Prenda Law, also known as Steele | Hansmeier PLLP and Anti-Piracy Law Group, was a Chicago-based law firm that ostensibly operated by undertaking litigation against copyright infringement. However, it was later characterized by the United States District Court for Central California in a May 2013 ruling as a "porno-trolling collective" whose business model "relie[d] on deception", and which resembled most closely a conspiracy and racketeering enterprise, referring in the judgment to RICO, the U.S. Federal anti-racketeering law. The firm ostensibly dissolved itself in July 2013 shortly after the adverse ruling although onlookers described Alpha Law Firm LLC as its apparent replacement. In 2014, the ABA Journal described the "Prenda Law saga" as having entered "legal folklore".
In the 2013 civil ruling, Prenda Law and three named principals, John Steele, Paul Hansmeier, and Paul Duffy, were found to have undertaken vexatious litigation, identity theft, misrepresentation and calculated deception (including "fraudulent signature"), professional misconduct and to have shown moral turpitude. The principals were also deemed to have founded and been the de facto owners and officers of the shell company which plaintiff and their alleged "client" created to "give an appearance of legitimacy".
The firm and its principals were fined; the matter was also referred to the United States Attorney for Central California (for criminal indictment consideration) and the IRS Criminal Investigation Division (for tax fraud consideration). A fourth attorney, Brett Gibbs, was also sanctioned, fined, and referred to a disciplinary committee by the court for false statements and his part in the subsequent cover-up, though described as their employee. (Gibbs' monetary sanctions were later vacated after turning whistleblower as part of his appeal.)
Other Federal courts in various states later ruled in a similar manner against the firm and others linked to it, including a ruling of fraud upon the court in a Minnesota court review of five closed cases and "relentless willingness to lie" in an Illinois court. Criminal prosecutor referrals also occurred or were suggested in other jurisdictions.
In 2019, Steele and Hansmeier both pleaded guilty in Federal court to a range of criminal charges related to and including extortion and fraudulent conduct, with substantial sums of their criminal proceeds to be reimbursed. Steele received a reduced sentence of 5 years due to his cooperation and Hansmeier, who had not cooperated, was sentenced to 14 years.
Modus operandi
As described in the ruling and media coverage, the firm's modus operandi was to threaten individual members of the public with litigation (hence public exposure) over allegations that they breached copyright during pornographic downloads (based, according to the court, on a "statistical guess"). The firm would then offer to settle the case (silently) for a little below the cost of an active legal defense, in what was described by the court as an "extortion payment". Cases with robust defendants and non-profitable cases were dropped. At times the firm acted for client corporations whose filed papers contained discredited signatures and identities found false by the courts—commenters characterized the firm's plaintiffs as often (though not always) being shell companies operated for the firm and/or attorneys' own benefit. A Federal District court described Prenda's principal attorneys in 2013 as "engaging [a] cloak of shell companies and fraud", and comments of "shocking" and apparent "shell game activity" by Seventh Circuit Court of Appeals judges at the inability or refusal to describe relationships between the law firms, "clients" and principals. An expert witness affidavit stated that IP addresses linked to Prenda's Minnesota and Florida offices and John Steele, had themselves been identified in 2013 as the initial "seeders" (sharers) of some pornographic media, tagged for "fast" sharing on file-sharing networks, which would be followed up by threat of legal action, with Prenda as the pornography producer or copyright purchaser, file sharer (offeror), plaintiff, and plaintiff's attorney; the suspect IP, linked to unauthorized media distribution, was confirmed as Steele and Hansmeier's by Comcast. In some cases hacking was alleged, or claims that the defendant was one of hundreds or thousands of "co-conspirators" for whom non-party subpoenas and discovery were sought; in one case the defendant testified he was in effect offered an ultimatum to act as a "sham" defendant and collusively agree to be sued.