Minnesota Attorney Indicted in Fraud and Extortion Scheme



White collar crimes in Minnesota don’t always make front page news. Recently, however, the case of a Minnesota¬†attorney who extorted millions of dollars from numerous individuals and businesses has made the headlines.

Paul Hansmeier, the Minnesota lawyer, and his law school buddy, John Steele from Illinois, devised an elaborate scheme to blackmail people they lured into a porn scheme.

Around 2010, Hansmeier, who headed up Prenda Law, and his attorney friend allegedly purchased copyright licenses for a bunch of pornographic films. They also hired women to act in porn movies that the attorneys produced.

The attorneys then uploaded the films on file sharing sites and waiting for unsuspecting individuals to download the videos.

Hansmeier would then make a discovery motion in court in an attempt to get the websites to divulge their subscriber lists. The list then allowed the attorneys to identify the users. They did this all under the guise of a copyright infringement lawsuit. The claim was that the individuals downloading the videos were violating copyright laws.

Once the users were identified, Prenda Law would send out cease and desist letters to the individuals promising to settle out of court. They would threaten to publicize the defendants’ porn use in some cases to get them to pay up.

Sometimes, Prenda Law would hire a local attorney, procured via Craigslist, to handle the out of state cases.

U.S. District Judge Otis Wright, caught on to their scheme and that is how the investigation got started.

Hansmeier and associates are estimated to have collected over $6 million dollars in settlements as a result of their extortion scheme. This lawsuit scam was so widespread that in 2013, it is estimated that one-third of all copyright infringement lawsuits were filed by Hansmeier and Prenda Law.

Even after Hansmeier was admonished for his actions, and the court started limiting the discovery motions and effectively blocking his access to personal user information, he wasn’t finished. He just devised another scheme.

The new scheme involved trying to bilk small companies using violations of the American with Disabilities Act. Most companies paid up because it was too costly to fight him in court. If anyone stood their ground and decided to take him on in court, the lawsuit was usually dropped.

In July, Paul Hansmeier tried to claim personal bankruptcy, but the trustee saw it as an attempt to defraud the system. The court then ordered an involuntary liquidation of assets. That case is still pending.

Both Hansmeier and Steele were arrested and face an 18 count indictment. Charges include; mail and wire fraud charges, conspiracy to commit mail and wire fraud, conspiracy to commit money laundering and perjury charges. There is also talk that identity theft charges may also be filed. This is based on the fact that the men forged the signature of a man who worked for Steele in order to show him as an officer of one the shell companies that was used to buy copyright licenses.

There is also talk that identity theft charges may be filed. This is based on the fact that the men forged the signature of a man who worked for Steele in order to show him as an officer of one the shell companies that was used to buy copyright licenses.

White collar crimes are still crimes and require the skills of a criminal defense attorney. In this case, an attorney who is experienced with handling crimes like bribery, extortion, fraud and embezzlement. Many of these crimes fall under the federal crimes umbrella, so it is even more important to provide yourself with the appropriate representation with a skilled lawyer.

In a case such as this, punishment will probably be harsh since the criminal is an officer of the court who betrayed the public’s trust and used the unsuspecting court to advance their schemes.

If you have been charged with a white collar crime, or any crime, please reach out to us to schedule a consultation with one of our attorneys. We will be happy to review your case and present you with a plan of defense and expected outcomes.

Disclaimer: The content of this article does not constitute an attorney-client relationship. Please contact Jennifer Speas to discuss the specifics of your case.