Extortionist lawyer pleads guilty to creating porn honeypot

Minneapolis lawyer Paul Hansmeier has pleaded guilty to a scheme in which he and another lawyer made porn films, seeded them to BitTorrent websites, and then extorted those who downloaded them, threatening to file lawsuits unless they paid $3,000 to keep from the embarrassment of getting dragged through court.
Hansmeier, along with co-defendant and fellow attorney John Steele, were the masterminds behind a multimillion-dollar extortion scheme carried out by their Prenda Law firm. The two were arrested in December 2016 and charged with running the fraud scheme between 2011 and 2014. The two lawyers, now debarred, also worked with a third lawyer, Paul Duffy, who’s now deceased.
According to the indictment, the scheme worked like this: Steele and Hansmeier would use sham entities to get copyrights to pornographic movies, some of which they filmed themselves. Then, they’d set up a porn honeypot by uploading the movies to BitTorrent file-sharing websites. When people downloaded the movies, the trolling lawyers would pounce, filing copyright lawsuits over illegal downloads against the “John Doe” defendants, whom they knew only by IP address.
They’d use the discovery process to get ISPs to hand over subscriber names associated with those IP addresses. Then, the lawyers would send letters or place phone calls, demanding that their targets pay around $3,000. Do it fast, they threatened, or there’d be public allegations and copyright infringement lawsuits over downloading the porn. They also created shell companies to stand in as plaintiffs in the lawsuits.

According to the plea deal, they started by uploading their clients’ porn films to sites including the Pirate Bay. That was in April 2011. In November 2011, Steele and Hansmeier created Prenda Law in order to distance themselves from any potential fallout that may have come from those copyright lawsuits.
By May 2012, they were filming their own porn films, which they also used as bait in the honeypot. Between 2011 and 2014, the lawyers made more than $3m from the lawsuits, which were filed without the court having a clue that Prenda Law had uploaded their clients’ films, had created their own films and uploaded those as well, or that they’d fabricated the plaintiffs that were claiming damages from copyright infringement.
Then, in or around 2012, Steele and Hansmeier created a company – Under the Bridge Consulting – to launder the loot via “consulting fees.” They transferred about $1m of the Prenda Law profits to Under the Bridge Consulting, and from there the funds made it into the lawyers’ pockets.
In early 2017, Steele pleaded guilty to seven charges, including mail and wire fraud. He also agreed to help prosecutors who were investigating the case.
Hansmeier’s guilty plea means that the trial, originally scheduled for 5 September, won’t happen. Rather, a judge will decide sentencing.
The Prenda Law case might not be over yet, though. In court on Friday, Hansmeier’s attorney, Manny Atwal, suggested that he might have an appeal up his sleeve. The Minneapolis Star-Tribune quoted him:

The plea agreement allows Mr. Hansmeier to appeal the denial of his pretrial motion to dismiss the indictment. I think we came to a fair resolution and will see what happens at sentencing and the 8th circuit.