Judge Wright has issued his long-awaited ruling in the case of Prenda Law, the notorious porno copyright trolls who used fraud and bullying to extort millions from Internet users by threatening to sue them for downloading pornography videos with embarrassing titles. Prenda used a combination of offshore shell companies, obfuscation, and even identity theft to disguise the ownership of their con, and when they landed before Judge Wright, it all started to unravel.
The judge has fined Prenda $80,000 ($40K in fees, doubled for punitive measure) and asked the FBI to investigate them for racketeering. He held that their operation was a fraud, that they had committed identity theft, and, importantly, identified Steele, Hansmeier, and Paul Duffy as the "de facto owners" of Prenda. He's asked the lawyers' bar associations to have them disbarred. And he made a lot of Star Trek references!
Nevertheless, it is clear that the Principals’ enterprise relies on deception. Part of that ploy requires cooperation from the courts, which could only be achieved through deception. In other words, if the Principals assigned the copyright to themselves, brought suit in their own names, and disclosed that they had the sole financial interest in the suit, a court would scrutinize their conduct from the outset. But by being less than forthcoming, they defrauded the Court. They anticipated that the Court would blindly approve their early-discovery requests, thereby opening the door to more settlement proceeds.
As for penalties, they begin with attorneys' fees. Prenda will have to pay these to the two defense lawyers who have been instrumental in this case: Morgan Pietz and Nicholas Ranallo. Wright awards $36,150 in fees to Pietz, $1,950 in fees to Ranallo, as well as legal costs (copying and filing fees, for example) to both. He then doubles the amount "as a punitive measure," arriving at $81,319.72. In a footnote, Wright says that the sum "is calculated to be just below the cost of an effective appeal"—a final dig at the Prenda business model of settlement offers just below the cost of defense. The Prenda folks have 14 days to pay up.
The harshest penalties are saved for last. First, Judge Wright suggests the Prenda lawyers should be disbarred, writing "there is little doubt that Steele, Hansmeier, Duffy, [and] Gibbs suffer from a form of moral turpitude unbecoming an officer of the court." In many states, including California, crimes reaching the standard of "moral turpitude" lead to automatic disbarment. Wright will be referring the four lawyers to every state bar in which they are admitted to practice...
Third, though Plaintiffs boldly probe the outskirts of law, the only enterprise they resemble is RICO. The federal agency eleven decks up is familiar with their prime directive and will gladly refit them for their next voyage. The Court will refer this matter to the United States Attorney for the Central District of California. The [court] will also refer this matter to the Criminal Investigation Division of the Internal Revenue Service and will notify all judges before whom these attorneys have pending cases.
Prenda hammered: Judge sends porn-trolling lawyers to criminal investigators [Joe Mullin/Ars Technica]