gonna b a movie !

In three hour hearing, Prenda attacks its former lawyer

Phone calls said to be Steele, lying about his identity, are played in court.

by Joe Mullin - Aug 29 2013, 7:04pm EST

http://arstechnica.com/tech-policy/2013/08/in-3-hour-hearing-prenda-attacks-its-former-lawyer/

Federal Building and US Courthouse, San Francisco, CA

When one imagines a tense cross-examination, the image that springs to mind is of a witness sweating under the rapid-fire questions of a lawyer. That wasn't what happened as Paul Duffy, a lawyer for embattled porn-troll Prenda Law, grilled a former colleague in a San Francisco courtroom yesterday. It was Duffy himself who appeared sweating and nervous, questioning his former colleague Brett Gibbs in rapid-fire, repetitive sentences that were at times hard to understand.
Gibbs just spent about 45 minutes testifying that Paul Hansmeier and John Steele were the true bosses behind the Prenda Law scheme, which involved mass-copyright lawsuits against Internet users who were accused of downloading pornographic films. In his cross-examination, Duffy tried to suss out any inconsistencies in what Gibbs said—with little success.
Duffy's performance was a last-ditch attempt to avoid a serious sanctions order against Prenda, which may be imminent for a second time. Prenda Law became infamous for suing thousands of Internet users at once, alleging they illegally downloaded pornography. But the operation has now ground to a halt and the lawyers who apparently led the charge are in serious trouble. Earlier this year, a Los Angeles federal judge slapped Duffy, Hansmeier, Steele, and Gibbs with an $81,000 sanction order which also included a referral to criminal investigators. Gibbs has since "switched sides" and has worked with defense lawyers, testifying against his former Prenda colleagues.
Now a second judge, US District Judge Edward Chen, is showing a keen interest in Prenda's possible misdeeds. Prenda sued Joe Navasca, a San Jose resident, in 2012. But the evidence that the prosecuting firm brought was weak, and Chen stopped Prenda from proceeding unless they agreed to post a bond, which they would not do. Now Prenda has been ordered to pay legal fees in this case, and is facing possible sanctions in this case as well.
Chen has referred the issue of considering sanctions to US Magistrate Judge Nandor Vadas, who sits in the distant Eureka, California courthouse. Vadas conducted yesterday's hearing via a teleconference link to San Francisco. Mark Lutz, the man that Prenda lawyers say is the true owner of two mass-lawsuit shell companies—AF Holdings and Ingenuity 13—was supposed to show up but didn't. Duffy told the judge he didn't know where Lutz was.

Steele and Hansmeier “were directing everything”

