One of the architects of the notorious Prenda Law copyright-porn scam, John Steele, has admitted that he and Paul Hansmeier made US$6 million out of the operation.
Steele's and Hansmeier's approach to wealth creation was ingenious, if nasty: they arranged for smutty films to be seeded onto pirate sites, then pursued downloaders with the threat that if they didn't pay up, their names would be published.
After civil courts tossed Prenda's lawsuits, the District Court of Minnesota ordered that money extracted from victims be returned, and late last year, the same state escalated matters with criminal charges.
Steele has now thrown in the towel. In a plea deal, he formally confessed to conspiracy to commit mail fraud and wire fraud.
The settlement reprises the whole sorry saga of the tactics Steele and Hansmeier adopted when their targets started fighting back: invented allegations that they'd been hacked; accusing their victims of deception and “lying to cover up their fraud”.
The settlement notes the penalties the various crimes carry as:
- 18 U.S. Code § 1349 (conspiracy) – up to 20 years imprisonment, and twice the proceeds of the crime or $250,000 (whichever is greater);
- 18 U.S. Code § 1956 h (conspiracy to launder money) – up to 20 years imprisonment, and twice the proceeds of the crime or $500,000 (whichever is greater).
Given the 16 pages in the plea agreement that detail the scheme, it's not surprising that the court suggests Steele could face a sentence of 10 years behind bars.
At Popehat, Ken White says Steele has “thrown himself on his sword”, perhaps in the hope that in giving “truthful” testimony during his sentencing hearing (along the way throwing Hansmeier under any bus the latter hasn't found for himself) he might slice a few more years from the sentence.
Steele has also agreed to waive his right to appeal any sentence up to five years in prison. ®