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UNITED STATES DISTRICT COURTFOR THE SOUTHERN DISTRICT OF ILLINOIS

___________________________________________ LIGHTSPEED MEDIA CORPORATION, ) ) Plaintiff, ) ) v. ) Case No. 3:12-cv-00889 )ANTHONY SMITH, SBC INTERNET SERVICES, )INC., d/b/a AT&T INTERNET SERVICES; AT&T )

DEFENDANT

ANTHONY

CORPORATE REPRESENTATIVE #1; COMCAST )

SMITH’S

EX PARTE

CABLE COMMUNICATIONS, LLC, and )

RENEWED

MOTION FOR

COMCAST CORPORATE REPRESENTATIVE #1, )

CONTEMPT

) Defendants. ) ___________________________________________ ) Defendant Anthony Smith (“Smith”) submits this motion for an order holding in contempt Plaintiff’s counsel John L. Steele (“Steele”), Paul A. Duffy (“Duffy”), and Paul R. Hansmeier (“Hansmeier”) (collectively “Plaintiff’s Counsel”). After Plaintiff’s Counsel failed to comply with the Court’s sanctions order, Smith and his fellow Defendants filed a joint motion for contempt against Plaintiff’s Counsel (Dkt. No. 107; the “Contempt Motion”), and Plaintiff’s Counsel claimed they lack the means to pay, submitting certain financial records to the Court for

in camera

review. Smith has since obtained discovery showing that despite their protestations, Plaintiff’s Counsel are fully capable of paying the amounts ordered by the Court, and have acted to conceal or otherwise move assets off-shore. Therefore, Smith renews the Contempt Motion’s request for sanctions and further moves for an order against Plaintiff’s Counsel imposing additional sanctions for failing to pay as ordered; freezing their assets; sanctioning them for interfering with discovery; and granting Smith access to the financial statements they provided the Court for

in camera

review.

I. PROCEDURAL BACKGROUND

On November 27, 2013, pursuant to 28 U.S.C. § 1927, the Court ordered Plaintiff’s Counsel to pay Defendants’ attorney fees and expenses totaling $261,025.11 within 14 days. Dkt. No. 100 (“Order”). Plaintiff’s Counsel have appealed the Order,

see

Dkt. No. 102, but they concede that they have not paid the sanctions as ordered, Dkt. No. 123, and they did not move for a stay of the Order until January 29, 2014,

see

Dkt. No. 114—more than a month after the Contempt Motion was filed. In the Contempt Motion, Defendants requested that Plaintiff’s Counsel be held in contempt or ordered to show cause why they should not be, and sanctioned further for their defiance of the

Case 3:12-cv-00889-DRH-SCW Document 135 *SEALED* Filed 03/20/14 Page 1 of 15 PageID 3223

Order. Dkt. 107. Duffy and Hansmeier filed oppositions. Dkt. Nos. 111 & 113. Duffy argued that Defendants had failed to determine whether any of Plaintiff’s Counsel “has assets sufficient to comply with the judgment of the Court.” Dkt. No. 111 p. 6. Hansmeier claimed, “the quarter of a million dollars liability created by the … Order would impose a crippling financial liability on Hansmeier.” Dkt. No. 113 p. 6. Defendants filed a joint reply. Dkt. No. 119. Steele moved to stay the sanctions Order. Dkt. No. 114. Steele claimed, “[t]he quarter of a million dollars liability created by the … Order would impose a crippling financial liability on Steele.” Dkt. No. 115 p. 3.

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The Court heard argument on February 13, 2014, denied Steele’s motion to stay, and took the Contempt Motion under advisement, allowing Plaintiff’s Counsel 10 days to submit asset statements from a certified public accountant. Dkt. No. 123. Without notice to Defendants, Plaintiff’s Counsel submitted their financial records to the Court for

in camera

review. By subpoenas issued to twelve financial institutions on January 16, 2014, Smith sought post-Order discovery to ascertain facts concerning Plaintiff’s Counsel’s financial resources and their ability to pay the amount ordered.

See

Dkt. No. 116-1. Steele moved to quash the subpoenas. Dkt. No. 116. Smith filed an opposition to the motion to quash. Dkt. No. 124. The Court denied the motion to quash, noting that “Smith provides compelling reasons why the financial records of these individuals and entities were subpoenaed.” Dkt. No. 125 p. 3. Smith’s discovery efforts are ongoing; some of the financial institutions have complied with the subpoenas; new aliases for Plaintiff’s Counsel are being have been revealed; and additional financial resources have been identified.

II. EVIDENCEA.Evidence of Plaintiff’s Counsel’s finances obtained in discovery.

The financial records produced in discovery so far give evidence that Plaintiff’s Counsel have significantly understated their financial resources and have acted to conceal or move assets off-shore. This evidence, combined with further deceptive statements and actions by Plaintiff’s Counsel, suggests that they are deliberately attempting to frustrate the Order and may have provided the Court

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Plaintiff’s Counsel’s remonstrations regarding their ability to pay the sanctions ordered are not only belied by the financial records presented to the Court in this motion; they are also “as a matter of law, immaterial under this circuit’s case law.”

Tate v. Ancell

, Nos. 11-cv-3252 & 12-cv-2694, 2014 U.S. App. LEXIS 963, *46 (7th Cir. Jan. 17, 2014). “It is awfully hard to see why a lawyer who acted in bad faith should be let off lightly. … A violation of § 1927 is a form of intentional tort. And there is no principle in tort law that damages depend on a tortfeasor’s assets. Quite the contrary. Damages depend on the victim's loss, not the wrongdoer's resources.”

Shales v. General Chauffeurs, Sales Drivers & Helpers Local Union No. 330

, 557 F.3d 746, 749 (7th Cir. 2009);