Case oo Document 140 Filed 05/15/13 Co ot A nA fF WwW NY we ee “_ © Paul Hansmeier (MN Bar #387795) Alpha Law Firm LLC 900 IDS Center 80 South 8th Street Minneapolis, MN 55402 Telephone: (612) 234-5744 pthansmeier @thefirm.mn In Propria Persona INGENUITY 13 LLC, Plaintiff, v. JOHN DOE, Defendant. 1 Page 1 of 28 Page ID #:2914 MAY 15 2013 CENT AAL DISTRICT OF CALE BY UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CASE NO. 2:12-CV-8333-ODW (JCx) Judge: Hon. Otis D. Wright, Magistrate Judge: Hon. Jacqueline Chooljian PAUL HANSMEIER’S NOTICE OF APPEAL AND REPRESENTATION STATEMENT NOTICE OF APPEAL AND REPRESENTATION STATEMENT CASE NO. 2:12-CV-8333-ODW (JCx) Case 2:12-cv-08333-ODW-JC Document 140 Filed 05/15/13 Page 2 of 28 Page ID #:2915 1 NOTICE OF APPEAL 2 NOTICE IS HEREBY GIVEN that Paul Hansmeier hereby appeals to the United States 3 |) Court of Appeals for the Ninth Circuit from: (1) the Court’s May 6, 2013 Order Issuing Sanctions 4 |) (ECF No. 130), attached as Exhibit A; (2) the Court’s Order Granting Request for Leave to File a 5 |i Reply (ECF No, 116) attached as Exhibit B; (3) the Court’s March 14, 2013 Order to show cause 6 || (ECF No. 86) (amending and incorporating ECF No. 48) attached as Exhibit C; and (4) the Court’s 7 || Order to appear (ECF No. 66) attached as Exhibit D. 8 9 Respectfully submitted, 10 || DATED: May 15, 2013 ll 12 Paul Hansmeier (MN Bar #387795) Alpha Law Firm LLC 13 900 IDS Center 80 South 8th Street 14 Minneapolis, MN 55402 Telephone: (612) 234-5744 15 prhansmeier @thefirm.mn In Propria Persona 16 17 18 19 20 21 22 23 24 25 26 27 28 2 NOTICE OF APPEAL AND REPRESENTATION STATEMENT CASE NO, 2:12-CV¥-8333-ODW (JCx) Case 2:12-cv-08333-ODW-JC Document 140 Filed 05/15/13 Page 3 of 28 Page ID #:2916 em N yw MY NY NY YY NH YB Be Be ee ee El Oe Pn RRR BBS F&F SF Be A BDAaA EHH KES oe IN DH HA F WN REPRESENTATION STATEMENT The undersigned is proceeding in propria persona. Pursuant to Rule 12(b) of the Federal Rules of Appellate Procedure and Circuit Rule 3-2(b), Paul Hansmeier submits this Representation Statement. The following list identifies all parties to the action and all persons and entities affected by the orders appealed from, and it identifies their respective counsel by name, firm, address, telephone number, and e-mail, where appropriate: PARTIES COUNSEL OF RECORD Non-Party Paul Hansmeier Paul R. Hansmeier Alpha Law Firm LLC 900 IDS Center 80 South 8th Street Minneapolis, MN 55402 Telephone: (612) 234-5744 prhansmeier@thefirm.mn In Propria Persona Non-Party Brett Gibbs Andrew J. Waxler, SBN 113682 Barry Z. Brodsky, SBN 93565 Won M. Park, SBN 194333 Waxler¢Carner¢Brodsky LLP 1960 East Grand Avenue, Suite 1210 E! Segundo, California 90245 Telephone: (310) 416-1300 Facsimile: (310) 416-1310 e-mail: awaxler@wcb-law.com e-mail: wpark@web-law.com Non-Parties Paul Duffy, Angela Van Den Hemel and Prenda Law, Inc. Heather L. Rosing, Bar No. 183986 David M. Majchrzak, Bar No. 220860 Klinedinst PC 501 West Broadway, Suite 600 San Diego, California 92101 Telephone: (619) 239-8131 Fax: (619) 238-8707 e-mail: hrosing@klinedinstlaw.com e-mail: dmajchrzak @klinedinstlaw.com 3 NOTICE OF APPEAL AND REPRESENTATION STATEMENT CASE NO, 2:12-CV-8333-ODW (JCx) Case ian Document 140 Filed 05/15/13 Page 4 of 28 Page ID #:2917 Non-Party John Steele Timothy J. Halloran — 104498 Thomas P. Mazzucco — 139758 Murphy, Pearson, Bradley & Feeney 88 Kearny Street, 10th Floor San Francisco, CA 94108-5530 Tel: (415) 788-1900 Fax: (415) 393-8087 Non-Parties Mark Lutz, Peter Hansmeier and Livewire Holdings LLC Livewire Holdings, LLC 2100 M St. NW Suite 170-417 Washington DC 20037-1233 Tel: (888)-588-9473 Fax: (888)-964-9473 Non-Party Steele Hansmeier PLLC No known address. Company formally dissolved in 2011. Non-Party 6881 Forensics, LLC —_ Springates East Government Road Charlestown, Nevis Plaintiff Ingenuity13, LLC and related-case Plaintiff AF Holdings, LLC Brett L. Gibbs, Esq. (SBN 251000) Of Counsel to Prenda Law Inc. 38 Miller Avenue, Suite 263 Mill Valley, CA 94941 415-325-5900 bigibbs @ wefightpiracy.com Non-Party Putative John Doe Morgan Pietz (SBN 260629) The Pietz Law Firm 3770 Highland Ave., Ste. 206 Manhattan Beach, CA 90266 mpietz @pietzlawfirm.com Telephone: (310) 424-5557 Facsimile: (310)546-5301 Nicholas Ranallo 371 Dogwood Way Boulder Creek, CA 95006 nick @ranallolawoffice.com Telephone: (831) 703-4011 Fax: (831) 533-5703 4 NOTICE OF APPEAL AND REPRESENTATION STATEMENT CASE NO. 2:12-CV-8333-ODW (JCx) Case 2: -Cv-08333-ODW-JC Document 140 Filed 05/15/13 Page 5 of 28 Page ID #:2918 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA INGENUITY 13 LLC, CASE NO. 2:12-CV-8333-ODW (JCx) Plaintiff, v. Judge: Hon. Otis D. Wright, I Magistrate Judge: Hon. Jacqueline Chooljian JOHN DOE, Defendant. CERTIFICATE OF SERVICE IT IS HEREBY CERTIFIED THAT: I, the undersigned, am a citizen of the United States and am at least eighteen years of age. My business address is 80 S. 8th St. Suite 900, Minneapolis, MN 55402. I am not a party to the above-entitled action. I have caused service of: PAUL HANSMEIER’S NOTICE OF APPEAL AND REPRESENTATION STATEMENT On the following parties via U.S. Mail first-class, postage prepaid: PARTIES ADDRESS Non-Party Brett Gibbs Andrew J. Waxler, SBN 113682 Barry Z. Brodsky, SBN 93565 Won M. Park, SBN 194333 Waxler¢Carner¢Brodsky LLP 1960 East Grand Avenue, Suite 1210 El Segundo, California 90245 Telephone: (310) 416-1300 Facsimile: (310) 416-1310 e-mail: awaxler@wcb-law.com e-mail: wpark@wcb-law.com Non-Parties Paul Duffy, Angela Van Den Hemel | Heather L. Rosing, Bar No. 183986 and Prenda Law, Inc. David M. Majchrzak, Bar No. 220860 Klinedinst PC 501 West Broadway, Suite 600 San Diego, California 92101 Telephone: (619) 239-8131 Fax: (619) 238-8707 e-mail: hrosing @klinedinstlaw.com e-mail: dmajchrzak @klinedinstlaw.com 5 NOTICE OF APPEAL AND REPRESENTATION STATEMENT CASE NO. 2:12-CV-8333-ODW (JCx) Case 2:12-cv-08333-ODW-JC Document 140 Filed 05/15/13 Page 6 of 28 Page ID #:2919 1 ||| Non-Party John Steele Timothy J. Halloran ~ 104498 Thomas P. Mazzucco — 139758 2 Murphy, Pearson, Bradley & Feeney 3 88 Kearny Street, 10th Floor San Francisco, CA 94108-5530 4 Tel: (415) 788-1900 | Fax: (415) 393-8087 5 ||| Non-Parties Mark Lutz, Peter Hansmeier and Livewire Holdings, LLC 6 Livewire Holdings LLC 2100 M St. NW Suite 170-417 7 Washington DC 20037-1233 Tel: (888)-588-9473 8 Fax: (888)-964-9473 9 || Non-Party Steele Hansmeier PLLC Company formally dissolved in 2011 a0 Non-Party 6881 Forensics, LLC Springates East 11 Government Road Charlestown, Nevis 12 Plaintiff Ingenuity13, LLC and Brett L. Gibbs, Esq. (SBN 251000) 13 11) related-case plaintiff AF Holdings, LLC Of Counsel to Prenda Law Inc. 14 38 Miller Avenue, Suite 263 Mill Valley, CA 94941 15 415-325-5900 blgibbs @ wefightpiracy.com 16 Non-Party Putative John Doe Morgan Pietz (SBN 260629) M The Pietz Law Firm 18 3770 Highland Ave., Ste. 206 Manhattan Beach, CA 90266 19 mpietz @pietzlawfirm.com Telephone: (310) 424-5557 20 Facsimile: (310)546-5301 a) I declare under penalty of perjury that the foregoing is true and correct. Executed on May 15, 22 | 2013. 23 (» eae 24 Signature 25 26 27 28 7 NOTICE OF APPEAL AND REPRESENTATION STATEMENT CASE NO, 2:12-CV-8333-ODW (JCx) Case 2:12-cv-08333-ODW-JC Document 140 Filed 05/15/13 Page 7 of 28 Page ID #:2920 EXHIBIT A Case No.: 2:12-cv-08333-ODW-JC Dkt. Entry 130 Case 2:IL2-cv-08333-ODW-JC Document 140 Filed 05/15/13 Page 8 of 28 Page ID ee as oOo eo HN DO wr FF W NY — ee nN = & 2:12-cv-08333-ODW-JC Document 130 Filed 05/06/13 Page 1of11 Page ID #:288 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA INGENUITY 13 LLC, Case No. 2:12-cv-8333-ODW(JCx) Plaintiff, ORDER ISSUING SANCTIONS v. JOHN DOE, Defendant. “The needs of the many outweigh the needs of the few.” —Spock, Star Trek H: The Wrath of Khan (1982). I. INTRODUCTION Plaintiffs’ have outmaneuvered the legal system.’ They’ve discovered the nexus of antiquated copyright laws, paralyzing social stigma, and unaffordable defense costs. And-.they exploit this anomaly by accusing individuals of illegally downloading a single pornographic video. Then they offer to settle—for a sum ' The term “Plaintiffs” used in this order refers to AF Holdings LLC, Ingenuity 13 LLC, as well as related entities, individuals, and attorneys that collaborated in the underlying scheme fronted by AF Holdings and Ingenuity 13. 2 This order concerns conduct committed in the following related cases: AF Holdings LLC v. Doe, No. 2:12-cev-6636-ODW(JCx) (C.D. Cal. filed Aug. 1, 2012); AF Holdings LLC v. Doe, No. 2:12-cv- 6669-ODW(JCx) (C.D. Cal. filed Aug. 2, 2012); Ingenuity 13 LLC v. Doe, No. 2:12-cv-6662- ODW(ICx) (C.D. Cal. filed Aug. 2, 2012); Ingenuity 13 LLC v. Doe, No. 2:12-cv-6668-ODW(JCx) (C.D. Cal. filed Aug. 2, 2012); Ingenuity 13 LLC v. Doe, No. 2:12-cv-8333-ODW(Cx) (C.D. Cal. filed Sept. 27, 2012). Case 2:42-cv-08333-ODW-JC Document 140 Filed 05/15/13 Page 9 of 28 aa as #:2922 h— oD oN DH WwW FW NY 10 2:12-cv-08333-ODW-JC Document 130 Filed 05/06/13 Page 2of11 Pag “2890 calculated to be just below the cost of a bare-bones defense. For these individuals, resistance is futile; most reluctantly pay rather than have