Guardaley

A Chicago bittorent defendant files a class action complaint against the Germans and troll attorney Michael Hierl

Michael Hierl

Today one of the defendants in Clear Skies Nevada v Does 1-30 (ILND 15-cv-06708) filed a third-party class action complaint against the plaintiff (CSN), two copyright troll attorneys from a Chicago mid-sized lawfirm “Hughes Socol Piers Resnick & Dym, Ltd.” – Michael Hierl and Mark Cisek – and two Guardaley’s “experts”: a fictional character Darren Griffin and a German national Daniel Macek:

[…] Plaintiff uses German corporations and/or German nationals, claiming they possess “expert qualifications” they do not, so as to complicate and discourage depositions and discovery. […]

The complaint is kind of emotional: the defendant’s attorney Lisa Clay tells a gruesome story of her client – a 62-year-old African-American lady of very modest means (“She lacked the financial means to obtain proper medical treatment for her symptoms”) and two ethically challenged attorneys, who harassed her for months, trying to extort a couple of thousand dollars from her, threatening with a possibility of insane maximum statutory damages ($150,000) – all without sufficient evidence:

Hierl and Cisek, with the knowledge and consent of co-conspirators CSN and German John Doe [Griffin/Macek], and more importantly, with the knowledge that evidence provided by German John Doe is insufficient to meet evidentiary standards, filed suit against 360 anonymous Does in seven cases filed on June 29, 2015 and eight cases filed on July 31, 2015.

Mark Cisek

In the beginning, the defendant understandably thought that she was a target of a scam, failed to respond to the allegations¹, and default was entered against her. This default was later set aside, and the Answer was filed yesterday.

Accusations presented in this complaint are hardly new to the readers of this blog. The defendant alleges a conspiracy to improperly prosecute copyright infringement (including theft by deception, deceptive practices, barratry, and maintenance). The defendant claims that the Germans seeded the allegedly infringed film Good Kill – a kind of an allegation that resulted in a criminal indictment against copyright trolls John Steele and Paul Hansmeier.

Upon information and belief, CSN, German John Doe(s), or one of his/her/their agents seeded a copy of Good Kill after copyright protection was requested, but before the movie was released in American theaters. The date on CSN’s Certificate of Registration is February 27, 2015. The first date of alleged infringement on an exhibit is April 4, 2015, at least a month before the movie was released in theaters.

Upon information and belief, CSN and its co-conspirators intentionally released Good Kill into the bit torrent environment knowing, authorizing and inviting its copying and distribution.

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Prenda

Prenda indictment – with links

Undeniably, the criminal indictment of copyright trolls John Steele and Paul Hansmeier was the main positive event of 2016 for thousands of Prenda’s (as well as other trolls’) victims. Last week, in the wake of the news, a reporter contacted me asking to explain the details of some charges. I was happy to help, and I did not have to do a lengthy explanation: I simply sent him a link to one of my and Raul’s 150 Prenda stories. Then he asked something else, and a link to another blog post was a perfect answer. So, I thought it would be helpful if I run the indictment through OCR and post the text with added links – mostly to this blog’s stories, but also to DieTrollDie‘s, Popehat’s, TechDirt’s, ArsTechnica’s, TotrrentFreak‘s etc., as well as to original court documents. If I missed some helpful references, let me know, and I will be happy to enhance this small project.

 

Happy New Year!

 


CASE 0:16-cr-00334-JNE-KMM    Document 1    Filed 12/14/16

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

UNITED STATES OF AMERICA,
Plaintiff,

v.

PAUL R. HANSMEIER and
JOHN L. STEELE,
Defendants

INDICTMENT

18 U.S.C. § 1349
18 U.S.C. § 1341
18 U.S.C. § 1343
18 U.S.C. § 1956(h)
18 U.S.C. § 371
18 U.S.C. § 2

THE UNITED STATES GRAND JURY CHARGES:

