MINNEAPOLIS, MN – John L. Steele, 45, a Minnesota attorney, admitted today to orchestrating a brazen $6 million scheme to con innocent Americans out of their money through bogus copyright infringement lawsuits. Steele pleaded guilty to conspiracy to commit mail fraud and wire fraud, and conspiracy to commit money laundering, before U.S. District Judge Joan N. Ericksen. The feds say the scheme preyed on individuals who downloaded pornographic movies, turning a simple download into a financial and reputational nightmare.
According to court documents, between 2011 and 2014, Steele and his co-defendant, Paul Hansmeier, didn’t just find copyright violations – they created them. The pair allegedly filmed some of the porn themselves, uploaded it to file-sharing sites like “The Pirate Bay,” and then sued anyone who dared to download it. It was a classic bait-and-switch, turning the tables on those accused of piracy. U.S. Attorney Andrew Luger minced no words, calling the scheme “an egregious fraudulent scheme” that “abused their positions of trust and exploited our justice system.”
The operation was slick. Steele and Hansmeier formed shell companies to claim copyright ownership, then unleashed a torrent of lawsuits. Once a judge granted them the power to subpoena internet service providers, they’d identify downloaders and hit them with threats of $3,000 settlements, along with the specter of public shaming. They operated under the guise of legitimate law firms, including Prenda Law, masking their fraudulent intent. This wasn’t about protecting intellectual property; it was about lining their pockets.
When courts began to wise up and limit their ability to mass-sue, Steele and Hansmeier switched tactics. They started filing lawsuits claiming their “clients’” computers had been hacked, recruiting unwitting victims – those already caught downloading porn – as “ruse defendants.” These individuals would be sued in exchange for a waived settlement fee, while Steele and Hansmeier pursued claims against the alleged “co-conspirators.” The scheme grew increasingly convoluted, a desperate attempt to keep the money flowing.
But the charade couldn’t last. Judges began to see through the deception, denying subpoenas, dismissing lawsuits, and even imposing sanctions. In May 2013, a federal court in California slapped the defendants with sanctions, a clear warning sign. Despite the mounting legal challenges, Steele and Hansmeier managed to rake in approximately $6 million before their scheme finally unraveled. The FBI and IRS-CI are continuing to investigate.
Paul R. Hansmeier, of St. Paul, Minnesota, remains charged as a co-defendant in an indictment filed December 16, 2016. He is presumed innocent until proven guilty. Sentencing for Steele has not yet been scheduled, but he faces a hefty penalty for his role in this calculated and cynical fraud. Assistant U.S. Attorneys Benjamin Langner and David Maclaughlin, along with Senior Trial Counsel Brian Levine, are prosecuting the case.
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Key Facts
- State: Minnesota
- Agency: DOJ USAO
- Category: Fraud & Financial Crimes|Cybercrime|White Collar Crime
- Source: Official Source ↗
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