their names associated with illegally downloading porn. So now, copyright laws originally designed to compensate starving artists allow, starving attorneys in this electronic-media era to plunder the citizenry. Plaintiffs do have a right to assert their intellectual-property rights, so long as they do it right. But Plaintiffs’ filing of cases using the same boilerplate complaint against dozens of defendants raised the Court’s alert. It was when the Court realized Plaintiffs engaged their cloak of shell companies and fraud that the Court went to battlestations. Il. PROCEDURAL HISTORY The Court issued its February 7, 2013 Order to Show Cause re Sanctions to allow counsel, Brett Gibbs, to explain why he ignored the Court’s discovery-stay Order, filed complaints without reasonable investigation, and defrauded the Court by asserting a copyright assignment secured with a stolen identity. (ECF No. 48.) As evidence materialized, it turned out that Gibbs was just a redshirt. Gibbs’s behavior in the porno-trolling collective was controlled by several attorneys, under whom other individuals also took their orders. Because it was conceivable that these attorneys (and others) were culpable for Gibbs’s conduct, the Court ordered these parties to appear. The following additional parties were ordered to appear: (a) John Stecle, of Steele Hansmeier PLLC, Prenda Law, Inc., and/or Livewire Holdings LLC; (b) Paul Hansmeier, of Steele Hansmeier PLLC and/or Livewire Holdings LLC; (c) Paul Duffy, of Prenda Law, Inc.; (d) Angela Van Den Hemel, of Prenda Law, Inc.; (e) Mark Lutz, of Prenda Law, Inc., AF Holdings LLC, and/or Ingenuity 13 LLC; (£) Alan Cooper, of AF Holdings LLC; (g) Peter Hansemeier, of 6881 Forensics, LLC; (h) Prenda Law, Inc.; (i) Livewire Holdings LLC; (j) Steele Hansmeier PLLC; (k) AF Holdings LLC; (1) Ingenuity 13 LLC; (m) 6881 Forensics, LLC; and (n) Alan Cooper, Case 2: Cas Do om IN KH WH FF WwW N -CV-08333-ODW-JC_ Document 140 Filed 05/15/13 Page 10 of 28 Page ID #:2923 2:12-cv-08333-ODW-JC Document 130 Filed 05/06/13 Page 3o0f11 Page |lD #:2891 of 2170 Highway 47 North, Isle, MN 56342. (ECF Nos. 66, 86.) These parties were ordered to show cause why they should not be sanctioned for their behind-the-scenes role in the conduct facially perpetrated by Gibbs. These parties were also ordered to explain the nature of their operations, relationships, and financial interests. Ill. LEGAL STANDARD The Court has a duty to supervise the conduct of attorneys appearing before it. Erickson v. Newmar Corp., 87 F.3d 298, 301 (9th Cir. 1996). The power to punish contempt and to coerce compliance with issued orders is based on statutes and the Court’s inherent authority. Int’l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 831 (1994). Though this power must be exercised with restraint, the Court has wide latitude in fashioning appropriate sanctions to fit the conduct. See Roadway Express, Inc. v. Piper, 447 U.S. 752, 764-65 (1980). Under the Court’s inherent authority, parties and their lawyers may be sanctioned for improper conduct. Fink v. Gomez, 239 F.3d 989, 991 (9th Cir. 2001). This inherent power extends to a full range of litigation abuses, the litigant must have engaged in bad faith or willful disobedience of a court’s order. Id. at 992. Sanctions under the Court’s inherent authority are particularly appropriate for fraud perpetrated on the court. See Chambers v. NASCO, Inc., 501 U.S. 32, 54 (1991). IV. DISCUSSION A. Findings of fact Based on the evidence presented on the papers and through sworn testimony, the Court finds the following facts, including those based on adverse inferences drawn from Steele, Hansmeier, Duffy, and Van Den Hemel’s blanket refusal to testify.’ 1. Steele, Hansmeier, and Duffy (“Principals”) are attorneys with shattered law practices. Seeking easy money, they conspired to operate this enterprise and 3 Even if their refusal was based on the Fifth Amendment privilege against self-incrimination, the Court still may draw adverse inferences against them in this civil proceeding. Baxter v. Palmigiano, 425 U.S. 308, 318 (1976). Case 2:42-cv-08333-ODW-JC Document 140 Fi : Bae iled 05/15/13 Page 11 of 28 Page Digg 24 Co om I HA WW A 12-cv-08333-ODW-JC Document 130 Filed 05/06/13 Page 4of11 Page formed the AF Holdings and Ingenuity 13 entities (among other fungible entities) for the sole purpose of litigating copyright-infringement lawsuits. They created these entities to shield the Principals from potential liability and to give an appearance of legitimacy. 