Prenda
Unsealed documents show Prenda parties’ twisted finances
Prenda’s recent devastating defeat in the Seventh Circuit Court of Appeals was a result of Dan Booth’s / Jason Sweet’s titanic work and John Steele’s / Paul Hansmeier’s incurable hubris. Trolls’ hubris made them foolishly believe that they had more than a “between slim and zero” chance of prevailing on appeal despite the compelling evidence of not so laundry-fresh financials.
The evidence itself, scrupulously collected by defendant Smith’s attorneys, was compiled in a single sealed motion for contempt (#135¹ filed on 3/20/2014), and it has been intriguing us for a while: scarce references in Steele/Hansmeier/Duffy’s motions pointed to the treasure trove of information, namely Prenda’s financial records showing that our trio of assclowns was indeed more than capable of paying what they owe:
The financial records produced in discovery so far give evidence that Plaintiff’s Counsel have significantly understated their financial resources and have acted to conceal or move assets off-shore. This evidence, combined with further deceptive statements and actions by Plaintiff’s Counsel, suggests that they are deliberately attempting to frustrate the Order and may have provided the Court with incomplete records of their finances for in camera review.
This motion was unsealed today after a two-week advance warning by the court:
If any document received under seal did not form the basis of the parties’ dispute and the district court’s resolution, a party can request that this court return the document to the district court.
[…]
Absent a motion from a party these sealed documents will be placed in the public record on August 15, 2014.
Surprisingly, no objections were filed, which I can’t explain (if it was indeed an oversight, expect emergency, instanter or similar Senna-themed motions). So now we can peek deeper into documents showing
…that despite their protestations, Plaintiff’s Counsel are fully capable of paying the amounts ordered by the Court, and have acted to conceal or otherwise move assets off-shore.
Take your time:
Thanks to @darthskeptic for procuring the document.
@That_AC the kind of things the IRS will salivate over.
— darthskeptic (@darthskeptic) August 18, 2014
Note that the hearing on this motion (and another one — motion for sanctions) is set to November (emphasis is mine):
NOTICE of Hearing on Motion 153 MOTION for Sanctions for Obstructing Discovery, 135 SEALED MOTION for contempt. Motion Hearing set for 11/12/2014 at 01:30 PM in East St. Louis Courthouse before Chief Judge David R. Herndon. The parties may NOT appear by phone for the hearing. (kbl)THIS TEXT ENTRY IS AN ORDER OF THE COURT. NO FURTHER DOCUMENTATION WILL BE MAILED. (Entered: 07/30/2014).
Second document
The second unsealed document, Anthony Smith’s Reply in Further Support of his Motion for Discovery Sanctions (#172, 05/16/2014) contains no less damning evidence of our trio’s crookery. Particularly, this motion debunks Steele’s laughable claim that multiple entities created by the conspirators (Prenda, Steele|Hansmeier, Alpha Law et cetera) are separate and independent. Also, the defense reiterates (presenting solid evidence) that our “big leaguers” are still in possession of what they looted from the US citizens:
Plaintiff’s Counsel have identified no current sources of income, yet are able to maintain mortgages in excess of $500,000.00 (see Ex. Y); able to provide for their families’ living expenses; and even on occasion add a pool, spa and other renovations to their home. See Ex. Z. Their violations of the Federal Rules to prevent Smith from clarifying their Byzantine finances should be sanctioned.
Coverage
- Techdirt: Unsealed Motions Shows How Team Prenda Sought To Hide Money by Mike Masnick
¹ Lightspeed Media Corporation v. Smith et al (initially St. Clair county, removed to ILSD — 12-cv-00889).
