Case in point: A South Beach lawyer was charged yesterday with operating a massive porn-blackmail scheme, in which he and his cohorts would make their own porn then upload it onto the internet in places they knew it would be illegally downloaded. The feds say that lawyer, John Steele, and his team would then wait for someone to download that porn, and then blackmail them into forking over wads of cash, lest Steele reveal the victim’s porn-watching history to the world.
According to a federal indictment filed yesterday, Steele — a Minnesota native with a name that sounds suspiciously like a male porn star’s — made $6 million from the scheme, working in tandem with his University of Minnesota classmate, Paul Hansmeier.
Steele was arrested in Fort Lauderdale earlier today, according to the Minneapolis Star-Tribune. In November 2011, he opened a branch of his law firm, Prenda Law, on 1111 Lincoln Road in Miami Beach.
“Between 2011 and 2014, defendants Paul R. Hansmeier and John L. Steele orchestrated an elaborate scheme to fraudulently obtain millions of dollars in copyright lawsuit settlements by deceiving state and federal courts throughout the country,” the indictment says. “In order to carry out the scheme, the defendants used sham entities to obtain copyrights to pornographic movies — some of which they filmed themselves — and then uploaded those movies to file-sharing websites in order to lure people to download the movies.”
Miami, one of the pornography industry’s world capitals, also functions as the Wild West for internet-porn law: In 2012, multiple people complained to New Times that porn companies were “shaking them down” for downloading illegal movies.
The victims claimed they were being blackmailed, since anyone who refused to pay porn-company fines would have to go through a very public fight over the right to watch people have sex on the internet. But adult film producers say suing people who steal their movies is one of the only ways they can protect the intellectual properties they worked (very) hard to produce.
That being said, the details of Steele’s blackmail case are particularly egregious. Copyright lawyers had long been watching Prenda Law: At least one copyright law blog has been writing about the firm, which it labeled a “copyright-troll law firm,” for at least three years. Prenda Law apparently did a dirt-poor job hiding its tracks, since the law blog Popehat says the firm routinely filed frivolous libel lawsuits against anyone who criticized it for exploiting the copyright law. Rather than silencing critics, they mostly just succeeded in drawing more attention to themselves.
According to the federal government, Steele and Hansmeier incorporated a host of “sham” companies, including Prenda Law, to file fraudulent copyright-infringement lawsuits against their victims. The government says the pair routinely bought the rights to existing porn films online, and would then upload copies of those films to BitTorrent sites like The Pirate Bay, and simply wait for users to download the movies. Copyright-troll blogs say the group filed many of their lawsuits from their Lincoln Road address.
(A “copyright troll” is someone who buys the rights to intellectual property just to sue people.)
The feds say the duo then monitored the IP addresses of anyone who downloaded their movies, and, beginning in 2010, started harassing the downloaders. They would file anonymous copyright-infringement lawsuits against the users, obtain their addresses and contact information, and then send letters demanding the victims pay $4,000, or face a massive, $150,000 criminal penalty. (That amount exceeded legal limits, but we digress.)
“Many of the individuals who received the defendants’ letters and phone calls agreed to pay the settlement rather than incur the expense of defending the lawsuit — which would undoubtedly exceed the settlement amount — or risk being publicly shamed for allegedly downloading pornographic movies,” the indictment says.
In April 2011, for example the due uploaded a movie called “Sexual Obsession” to the Pirate Bay, and caught 71 different IP addresses downloading the movie. Steele and Hansmeier then proceeded to allegedly harass all 71 people — and by 2012, tried to punish 3,000 different people for downloading the movie.
In May 2012, they then got their own hands dirty, and started filming their own porn films. Investigators say Steele and Hansmeier attended at least three different adult film conventions — in Chicago, Las Vegas, and Miami — and paid porn stars to produce “multiple short pornographic films.”
Rather than sell the movies, the duo instead just uploaded them to the Pirate Bay, and attacked anyone who downloaded the films.
Naturally, the pair found themselves in court often between 2011 and 2016 — in addition to getting charged this morning with fraud and extortion, the feds say Steele and Hansmeier habitually lied to the court to cover themselves.
Neither Steele nor Hansmeier have attorneys listed yet in federal court.