2; AF Holdings and Ingenuity 13 have no assets other than several copyrights to pornographic movies. There are no official owners or officers for these two offshore entities, but the Principals are the de facto owners and officers. 3. The Principals started their copyright-enforcement crusade in about 2010, through Prenda Law, which was also owned and controlled by the Principals. Their litigation strategy consisted of monitoring BitTorrent download activity of their copyrighted pornographic movies, recording IP addresses of the computers downloading the movies, filing suit in federal court to subpoena Internet Service Providers (“ISPs”) for the identity of the subscribers to these IP addresses, and sending cease-and-desist letters to the subscribers, offering to settle each copyright- infringement claim for about $4,000. 4. This nationwide strategy was highly successful because of statutory- copyright damages, the pornographic subject matter, and the high cost of litigation. Most defendants settled with the Principals, resulting in proceeds of millions of dollars due to the numerosity of defendants. These settlement funds resided in the Principals’ accounts and not in accounts belonging to AF Holdings or Ingenuity 13. No taxes have been paid on this income. 5. For defendants that refused to settle, the Principals engaged in vexatious litigation designed to coerce settlement. These lawsuits were filed using boilerplate complaints based on a modicum of evidence, calculated to maximize settlement profits by minimizing costs and effort. 6. The Principals have shown little desire to proceed in these lawsuits when faced with a determined defendant. Instead of litigating, they dismiss the case. When pressed for discovery, the Principals offer only disinformation—even to the Court. meee 2d. cv-08333-ODW-JC Document 140_ Filed 05/15/13 age 2 2 of 28 Pag fd ID 1p 9925 Oo Om nN DH NH BP WW N - Oo 2:12-cv-08333-ODW-JC Document 130 Filed 05/06/13 Page aot 11 Paged 7. The Principals have hired willing attorneys, like Gibbs, to prosecute these cases. Though Gibbs is culpable for his own conduct before the Court, the Principals directed his actions. In some instances, Gibbs operated within narrow parameters given to him by the Principals, whom he called “senior attorneys.” 8. The Principals maintained full control over the entire copyright-litigation operation. The Principals dictated the strategy to employ in each case, ordered their hired lawyers and witnesses to provide disinformation about the cases and the nature of their operation, and possessed all financial interests in the outcome of each case. 9. The Principals stole the identity of Alan Cooper (of 2170 Highway 47 North, Isle, MN 56342). The Principals fraudulently signed the copyright assignment for “Popular Demand” using Alan Cooper’s signature without his authorization, holding him out to be an officer of AF Holdings. Alan Cooper is not an officer of AF Holdings and has no affiliation with Plaintiffs other than his employment as a groundskeeper for Steele. There is no other person named Alan Cooper related to AF Holdings or Ingenuity 13. 10. The Principals ordered Gibbs to commit the following acts before this Court: file copyright-infringement complaints based on a single snapshot of Internet activity; name individuals as defendants based on a statistical guess; and assert a copyright assignment with a fraudulent signature. The Principals also instructed Gibbs to prosecute these lawsuits only if they remained profitable; and to dismiss them otherwise. 11. Plaintiffs have demonstrated their willingness to deceive not just this Court, but other courts where they have appeared. Plaintiffs’ representations about their operations, relationships, and financial interests have varied from feigned ignorance to misstatements to outright lies. But this deception was calculated so that the Court would grant Plaintiffs’ early-discovery requests, thereby allowing Plaintiffs to identify defendants and exact settlement proceeds from them. With these granted requests, Plaintiffs borrow the authority of the Court to pressure settlement. Case Cc 21 sf eSSERES Document 130 Filed 05/06/13 Page 6of1i1 Pagé ID #28 om Oo ND DBD A BP WB N — oe _™ © -CV-08333-ODW-JC Document 140 Filed 05/15/13. Page 13 of 28 _ Page ID iG B. Sanctions Although the Court originally notified the parties that sanctions would be imposed under Federal Rule of Civil Procedure 11(b)(3) and Local Rule 83-3, the Court finds it more appropriate to sanction the parties under its inherent authority. See In re DeVille, 361 F.3d 539, 550 (9th Cir. 2004) (“[T]he bankruptcy court’s failure to specify, in advance of the disciplinary proceedings, that its inherent power was a basis for those proceedings, did not serve to undercut its sanctioning authority.”). The sanctions for Plaintiffs’ misconduct are as follows. 