OVERVIEW

1. Between 2011 and 2014, defendants Paul R. HANSMEIER and John L. STEELE orchestrated an elaborate scheme to fraudulently obtain millions of dollars in copyright lawsuit settlements by deceiving state and federal courts throughout the country. In order to carry out the scheme, the defendants used sham entities to obtain copyrights to pornographic movies—some of which they filmed themselves—and then uploaded those movies to file-sharing websites in order to lure people to download the movies. To learn the identities of the people caught in the trap they constructed, HANSMEIER and STEELE filed specious copyright infringement lawsuits and fraudulently procured permission from courts to send subpoenas to internet service providers for subscriber information associated with the IP addresses used to download their pornographic movies. After receiving this information, the defendants—through extortionate letters and phone callsthreatened the subscribers with enormous financial penalties and public embarrassment unless the subscribers agreed to pay a settlement, all the while concealing their collusion in the alleged copyright infringement. When courts restricted their ability to sue multiple individuals in the same lawsuit, the defendants shifted tactics. They filed lawsuits falsely alleging that computer systems purportedly belonging to their sham clients had been infiltrated by hackers, and then recruited ruse defendants against whom they brought these illusory “hacking” lawsuits. Finally, when courts became suspicious of the defendants’ tactics and motives, the defendants began a long process of lies and deceit designed to conceal the truth and deflect responsibility from themselves. In total, the defendants obtained approximately $6,000,000 made possible by the fraudulent copyright lawsuits they peddled to courts throughout the country.
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Guardaley

Copyright troll David Lowe drops three defendants after defense attorney threatens to expose fraud

A month ago, a copyright troll from Washington David A. Lowe dismissed a defendant with prejudice promptly after the defense counsel Christopher Lynch threatened to expose a massive fraud upon the US federal courts. This story made rounds on the Internet (DieTrollDie, TorrentFreak, Techdirt).

David A. Lowe

What followed next was both astonishing and encouraging (I’ll explain why shortly): as of today, the same troll attorney dropped three more cases following the same pattern:

1 & 2

On 12/13/2016, Mr. Lynch sent two letters to Mr. Lowe asking to dismiss his clients Patricia Alexander, a 69-year old grandmother, and James Collins, a 76-year old US Navy veteran, from LHF Productions v. Does 1-18 (WAWD 16-cv-1017):

We remain concerned that these LHF cases continue to progress through the Western District of Washington when they have a direct tie to the prolific use (over 40 instances) of a fictitious declarant in the Western District of Washington. For example, we note Dkt. #16 filed by LHF in this WD WA matter cites the ED WA Elf-Man case as authority. That ED WA Elf-Man case is where your law firm represented to the Court (e.g. ECF No. 105 at p. 3) that the prolific fictitious declarant was a “former investigator” for “Crystal Bay Corporation” of “South Dakota.” That same Dkt. # 16 also cites to other WD WA cases your law firm has filed (e.g. 2:14-cv-1336) using a declarant, Daniel Macek, who claimed to work for the same “Crystal Bay Corporation” of “South Dakota” in its “technical department,” just as the fictitious declarant falsely stated “he” worked for. That same declarant, Mr. Macek, has testified for LHF in WD WA, stating he now works for a German company (although he claims to work for Crystal Bay Corporation in an LHF declaration filed in Ohio). In discovery, we assume Mr. Macek will have no documentary evidence of his “work” for “Crystal Bay Corporation” and will have to admit that he has no personal knowledge of any “Darren M. Griffin,” despite being aware of declarations filed under that name.

[…]

Please consider our offer to not Answer, nor pursue defense attorneys’ fees, if the case against Ms. Alexander is dismissed by Noon, Monday December 19, 2016. Otherwise, we will submit our Answer that afternoon and patiently work towards Ms. Alexander’s full exoneration and the ruling on our request for defense attorneys’ fees.

Three days later (and three days before the deadline), the troll dismissed the claims against both defendants.
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Guardaley | X-Art

Appellate brief filed in a Malibu Media case after the troll cuts and runs to avoid compensating wrongly accused

At the end of a case, although a litigant may be disappointed in the outcome, he should still leave the courthouse feeling that he has been treated fairly.
From the opening brief in CA6 16-3628

As I wrote in my 6/11/2016 post “Righting the wrongs: Malibu Media defendants appeal bad rulings,” in Malibu Media v Ricupero (OHSD 14-cv-00821), a competent defense by Booth Sweet caused the troll to cowardly cut and run, i.e. after plaintiff’s walk-away offer was rejected by the defendant, Malibu moved to dismiss the case without prejudice — to avoid paying loser’s fees.

To our astonishment, Magistrate Judge Terence P. Kemp allowed the dismissal, ignoring well-documented and well-presented evidence of plaintiff’s discovery shenanigans. The order reads like the judge was annoyed by aggressiveness of the defense and simply wanted this case out of the docket — damn the merits.

