It’s not been a good year for Paul Hansmeier, the Prenda attorney-turned-“ADA Champion”. He’s been hit with counter-claims on his Americans with Disabilities Act (ADA) lawsuits which claim thousands in damages from local companies despite no actual issues. This was followed in May by an appeal hearing on Judge Wright’s infamous Star Trek order where after summing up the Prenda business model 9th circuit Appeals Judge Pregerson called it an “Ingenious crooked extortionate operation”.
Then in August, one of the three central figures in the Prenda saga, Paul Duffy, died, moving the focus more squarely onto Hansmeier and Steele. Finally, just over two weeks ago, the Minnesota Law Board started proceedings to disbar him, meaning his ability to continue as a lawyer at all would be in jeopardy.
Amongst all that, in July Hansmeier filed for Chapter 13 bankruptcy (RECAP docket), seeking to repay his debts (many of which are damages and costs from various Prenda cases nationwide) totalling $2.43Million (€2.23M, or £1.6M) via instalments. Under US Bankruptcy law, a person owed money by someone in Chapter 13 proceedings cannot start or continue collection proceedings, so for Hansmeier, it would have been a neat way to push payment of these debts down the road, while paying them off at a fraction of their value. (His proposed plan would have paid off a maximum of $161,400 in monthly instalments of $2,690 across 5 years legal maximum at which point all debts would be discharged and considered paid)
However, petitions by the creditors (those who are owed money) pointed out in motions leading up to a December 3rd hearing at the United States Bankruptcy Court for the District of Minnesota that He had shown he was not trustworthy. “The argument that somehow there’s going to be a payment in full, your honor, just doesn’t ring true,” Michael R Fadlovich, the attorney representing the Bankruptcy Trustee is reported to have said.
Even Hansmeier’s lawyer admitted “he’s a bad actor”, but claimed “he’d found Jesus”, although given the number of Doe’s filed against, it’s entirely possible Jesus was found by their speculative invoice letters. She also claimed that the sale of Hansmeier’s downtown Mineapolis condo for $1.2M would have provided a rare chance to have his debts mostly paid off, despite figures submitted by the trustee that indicate less than $90,000 would be realised by the sale
Nevertheless, U.S. Bankruptcy Judge Kathleen H. Sanberg was not swayed, converting the proceedings from Chapter 13 to Chapter 7, and requiring a liquidation of assets to pay, while any money left from the sale of the condo goes towards the debt fund. However, the court is not yet finished with Hansmeier. Numerous lawyers (representing creditors) highlighted a number of suspicious money transfers, possibly to hide assets, as other judges have already discovered. At issue was his constant dishonesty with courts, in this proceeding and others, which the judge sided with. While further actions are coming, Hansmeier has to now be very careful, as bankruptcy fraud is an imprisonable offence, and investigated by the FBI who are presumably already well aware of Mr Hansmeier courtesy of Judge Wright.
It seems that Hansmeier’s ‘luck’ has just about run out.