1, Rule 11 sanctions The Court maintains that its prior analysis of Plaintiffs’ Rule 11 violations is accurate. (ECF No. 48.) Plaintiffs can only show that someone, using an IP address belonging to the subscriber, was seen online in a torrent swarm. But Plaintiffs did not conduct a sufficient investigation to determine whether that person actually downloaded enough data (or even anything at all) to produce a viewable video. Further, Plaintiffs cannot conclude whether that person spoofed the IP address, is the subscriber of that IP address, or is someone else using that subscriber’s Internet access. Without better technology, prosecuting illegal BitTorrent activity requires substantial effort in order to make a case. It is simply not economically viable to properly prosecute the illegal download of a single copyrighted video. Enter Plaintiffs and their cottage-industry lawsuits. Even so, the Court is not as troubled by their lack of reasonable investigation as by their cover-up. Gibbs argued that a deep inquiry was performed prior to filing. Yet these arguments are not credible and do not support Gibbs’s conclusions. Instead, Gibbs’s arguments suggest a hasty after-the-fact investigation, and a shoddy one at that. For instance, Gibbs characterized Marvin Denton’s property as “a very large estate consisting of a gate for entry and multiple separate houses/structures on the property.” (ECF No. 49, at 19.) He stated this to demonstrate the improbability that Denton’s Wi-Fi signal could be received by someone outside the residence. But Case 2: Oo em nN DH FF Ww NH = j=) -cV-08333-ODW-JC_ Document 140 Filed 05/15/13 Page 14 of 28. Page ID #:2927 2:12-cv-08333-ODW-JC Document 130 Filed 05/06/13 Page 7 of 11 PagetD Peas Denton’s property is not a large estate; it is a small house in a closely packed residential neighborhood. There are also no gates visible. h Google Getdirectiont | My places 636 S Vanderwell Ave West Coving, CA 91790 Directions Szarch nearby more~ saps Labs Hels Googla Msps- 82012 Google - Farms af Une Privasy Gibbs’s statement is a blatant lie. His statement resembles other statements given by Plaintiffs in this and their other cases: statements that sound reasonable but lack truth. Thus, the Court concludes that Gibbs, even in the face of sanctions, continued to make factual misrepresentions to the Court. Nevertheless, Rule 11 sanctions are inappropriate here because it is the wrong sanctions vehicle at this stage of litigation. The cases have already been dismissed and monetary sanctions are not available. Fed. R. Civ. P 11(c)(5)(B) (a court cannot impose a monetary sanction on its own unless it issued the show-cause order before voluntary dismissal). The more appropriate sanction for these Rule 11 violations is Case 2:1p-cv-08333-ODW-JC Document 140 Filed 05/15/13 Page 150 = Oo fo nN DH FF WB NY f28_ Page ID #:2928 To Document 130 Filed 05/06/13 Page 8 of 11 pA P3868 what the Court had already imposed: denial of requests for early discovery. (ECF No. 28.) 2. Sanctions under the Court’s inherent authority In addition to Gibbs’s misrepresentations, there is the matter of the ignored Court Order vacating early discovery. (ECF No. 28.) The evidence does not show that the Order was ignored because of miscommunication among Plaintiffs. The Order was purposely ignored—hoping that the ISPs were unaware of the vacatur and would turn over the requested subscriber information. Then there is the Alan Cooper forgery. Although a recipient of a copyright assignment need not sign the document, a forgery is still a forgery. And trying to pass that forged document by the Court smacks of fraud. Unfortunately, other than these specific instances of fraud, the Court cannot make more detailed findings of fraud. Nevertheless, it is clear that the Principals’ enterprise relies on deception. Part of that ploy requires cooperation from the courts, which could only be achieved through deception. In other words, if the Principals assigned the copyright to themselves, brought suit in their own names, and disclosed that they had the sole financial interest in the suit, a court would scrutinize their conduct from the outset. But by being Jess than forthcoming, they defrauded the Court. They anticipated that the Court would blindly approve their early-discovery requests, thereby opening the door to more settlement proceeds. The Principals also obfuscate