Case 3:12-cv-00889-DRH-SCW Document 156 Filed 04/21/14 Page 1 of 17 Page ID #3551UNITED STATES DISTRICT COURTFOR THE SOUTHERN DISTRICT OF ILLINOISLIGHSPEED MEDIA CORP.,Plaintiff,v.Civil No. 3:12-cv-889-DRH-SCWANTHONY SMITH, et al.,Defendants.JOHN STEELE’S MEMORANDUM IN OPPOSITION TO ANTHONYSMITH’S RENEWED MOTION FOR CONTEMPTI.INTRODUCTIONAnthony Smith’s renewed contempt motion1, like the rest of the pleadingsfiled by his law firm, Booth and Sweet (“Booth”) is full of wild and bizarreallegations, none of which have any basis in fact. Thankfully, a detailed response toeach and every unfounded and completely unsupported allegation is unnecessary.Steele has posted the Supersedeas bond, and Counsel for Defendant’s dream ofseizing Steele’s assets are no longer even remotely appropriate.2 To the extentBooth’s motion claims that Steele was untruthful to this Court and had the abilityto pay, they utterly fail to support this unfounded assertion.Some unsubstantiated, and never proven, claims including the lie that Steelehas an ownership interest in Prenda Law are now before this Court due to the most                                                                                                                        Steele believes that Mr. Smith has nothing to do with Booth’s efforts to essentiallycreate a law practice out of filing serial sanction motions.1Steele feels relieved that at least Booth did not ask for his incarceration like theydid recently in a Massachusetts court. Fortunately, the judge in that matter deniedBooth’s absurd request.2Case 3:12-cv-00889-DRH-SCW Document 156 Filed 04/21/14 Page 2 of 17 Page ID #3552recent (but surely not last) motion for sanctions from Booth. For example, sinceSteele has never had an ownership interest in Prenda Law, he cannot discussmysterious, and as-of-yet-unauthenticated documents from Brett Gibbs.Much of the documentation provided by Booth has nothing to do with Steele.The documents that do pertain to Steele, such as his claim to have made $900,000in 2011 is true, and completely irrelevant. Steele could have been a billionaire in2011. The question before this Court however, is not whether Steele has ever mademoney. Nor is the question did Steele create overseas accounts.3 The simplequestion that Booth has the burden of proving is whether Steele personally hadsufficient assets sufficient in November 2013 to pay $261,000. The truth is thatSteele did not. Booth has not furnished a single document that contradicts Steele’sassertions. This is a common theme with filings by Booth, who also cavalierlyassert that Steele owns Prenda Law, AF Holdings, Ingenuity 13, and severalentities that Steele has never even heard of. Having dealt with Booth in othercases, he is aware that the lack of evidence has never prevented them taking a fact,such as Steele and his siblings receiving $2.1 million from his father’s estate, andcreating a fantastical story that has no relationship with the truth. Furthermore,Booth has turned completely legal actions performed by Steele, such as subscribingto the website www.sovereignman.com, into ipso facto proof that Steele has movedmoney overseas, committed widespread perjury, and has somehow induced others tocommit widespread perjury. For this Court to believe Booth, it must also find that                                                                                                                        3Steele adamantly denies ever creating an offshore financial account of any sort.2    Case 3:12-cv-00889-DRH-SCW Document 156 Filed 04/21/14 Page 3 of 17 Page ID #3553the actual owner of Prenda Law—Paul Duffy—committed perjury when he swore hewas its owner. Steele would have also had to convince Steve Lightspeed—the ownerof the Plaintiff Lightspeed Media—to appear in this Court and lie to Judge Murphy.And for all their discovery efforts, Booth has been able to show a grand sun of $2000being sent overseas three years ago. This would be comical, if not for the pain andtrouble Booth has caused to Steele and his family.Steele unequivocally denies ever having created an offshore account of anysort at any time in his life. Period. Either Steele is committing perjury, lying tomultiple federal judges, and committing widespread tax fraud, or Booth hasengaged in sanctionable misrepresentations. Alleging that Steele has offshoreaccounts, regardless of the