If John Steele and Paul Hansmeier didn't realize they were in serious trouble already, things just got a lot more difficult for them. As you may recall, Steele and Hansmeier have been bending over backwards to insist that they had nothing whatsoever to do with Prenda Law, and that they got no money from any of the settlements. Courts haven't been buying this argument, and earlier this week we wrote about Judge Chen in Northern California noting that he was convinced that Steele and Hansmeier really were Prenda.

But the evidence just got a lot stronger. It appears that Steele and Hansmeier's attempt to throw lawyer Brett Gibbs under the bus has just come back to haunt them. Gibbs has just made a filing in the Judge Otis Wright case in the Central District of California (the first case to directly state that Hansmeier and Steele were clearly behind Prenda) that might be Steele and Hansmeier's worst nightmare: because it reveals a spreadsheet showing how most of the Prenda settlement money went to them.

Ostensibly, the filing from Gibbs is an attempt to get out from Judge Wright's order which lumped in Gibbs with Steele, Hansmeier, Duffy and Lutz as "principles" of Prenda, making them all responsible for the attorneys' fees. Gibbs has been trying to distance himself from the Prenda crew for a while, but with this filing he reveals the real meat: it seems that there was a Dropbox account that was shared between Gibbs, Hansmeier and Steele, and in it was a spreadsheet revealing the payouts from Prenda settlements. And while Steele and Hansmeier have told courts that they are not associated with Prenda and not making any money from the cases, the documents... show otherwise.

According to the Prenda Law Profit and Loss Detail, in 2012 alone, Prenda made "Payments to Old Owners" - Hansmeier, Steele and Under the Bridge Consulting (their jointly-owned company) - equal to almost 70% of Prenda's total revenue. Hansmeier received $645,821.29 ($185,321.28 directly and $460,500.00 through Under the Bridge). Steele received $660,915.94 ($200,415.94 directly and $460,500.00 through Under the Bridge). This does not include tens of thousands of dollars in additional payments to or on behalf of Steele and Hansmeier for travel and entertainment, meals, credit card charges, and miscellaneous reimbursements, or payments to Steel's wife, Kerry Eckenrode Steele. It also does not include payments totaling $37,069.56 to Duffy or Duffy Law Group, also classified as "Payments to Old Owners." Judging from the documents it appears that neither the Profit and Loss Detail nor the Balance Sheet Detail show any payments to AF Holdings, Ingenuity 13 or other Plaintiffs represented by Prenda.

In an affidavit, Gibbs points out that Hansmeier had told him earlier that Steele and Hansmeier had setup "Under the Bridge Consulting" (nice troll reference guys, very subtle) and each had a 50% stake. As Gibbs points out, this very strongly supports Gibbs' earlier claims and reinforces the idea that Steele and Hansmeier are both the powers that be behind Prenda and that they directly lied in the past concerning their involvement. While the spreadsheets do say "old owners," Gibbs' filing correctly notes that (1) this suggest they at one time did own Prenda and (2) getting more than 70% of the revenue going to "old owners" certainly doesn't suggest that those two were no longer involved in the business.

Separately, in the filing, Gibbs notes that Hansmeier called him after Wright's original ruling, trying to get him to sign a document that would require him to lie, and also to indemnify both Hansmeier and Steele, in order to be included under the bond that Duffy, Hansmeier and Steele were organizing as required by Judge Wright's order. Basically, Hansmeier offered Gibbs a terrible deal: to get in on the bond that we're getting, you have to lie to the court and then basically accept any and all liability that may come down because of all this. Gibbs, quite reasonably, rejected the deal, leading to this filing now:

After receiving the May 6 Order, Hansmeier telephoned Gibbs in an attempt to persuade him to work with, not against, the Principals as they appealed the Order. Over several conversations, Hansmeier conveyed to Gibbs exactly what he would have to do to be covered by the superseadous bond which the Principals were arranging to purchase. Knowing that Gibbs would not be able to post sufficient collateral to buy a separate bond, Steele and Hansmeier made six demands which Gibbs would have to accede to before they would add him to their bond: (1) Gibbs pay $3,000 to Hansmeier and Steele to reimburse them for the entire cost of the bond; (2) Gibbs sign a unilateral Release and Settlement Agreement releasing any and all claims he might have against Duffy, Steele, Hansmeier, Prenda Law, Steele Hansmeier PLLC, and Alpha Law Firm (See Exhibit A); (3) Gibbs agree to sign a declaration stating (falsely) that Steele had no involvement in a Florida copyright case; (4) Gibbs represent AF Holdings and Ingenuity 13 in their appeal of the May 6 Order; (5) Gibbs sign an agreement that would create a fiduciary relationship between Gibbs and both Steele and Hansmeier;2 and (6) Gibbs sign an agreement indemnifying Steele and Hansmeier

It's quite incredible that Hansmeier apparently thought Gibbs was so stupid as to accept such a terrible deal. There's a bunch more in the filing worth reading, but these are the highlights - and ones that I'd imagine are about to be refiled in a number of other Prenda-related cases around the country. My only question, however, is why Gibbs waited until now to file this...

Still, assuming that this information turns out to be legit, and there's no reason to think it isn't, Steele and Hansmeier may be in for a world of trouble. Everyone knew something like this was coming eventually, but I can't see how the two of them will tap dance around this one.