Prenda’s Paul Hansmeier Loses Law License

Hansmeier told the St. Paul Pioneer Press he’s not sure he’ll return to the law.

Bowing out of the profession might be a wise move, considering the court’s one-page decision laid out a stark picture of a legal career not likely to be forgiven by the Minnesota bar, former clients in the adult entertainment industry, or anyone targeted by Hansmeier and his cohorts.

“Hansmeier committed misconduct in the first matter by bringing a lawsuit for the sole purpose of conducting discovery to find the identity of others against whom claims could be made, making misrepresentations to the tribunal, filing articles of termination for a corporation that contained false statements, failing to comply with discovery requests, failing to pay attorney fees assessed against him, and transferring funds out of his law firm in order to avoid paying sanctions,” the decision penned by Associate Justice David R. Stras reads. “In a second matter, Hansmeier committed misconduct by participating in the initiation of a lawsuit without a basis in law and fact, making false and misleading statements to the court, failing to pay attorney fees assessed against him by the court, and submitting to the court a financial statement that was false, misleading, and deceptive. In a third matter, Hansmeier committed misconduct by bringing a frivolous action for an improper purpose. And in a fourth matter, Hansmeier committed misconduct by testifying falsely during a deposition, bringing a frivolous claim, and perpetrating a fraud upon the court.”

In retrospect, Hansmeier’s entire career looks shady. Upon admission to the Minnesota bar in 2007, he immediately began inserting himself into class-action lawsuits against Groupon and others by representing settlement objectors including his father (also an attorney) and his wife. By the time Hansmeier, John Steele and Paul Duffy formed Prenda Law in 2010, Hansmeier already had earned a reputation as a “vexatious” litigator. He continued to build that reputation by leading Prenda’s crusade against private citizens the firm accused of downloading pirated porn from BitTorrent sites. Prenda always offered to settle for a few thousand dollars, which defendants often accepted rather than mount expensive legal defenses or have their reputations besmirched by association with pornography. When defendants fought back, Prenda dropped the lawsuits.

By early 2013, Hansmeier and his Prenda partners had dissolved their various law firms and shell companies in an apparent attempt to outrun clients’ allegations of theft and evade professional sanctions, financial penalties levied by various courts, and criminal investigations for fraud and tax evasion, among other things.

A May 2013 judgment handed down by Judge Otis D. Wright of the United States District Court for the Central District of California characterized Hansmeier, Steele and Duffy as a “porno-trolling collective” whose business “relied on deception.” The decision likened the trio’s operation to a conspiracy and a racketeering enterprise as defined by the federal Racketeer Influenced and Corrupt Organizations Act (RICO). Wright called the settlement offers Prenda tendered to victims of its aggressive litigation “extortion.”

Once their porn-trolling operation disintegrated, the Prenda partners moved on to suing their online critics for defamation. Most recently, Hansmeier has been accused of filing questionable class-action lawsuits against small businesses for alleged violations of the Americans with Disabilities Act.

As a result of what the Seventh Circuit Court of Appeals called “abusive litigation,” Prenda and its various aliases raked in more than $15 million by 2012, according to Steele. By 2014, courts at several levels in several states had ordered Prenda’s principals to pay millions of dollars in statutory, compensatory and punitive damages along with court costs, professional sanctions and attorney fees. Interest and additional fines on those debts have mounted while Hansmeier and company appealed the verdicts. The process appears to have ended in June 2016 when an appeals court affirmed the awards.

In December 2015, a Minnesota bankruptcy court converted Hansmeier’s petition to restructure his debts into a Chapter 7 — or thorough liquidation — bankruptcy and ordered Hansmeier to liquidate his assets in order to pay $2.5 million in bills. Creditors, including Hansmeier’s legal representatives, alleged suspicious money transfers that suggested an attempt to hide assets. In his decision, the judge warned Hansmeier about bankruptcy fraud.

Financial woes and civil court cases may be the least of Hansmeier’s concerns, however. According to former federal prosecutor and legal blogger Ken “Popehat” White, the FBI is actively investigating the Prenda partners’ activities (with the exclusion of Duffy, who died of heart disease and alcoholism in August 2015).

“The FBI is focusing on ‘a fraudulent scheme known as trolling’ — which may indicate that the FBI has concluded that Prenda Law principals themselves uploaded their pornography to BitTorrent sites in order to sue people who downloaded it,” White noted.