Initially the opening brief was due on 8/3/2016. However, the deadline was extended a couple of times because the defendant requested the district court to supplement the record with the statements of proceedings: i.e., to put in writing what happened during two phone conferences.

After the district court satisfied the defendant’s requests, no more extensions were allowed, and the opening brief was finally filed today.

Denying any chance of recovery under § 505 after Malibu voluntarily dismissed its suit provides an escape hatch encouraging abusive behavior and vitiate the application of § 505 where it is needed most, and leaves Ricupero nothing but a pyrrhic victory in a meritless case.

As discussed above, when confronted with a meritless suit, defendants face the dilemma of settling for anything less than the cost of litigation or litigating at great expense. Malibu has further leveraged the lopsided, upfront costs of discovery with the goal of forcing early settlements while assuming little risk. The possibility of incurring fees under § 505 has the potential to help balance the litigants’ positions and discourage meritless suits. Problem is Malibu starts with the conclusion a defendant is the infringer, then works backwards ignoring or discounting anything that does not fit that narrative.

Disallowing Ricupero’s potential recovery after a voluntary dismissal eliminates any chance of balance, especially where the most abusive litigation strategies always end in settlement or dismissal before trial. Such a result is manifestly unjust and would all but force defendants like Ricupero to settle regardless of the underlying merits of the case.

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Prenda

Steele and Hansmeier have been finally indicted on fraud, money laundering charges

Sweet holiday gift. The masterminds of a porn extortion outfit PrendaJohn Steele and Paul Hansmeier — are finally indicted (USA v. Hansmeier et al, MND 16-cr-00334). Congratulations to everyone who made it happen. Slow wheels of justice do grind.

Paul HansmeierPaul Hansmeier

Twin Cities’ Star Tribune was the first who broke the story:

Authorities arrested Paul Hansmeier, of Woodbury, and John L. Steele, an attorney in Illinois who was a former classmate of Hansmeier’s at the University of Minnesota, shortly before U.S. Attorney Andrew Luger announced charges Friday morning.

They were charged Wednesday in an 18-count indictment with orchestrating a multimillion-dollar extortion fraud. The charges, unsealed Friday, include conspiracy to commit fraud, conspiracy to perjure and conspiracy to launder money.

The indictment refers to other Prenda parties by initials:

  • P.H. = Peter Hansmeier, Paul’s brother: I believe that his role in the scheme is under reported. It may very well be that his participation as a racket mastermind was even bigger that his brother’s
  • M.L. = Mark Lutz, a paralegal, faux owner of fake corporations and trusts
  • P.D. = Paul Duffy. De mortuis nil nisi bonum
  • B.G. = Brett Gibbs

Although the indictment names only Steele and Hansmeier, the language used to describe the scheme can be easily applied to the ongoing extortion racket perpetuated by other outfits: Malibu Media, Voltage Pictures, CEG-TEK, Rightscorp. Today’s event resurrects my hopes that this judicial plague is curable.
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Guardaley | Voltage

Why the FBI should investigate the Guardaley racket

Last week DieTrollDie published a letter from a Spokane attorney Christopher Lynch to a Guardaley’s copyright troll David Lowe. In that letter Mr. Lynch indicated that his client wouldn’t cave in to troll’s evidence-free demands and was prepared to fight and win. Surprisingly or not, the troll backed off and dropped the defendant (LHF Productions v Doe 1 et al, WAWD 16-cv-01017). This story was picked up by the tech media (TorrentFreak, Techdirt). So, given the coverage, I won’t elaborate on the obvious — that the trolls are cry-bullies, who tend to run away once they smell the trouble of a competent defense. However, I want to dig a bit deeper into one of the reasons behind the troll’s hasty retreat. Particularly, I’d like to elaborate on a mind-boggling fraud that the Guardaley network committed upon the US federal courts in 2012-13, an FBI-probe-worthy fraud that outdid the infamous Prenda’s forgery:

We will also seek discovery of the relationship of Messrs. Macek and Arheidt to the fictitious “Darren M. Griffin.” […]

