Paul Hansmeier should be disbarred, the Lawyers Professional Responsibility Board told the Supreme Court in a new petition filed while Hansmeier is still under suspension from a 2016 order.
Hansmeier, you may recall, is Minnesota’s infamous porn troll who, with other lawyers, schemed to get people to download porn and then threatened to sue them for doing so. He and his law partner then talked them into settlements of these fake lawsuits. Eventually, courts across the country caught on and began to sanction him and assess attorney’s fees.
His failure to pay the sanctions and fees is part of the current petition, which centers on Hansmeier’s Chapter 13 bankruptcy filed in July 2015. The lawyers board alleges that in his bankruptcy Hansmeier knowingly made false and misleading statements and omissions of material fact.
For instance, Hansmeier was the grantor to The Mill Trust, of which his spouse was the trustee, which was used to support the couple and their family. The trust was funded by contributions from Hansmeier and entities where he held an interest. The bankruptcy did not disclose the existence of the trust.
Hansmeier also incorporated an entity called Monyet, of which The Mill Trust was a member. He transferred more than $500,000 out of the Monyet brokerage account but never disclosed it on the bankruptcy.
He claimed that his monthly household living expenses were $10,000 per month but also told the court that his spouse pays all the household expenses. One of those two sentences was false, the board alleged. He failed to disclose the sale of his home for $1.2 million although he told the court its value was $885,000. After he moved he failed to correct his living expenses.
In December 2015, the court converted the petition to a Chapter 7, finding that Hansmeier had a “pattern and practice of being untruthful with the courts in this bankruptcy case.” Hansmeier appealed and the 8th Circuit bankruptcy appellate panel affirmed.
Second petition ‘not unusual’
Hansmeier will not be charged with a crime for his actions in bankruptcy court. That’s because on Aug. 17, he pleaded guilty to two counts of wire fraud and conspiracy to commit money laundering. The prosecution agreed not to charge out any other crimes known to it, including conduct associated with Hansmeier’s bankruptcy.
The plea deal calls for a guidelines sentence but the prosecution agreed not to ask for more than 150 months. He has not been sentenced yet.
Hansmeier retains the right to appeal the District Court’s denial of his motion to dismiss the charges in the indictment against him. If he wins the appeal, he has the right to withdraw his guilty plea.
Hansmeier admitted in his plea that he and his partner made more than $3 million from porn trolling, although the U.S. attorney said it was about twice that much.
The petition for disbarment or other discipline does not address the felony charges and does not say why it was filed now, while the suspension is ongoing and the criminal matter is up in the air.
LPRB director Susan Humiston would not comment on the timing of the new petition because that would amount to discussing the case, she said. But she said that the new petition during Hansmeier’s suspension is not unusual.
A second petition during a suspension is not restricted to conduct by the lawyer during the suspension, Humiston said. “Sometimes the discipline is more of the same and sometimes it’s different,” she said.
The office evaluates everything on a case-by-case basis, Humiston said. “It’s how we approach the use of our resources.”