United States Attorney Erica H. MacDonald today announced
the sentencing of PAUL R. HANSMEIER, 37, to 168 months in prison for
orchestrating a multi-million dollar fraud scheme to obtain payments from
extortion victims to settle sham copyright infringement lawsuits by lying to
state and federal courts throughout the country. HANSMEIER, who pleaded guilty
on August 17, 2018, was sentenced today before Judge Joan N. Ericksen in U.S.
District Court in Minneapolis, Minnesota. HANSMEIER’S co-defendant JOHN L. STEELE
also pleaded guilty to his role in the scheme. STEELE is scheduled to be
sentenced on July 9, 2019.
United States Attorney Erica MacDonald said, “Paul Hansmeier
abandoned his sworn oath to uphold the law and chose instead to use coercion
and lies to exploit victims and deceive judges. The sentence he received today
is a just consequence for his actions.”
“Today's sentence for Paul Hansmeier is the just result for
an attorney who abused his license to practice law and disgraced himself and
the bar in so many ways,” said Jill Sanborn, Special Agent in Charge of the
FBI's Minneapolis Division. “Hansmeier’s role in this salacious fraud scheme
exploited victims by misusing his position of trust as an officer of the court.
The FBI is grateful for the victims who came forward in this case because their
information was critical to our work.”
“Today justice has been served with the fourteen-year
sentencing of Mr. Hansmeier,” stated Tara Sullivan, IRS Criminal Investigation
Special Agent in Charge of the Chicago Field Office. “Mr. Hansmeier greatly
misused his position as an attorney by preying upon unsuspecting individuals
for nothing but pure power and greed. IRS Criminal Investigation is proud to
have worked alongside with the U.S. Attorney’s Office and the FBI to dismantle
this money laundering enterprise created by Hansmeier and his partner.”
According to his guilty plea and documents filed in court,
between 2011 and 2014, HANSMEIER and STEELE, both practicing lawyers, executed
a scheme to obtain millions of dollars by threatening copyright lawsuits
against individuals who allegedly downloaded pornographic movies from
file-sharing websites. HANSMEIER admitted in court during his plea that he and
STEELE created a series of sham entities, which he and STEELE surreptitiously
controlled, to obtain copyrights to pornographic movies – some of which they
filmed themselves – and then uploaded those movies to file-sharing websites
like “The Pirate Bay” in order to lure people to download the movies. The
defendants then filed bogus copyright infringement lawsuits that concealed both
their role in distributing the movies, and their personal stake in the outcome
of the litigation. After filing the lawsuits, HANSMEIER and STEELE gained
authority from the courts to subpoena internet service providers (“ISPs”) for
identification information of the subscriber who controlled the IP address used
to download the movie. With that information, the defendants used extortionate
tactics such as letters and phone calls to threaten victims with enormous
financial penalties and public embarrassment unless they agreed to pay a $3,000
settlement fee.
According to the Indictment, the plea agreement, and other
court documents, in November 2011, in order to distance themselves from the
specious lawsuits and any potential fallout, HANSMEIER and STEELE created and
used Prenda Law, among other law firms, to pursue their fraudulent lawsuits.
HANSMEIER acknowledged at his plea hearing that he and STEELE exerted de facto
control over Prenda Law throughout the scheme, but recruited a now-deceased
Illinois attorney to pretend to own and control the law firm.
In October 2012, the defendants changed their tactics and
began filing lawsuits falsely alleging that computer systems belonging to their
sham clients had been hacked. To facilitate their phony “hacking” lawsuits,
HANSMEIER and STEELE recruited individuals who had been caught downloading
pornography from a file-sharing website, to act as ruse “defendants.” These
ruse defendants agreed to be sued and permit HANSMEIER and STEELE to conduct
early discovery against their supposed “co-conspirators” in exchange for
HANSMEIER and STEELE waiving their settlement fees. During his plea hearing,
HANSMEIER admitted that the allegations of “hacking” in these complaints were
made up.
In total, HANSMEIER and STEELE obtained approximately $3
million from the fraudulent copyright lawsuits.
This case is the result of an investigation conducted by the
FBI and the Criminal Investigation Division of the IRS.
Assistant U.S. Attorneys Benjamin F. Langner and David J.
MacLaughlin of the District of Minnesota, and Senior Trial Counsel Brian Levine
of the Criminal Division’s Computer Crime and Intellectual Property Section,
prosecuted the case.
Defendant Information:
PAUL R. HANSMEIER, 37
Woodbury, Minn.
Convicted:
Conspiracy to
commit mail fraud and wire fraud, 1 count
Conspiracy to
commit money laundering, 1 count
Sentenced:
168 months in
prison
Two years of
supervised release
Restitution in the
amount of $1,541,527.37
Posts
No comments:
Post a Comment