excessive use of hyperbole and scary adjectives, does notchange the fact that no evidence of any offshore accounts related to Steele has everbeen presented in any court ever.For this Court to find any act of Prenda should be attributed to Steele, theCourt would have to believe that Steele lied to multiple federal judges withoutgetting caught, committed massive tax fraud without the IRS finding out, andproactively broke into the Illinois Secretary of State’s corporate records database tohide his ownership of Prenda Law, all because of the remote chance that years latera federal judge might sanction Prenda Law for $261,000. It is patently unfair, andcontrary to established case law as discussed extensively in the Hansmeierresponse, for Steele to bear the burden of proving a negative. Especially considering3    Case 3:12-cv-00889-DRH-SCW Document 156 Filed 04/21/14 Page 4 of 17 Page ID #3554that Booth has yet to even establish that Steele had the ability to pay $261,000 inNovember 2013, that Steele lied to this Court, or that Steele owns Prenda Law.In short, Steele has done nothing warranting a further contempt finding, letalone the illegitimate forms of relief requested in Smith’s motion—most of whichare, in any event, moot due to the recent stay of the contempt order. As isdemonstrated below, Smith’s speculation rests on selected facts put into falsecontexts, with Booth withholding facts that do not fit in with their conspiracytheories. Smith’s renewed motion is the very definition of baselessness. It should bedenied.II.BACKGROUNDSteele and his partner, Paul Hansmeier (”Hansmeier”) were early pioneers incatching thieves and hackers who engaged in stealing copyrighted works and othercomputer related misdeeds, including computer hacking and copyrightinfringement. From 2010 until November 2011, Steele Hansmeier PLLC,represented various copyright holders in suits against individuals they hadobtained evidence against using the same methods that the FBI utilizes to catchpirates and hackers. In November 2012, Steele and Hansmeier transferred its bookof clients to a new law firm named Prenda Law, Inc. recently created by Paul Duffy.Mr. Duffy is an Illinois attorney who had known Steele for several years.During an approximately six-month transition period, Steele assisted Mr.Duffy as he implemented a system to pursue pirates. At several times during thistransition, Steele assisted Prenda Law by appearing at a handful of oral arguments,4    Case 3:12-cv-00889-DRH-SCW Document 156 Filed 04/21/14 Page 5 of 17 Page ID #3555mostly during a time that Mr. Duffy was recovering from eye surgery. Steelemoved to the State of Florida in the summer of 2011, and rarely returned to Illinois.Steele’s law license is not active, as he has not engaged in the regular practice oflaw in years.This Court held a hearing in February 2014 regarding Booth’s first (butcertainly not last) motion for contempt. At the hearing, Steele, Hansmeier, andDuffy were all ordered to prepare and submit financial statements prepared by alicensed CPA within 7 days. At the hearing, no reference was made to the GAAP,the Generally Accepted Accounting Rules, a set of standards designed for thefinancial reporting of corporations, not individuals. Steele submitted his financialstatement as directed. Steele’s submissions were accurate, and no filing since hasdisproved any aspect of Steele’s statement.Having engaged in a discovery effort that would be fairly described as “veryexpansive”, Booth subpoenaed an untold number of third party deponents,accompanying his requests to these third parties with inappropriate andunsubstantiated statements regarding Steele. As a result of this effort, Boothsubmitted 180 pages of financial records that also do not contradict Steele’sfinancial statement, or support the proposition that Steele could have personallypaid $261,000 in November 2013.5    Case 3:12-cv-00889-DRH-SCW Document 156 Filed 04/21/14 Page 6 of 17 Page ID #3556III.ARGUMENTA.Legal StandardSmith bears the burden to prove by clear and convincing evidence that Steeleis in contempt. FTC v. Trudeau, 579 F.3d 754, 763 (7th Cir. 2009); Goluba v. SchoolDistrict of Ripon, 45 F.3d 1035, 1037 (7th Cir. 1995). Clear and convincing evidenceis a high standard: Smith must “leave[] no reasonable doubt in the mind of the trierof fact as to the truth of the proposition[s] in question.” As