John Steele pleaded guilty to conspiracy to commit mail and wire fraud, as well as conspiracy to commit money laundering, at the US District Court for the District of Minnesota. He has yet to be sentenced.
As part of his plea deal, Steele accepted the charges brought against him and co-defendant Paul Hansmeier in December. Hansmeier has admitted no guilt and still faces a trial.
Steele admitted, through Prenda Law, to threatening individuals who supposedly downloaded adult movies from file-sharing websites with copyright infringement lawsuits between 2011 and 2014, and extracting some $6 million in settlements.
They went to extreme lengths in their scheme, Steele admitted, creating and using a series of sham entities to obtain the rights to adult movies—some of which they filmed themselves—and then uploading those movies to file-sharing websites such as The Pirate Bay in order to lure people to download them.
According to Steele, the pair filed bogus copyright infringement lawsuits to learn the identities of their potential victims. Once they obtained relevant subscriber information from ISPs, they used extortionate letters and phone calls to threaten the victims with enormous financial penalties and public embarrassment unless they agreed to pay a settlement of thousands of dollars.
Courts began to wake up to their tactics and restricted their ability to file suits against multiple defendants, prompting Hansmeier and Steele to claim that the computers of their various fake clients had been hacked.
Hansmeier and Steele then recruited the downloaders with whom they’d already settled to act as defendants and filed hacking lawsuits so that they could seek discovery against the ruse defendants’ supposed ‘co-conspirators’.