Fight © Trolls 
“Case in point: On March 8, 2013, Alpha Law Firm LLC, “the law firm that [Hansmeier] own[s]” (Dkt. No. 101 p. 16), was ordered to show cause “why the Court should not order you to pay the reasonable attorney fees and costs incurred by the non-parties to this action.” Guava LLC v. Spencer Merkel , No. 27-cv-12-20976, (4th Cir. Hennepin Cty., Minn. March 8, 2013). See Exhibit AA. Five days later Hansmeier wrote an $80,000 payment to himself personally for his “mortgage,” effectively draining Alpha Law’s assets. See Exhibit BB. On August 30, 2013, Alpha Law was held jointly and severally liable for attorneys’ fees and costs in the amount of $63,367.52. See Exhibit CC. That same day Hansmeier dissolved Alpha Law. See Exhibit DD.”
Page 9
In doc 154 Hans does not even address this. At best he hints at “Just because I paid 80k to a “mortgage” in early 2013 does not mean I could pay a sanction at the end of 2013.”
Thanks for posting this, and awesome work on the part of Booth Sweet!
Wow – just plain wow. I stand corrected. I never, ever, thought they’d engage in offshore movements of money because of the risk. This is high level IRS material. Have they never heard of the Department of Justice? These guys must be whacked out completely.
Money Laundering – nothing more, nothing less.
o m f fsm….
wow
These clowns are more incompetent that I’d previously believed.
Not so much “incompetent” as opposed to “foolhardy”. They banked on the embarrassment of being associated with a porn suit, hoping that their victims would be too intimidated to connect the dots.
That paragraph at the top of page 14 (starting with “Plaintiff’s Counsel’s financial records make irrefutable that Steele, Hansmeier and Duffy were properly found to be jointly and severally liable.”) makes me wonder if maybe they’re laying the groundwork for piercing the corporate veil–particularly when they make the point that S/H/D had commingled personal funds with corporate funds and failed to keep accurate corporate records…
@darthskeptic: to be a fly on the wall in the room when Michael Dugas found that out…
Weren’t there two sealed motions? Will the other one get posted as well?
Alright, will post in a few.
You’re a saint, SJD.
Whaddya know? On page 42 of the second doc, Peter’s signature really does bear no resemblance to Paul’s. Who would have thought?
This is really strange…
Page 76 shows John Steele flew to vegas and purchased a couple of $3 things on his spirit airlines flights (lol).
8/30 shows an expense from “Aitkin Aviation.”
Which appears to be for a charter flight or flying lessons? But why is he paying for charter flights or flying lessons when he’s clearly in vegas?
Just weird.
Could it have been for the ariel photos of his property in putting it up for sale? Don’t know the dates on what you are talking about, but that is what popped into my mind when I read it.
Barrels of cash buried in the desert. Who knew?
There really is no such thing as “white collar crime” in the U.S.A. If you shuffle enough money around (you don’t need to actively bribe anyone, just wave it around), you won’t go to jail. As long as you are white above that collar, of course. Otherwise jaywalking might get you executed on the spot.
How many years have those jokers been flagged as fraudsters and jugglers by courts now, and they are still operative?
Look at the heaps of shit a defense lawyer dug out about them. It’s been years since the IRS and FBI and several others have been notified of these shuysters, and they are still operating just fine. Because nobody can be bothered.
A total of 287 pages. I guess I know how I am going to spend my evening.
I’m guessing that the IRS already has all of these records. They may not have traced through the transactions, or understood the reasons for shuffling money, but they know where it went.
The court, on the other hand, doesn’t have any idea of the true financial status of the parties. Or who is really behind the corporations and partnerships.
One major point exposed is the insurance. Steele, Hansmeier and Duffy might have a pretense of running unrelated law firms, but that didn’t extend to paying for duplicate insurance.
LMAO!!! Oh boy does these guys have it coming. I can also tell you as Kerry Steele has her name on some of these documents, any seasoned criminal investigator is going to use that point to gain and maintain cooperation with investigators. It is one thing to have one parent possibly going to jail…
“Sow a thought you reap an act. Sow an act, you reap a habit. Sow a habit, you reap a character. Sow a character, you reap a consequence.” – John Steele and Company sure are ‘Characters.’
