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Court Rules You Can’t Take Over $100,000 Out of Your Law Firm to Fake a Financial Crisis
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Paul Hansmeier

Summary: A lawyer has been accused of taking money out of his law firm and putting it into a newly created business and his personal account in order to dodge having to pay fines.

The Prenda Law copyright-trolling scheme or the porn-trolling scheme has finally reached an end. Paul Hansmeier, one of the two lawyers the created the scheme has been ordered to pay fines for trying to cover up the financial status of his firm.

  
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The case started when defendant Spencer Merkel illegally downloaded a porno movie. He was ordered to fork over $3,400 as payment for the video by Prenda Law. Merkel called the law firm Prenda Law to figure out what could be done since he did not have that kind of money lying around.

Prenda Law gave Merkel the option of handing over his computer and all the information on it in exchange for a free lawyer. This was obviously an option that Merkel took and soon after giving his computer to the firm, they started issuing subpoenas for anti-hacking claims. The firm wanted to trace the numerous ISPs to find other customers that would become the defendants “co-conspirators.”

Prenda Law’s actions were eventually exposed and subjected to sanctions that caused the firm to fall apart. The firm as well as Hansmeier’s Alpha Law Firm were sanctioned $64,000. The Alpha Law Firm was found to be another conspirator to the fraud being imposed on the courts.

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When Hansmeier realized that he was about to be exposed and his firm would be sanctioned, he moved $65,970 to his new company Class Action Justice Institute. Once the order was issued, Hansmeier took another $80,000 and put it into his personal account.

The court ruled “Hansmeier abused the corporate-liability shield to avoid paying sanctions in a bad-faith lawsuit for which he was repsonbile.”



Source: http://arstechnica.com/tech-policy/2015/08/appeals-court-prenda-lawyer-who-drained-cash-from-his-law-firm-must-pay-up/

Photo: madisonrecord.com



 

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