other facts, especially those concerning their operations, relationships, and financial interests. The Principals’ web of disinformation is so vast that the Principals cannot keep track—their explanations of their operations, relationships, and financial interests constantly vary. This makes it difficult for the Court to make a concrete determination. Still, the Court adopts as its finding the following chart detailing Plaintiffs’ relationships. Though incomplete, this chart is about as accurate as possible given Plaintiffs’ obfuscation. Case 2: Cas Oo man Dn wD F&F YW NH wb NY NY NY YY N NY NY SS SF KF PF Fe ee Be eS co aM A UW BB BW NY Fe OG OD wD DWN BR BY NY FF -CV-08333-ODW-JC_ Document 140 Filed 05/15/13 Page 16 of 28_ Page ID “2929 aeons Document 130 Filed 05/06/13 Page 9of11 Page |D PoB6y John Steele = Paul Duffy —_ Brett Gibbs aoe Lutz = “Prineipal™ Lutz = Paralegal Gibbs = In House Counsel Dugas’ wife also Counsel LAW FIRMS - Hi ker Digital, LLC) Counsel “Client” __Boyracesinc | A | & Ingenuity 13, LLC 4532 East Villa ‘Theresa Drive, _Phoonix, AZ Arte de Oaxaca, LLC (Unknown) i) (Nev Future Blue, ine. Aa! Hard Drive Prods, Inc. i tres | rr Openmind Solutions, inc. Pink Lotus Entertainment _ COMPUTER FORENSICS" As for Van Den Hemel, Lutz, and Hansemeier, they are not without fault even though they acted under orders from the Principals. They were not merely assimilated; they knowingly participated in this scheme, reaping the benefits when the going was good. Even so, their status as non-attorneys and non-parties severely limits the sanctions that could be levied against them. Despite these findings, the Court deems these findings insufficient to support a large monetary sanction—a seven-digit sanction adequate to deter Plaintiffs from continuing their profitable enterprise. Even if the Court enters such a sanction, it is certain that Plaintiffs will transfer out their settlement proceeds and plead paucity. Yet Plaintiffs’ bad-faith conduct supports other more fitting sanctions. Ifl Case 2: Case Oo oN Dn OH BR WY NY poe re -Cv-08333-ODW-JC Document 140 Filed 05/15/13 Page 17 of 28 Page ID H56900 :12-cv-08333-ODW-JC Document 130 Filed 05/06/13 Page 10 of 11 Page ID #:28 First, an award of attorney’s fees to Defendants is appropriate. This award compensates them for expenses incurred in this vexatious lawsuit, especially for their efforts in countering and revealing the fraud perpetrated by Plaintiffs. So far, only Morgan Pietz and Nicholas Ranallo have appeared.’ Upon review, the Court finds Pietz’s expenditure of 120.5 hours at an hourly rate of $300 reasonable based on his experience, work quality, and quantity of necessary papers filed with the Court. (ECF No. 102.) Although many of these hours were spent after the case was dismissed, these hours were spent in connection with the sanction hearings—time well spent. Similarly, the attorney’s fees and costs incurred by Ranallo also appear reasonable. Therefore, the Court awards attorney’s fees and costs in the sum of $40,659.86 to Doe: $36,150.00 for Pietz’s attorney’s fees; $1,950.00 for Ranallo’s attorney’s fees, $2,226.26 for Pietz’s costs; and $333.60 for Ranallo’s costs. As a punitive measure, the Court doubles this award, yielding $81,319.72.° This punitive multiplier is justified by Plaintiffs’ brazen misconduct and relentless fraud. The Principals, AF Holdings, Ingenuity 13, Prenda Law, and Gibbs are liable for this sum jointly and severally, and shall pay this sum within 14 days of this order. Second, there is little doubt that that Steele, Hansmeier, Duffy, Gibbs suffer from a form of moral turpitude unbecoming of an officer of the court. To this end, the Court will refer them to their respective state and federal bars. Third, though Plaintiffs boldly probe the outskirts of law, the only enterprise they resemble is RICO. The federal agency eleven decks up is familiar with their prime directive and will gladly refit them for their next voyage. The Court will refer this matter to the United States Attorney for the Central District of California. The will also refer this matter to the Criminal Investigation Division of the Internal 4 They appeared on behalf of the Doe Defendant in the case Ingenuity 13 LLC v. Doe, No. 2:12-cv- 8333-ODW(JCx) (C.D. Cal. filed Sept. 27, 2012). > This punitive portion is calculated to be just below the cost of an effective appeal. Case 2: Case Oo eat DH WH FF YW NY e “ OQ 12 -Cv-08333-ODW-JC Document 140 Filed 05/15/13 Page 18 of 28 Page ID #:2931 :12-cv-08333-ODW-JC Document 130 Filed 05/06/13 Page 11 of 11 Page ID #:2899 Revenue Service and will notify all judges before whom these attorneys have pending cases. For the sake of completeness, the Court requests Pietz to assist by filing a report, within 14 days, containing contact information for: (1) every bar (state and federal) where these attorneys are admitted to practice; and (2) every judge before whom these attorneys have pending cases. 