Policy

Copyright lawyer for litigious porn studio hit with bank fraud charges

One of Malibu Media's top lawyers says decade-old charges are trumped up.

Joe Mullin – Sep 17, 2015 11:08 am | 57

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Porn studio Malibu Media files a lot of copyright lawsuits—more than any other entity in the US. In all, the company has filed more than 4,300 lawsuits since 2009, according to a report by Lex Machina. Malibu relies on a network of attorneys in several states to sue thousands of Internet users for downloading Malibu's pornographic movies.

Now, one of the main figures behind the litigation, attorney Paul Nicoletti, is in trouble with the law. This summer, Nicoletti was indicted on four charges of bank fraud, stemming from real estate deals he did back in 2005. The charges were unsealed three weeks ago and published on Saturday by the blog Fight Copyright Trolls.

The indictment (PDF) alleges that Nicoletti arranged for several construction bank loans from Fifth Third Bank. Prosecutors say Nicoletti and several co-conspirators used "straw buyers" to arrange for construction loans, who were paid a fee for use of their names and credit histories. The straw buyers wrote false information on the loan applications to qualify, according to the indictment.

Nicoletti was involved with two fraudulent loans that were worth $2.66 million each and another loan for $3.57 million, according to the indictment.

In an interview with Ars, Nicoletti said he is innocent of any wrongdoing and would fight the charges. The allegations stem from a title company he ran in 2005 and had nothing to do with his legal practice, he said.

In Nicoletti's view, Fifth Third Bank, which does "a lot of work with the FBI," pressured the feds to indict him. The bank "sued everyone in Oakland County [Michigan] in 2005 and lost a lawsuit against my underwriter, First American," he said. "Their only hope is to convict me of a felony, so they're putting pressure on the US Attorney's office."

The charges were made just months before Nicoletti's alleged crimes passed the 10-year statute of limitations.

"Two years ago they asked me if I was interested in plea bargaining, and I said 'hell no,'" he said. "My plan is to defend the case on the basis of the truth. I had no idea these loan applications were false. My job was to close the loans, not to process or approve them."

Nicoletti says in the build-up to the mortgage crisis, Fifth Third was doing loan applications "fast and loose" and not verifying the information. He processed thousands of loans for the bank in all, but only several of those are said by the feds to be fraudulent. His title insurance license was never revoked, he noted.

He also defended his copyright practice, noting that he works for both Malibu and other mainstream content owners including Voltage Pictures, which has filed lawsuits over piracy of hit movies like Dallas Buyers Club, and more recently, Adam Sandler's flop The Cobbler.

"There was a point in time when people didn't think they could prevail in these lawsuits, but the technology is so sophisticated now, when we sue someone we know with almost 100 percent accuracy, it's that IP address," he said.

Nicoletti says he expects a trial to take place within the next few months. Craig Weier, a prosecutor on Nicoletti's case, declined to comment for this story.

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Joe Mullin Tech Policy Editor

Joe Mullin Tech Policy Editor

Joe has covered the intersection of law and technology, including the world's biggest copyright and patent battles, since 2007.