Brett Gibbs was sworn in about 15 minutes into the hearing and was questioned by defense lawyer Nicholas Ranallo for the better part of an hour.
Gibbs began with a basic outline of his history with Prenda. He started working for the Steele Hansmeier law firm in March 2011. In 2012, they changed the name to Prenda Law. "They said that the firm was changing names, and everything would go on as it was at Steele Hansmeier," said Gibbs. "Nothing would change in that sense."
Nothing did change. Working for Prenda Law, he kept on filing copyright suits in California for the two bosses: John Steele and Paul Hansmeier. In the beginning, Gibbs said, he was filing suits for various entities, including real porn companies like Hard Drive Productions. By December 2012, the plan had changed.
"John Steele told me their plan ultimately was to be a company, and eventually they called this company Livewire Holdings," said Gibbs. "That company would own AF Holdings and Ingenuity 13, and they would solely work on those files."
After that, Gibbs only filed cases for those two Prenda-controlled shells, which constituted the majority of his work. The whole time, Gibbs repeated, he reported to Steele and Hansmeier.
"They were the partners," said Gibbs. "They were the ones with the client contact. I was 1099, a contract attorney. They had different styles of supervising people, but they were making decisions together. Paul Hansmeier would say, 'This is a decision I'm going to talk to John about.' But these are the individuals that were directing everything for Steele Hansmeier and for Prenda Law as well.
"And you're aware that they [Steele and Hansmeier] have denied that your version of events is true?" asked Ranallo.
"Yes, I'm aware," said Gibbs.
"Concerning the Central District of California case [in Judge Wright's court], they actually said they had no contact with you whatsoever, true?"
"Yes, that's true," said Gibbs, smiling slightly and shaking his head. It was an expression of disbelief—he seemed too sad to laugh.
"Did you have contact?"
"Yes, we did."
Gibbs said that when Judge Wright issued his order to show cause, suggesting that Prenda was defrauding his court, it came out of the blue for him. He was worried Wright believed he was a part owner of Steele Hansmeier, which he was not.
"I was pretty shocked by the allegations in there," said Gibbs. "I called Paul Hansmeier and said look, you have to indemnify me here. There has to be something you can do, you have to hire an attorney or something to straighten this out." Ultimately, Gibbs got representation through the Steele Hansmeier insurance company.
Ranallo pulled up an Excel spreadsheet of Gibbs' phone calls, highlighting calls to Hansmeier's cell phone. There were four on February 7, the day of Wright's order to show cause. The shocking order "consumed... the entire day, for me at least," said Gibbs. He continued to speak with Hansmeier almost daily for several days but soon decided to go his own way, he said. He told Hansmeier he wouldn't be working for him anymore.
It was the end of a friendship as well as a work relationship. Gibbs has known Hansmeier since law school, when they were roommates at the University of Minnesota before Gibbs transferred to finish his education at UC Hastings in San Francisco.
Gibbs' emphatic testimony that Steele and Hansmeier controlled Prenda echoed statements he made back in March in Los Angeles. This time, however, Gibbs' talk would be backed up by phone recordings and forensic evidence suggesting that the porn files Prenda was suing over were actually uploaded to The Pirate Bay by John Steele. And of course, this time Gibbs would be cross-examined by Duffy.

Play the tape

At that point, Ranallo played two phone calls to GoDaddy's customer service department, which were acquired from the hosting service by Blair Chintella in a Georgia-based Prenda case. The voice played identifies himself in one case as Mark Lutz and in another as Alan Cooper. (Cooper, Steele's former housekeeper, is the man whose name is on the copyright assignments; Cooper denies he ever signed such paperwork.)
The first one began with a voice saying "I don't have it... I have the domain name, and my name, so... it's dangerousxxx.com." "And your name?" asked the GoDaddy rep. "Alan Cooper," said the recorded voice.

00:00

Ranallo stopped the recording. "Do you recognize the voice on that tape?" he asked.
"I do," said Gibbs.
"Can you tell me who it was?"
"John Steele."
Ranallo loaded the next recording. After naming his 4-digit PIN, a voice that sounded the same as the first recording identified himself with the name "Mark Lutz."
"Did you recognize the voice on that recording?" asked Ranallo.
"Yes," said Gibbs.
"Who was that voice?"
"John Steele," said Gibbs.
Finally, Ranallo asked Gibbs about the mysterious Salt Marsh signature. Gibbs had always been under the impression Salt Marsh was a real person, he said.
"I asked John Steele, who, essentially, is the client here?" said Gibbs. "He said the individual's name is Salt Marsh. Don't worry about it, he's already signed the papers."

The hunt for contradictions

Duffy started his cross-examination by trying to point out inconsistencies in Gibbs' testimony—but on points that sometimes seemed barely relevant. On more than one occasion, Judge Vadas jumped in to ask Duffy what the point of his questioning was or to ask him to move on. At one point he insisted Duffy stop jumping into an extended question before Gibbs had a chance to answer. "This isn't television!" said Vadas, who was himself in court "virtually," appearing on a large monitor.
Duffy began by quizzing Gibbs about the exact nature of the change in law firm.