DTD 🙂 .
You can bet someone at the IRS Criminial division is wondering with all these Shell companies and with just a few people in charge of them, what taxes had been paid and what taxes hadn’t been paid, what monies were declared as income and what wasn’t/
It ought to be interesting to see what monies were moved to avoid taxes on it, and why these funds were not reported as income and what entities declared the income and paid taxes and what entities didnt do it at all. interesting to see what Prenda Law, Steele Handsmeier LLC reported as income and under the bride consulting as well on what income was reported and what taxes paid.
I think this little bit of detective work by Booth & Sweet is going to be of much interest to the IRS Criminal Division and a grand jury that could be investigating RICO. This helps to keep the coffin closed that and the Prenda gang in a cell themselves in my opinion and on edge of U.S. Marshals raiding their homes and offices and bank accounts. The Prenda gang are idiots in my opinion for all their tactics to avoid paying and being truthful about the monies made.
This is going to be a major nail in their coffin, get ready for the fallout
I found it quite interesting on page 3 of the original motion that Steele had apparently put over $2M of his own money into his IOLTA account. I’ve seen lawyers disbarred for that.
For those not familiar, IOLTA is an acronym for Interest on Lawyer Trust Accounts. A lawyer who holds any client funds is required to keep those funds in a separate trust account, as a trustee for the clients. Because these are trust accounts, and their contents belong to the clients, they are generally protected from the lawyer’s creditors. In most states, those accounts are required to bear interest, and that interest goes to the state bar to fund legal services for the poor. Thus, the client trust account is often referred to as the IOLTA account.
There are a lot of rules surrounding IOLTA accounts, the most intuitively obvious being that you have to account for every client’s money in the account, and you can’t ever overdraw it. Another rule, perhaps slightly less obvious, is that lawyers aren’t allowed to keep their personal or firm funds in that account, above a nominal amount to cover fees and such. In the particular case I recall, I believe the lawyer was involved in a bankruptcy, and had moved personal funds to the IOLTA account. Again, the lawyer was disbarred.
“Surprisingly, no objections were filed, which I can’t explain”
Dude. Steele’s gone. All this other crap that’s been going on for the past year, after Salt Marsh & Alan Cooper went tits-up that has seemed like ego-fueled desperation? Delay tactics.
There is nothing illegal about having large sums of money off-shore. I have personally had bank accounts, each with six-figure balances, parked abroad and in one case the country is generally considered a tax haven. Had I paid taxes on that money? Of course. Did I declare an on-going ownership interest in a foreign bank account? You bet. Did I hear from the IRS? Nary a peep.
So the real question is whether Steele & company declared all this money on their tax returns and filed the necessary disclosures when the money moved off-shore. Musical bank accounts, while suspicious, is not illegal per se. Hubris is a bitch when it catches up with you.
More then where the money is parked is the idea of how they came to get it. Also the statements Steele and Hansmeier made about not having any ownership, fiducary relationship with Prenda. Bank statements show different where Steele is the signatory and moved HIS personal funds in and out of law firm accounts,etc. One thing missing on these bank records ( though I found numerous others mentioned in the docs) is Hansmeier was not a signatory to the accounts.for Prenda, though he was the beneficary of the haul. Poor Lutz – nary a dime beyond his wages for his unborn children. Shame.
Hope they can retire on a couple of $million. Otherwise they’re going to have to find some (undoubtedly scammy) work in the future.
Just goes to show.. those with no class may somehow acquire lots of money, but they sure won’t keep it. And they’ll eventually wind up back at their classless roots.
I assume “class” is your personal shorthand for “robber descendant”. The U.S.A. was founded on the principle of grabbing all you can and killing the original owners/natives. “class” is the particular headstart in depravity your ancestors handed you.
“People who live in glass houses shouldn’t throw stones.”
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