Lawyer Posts Free Porn Online, Blackmails Viewers for $6 Million

How John L. Steele made porn, gave it away, and made a fortune from porn downloaders afraid of being exposed

Last Updated: March 9, 2017 @ 2:30 PM

One judge called it a “porno-trolling collective”: John L. Steele would make porn, place it on piracy websites, and then lie in wait — hoping people would download it without paying.

Why? Because he wasn’t a normal pornographer, trying to make an honest buck in the adult-film business. Steele was a lawyer, playing a long-con game in which he sued the thousands of people who fell into the trap of downloading the porn he himself had placed online.

Prosecutors said he sued defendants in California, Florida, and other states for supposed copyright infringement, and that the scheme raked in more than $6 million from victims hoping to keep their downloading habits from becoming public.

The scam came crashing down on Monday when Steele pleaded guilty to conspiracy to commit mail fraud and wire fraud, and conspiracy to commit money laundering. He entered his plea during a hearing before U.S. District Judge Joan N. Ericksen in Minneapolis.

According to Steele’s plea agreement, the victims “often were either too embarrassed or could not afford to defend themselves.” Many agreed to pay so-called settlements of $3,000 in order to avoid threats of even greater penalties and “being publicly shamed for allegedly downloading pornographic movies.”

Steele said in his plea agreement that he and his law partner, Paul Hansmeier, raked in millions from their victims between 2011 and 2014. Hansmeier maintains that he is innocent.


Steele’s lawyer, Mark Eiglarsh, told TheWrap that his client “immediately accepted responsibility for his actions by pleading guilty.”

Eiglarsh said that Steele “admitted to the judge the mistakes that he made in the past and is currently doing all he can to assist the Government” and “is eager to move past this challenging chapter of his life so he can devote his full energy towards supporting his young daughter, who he loves dearly.”

Nicholas Ranallo, a San Francisco lawyer who represented one of the defendants in a Los Angeles copyright lawsuit, helped uncover the scam in 2013. Most of the defendants were referred to as “John Does” in the fraud case.

“These cases were incredibly traumatic for the Does involved in them, and everyone owes a debt of gratitude for the few Does (and named individuals) who stood up for themselves in the face of this scheme and ultimately contributed to its downfall,” he told TheWrap.

Graham Syfert, a Florida lawyer who represented about 50 “John Does” and helped “hundreds of others,” said he feels vindicated because he, too, uncovered some of Steele’s tactics in 2013.

“I know it certainly shows the stuff I was saying back then wasn’t crazy,” he told TheWrap.

The lawyers said they were unable to reach their “John Doe” clients to comment on Steele’s guilty plea.

The sleuthing by attorney Ranallo and another “John Doe” lawyer, Morgan Pietz of Manhattan Beach, caught the interest of U.S. District Judge Otis Wright in Los Angeles.

The judge said he “went to battlestations” after uncovering “shell companies and fraud” behind Steele’s copyright lawsuits.

Wright slapped Steele, Hansmeier, and their associates with more than $80,000 in sanctions. But even worse for Steele and Hansmeier, the judge also referred the case to federal prosecutors, saying that the lawyers’ “only enterprise they resemble is RICO.”

Wright wrote in his 2013 sanctions order that Steele and his team were a “porno-trolling collective” that employed the “nexus of antiquated copyright laws, paralyzing social stigma, and unaffordable defense costs” to entrap users into illegal downloads of pornographic films and demand secret copyright infringement settlements.

“So now,” the judge wrote, “copyright laws originally designed to compensate starving artists allow starving attorneys in this electronic-media era to plunder the citizenry.”

Here’s how the scam worked, according to Steele’s guilty plea and federal indictment.

Steele and Hansmeier created several sham production companies — AF Holdings, Ingenuity13, Guava, Livewire Holdings, and LW Systems — to buy the copyright of several pornographic films, including “Five Fan Favorites” and “A Peek Behind the Scenes at the Show.”

The two lawyers also got into the porn biz themselves. On “at least three separate occasions in Chicago, Miami, and Las Vegas,” the men “contracted with adult film actresses and produced multiple short pornographic films,” Steele’s plea agreement said.

The lawyers “made no legitimate effort to publicly distribute or commercially release the movies they filmed,” Steele’s plea agreement says. Instead, they shared their films on well-known BitTorrent piracy websites like Pirate Bay to entrap users into downloading their films for free.

Then, switching hats and acting as lawyers with the Chicago law firms Steele Hansmeier, Anti-Piracy Law Group, and Prenda Law, Steele said he and his team filed lawsuits in states across the country against thousands of “John Doe” defendants.


But these copyright lawsuits were “fraudulent” because they “concealed from the courts” that Steele and his team “purposely allowed and authorized” users on the websites “to obtain” the porn movies, the plea agreement said.

Because Steele and his team gave the “John Doe” implicit consent to copy the films in Pirate Bay, the “John Does” did not engage in unauthorized copying or copyright infringement at all, the plea agreement explained.

Unware of the scam, most “John Does” paid Steele and Hansmeier to settle their copyright infringement cases to avoid the embarrassment of being unmasked in a public porn copyright lawsuit or because they were unable to pay for lawyers, the plea document said.

The Prenda Law lawyers used “extortionate tactics such as letters and phone calls to threaten victims with enormous financial penalties and public embarrassment unless they agreed to pay a $3,000 settlement fee,” the U.S. Attorney’s Office in Minneapolis said in a statement.

Steele faces up to 20 years in prison for each of the two counts.

Lawyers who fought against Steele’s tactics want copyright trolls to view Steele’s guilty plea as a cautionary tale.

“Mr. Steele abused copyright law and the judicial process for years to extract unfair settlements from people all over the United States,” Corynne McSherry, legal director of the Electronic Frontier Foundation in San Francisco, told TheWrap. “We are pleased that he is being held accountable and we hope this will send a message to other copyright trolls.”

EFF, joined by the American Civil Liberties Union, Public Citizen, and Public Knowledge, has fought for years to educate courts about the growing problem of copyright “trolls,” who use sham claims of copyright infringement to sue thousands of “John Does” after obtaining their IP addresses through court-sanctioned discovery.

Most internet subscribers do what the “John Does” did in the Prenda Law cases: settle rather than incur the cost of fighting a complex copyright case in federal court, EFF says.

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