According to NBC News and The Wall Street Journal,  a Minnesota Federal grand jury indicted lawyers Paul Hansmeier and John Steele of trying to extort money from victims who uploaded X-rated files to file-sharing sites

Basically the shakedown stared by getting the internet addresses of the people that downloaded the X-rated movies.  Once they had the internet addresses they would file a copyright infringement lawsuit against “John Does" to obtain the names of their victims.  With the names the attorneys would then contact the victims and then demand a settlement to prevent the litigation from proceeding.  To induce them to settle they would typically demand a $4000 settlement to prevent exposing them for downloaded the X-rated material.

Prosecutors alleged the lawyers repeatedly mislead the federal and state courts on many topics, including their ownership of the companies holding the copyrights, their role in uploading the movies to file-sharing websites, and the way some people were able to download the movies.

The lawyers had started out by offering to represent sex film makers against pirated video.  But eventually decided they could make more money without a client and started to produce their own porn movies to place on web sharing sites.  They started their own company, called Guava, and even claimed that their movies had been “hacked” and uploaded to the filing sharing sites without their permission.

They never had intended to go ahead with the litigation because to do so would have revealed that they themselves had uploaded the movies to the file-sharing sites. 

It is alleged that their scheme brought in over $6 million until it was recently shut down.

The pair’s law firm Prenda Law, has been shut down and Hansmeier & Steele were both arrested Friday.

If one is looking for an example of a "deliberate act" that is likely excluded from an Attorney Malpractice Insurance Policy this would be it.

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