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

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United States Attorney’s Office, District of Minnesota: (612) 664-5600