the Supreme Court hasobserved, “clear and convincing evidence” is “evidence so clear, direct and weightyand convincing as to enable [the factfinder] to come to a clear conviction, withouthesitancy, of the truth of the precise facts in issue.” Cruzan by Cruzan v. Director,Mo. Dept. of Health, 497 U.S. 261, 285 n.11 (1990).Steele incorporates Hansmeier’s Memorandum in response to Booth’srenewed Motion. In addition, Steele supplemts the record with the followingresponse to allegations made regarding Steele personally.B. Argument1. Steele claims his income in 2011 was $900,000This is completely true. In fact, Steele believes he earned slightly more thanthat in 2011. And, since Steele has properly reported all of his income since hestarted working at age 16, Steele’s 2011 tax return properly reflects that income,and Steele paid his proper taxes on that income. Steele has no idea why what heearned in 2011 is relevant to his ability to pay in 2013. This Court itself has taken6    Case 3:12-cv-00889-DRH-SCW Document 156 Filed 04/21/14 Page 7 of 17 Page ID #3557judicial notice that Steele had to contribute to a $250,000 bond in California in2013, thus decreasing his available assets.2. Steele had $2,177,005.27 wired into his account anddistributed that funds soon thereafter.Steele would hope this Court takes a critical look at this ‘smoking gun’, inwhich Booth breathlessly claims a mysterious $2.1 million dollars was movedaround various accounts by Steele. The money in question resulted from Steele’sdeceased father’s estate, which had recently sold a company owned by Steele’sfather for over 20 years. The money was deposited into Steele’s personal account,and Steele transferred it into an IOLTA account shortly thereafter. The reasonSteele preferred to keep the money in an IOLTA account is because he was onlyentitled to 1/3 of that money. His two siblings were the beneficiaries of the other2/3’s of the money. Booth knows this since the wire instructions list Steele’ssiblings on the transfer. But in keeping with their standard practice, Booth cherrypicks facts, failing to mention anything that contradicts their latest conspiracytheory. Attached as Exhibit ‘A’ is a letter from Attorney Steven Prebish of the lawfirm Patzik, Frank, & Samotny Ltd regarding the transfer. Steele believes thatBooth is well aware of the innocuous nature of this money as banking records showwhere the money went to. Booth intentionally fails to disclose facts such as theoutgoing wires show they went to family members, and instead misleads this Courtinto assuming something nefarious is afoot.7    Case 3:12-cv-00889-DRH-SCW Document 156 Filed 04/21/14 Page 8 of 17 Page ID #35583. Prenda’s payment of $5000 in 2012 to another law firm is notrelevant to any of the questions before this Court.There are many logical flaws in connecting a $5000 payment made by a lawfirm Steele does not own to a sanctions order that came out against Steele over ayear later. Assuming for a moment that Steele owns Prenda—which he does not—and that Steele issued a $5000 payment to a law firm. Steele fails to see any logicalconnection between a legal payment made to a law firm in 2012 to Steele’s ability topay $261,000 in November 2013. Despite the breathless exclamation andhyperbole, there is no evidence that Prenda Law, Paul Hansmeier, Paul Duffy, orJohn Steele ever transferred any funds overseas between November 2013 andpresent. That is because Steele did not. In fact, Steele cannot remember a singleperson, or company, that he knows transferring money overseas in 2013 or 2014.4. There were a total of $4.4 Million dollars in settlementmonies paid out to Steele Hansmeier, Prenda, and LivewireHoldings.Steele will assume Booth is correct in this statement, and adds that itactually hurts their ‘theory’. First, Steele does not own Prenda Law, or LivewireHoldings. Second, Steele would submit to the Court that it is pretty standardpractice for a litigation firm such as Steele Hansmeier to receive settlements.Surely, Booth does not argue that every law firm who receives settlement funds intotheir IOLTA account is doing anything unethical. Second, all the funds mentionedby Booth are prior to the sanction in this case. Lastly, Steele openly admits that he8    Case 3:12-cv-00889-DRH-SCW Document 156 Filed 04/21/14 Page 9 of 17 Page ID #3559received a contingency fee for legal