We have a spreadsheet of over 600 federal cases where parties related to your client’s foreign representatives filed a declaration of “Darren M. Griffin.” Most of these declarations are verbatim copies of the 21 paragraph Macek and Arheidt declarations filed by your firm claiming the witness was “retained as a consultant” by Maverickeye or Crystal Bay Corporation “in its technical department.” Most of the 600+ Griffin declarations do not state any education or work experience sufficient to admit the typed-up charts of alleged infringement. But, interestingly, the 42 “Darren M. Griffin” declarations filed in the WD WA claim “Darren M. Griffin” has “a degree in computer science.” This is at odds with the APMC playbook I discovered where the apparent goal is to downplay the declarant’s credentials “hoping the judge won’t question his qualifications too much.” It was bold of your client’s foreign representatives to tell the Judges of our Western District of Washington in 42 declarations that a fictitious declarant has a college degree – just like it was bold to tell Judge Rice that “Darren M. Griffin” is a former investigator for Crystal Bay Corporation. If we go forward, we will expect cooperation on discovery of how LHF witnesses Messrs. Arheidt and Macek are connected to “Darren M. Griffin” and to Crystal Bay Corporation.

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Guardaley | X-Art

Because of defendant’s counterclaim, judge disqualifies Malibu Media’s attorney Christopher Fiore

Copyright troll lawyers are a highly motivated and somewhat resourceful bunch, yet their ranks are small compared to the sheer number of citizens those attorneys have been shaking down for years. While most defendants pay the ransom, many chose to fight back, and with every new pushback fresh defense attorneys bring new ideas, and some of those ideas are statistically destined to success.

US Federal Judge
Christopher C. Conner

To my observation, the Middle District of Pennsylvania was not a source of interesting developments — until the last week. On 10/25/2016, Chief Judge Christopher C. Conner granted the defendant’s motion to disqualify X-Art/Malibu Media’s attorney Christopher Fiore in Malibu Media v John Doe (PAMD 15-cv-0228):

The court finds sufficient grounds to disqualify Attorney Fiore based on the conflict of interest and lawyer-as-witness provisions of the Pennsylvania Rules of Professional Conduct.

In short, Fiore, along with Malibu Media and its owners Brigham Field and Colette Pelissier Field, became a counter-defendant due to John Doe’s counterclaims, and the judge didn’t see a possibility of Fiore diligently representing Malibu under the circumstances.

I’ll get back to the judge’s reasoning later, after a brief discussion of the counterclaims, which led to the disqualification.

Counterclaims

This lawsuit is one of the 5,000+ shakedown actions a “barely legal” hardcore porn purveyor X-Art filed across the country over the last four years. It was ill-conceived 11 months ago with a cookie-cutter complaint and a subsequent motion for ex-parte discovery, which judges across the country jollily rubberstamp. As soon as the defendant found out that he (or she) was sued, he retained Aaron Brooks, an attorney at Penn State University’s Student Legal Services department.

Attorney Brooks started with a motion to quash, which was unsurprisingly denied. However, the judge allowed the defendant to stay pseudonymous. The next step was rather unusual: the defense moved to disqualify Malibu’s long-time local, Christopher Fiore, arguing that the defendant planned to counter-sue Malibu, its principals, and Fiore, which would create a conflict of interest. On 3/21/2016 this motion was denied as premature.

On 4/14 the troll filed an amended complaint, and on 7/21 defendant answered denying any wrongdoing. The answer was followed by affirmative defenses a handful of counterclaims. The premise of these counterclaims was:

[…] Plaintiff willingly entered into business partnerships with third-party websites (hereinafter “Free-sites”), which offer free performance, copying, and distribution of Plaintiff’s copyrighted materials. Plaintiff advertises itself as a producer of free content for numerous Free-sites. Said Free-sites post hundreds of Plaintiff’s videos for free download and sharing. Defense has identified more than 133,000,000 “hits” on Plaintiff’s videos with potentially as many downloads and re-distributions through its business partners’ websites. […]

The defendant listed a plethora of examples of X-Art deliberately distributing its flicks on tube sites — the very same flicks it later sued alleged file-sharers over. The answer/counterlaim was supplemented by 24 exhibits, which are unfortunately not available: the judge ordered to seal any pornographic screenshots.

The counterclaims:

As for Fiore, the defendant accused Malibu’s local of knowingly concealing the information about the massive free distribution of X-Art’s porn on tube sites:

Christopher Fiore, Esq., is an experienced litigator in copyright infringement actions and knows that disclosure of the material information could potentially adversely affect whether a judge would grant an ex-parte motion for early discovery prior to a Rule 26(f) conference.

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