This is the latest post in the Prenda Law saga.
From the start, the perpetrators of the nationwide fraud scheme frequently known as "Prenda Law" have obeyed the most basic rules of sociopaths and con artists: admit nothing, deny everything, aggressively accuse the victims of misconduct. In fact, that's how I got interested in the story three years ago now — Prenda Law, through its lead perpetrator John Steele, attacked one of their victims, suing a hapless dude for defamation after he complained that they had stolen his identity as a front for their porn-trolling scheme. At every step, the Prenda Law team — especially lead miscreants John Steele and Paul Hansmeier — have defied all evidence and the rising tide of adverse judicial decisions, claiming it was all a mistake and they were innocent.
Back in December the feds charged Steele and Hansmeier with an array of federal crimes arising from a scheme that has now been identified and decried by federal courts across the country. And today John Steele pleaded guilty in federal court to two counts of that indictment — mail fraud in violation of 18 USC 1341 and money laundering in violation of 18 USC 1956(h). Upon entry of judgment after his sentencing, John Steele will be a convicted felon with a federal fraud conviction. His career as a lawyer — or, more generally, as a gainfully employed person — is over.
Steele's plea agreement with the government is extensive even by federal standards. (State pleas are frequently completed with a few mumbled words on the record; federal pleas are wordy, impenetrable creatures that can be torture to explain to a client.) The factual basis section — which Steele admits is true (as to facts he knows) or that the government can prove (as to facts he doesn't know directly) — is a startling 16 pages long and lavishly documents the entire scheme, complete with many details that accusers have been pointing out for years. In short, Steele admits that he and Hansmeier used sham entities to obtain the copyright to (or in some cases film) porn, uploaded it to file-sharing websites, and then filed "false and deceptive" copyright suits against downloaders designed to conceal their role in distributing the films and their stake in the outcomes. They lied to courts themselves, sent others to court to lie, lied at depositions, lied in sworn affidavits, created sham entities as plaintiffs, created fraudulent hacking allegations to try to obtain discovery into the identity of downloaders, used "ruse defendants" (strawmen, in effect) to get courts to approve broad discovery into IP addresses. Steele, through the plea, admits to — and implicates Hansmeier in — a nationwide scheme to defraud many courts.
Based on his plea Steele faces a statutory maximum sentence of 40 years — the number that will get reported in some media — but Popehat readers know that number bears no relation to his probable sentence. The judge — guided (but no longer constrained) by the U.S. Sentencing Guidelines — will have broad discretion to frame a sentence. The judge's determination will begin with a calculation of a Guideline sentence. Steele and the government have stipulated to factors yielding an anticipated guideline range of 97-121 months of imprisonment. Yes, up to ten years in federal prison. This is not a highly favorable plea agreement — Steele isn't getting any killer deal (yet) for pleading guilty. The feds made him plead to both mail fraud and money laundering — a "good deal" would drop the money laundering. In addition, the feds made Steele agree to just about every Guideline enhancement I can think of, rather than leaving those enhancements open to argue. Steele has truly hurled himself on the sword here.
Why? Well, the deal also contemplates that Steele will cooperate — become a rat, if you want to be unkind. That means being available to testify against Hansmeier and, perhaps, actually doing so. If he cooperates truthfully, the government will consider asking the court to reduce that rather formidable sentence, and the court will have discretion to reduce the sentence even more than the government requests. Steele appears to have pinned all of his hopes on that option, betting that the court will reduce his sentence by an extraordinary amount. I note that he's waived his right to appeal the sentence unless the court sentences him to more than 60 months, perhaps signalling his hope (misplaced, I think) that the court will go that low.
I've seen a lot of plea agreements in a lot of federal cases, and I don't recall another one that so clearly conveyed the defendant utterly surrendering and accepting everything the government demanded, all in hopes of talking his sentence down later. Trusting your ability to talk your way out of it later is typical of a sociopath and a con man, of course.
The heat's on Hansmeier now. He's, at best, second in the door, and can't hope to get much credit for cooperation unless he starts giving up third parties.
The wheels grind slowly, my friends, but they do grind.
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