work he performed while an attorney at SteeleHansmeier in 2010 and 2011. Every dollar paid to Steele was declared on his 2010and 2011 tax returns. While an attorney earning legal fees by actually helpingclients and not relying on the serial filing of sanction motions may seem strange toBooth, Steele submits that his contingency fees are a standard industry practice.5.Steele legally opened up multiple bank accounts.Steele is unsure how to respond to this accusation. Steele is a U.S. citizenand is aware of no case law that suggests he is prevented from opening—orclosing—a bank account. Steele never lied an any forms, or committed any illegalact by opening or closing any account. In fact, Steele strongly argues that the veryfact that he openly used U.S. banks and provided his Social Security number andidentification when opening any of his accounts, that his behavior shows he was nottrying to hide accounts or money. It simply belies logic that a person trying to hidemoney overseas would open a bank account at a U.S. Bank with his own socialsecurity number.6.Steele transferred money between several bankaccounts he had two years before this case started.Steele completely agrees with the facts asserted by Booth, but is not surewhat relevance they have to the legal question before this Court. In fact, Steele hasopened and transferred money between various accounts for decades, and believesthis to be a legal act. Furthermore, Steele fully asserts his right to open bankaccounts in the future, and transfer his money in or out of them as he sees fit.9    Case 3:12-cv-00889-DRH-SCW Document 156 Filed 04/21/14 Page 10 of 17 Page ID #3560Steele could have opened 1000 bank accounts in the same day, and his position isthat such acts are perfectly legal.7.Steele is a signatory on accounts at Fifth Thirdbank.Steele agrees this is true. Steele also has made clear on many occasions thathe assisted Mr. Duffy during an initial transition period, and afterwards as neededto assist Mr. Duffy. Steele never signed any checks or used his signature in anyway with the accounts in question. Booth clearly knows that Steele never wrote acheck or made a deposit, since Steele’s name is not any actual transactionaldocuments. But Booth intentionally leaves out that critical fact, and allows thisCourt to incorrectly infer a relationship that is not supported by the facts or therecord. Steele would add that even if he did sign all the checks for Prenda and wasthe only person who every dealt with the accounts in question—which is not thecase—such a fact would not show that Steele could pay $261,000 in November of2013. Most law firms have an accountant who has signing authority, and Steele isnot aware of any case law that would hold a law firm’s accountant is suddenly theowner of a law firm if they have signing authority to write checks.8.Steele paid for a subscription to Sovereign Man.Like several of Booth’s initial factual claims, this statement is true.However, as is the case with much of Booth’s allegations, they begin with aninnocuous fact, invent a conclusion that fits their agenda, and then hides relevantfacts from the Court. Steele is aware of no case law that makes it illegal for10    Case 3:12-cv-00889-DRH-SCW Document 156 Filed 04/21/14 Page 11 of 17 Page ID #3561someone to sign up for emails from the Sovereign Man website. Steele never readan article regarding Latvia, and has never heard of Peter Gage Morris or OberHaus Real Estate Advisors. Booth is claiming that because Steele signed up for aone-year subscription to Sovereign Man, he must have offshore accounts in Latvia.9. Steele set up an email on Countermail.Steele agrees wholeheartedly with the claim by Booth that he opened anemail account with a service called Countermail. This was done largely because ofBooth and the type of clients that Booth represents. Steele has been the subject ofmultiple identity theft attempts, and numerous attempts by hackers and pirates tosteal personal information from Steele. Indeed, during the pendency of this lawsuitPrenda Law’s website was hacked into, presumably by Smith or one of hiscoconspirators (notwithstanding Smith’s unsigned declaration that was an innocentactor in this case). Indeed, as recently as yesterday Steele understands that the email account of an anti-piracy attorney was hacked into and his e-mails were stolen.Steele is not