“An Unrelenting Readiness”: Minnesota Disbars Porn Troll

The Minnesota Supreme Court has ordered the disbarment of an attorney for misconduct in his personal bankruptcy 

Paul Hansmeier was admitted to the practice of law in Minnesota in 2007. In September 2016, Hansmeier was indefinitely suspended from the practice of law with no right to petition for 4 years. In re Hansmeier, 884 N.W.2d 863, 863 (Minn. 2016) (order). He was suspended for his misconduct in four civil matters arising out of a porn fraud scheme he began in 2011.  As relevant here, Hansmeier’s misconduct included making misrepresentations to tribunals, making false statements in legal documents and during legal proceedings, transferring funds to avoid paying sanctions, and perpetrating a fraud upon the court. Id. Hansmeier remains suspended.

The case before us involves misconduct related to Hansmeier’s personal bankruptcy. In July 2015, Hansmeier filed a Chapter 13 voluntary petition for bankruptcy. His filings included schedules A–J and a statement of financial affairs, which he signed as true and correct under penalty of perjury. He also submitted a Chapter 13 plan.

Four months later, the U.S. bankruptcy trustee filed a motion to convert the bankruptcy from Chapter 13 to Chapter 7 based on Hansmeier’s alleged bad faith and failure to propose a confirmable plan. On December 3, 2015, the bankruptcy court granted the motion.

The United States Attorney for the District of Minnesota had this press release on his unrelated criminal sentencing

According to his guilty plea and documents filed in court, between 2011 and 2014, HANSMEIER and STEELE, both practicing lawyers, executed a scheme to obtain millions of dollars by threatening copyright lawsuits against individuals who allegedly downloaded pornographic movies from file-sharing websites. HANSMEIER admitted in court during his plea that he and STEELE created a series of sham entities, which he and STEELE surreptitiously controlled, to obtain copyrights to pornographic movies – some of which they filmed themselves – and then uploaded those movies to file-sharing websites like “The Pirate Bay” in order to lure people to download the movies. The defendants then filed bogus copyright infringement lawsuits that concealed both their role in distributing the movies, and their personal stake in the outcome of the litigation. After filing the lawsuits, HANSMEIER and STEELE gained authority from the courts to subpoena internet service providers (“ISPs”) for identification information of the subscriber who controlled the IP address used to download the movie. With that information, the defendants used extortionate tactics such as letters and phone calls to threaten victims with enormous financial penalties and public embarrassment unless they agreed to pay a $3,000 settlement fee.

Here, he was charged with a number of false statements and omissions 

The referee concluded that “[t]he Director has prove[n] by clear and convincing evidence that the Respondent made knowingly false statements and omissions in his personal bankruptcy matter in violation of Rule[s] 8.4(c) and (d), [Minnesota Rules of Professional Conduct].” Based on these violations, six aggravating factors, and no mitigating factors, the referee recommended disbarment.

Sanction

An attorney’s lack of remorse may also be used as an aggravating factor. In re Rebeau, 787 N.W.2d 168, 176 (Minn. 2010). The referee found, and the record confirms, that Hansmeier exhibited no remorse and did not accept responsibility for his misconduct. In fact, one of his asserted affirmative defenses before the referee was his good faith reliance on the advice of his bankruptcy counsel. That very same counsel had withdrawn from representing Hansmeier in his bankruptcy appeal because she claimed her obligation of truthfulness to the court clashed with her obligations to Hansmeier, her client.

…Hansmeier, like the attorney in Graham, has shown an unrelenting readiness to engage in intentional misconduct for his own personal gain. Hansmeier’s multi-year  history of misconduct is defined by “dishonesty, fraud, deceit, [and] misrepresentation. ” Minn. R. Prof. Conduct 8.4(c). He has been disciplined by this court, has had civil sanctions entered against him, and has been convicted of federal crimes. Hansmeier’s misconduct in the current disciplinary action is merely the latest in a long series of attempts to escape the consequences of his actions and to abuse the very legal system he swore to uphold. Hansmeier’s misconduct is prejudicial to, and is truly the antithesis of, the administration of justice. See Minn. R. Prof. Conduct 8.4(d) (stating that it is professional misconduct for a lawyer to “engage in conduct that is prejudicial to the administration of justice”). We conclude that, in light of Hansmeier’s serious misconduct, the appropriate discipline is disbarment.

The Minnesota Lawyer covered the oral argument before the court. (Mike Frisch)