The copyright-lawsuit factory known as Prenda Law is in the midst of a long shutdown, which is certainly no fun for the lawyers that run the organization. Today their headaches multiplied, as a second federal judge has followed the example of US District Judge Otis Wright, referring the Prenda firm to the US Attorney's office in Minnesota.

Today's order [PDF] by US District Judge Franklin Noel also requires Prenda to pay back the four defendants who settled cases in his court, making payments which range between $3,500 and $6,000. Prenda also has to pay legal fees for those defendants.

While Prenda has now been ordered to pay attorney's fees in five cases, today's order by Noel stands out. Like Wright, he also refers Prenda to state and federal investigators, as well as the state bar authorities.

Noel's order follows a 2.5-hour hearing conducted on September 30, in which he tried to dig down for the truth as to who really signed the copyright documents attached to AF Holdings. Prenda has sued thousands of Internet users for illegally downloading pornography, according to lawsuits filed through shell companies like AF Holdings and Ingenuity 13.

Those companies were using copyright assignments now alleged to be bogus. Key documents were signed by Alan Cooper, the one-time housekeeper for John Steele (Steele is believed by Prenda critics to be one of the masterminds behind the Prenda operation). But Cooper has denied signing those documents or giving his authorization to anyone else to do so. He made those denials again in Noel's courtroom on Sept. 30, and the judge found them convincing.

The court "expressly disbelieves" Steele

Today's order minces no words in condemning Prenda or Steele, whom the judge practically accuses of lying under oath. In the Sept. 30 hearing , Steele said that Cooper gave permission to Mark Lutz—the only acknowledged owner of AF Holdings—to sign his name. This supposedly happened after Steele introduced the two by telephone. But that didn't sound right to US District Judge Franklin Noel.

At the hearing last month, Noel asked Steele directly: "Did you hear Mr. Cooper give Mr. Lutz authority or permission to sign his name to documents?" Steele said yes, but today it's clear that the judge wasn't convinced. "The Court expressly disbelieves Steele’s testimony in this regard," Noel wrote today. "AF Holdings failed to meet its burden of proving the authenticity of the copyright-assignment agreements for Popular Demand and Sexual Obsession."

And it didn't escape Noel's notice that Mark Lutz failed to show up, just like he failed to show up in San Francisco a month earlier. Noel wrote:

At the end of the hearing, the Court inquired about who was going to testify on behalf of AF Holdings. Mr. Hansmeier informed the Court that Mark Lutz—the “sole officer” of AF Holdings—was informed of the hearing and planned to attend, but for unknown reasons did not get on his scheduled flight from Miami, Florida to Minneapolis, Minnesota... Hansmeier represented to the Court that Steele entered Lutz’s apartment and, after finding him absent, searched for him at the “usual places [he] recreate[s].” Cooper’s attorney, Mr. Godfread, noted the recent pattern of Lutz failing to appear when he is scheduled to testify under oath.

Noel goes on to find that Prenda has defrauded his court, just like they did Wright's:

The Court has been the victim of a fraud perpetrated by AF Holdings, LLC. The Court concludes that the appropriate remedy for this fraud is to require AF Holdings to return all of the settlement money it received from all of the Defendants in these cases, and to pay all costs and fees (including attorneys’ fees) incurred by the Defendants. After all settlement payments are returned and other fees are paid, all five cases should be dismissed on the merits, with prejudice. ... The Court further concludes that, once all of the ill-gotten gains are fully disgorged from AF Holdings, it would not be a wise use of the Court’s limited resources to sua sponte attempt to fully untangle the relationship between Hansmeier, Steele, Duffy, Dugas, Lutz, and Prenda Law, on the one hand—and the Plaintiff, AF Holdings, LLC., on the other. Such investigation can more effectively be conducted by federal and state law enforcement at the direction of the United States Attorney, the Minnesota Attorney General, and the Boards of Professional Responsibility in the jurisdictions where the attorneys involved in this apparent scheme are licensed to practice law.

Noel noted that since Prenda's dissolution in July, "it is unclear where Prenda's assets—including the settlement agreement monies from these cases—were transferred." He took note of the spreadsheets recently turned in by former Prenda lawyer Brett Gibbs, showing that Paul Hansmeier and John Steele received $1.3 million from Prenda over the course of 2012.

Wherever the money may be, Prenda and AF Holdings have until November 20 to pay back the four Minnesota defendants.