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Gibbs just spent about 45 minutes testifying that Paul Hansmeier and John Steele were the true bosses behind the Prenda Law scheme, which involved mass-copyright lawsuits against Internet users who were accused of downloading pornographic films. In his cross-examination, Duffy tried to suss out any inconsistencies in what Gibbs said - with little success.
Duffy's performance was a last-ditch attempt to avoid a serious sanctions order against Prenda, which may be imminent for a second time. Prenda Law became infamous for suing thousands of Internet users at once, alleging they illegally downloaded pornography. But the operation has now ground to a halt and the lawyers who apparently led the charge are in serious trouble. Earlier this year, a Los Angeles federal judge slapped Duffy, Hansmeier, Steele, and Gibbs with an $81,000 sanction order which also included a referral to criminal investigators. Gibbs has since "switched sides" and has worked with defense lawyers, testifying against his former Prenda colleagues.
Now a second judge, US District Judge Edward Chen, is showing a keen interest in Prenda's possible misdeeds. Prenda sued Joe Navasca, a San Jose resident, in 2012. But the evidence that the prosecuting firm brought was weak, and Chen stopped Prenda from proceeding unless they agreed to post a bond, which they would not do. Now Prenda has been ordered to pay legal fees in this case, and is facing possible sanctions in this case as well.
Chen has referred the issue of considering sanctions to US Magistrate Judge Nandor Vadas, who sits in the distant Eureka, California courthouse. Vadas conducted yesterday's hearing via a teleconference link to San Francisco. Mark Lutz, the man that Prenda lawyers say is the true owner of two mass-lawsuit shell companies - AF Holdings and Ingenuity 13 - was supposed to show up but didn't. Duffy told the judge he didn't know where Lutz was.
Brett Gibbs was sworn in about 15 minutes into the hearing and was questioned by defense lawyer Nicholas Ranallo for the better part of an hour.
Gibbs began with a basic outline of his history with Prenda. He started working for the Steele Hansmeier law firm in March 2011. In 2012, they changed the name to Prenda Law. "They said that the firm was changing names, and everything would go on as it was at Steele Hansmeier," said Gibbs. "Nothing would change in that sense."
Nothing did change. Working for Prenda Law, he kept on filing copyright suits in California for the two bosses: John Steele and Paul Hansmeier. In the beginning, Gibbs said, he was filing suits for various entities, including real porn companies like Hard Drive Productions. By December 2012, the plan had changed.
"John Steele told me their plan ultimately was to be a company, and eventually they called this company Livewire Holdings," said Gibbs. "That company would own AF Holdings and Ingenuity 13, and they would solely work on those files."
After that, Gibbs only filed cases for those two Prenda-controlled shells, which constituted the majority of his work. The whole time, Gibbs repeated, he reported to Steele and Hansmeier.
"They were the partners," said Gibbs. "They were the ones with the client contact. I was 1099, a contract attorney. They had different styles of supervising people, but they were making decisions together. Paul Hansmeier would say, 'This is a decision I'm going to talk to John about.' But these are the individuals that were directing everything for Steele Hansmeier and for Prenda Law as well."
"And you're aware that they [Steele and Hansmeier] have denied that your version of events is true?" asked Ranallo.
"Yes, I'm aware," said Gibbs.
Gibbs' emphatic testimony that Steele and Hansmeier controlled Prenda echoed statements he made back in March in Los Angeles. This time, however, Gibbs' talk would be backed up by phone recordings and forensic evidence suggesting that the porn files Prenda was suing over were actually uploaded to The Pirate Bay by John Steele. And of course, this time Gibbs would be cross-examined by Duffy.
At that point, Ranallo played two phone calls to GoDaddy's customer service department, which were acquired from the hosting service by Blair Chintella in a Georgia-based Prenda case. The voice played identifies himself in one case as Mark Lutz and in another as Alan Cooper. (Cooper, Steele's former housekeeper, is the man whose name is on the copyright assignments; Cooper denies he ever signed such paperwork.)
The first one began with a voice saying "I don't have it... I have the domain name, and my name, so... it's dangerousxxx.com." "And your name?" asked the GoDaddy rep. "Alan Cooper," said the recorded voice.
Ranallo stopped the recording. "Do you recognize the voice on that tape?" he asked.
"I do," said Gibbs.
"Can you tell me who it was?"
"John Steele."
Ranallo loaded the next recording. After naming his 4-digit PIN, a voice that sounded the same as the first recording identified himself with the name "Mark Lutz."
"Did you recognize the voice on that recording?" asked Ranallo.
"Yes," said Gibbs.
"Who was that voice?"
"John Steele," said Gibbs.
Duffy started his cross-examination by trying to point out inconsistencies in Gibbs' testimony - but on points that sometimes seemed barely relevant. On more than one occasion, Judge Vadas jumped in to ask Duffy what the point of his questioning was or to ask him to move on. At one point he insisted Duffy stop jumping into an extended question before Gibbs had a chance to answer. "This isn't television!" said Vadas, who was himself in court "virtually," appearing on a large monitor.
"It strikes me from what I have heard so far that there's a chain of command here, and that Mr. Steele and Mr. Hansmeier were managing partners of the firm that became Prenda Law," said Vadas. "This counsel and other counsels were contract lawyers doing the heavy lifting in whatever states these lawsuits were being filed... Isn't that a fair analysis?"
"But they were reporting to Mr. Gibbs," said Duffy. "It's a fair analysis of what this person [Gibbs] testified. In exchange for consideration, he's substantially changed his declaration in federal court."
Gibbs' behavior seemed like less of a contradiction to Vadas. "Can't you take marching orders from above, and then as a captain, order your lieutenants below to do whatever heavy lifting?" he asked.
"Mr. Gibbs described himself as a secretary!" said Duffy. "A secretary doesn't advise other attorneys." Gibbs was getting a "substantial economic benefit" by not having to pay for the $100,000 bond to pay the sanctions in the Wright case, he noted.
Vadas said he'd have a recommendation on sanctions ready in a few weeks.
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