aware of any case law that supports the position that using CounterMail is illegal. Steele asserts that he has an absolute right to use any emailprovider he chooses. And since Booth makes a regular habit out of filing pleadingsand issuing subpoenas without proper notice to Steele, it is only prudent for Steeleprotect his personal information as best he can.10. Ingenuity 13, LLC and the unverified documents thatBrett Gibbs has given to Booth.11    Case 3:12-cv-00889-DRH-SCW Document 156 Filed 04/21/14 Page 12 of 17 Page ID #3562Any payments received by Steele in 2011 through 2013 are clearly outlined inSteele’s bank statements and reported as income by Steele for tax purposes. Itappears that Mr. Gibbs created some accounting sheet of Prenda Law finances forsome period of time prior to this case, and thus is irrelevant. Steele has no personalknowledge of Mr. Gibbs’ accounting records, methodology, or how Mr. Gibbs createdhis documents. According to Mr. Gibbs himself, he doesn’t either, and claims hedoesn’t even know how his document came into existence. Such a document hardlycomports with the Federal Rules of Civil Procedure governing admissible evidence.Fortunately for this Court, and the other courts that have already thrown outBooth’s inflammatory sanction motions, none of the documents are relevant. ForMr. Gibbs to provide statements relevant to Booth’s renewed motion for sanctions,Mr. Gibbs would have to show first hand knowledge of Steele’s finances betweenNovember 2013 and present. Given that Mr. Steele has not spoken to Mr. Gibbssince shortly after he perjured himself before Judge Wright in March 2013, Mr.Gibbs could have no such knowledge of Steele.Mr. Gibbs client in the Judge Wright matter has filed an extensive barcomplaint regarding Mr. Gibbs conduct. Steele has also filed a bar complaintagainst Mr. Gibbs and was recently contacted by the California Bar requestingadditional information regarding Mr. Gibbs.B.Steele did nothing wrong in asking that the ISP’s and Boothnot publish personal information regarding Steele and hisfamily.12    Case 3:12-cv-00889-DRH-SCW Document 156 Filed 04/21/14 Page 13 of 17 Page ID #3563Steele affirmatively states that he was working on a motion for a limitedprotective order solely for the purpose protecting personal information from beingreleased as a marketing tool by Booth. Steele reached out to AT&T and Comcastasking that they not disclose any such information. In phone calls and via email,the ISP’s indicated that they would not. Steele has had past dealings with thesetwo ISP’s. Despite their differences, Steele felt reassured that the ISP’s would notmisuse any personal information they obtained. After attempting to reach out toBooth in good faith, asking them to respect his family’s privacy, it was obvious toSteele that Booth would never agree to such a courtesy.The remainder of Booth’s motion is filled with ad hominem attacks on Steele,claims unsupported by the record, and requests for this Court to freeze assets andpunish Steele in various ways. Steele has posted the bond—by receiving loans froma friend and a family member4—and thus all the extensive requests from Booth thatthis Court punish Steele for not posting a bond are moot.C.Smith Has Not Demonstrated That Steele had the ability to paythe sanctions order issued in November 2013.Booth has a pretty obvious business model. First they offer to representpirates who were caught stealing or hacking various copyright holders at no cost tothe pirate. Then they file numerous sanction motions in an effort to obtain anunearned windfall. By accusing the Plaintiff, and its attorneys of bad conduct, they                                                                                                                        Steele is fully prepared to provide proof that the funds were paid by two otherindividuals with funds that had been in their control since before this case started.Steele would ask that any proof be provided in camera. Past experience with Booth,and their pirate clients, have shown a propensity to harass anyone associated withSteele.413    Case 3:12-cv-00889-DRH-SCW Document 156 Filed 04/21/14 Page 14 of 17 Page ID #3564hope to change the court’s focus from their own client’s illegal acts to the behavior ofthe Plaintiff and their attorneys. Normally, after accusing an attorney ofwrongdoing, an opposing