my staff have spent literally months building up local counsel networks and researching each federal court’s rules to properly defend clients who are named as defendants in their copyright infringement lawsuits. I personally warned a number of copyright trolls that if they named my clients, myself and the attorneys I work with would find a way to make defending these cases affordable. So you can understand why I was amused when the principals at Prenda Law Inc. shifted from what looked to be a trend towards individual lawsuits against former John Doe Defendants to their more recent “world domination” shenanigans which led to widespread questions as to the identity of the “real” AF Holdings, LLC Alan Cooper, which of the copyright troll entities are real and which are shams, and then once caught, which led to the finger-pointing which began between their local counsel and other defense counsel, and then ultimately to the finger-pointing towards the principals at Prenda Law Inc. I’m happy that their lawsuits have gone nowhere these recent months, but personally I feel that their focus has shifted to “doubling down” on what appear to be outright lies rather than representing their clients to stop the piracy of their copyrighted films.  I often stop myself from asking, “wasn’t that the whole purpose of this grand charade?”  At least the war I thought I was fighting was to defend internet users from being subjected to copyright extortion-like lawsuits for the downloading or viewing of copyrighted movies and videos.

    For these reasons, I really have nothing to say or comment because what Prenda Law Inc. / formerly, Steele|Hansmeier PLLC/ or more recently, the Anti-Piracy Law Group / John Steele / Paul Duffy / Brett Gibbs / former paralegal Mark Lutz (and their local counsel, many still disgruntled) have been doing and their antics have little-to-nothing to do with the so-called “rampant piracy” and the copyright infringement I thought they were here to stop.

    So now John Steele and the entities he supposedly has nothing to do with are suing Paul Godfread, the real Alan Cooper (as opposed to the one they have not yet produced), along with all of the anti-copyright troll internet population, probably most notably, Sophisticated Jane Doe (http://www.fightcopyrighttrolls.com), Die Troll Die (http://www.dietrolldie.com), and probably a handful of others who have been hugely helpful to our law firm over the years through their reporting on Twitter. I could easily be part of this group of anti-copyright troll “Does” from all the posts I have written on his cases.

    The problem with the “sue everyone for defamation” approach is 1) the elements of defamation are simply not there (as Forbes Magazine might report, John Steele is clearly a “public person” who has cast himself forth as being one of the foremost and first copyright trolls), 2) his lawsuits likely invoke the anti-SLAPP laws because they appear to have been filed to “create chilling effects and to stifle speech,” and most importantly, 3) people like Sophisticated Jane Doe, Die Troll Die, and the others blog and tweet anonymously. Thus, even if they figured out which IP addresses did the posting or the tweeting, the IP address will likely point to a private internet service who have no ability to even know who these anonymous bloggers are.

    In closing, there is not much to say about these lawsuits. Techdirt wrote about them here.  ArsTechnica wrote about them here.  Sophisticated Jane Doe wrote about them here. Copyright Clerk wrote about them here. Jordan Rushie wrote about them here. No doubt there will be many more articles, and no doubt there will be much more drama. However, as far as these lawsuits affect his copyright infringement and “hacker” lawsuits (the purpose for which I write this blog), I cannot see them affecting his lawsuits positively, and if anything, this was a misstep for Steele and his affiliates.

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    UPDATE (3/9/2013): DENIED.  Automattic, Inc. letter to Prenda Law Inc. (on behalf of WordPress.com sites) rejects Prenda’s attempts to ascertain the IP addresses of the anti-troll community citing five (5) deficiencies in their subpoena.  Other notable reasons for non-compliance with the subpoena include: 1) rights under the First Amendment to anonymous speech; 2) right to privacy; 3) subpoena (“outrageously”) overly broad; 4) subpoena seeks information that is not likely to lead to discoverable information.