4, Local Rule 83-3 sanctions For the same reasons stated above, the Court will refer Duffy and Gibbs to the Standing Committee on Discipline (for this District) under Local Rule 83-3. Vv. CONCLUSION Steele, Hansmeier, Duffy, Gibbs, Prenda Law, AF Holdings, and Ingenuity 13 shall pay, within 14 days of this order, attorney’s fees and costs totaling $81,319.72 to Doe. The Court enters additional nonmonetary sanctions in accordance with the discussion above. IT IS SO ORDERED. May 6, 2013 Case 2:12-cv-08333-ODW-JC Document 140 Filed 05/15/13 Page 19 of 28 Page ID #:2932 EXHIBIT B Case No.: 2:12-cv-08333-ODW-JC Dkt. Entry 116 asdf 2:12-cv-08333-ODW-JC Document 140 Filed 05/15/13 Page 20 of 28 Page ID ase 2:12-cv-08333-ODW-JC Document 116 Filed 04/11/13 Page 1of2 Page ID #2 Morgan E. Pietz (SBN 260629) THE PIETZ LAW FIRM 3770 Highland Ave., Ste. 206 Manhattan Beach, CA 90266 mpietz@pietzlawfirm.com Telephone: (310) 424-5557 Facsimile: (310) 546-5301 Nicholas Ranallo (SBN 275016) 371 Dogwood Way Boulder Creek, CA 95006 nick@ranallolawoffice.com Telephone: (831) 703-4011 Fax: (831) 533-5073 # 270 Attorneys for Putative John Doe in 2:12-cv-08333-ODW-JC UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA INGENUITY 13, LLC, a Limited Liability Company Organized Under the Laws of the Federation of Saint Kitts and Nevis, Plaintiff, Vv. JOHN DOE, Defendant. Case Number: 2:12-cv-08333-OD W(JCx) Case Assigned to: District Judge Otis D Wright, II Discovery Referred to: Magistrate Judge Jacqueline Chooljian Case Consolidated with Case Nos.: 2:12-cv-6636; 2:12-cv-6669; 2:12-cv- 6662; 2:12-cv-6668 ORDER GRANTING REQUEST FOR LEAVE TO FILE A REPLY 1 _ [PROPOSED] ORDER GRANTING REQUEST FOR LEAVE TO FILE A REPLY Case #:12-cv-08333-ODW-JC Document 140 Filed 05/15/13 Page 21 of 28 Page ID #:2934 se 2:12-cv-08333-ODW-JC Document i116 Filed 04/11/13 Page 2of2 Page aaa 1 ORDER 2 On April 10, 2013, the putative John Doe in 2:12-cv-08333-DMG-PJW by 3 || and through counsel, requested leave to file a brief reply, of no more than 10 pages, 4 ||by Tuesday April 16, 2013, in response to the new information contained in the 5 ||three Responses to the Order to Show Cause filed by counsel for Paul Duffy, Prenda 6 || Law, Inc., and Angela Van Den Hemel (ECF No. 108); for Paul Hansemeier (ECF 7 || No. 109); and for John Steele (ECF No. 110). 8 For good cause shown, it is hereby ORDERED that the putative defendant’s 9 |}request for leave to file a reply of no more than ten pages by Tuesday Apri! 16, 2013 10 ||/is GRANTED. 1 SO ORDERED. =a : - Shyer 13 ||Dated: April 11, 2013 By: 14 Hon. Otis D. Wright, II United States District Judge -2- [PROPOSED] ORDER GRANTING REQUEST FOR LEAVE TO FILE A REPLY Case 2:12-cv-08333-ODW-JC Document 140 Filed 05/15/13 Page 22 of 28 Page ID #:2935 EXHIBIT C Case No.: 2:12-cv-08333-ODW-JC Dkt. Entry 86 Oo fo NN DH HW FF Ww NY 2:12-cv-08333-ODW-JC Document 86 Filed 03/14/13 Page lof 3 Page ID #:213 wea Siento Document 140 Filed 05/15/13 Page 23 of 28 Pape ID gee UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA INGENUITY 13 LLC, Case Nos, 2:12-cv-8333-ODW(JCx) Plaintiff, ORDER v. JOHN DOE, Defendant. The Court has received the Ex Parte Application filed on behalf of John Steele, Paul Hansmeier, Paul Duffy, and Angela Van Den Hemel, requesting the Court to withdraw its March 5, 2013 Order requiring their attendance on March 11, 2013. Based on the papers filed and the evidence presented during the March 11, 2013 hearing, the Court concludes there is at least specific jurisdiction over these persons because of their pecuniary interest and active, albeit clandestine participation in these cases. Not only does the Ex Parte Application lack merit, its eleventh-hour filing exemplifies gamesmanship. Accordingly, the Ex Parte Application is DENIED. The March 11, 2013 hearing raised questions concerning acts performed by other persons related to Prenda Law, Inc., Steele Hansmeier PLLC, Livewire Holdings LLC, AF Holdings LLC, Ingenuity 13 LLC, and 6881 Forensics, LLC. The evidence presented suggests these persons may be culpable for the sanctionable conduct explained in the Court’s February 7, 2013 Order to Show Cause, which the Court previously attributed to Brett Gibbs only. Further, it appears