counsel will provide proof. Booth has a different approach.They simply double down, restate their original claim with new adjectives, addsome new unsupported claims, and demand that Steele disprove their assertions.However, if Booth really had proof of any off shore money transfers, or Steeleowning Prenda Law, they would have brought that to the various Courts a longtime ago. Unfortunately for Booth, the actual owners of the various entitles havetestified Steele has no ownership. And there is nothing in the record to show Steelecould have paid a $261,000 sanction award in November 2013.Steele has never created an account of any type whatsoever overseas. Steeleaffirmatively claims that he would not know how to create such an account. Steelehas never reported an overseas account on his tax return. A $2000 wire to Latviafrom 2011 that Steele cannot even recall is hardly the proof required of Booth toshow Steele could pay $261,000 in November 2013. Furthermore, given that norecord exists in the world that Steele has ever had an overseas account, the clearburden of proving otherwise rests on Booth. After spending untold hours obsessingover Steele’s financials, Booth was unable to find any such proof. Rather thanadmit the lack of any proof, Booth now claims that such lack of proof is proof itself!In other words, according to Booth, the fact that no proof exists of any overseaswires or accounts is proof that Steele has overseas accounts. Steele respectfullyasks this Court to hold Booth to the same standard that Judge Murphy imposed in14    Case 3:12-cv-00889-DRH-SCW Document 156 Filed 04/21/14 Page 15 of 17 Page ID #3565this Case. At least the Plaintiff in this case claimed to have actual proof ofDefendant Smith’s guilt, and came to Court with it. Booth claims that since Steelesigned up Sovereign Man in 2011, and his law firm paid someone $2000 in 2011.Therefore, Steele could pay a sanction award of $261,000 three years later. If thisCourt were to require Booth to substantiate each and every one of theirunsupported claims made in their Renewed Motion for Contempt, Steele sincerelybelieves it would be Booth paying a sanction award to Steele.Steele would like to respectfully remind this Court that notwithstanding thegratuitous referrals to bar disciplinary authorities and other investigative agencies(including referrals issued by a federal magistrate judge who was recentlyauthoritatively overruled on review), none of these agencies have attributedwrongdoing to Steele or anyone else.5Finally, Steele wishes to add that he does not believe Paul Duffy, or hiscompany Prenda Law, did anything wrong in this case. Had Steele owned PrendaLaw at any time, he would proudly inform the Court of such ownership. And ifSteele had an ownership interest in Lightspeed Media, or any of the othercompanies Booth casually accuses Steele of owning, Steele would gladly state thatpoint. Steele does not believe Lightspeed Media, nor any other company pursingBooth’s clients, did anything other than try to protect their companies from beingdevastated by computer criminals. While most courts have allowed the victims of                                                                                                                        In at least one other case in the U.S. District Court for the District ofMassachusetts, Booth added Steele’s name to a judgment in a case Steele did noteven knew existed. So Steele cannot state with certainty if there are other sanctionorders issued on an ex parte basis.515    Case 3:12-cv-00889-DRH-SCW Document 156 Filed 04/21/14 Page 16 of 17 Page ID #3566computer crime in these types of cases to present a case, Steele will be the first toadmit that the constant cries by Booth have gained traction in an extremely limitednumber of courts.III.CONCLUSIONSmith’s renewed motion for contempt is baseless, nothing but aninappropriate effort by Booth for an undeserved windfall, and should be denied.April 21, 2014/s/ John SteeleJohn Steele1111 Lincoln Road, Suite 400Miami Beach, FL 33139Johnlsteele33140@gmail.com612-466-087016    Case 3:12-cv-00889-DRH-SCW Document 156 Filed 04/21/14 Page 17 of 17 Page ID #3567CERTIFICATE OF SERVICEI hereby certify that on April 21, 2014I filed the foregoing document throughthe Court’s CM/ECF system, which will electronically serve this document on allparties of record./s/ John Steele17