Lawyer Pleads Guilty in Porn Extortion Plot

MINNEAPOLIS (CN) – An Illinois attorney pleaded guilty to filing bogus copyright infringement lawsuits against pornography downloaders after uploading adult films to file-sharing websites, and he is expected to cooperate with prosecutors against his colleague, who denies any wrongdoing.

John L .Steele, a former attorney in Chicago, pleaded guilty Monday to conspiracy to commit mail fraud, wire fraud and money laundering.

According to the plea agreement, Steele, 45, and co-defendant Paul Hansmeier orchestrated a scheme to fraudulently win millions of dollars in copyright lawsuit settlements by deceiving state and federal courts nationwide from 2011 until 2014.

The two lawyers allegedly used sham entities they both controlled to obtain copyrights to pornographic movies, some of which they filmed themselves.

Hoping to lure people into downloading their movies, Steele and Hansmeier uploaded the movies to file-sharing websites, the plea deal states. Once a person downloaded a movie, the duo would file a bogus copyright infringement suit that concealed their role in distributing the movies, prosecutors say.

After convincing courts to give them the power to subpoena internet service providers to identify the subscriber who controlled the IP address used to download the movie, the attorneys used “extortionate tactics to garner quick settlements” from people who didn’t know about the scheme, were too embarrassed or could not afford to defend themselves, according to the plea agreement.

Steele and Hansmeier allegedly threatened subscribers associated with the targeted IP addresses with significant financial penalties – the federal copyright statute allows plaintiffs to recover damages up to $150,000 per infringement – and public disclosure unless the infringers agreed to pay a settlement of $3,000.

If someone did fight back, Steele and Hansmeier would dismiss the lawsuits, the plea deal states.

Between April 2011 and December 2012, prosecutors say the attorneys filed at least 200 fraudulent copyright infringement lawsuits nationwide, and sought subscriber information associated with more than 3,000 IP addresses, according to the plea.

“After courts began limiting the number of people that Steele and Hansmeier could sue in one lawsuit, they changed tactics and began filing lawsuits falsely alleging that computer systems belonging to certain of their sham clients had been ‘hacked’ and recruited ruse defendants to fraudulently obtain authority from courts to subpoena internet service providers,” the plea agreement states.

Steele faces eight to 10 years in prison when he is sentenced, which has not yet been scheduled. As part of the plea agreement, Steele agreed to cooperate with prosecutors and testify against others involved in the case, presumably Hansmeier.

Hansmeier, a Minnesota lawyer, is currently suspended from practicing law and has denied the charges against him.

Late last year, Hansmeier was also under FBI investigation for claims that he filed numerous frivolous disability-access lawsuits. The Star Tribune reports that Hansmeier made $312,218 from July 2014 to June 2016 despite never litigating a case to a verdict or being awarded attorney’s fees.

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