Duffy: Who constituted Steele Hansmeier? How big an operation was it?
Gibbs: It was probably less than 10... around eight people.
Duffy: You indicated you worked with Paul Hansmeier?
Gibbs: Yes, absolutely.
Duffy: When you say there was a transition, what was the transition, legally?
Gibbs: I was just told one day, 'We're going to be Prenda Law,' and that Paul Duffy is going to be [the owner of Prenda].
Duffy: Are you aware that Steele Hansmeier was dissolved in the Minnesota Secretary of State's office, in 2011?
Gibbs: I was not aware.
Duffy: Did you look it up? To see if it was in existence or see if it merged into another firm?
Gibbs: No.
Duffy: There was nothing stating it had merged with another entity—so, other than someone telling you there was a transition, the two were clearly separate firms?
Gibbs: All I know is what I've testified so far today. Whether it's the same firm, or separate firms... I was managed, the entire time, by John Steele and Paul Hansmeier.

Duffy wouldn't stop hammering away at the same point.
"So you never looked up whether they were separate entities?" said Duffy. "Nothing written—Did you ever see anything written on a corporate document from the Secretary of State saying that the two had merged?"
"I don't remember," said Gibbs, looking more bored than scared by the persistent questioning.
Then Duffy launched into a line of questioning implying that Gibbs is the one who should have held the actual handwritten "Salt Marsh" signature.
"In this situation, I was told that Mr. Hansmeier had a signature at the law firm," explained Gibbs. "I didn't see the necessity of having my own version, considering I was a 1099 contractor."
Again, Duffy pounded away at the same issue for some time, suggesting that Gibbs was the irresponsible one.
"So did you ever see an original signature for the person you were told was Salt Marsh?" asked Duffy.
"I don't think so," answered Gibbs.
"Well did you ever do any investigation? Aside from asking Mr. Hansmeier?"
"I don't remember any."
"So there's no original signature anywhere, and you never obtained an original signature?"
Gibbs started to answer but Duffy interrupted, insisting on a yes or no answer.
"I'm asking a very easy question, sir!" said Duffy. "You never obtained an original signature, correct?"
"I never obtained one," acknowledged Gibbs.
"Didn't the court give you an opportunity to produce it? And a two week extension because you were out of town?"
At that, Gibbs actually looked incredulous. "I believe the order was directed at yourself."
At this point, Magistrate Judge Vadas broke in to ask Duffy a question. "Counsel, where are we going with this?"
"Counsel has the obligation under federal and local rules to maintain the original signature and he [Gibbs] didn't do it!" said Duffy. "He's trying to blame other people who weren't on the case. Any liability should fall upon him as the filer."
Duffy went on. A minute later, Vadas broke in again, with the same question, asking where the line of questioning was going. Duffy was trying to show that Gibbs changed his story as a result of a "deal" with another defense attorney in Florida to drop sanctions against him.
"It strikes me from what I have heard so far that there's a chain of command here, and that Mr. Steele and Mr. Hansmeier were managing partners of the firm that became Prenda Law," said Vadas. "This counsel and other counsels were contract lawyers doing the heavy lifting in whatever states these lawsuits were being filed... Isn't that a fair analysis?"
"But they were reporting to Mr. Gibbs," said Duffy. "It's a fair analysis of what this person [Gibbs] testified. In exchange for consideration, he's substantially changed his declaration in federal court."
Gibbs' behavior seemed like less of a contradiction to Vadas. "Can't you take marching orders from above, and then as a captain, order your lieutenants below to do whatever heavy lifting?" he asked.
"Mr. Gibbs described himself as a secretary!" said Duffy. "A secretary doesn't advise other attorneys." Gibbs was getting a "substantial economic benefit" by not having to pay for the $100,000 bond to pay the sanctions in the Wright case, he noted.

The truth

I followed Brett Gibbs out into the hall and asked if he would be open to an interview to express his view on events. He declined.
"I'm just trying to get on with my life," he said. "I'm pretty overwhelmed by this. There just needs to be some truth in this, in the whole matter, and that's why I came today. I don't know if they believe their own lies at this point."
I went back into the courtroom. Vadas said he'd have a recommendation on sanctions ready in a few weeks. Duffy declined to be interviewed and left immediately after the hearing.

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