FBI investigating attorney Paul Hansmeier's disability-access lawsuits

Paul Hansmeier, the Minnesota lawyer indicted this month for allegedly operating a fraudulent multimillion-dollar porn-trolling scheme, is also under investigation by the FBI in relation to his practice of filing scores of disability-access lawsuits, according to documents filed Wednesday in federal court.

An attorney representing Hansmeier's former client Eric Wong, of Minneapolis, revealed the new allegations in a motion to oppose a legal settlement in a disability-access case. Wong, through his attorney, alleged that his fellow plaintiff and one-time finance director of the nonprofit Disability Support Alliance (DSA), Scott Smith, had cut him out of negotiations in a 2015 lawsuit that Smith had settled with CCRE, which runs Cedar Cliff Shopping Center in Eagan.

Jennifer L. Urban, an attorney for DSA, said in court filings that the nonprofit was a victim of a crime perpetrated by Smith and Hansmeier, his former attorney.

Urban wrote that the DSA filed criminal complaints with the Burnsville Police Department against Smith and another former DSA director, Aaron Dalton, over a series of cash withdrawals earlier this year. A Burnsville detective helped DSA retrieve $4,400 that Dalton was captured on camera taking out of an ATM but was unable to recover $6,900 withdrawn by Smith, Urban said.

The FBI, meanwhile, notified Urban in October that DSA was a possible victim of a federal crime. She wrote Wednesday that DSA is "cooperating with the ongoing federal criminal investigation/prosecution of Paul Hansmeier."

A grand jury indicted Hansmeier and his former Prenda Law colleague John Steele earlier this month in a multimillion-fraud and extortion conspiracy that allegedly involved hundreds of fraudulent porn copyright-trolling lawsuits. According to charges, the pair and other unnamed co-conspirators even recorded their own porn films and later made them available on file-sharing websites only to later target users for litigation.

The controversies surrounding the porn trolling cases led Hansmeier to drop that line of business. Instead, he began suing mostly small businesses for allegedly failing to comply with the Americans with Disabilities Act accessibility rules. He filed more than 100 such lawsuits in Minnesota, reaping minor settlements from defendants who said it would cost too much to fight in court.

The Minnesota Supreme Court suspended Hansmeier's law license in September over ethics violations related to the porn-trolling scheme and his attempts to deceive the courts. His wife, Padraigin Browne, picked up his pending disability access lawsuits — including the CCRE federal suit — and has since filed a number of her own. Browne declined to comment Wednesday for this story.

DSA Board Chair Eric Wong hired Urban's firm late last year, partly to investigate suspected internal theft. The investigation revealed the theft by Smith and Dalton but also that Hansmeier helped four DSA directors — Smith, Dalton, Zachary Hillesheim and Melanie Davis — steal settlement proceeds from litigation efforts, according to Urban.

She said the investigation also revealed that Hansmeier got $312,218 — more than 70 percent of the revenue generated by DSA litigation — from July 2014 to June 2016 despite never litigating a case to a verdict and being awarded attorney's fees or invoicing DSA for payment.

"DSA is a nonprofit corporation that has a legitimate and charitable purpose to benefit the community," Urban said. "However, it is incredibly unfortunate that the acts of five people have polluted its name and good works, and have ransacked and pillaged the nonprofit's assets for personal gain."

Attorneys for Smith and CCRE LLC are scheduled to present their motion to dismiss the case at a Feb. 9 hearing before Senior U.S. District Judge Michael Davis in Minneapolis.

Stephen Montemayor • 612-673-1755

Twitter: @smontemayor