The copyright violation notice is every pirate’s worst nightmare, a clear legal sign that a major copyright holder knows what you’ve been torrenting and is ready to make you pay for your crimes.
But according to an indictment filed today in Minnesota federal court, that system has also opened the door to some very creative forms of fraud. The indictment alleges that two lawyers — Paul R. Hansmeier and John L. Steele — used the copyright system to extort roughly $6 million out of porn pirates over the course of three years.
Prosecutors say the lawyers uploaded their own pornographic videos to torrent services — including the embattled Pirate Bay — then aggressively targeted users who downloaded the content, discovering names through the standard copyright violation process and then threatening pirates with damages up to $150,000 unless they agreed to a settlement. The typical cost of a settlement was $4,000, far less than the cost of challenging the order in open court.
Throughout the process, Feds allege that Hansmeier and Steele concealed their role in uploading the videos, although the underlying copyright claim was often legitimate. The duo typically obtained copyright to the videos through shell companies, although in some cases they actually filmed and produced their own pornography as part of the scheme.
“The defendants used extortionate tactics to garner quick settlements from individuals who were unaware of the defendants' role in uploading the movie, and often were either too embarrassed or could not afford to defend themselves,” the indictment reads. “When these individuals did fight back, the defendants dismissed the lawsuits rather than risk their scheme being unearthed.”
The two defendants face a total of 18 counts, including charges of conspiracy, mail and wire fraud, and concealment money laundering. Hansmeier was barred from practicing law in Minnesota earlier this year.