that these persons, and = ow mn Dw BF WwW NY 2:12-cv-08333-ODW-JC Document 86 Filed 03/14/13 Page 2of3 Page ID #:2134 Sa Sidertes Son Document 140 Filed 05/15/13 Page 24 of 28 Page ID #:2937 a their related entities, may have defrauded the Court through their acts and representations in these cases. Thus, the Court amends its February 7, 2013 Order to Show Cause (ECF No. 48) to include sanctions against the persons and entities in subparagraphs a—m below: a) b) c) d) ) f) g) h) i) aD) k) ) m) John Steele, of Steele Hansmeier PLLC, Prenda Law, Inc., and/or Livewire Holdings LLC; Paul Hansmeier, of Steele Hansmeier PLLC and/or Livewire Holdings LLC; Paul Duffy, of Prenda Law, Inc.; Angela Van Den Hemel, of Prenda Law, Inc.; Mark Lutz, of Prenda Law, Inc., AF Holdings LLC and/or Ingenuity 13 LLC; Alan Cooper, of AF Holdings LLC; Peter Hansemeier, of 6881 Forensics, LLC; Prenda Law, Inc.; Livewire Holdings LLC; Steele Hansmeier PLLC; AF Holdings LLC; Ingenuity 13 LLC; and 6881 Forensics, LLC. These persons and entities are ORDERED to appear on March 29, 2013, at 10:30 a.m., TO SHOW CAUSE for the following: )) 2) Why they should not be sanctioned for their participation, direction, and execution of the acts described in the Court’s February 7, 2013 Order to Show Cause; Why they should not be sanctioned for failing to notify the Court of all parties that have a financial interest in the outcome of litigation; Case 2:1P-cv-08333-ODW-JC Document 140 Filed 05/15/13 Page 25 of 28 Page ID #:2938 Ca Oo oN DH HH fF W NY Se ose Se Se BR BW NHN S&S O&O 15 2:12-cv-08333-ODW-JC Document 86 Filed 03/14/13 Page 30f3 Page [D #2135 3) Why they should not be sanctioned for defrauding the Court by misrepresenting the nature and relationship of the individuals and entities in subparagraphs a—m above; 4) | Why John Steele and Paul Hansmeier should not be sanctioned for failing to make a pro hac vice appearance before the Court, given their involvement as “senior attorneys” in the cases; and 5) Why the individuals in subparagraphs a-g above should not be sanctioned for contravening the Court’s March 5, 2013 Order (ECF No. 66) and failing to appear on March 11, 2013. Gibbs is ORDERED to serve a copy of this order on the persons and entities in subparagraphs a—m above by March 15, 2013, and must file proofs of service with the Court by March 18, 2013. Gibbs is further ORDERED to appear on March 29, 2013, at 10:30 a.m. No other parties are required to appear on March 29, 2013. If so desired, Morgan E. Pietz and Nicholas R. Ranallo may appear on behalf of Defendant Doe. Should the persons and entities in subparagraphs a-m above not appear on March 29, 2013, the Court is prepared to draw reasonable inferences concerning their conduct in the cases before the Court, including any inferences derived from their failure to appear. Failure to comply with this order will result in the imposition of sanctions. IT IS SO ORDERED. March 14, 2013 Case 2:12-cv-08333-ODW-JC Document 140 Filed 05/15/13 Page 26 of 28 Page ID #:2939 EXHIBIT D Case No.: 2:12-cv-08333-ODW-JC Dkt. Entry 66 Case 2: Ca: 0 Oo KN DH HR SF WN wb NM NN NN YD SF Se SF FP Se Pe Re Re SS Rex Ra RP BS SF 5S Owe ADAH RH KH KH CO 2-cv-08333-ODW-JC Document 140 Filed 05/15/13 Page 27 of 28 Page Lt Ls 2940 2:12-cv-08333-ODW-JC Document 66 Filed 03/05/13 Page 1of2 Page ID #1 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA INGENUITY 13 LLC, Case Nos. 2:12-cv-8333-OD W(JCx) Plaintiff, ORDER v. JOHN DOE, Defendant. In light of the parties’ recent representations made in response to the Court’s Order to Show Cause, the Court hereby orders the following: 1) The following persons are hereby ORDERED to appear on March 11, 2013, at 1:30 p.m.: a) John Steele, of Steele Hansmeier PLLC and/or Livewire Holdings LLC; b) Paul Hansmeier, of Steele Hansmeier PLLC and/or Livewire Holdings LLC; c) Paul Duffy, of Prenda Law, Inc., d) Angela Van Den Hemel, of Prenda Law, Inc.; e) Mark Lutz, CEO of AF Holdings LLC and Ingenuity 13 LLC; f) Alan Cooper, of AF Holdings LLC; g) Peter Hansemeier of 6881 Forensics, LLC; and h) Alan Cooper, of 2170 Highway 47 North, Isle, MN 56342. Case 2:42-cv-08333-ODW-JC Document 140 Filed 05/15/13 Page 28 of 28 Page ID #:2941 Cage 2:12-cv-08333-ODW-JC Document 66 Filed 03/05/13 Page 2 of 2 Page ID #1293 1 2) Brett L. Gibbs is hereby ORDERED to serve a copy of this order on the 211 persons in subparagraphs a-g above by March 7, 2013. 3 3) Morgan E. Pietz is hereby ORDERED to serve a copy of this order on 4 |) the person in subparagraph h above by March 7, 2013. 5 IT IS SO ORDERED. 6 March 5, 2013 7 8 9