Bankruptcy Fight May Be The Least Of Team Prenda's Concerns, As The FBI Comes Knocking

If you've been following the Prenda Law saga around here for any length of time, you're aware that it's been going on for years, with sketchy copyright trolling practices that appeared to include Team Prenda uploading their own content to torrent sites, tracking who downloaded them, and then filing questionable lawsuits. That scheme fell apart after a series of judges, led by Judge Otis Wright, called out Team Prenda for committing fraud on the courts, and referred the issue to the feds, while also hitting them with a fine. That was three years ago. Other courts piled on more fines and attorneys' fees -- and more referrals to the feds. After the second such referral, Ken "Popehat" White noted that these things take time, but that something would probably happen eventually:

The wheels turn slowly, friends, but make no mistake, the wheels turn. The wheels are grinding down Team Prenda, and doing so faster and faster every month. With two different federal judges referring the matter to state bars and the U.S. Attorney's office, the probability of bar investigations and federal grand jury investigations approaches certainty.

Of course, it's been three years since then and a few things have happened. One of the three main members of Team Prenda (though, probably the least involved of the three) passed away. But the other two are both facing bar complaints over ethical violations. Paul Hansmeier also famously tried to declare bankruptcy, but appears to have lied to the court in the process. Fight Copyright Trolls just recently had an update on that case, and suffice it to say, it's hilarious. Hansmeier has not just lost his lawyer after she told the court that she could no longer represent him and be a servant of the court (i.e., heavily hinting that Hansmeier was likely asking her to lie to the court), but he's also lashed out at the trustee handling his bankruptcy for... buying a new car.

And, of course, both Hansmeier and Steele have moved on to a revamped version of the same old trolling trick, but this time using the Americans with Disabilities Act as the fulcrum, rather than copyright law.

But, it appears that all that may be small potatoes. Because, as White told us three years ago, the wheels of justice do keep turning, and he now has strong indications that not only is the FBI actively investigating Steele and Hansmeier for fraud, but that they may be just about ready to move on to the next steps:

Based on my 21 years in the federal criminal justice system, I believe the letter reflects an active, determined investigation in its later stages. The letter represents an abandonment of operational security and confidentiality; it suggests the FBI no longer sees a need for stealth. That, in turn, suggests that the FBI believes it's already developed the evidence it needs to prove the substance of its case (that Team Prenda committed wire and/or mail fraud) and is just identifying as many victims as possible for potential witnesses and to establish the amount of damages. Bear in mind that under the Federal Sentencing Guidelines, the more money wrongdoers made, the more time they're facing.

Now, to be fair, over the years we've noted many times that the DOJ often misrepresents things in criminal filings, so it will be interesting to see what charges are actually filed, assuming that the case really is ready to move. But as White also noted, "Team Prenda needs federal criminal defense attorneys, and needs them right now."

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