United States Court of Appeals

For the Eighth Circuit 

___________________________

No. 19-2386

___________________________ 

United States of America

 Plaintiff - Appellee

v.

Paul R. Hansmeier

 Defendant - Appellant

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Appeal from United States District Court 

for the District of Minnesota

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Submitted: October 23, 2020

 Filed: February 10, 2021 

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Before BENTON, SHEPHERD, and KELLY, Circuit Judges. 

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KELLY, Circuit Judge

Paul Hansmeier was charged in an 18-count indictment with mail and wire 

fraud, 18 U.S.C. §§ 1341, 1343; conspiracy to commit mail and wire fraud, 18 U.S.C. 

§ 1349; conspiracy to commit money laundering, 18 U.S.C. § 1956(h); and 
-2-

conspiracy to commit and suborn perjury, 18 U.S.C. § 371. After the district court1

denied his motion to dismiss the 17 fraud and money laundering counts, Hansmeier 

pleaded guilty to one count of conspiracy to commit mail and wire fraud and one 

count of conspiracy to commit money laundering. He was sentenced to 168 months’ 

imprisonment and ordered to pay restitution in the amount of $1,541,527.37. 

Hansmeier presents two arguments on appeal. First, he claims that the district 

court erred in denying his motion to dismiss. Second, he contends that the district 

court’s restitution award improperly included more than just the losses caused by his 

offense. We affirm. 

I. 

A.2

Paul Hansmeier was an attorney licensed to practice law in Minnesota. Along 

with his business partner John Steele, who was charged in the same indictment,3

Hansmeier operated the law firm Steele Hansmeier PLLC. Beginning around 

1

The Honorable Joan N. Ericksen, United States District Judge for the District 

of Minnesota. 

2

Though both Hansmeier and the government have offered additional factual 

context in their presentations before this court, our analysis of Hansmeier’s motion 

to dismiss is limited to what is contained in the indictment. United States v. Steffen, 

687 F.3d 1104, 1107 n.2 (8th Cir. 2012) (“In reviewing the sufficiency of an 

indictment, we accept the government’s factual allegations as true, without reference 

to allegations outside the indicting document.” (quoting United States v. Farm & 

Home Sav. Ass’n, 932 F.2d 1256, 1259 n.3 (8th Cir. 1994))). Accordingly, the 

following description of Hansmeier’s conduct is drawn from the indictment that 

forms the basis of our review and takes the facts alleged in the indictment as true. 

Cf. id. (drawing “the facts set forth in [the] opinion . . . from the indictment”). 

3

Steele pleaded guilty to both conspiracy counts in March 2017 and was 

sentenced to a prison term of 60 months. 
-3-

September 2010, the firm started representing organizations and individuals that 

owned the copyrights to certain pornographic movies. As part of their 

representation, Hansmeier and Steele pursued the following strategy, as described in 

the indictment: 

Defendants and their agents monitored file-sharing websites and obtained IP 

Addresses of individuals who downloaded or attempted to download their 

clients’ movies. Defendants then filed copyright infringement lawsuits 

against these anonymous individuals, sometimes referred to as “John Does,” 

and sought authority from the court—often referred to as “early discovery”—

to subpoena internet service providers for subscriber information associated 

with the IP Addresses. 

After receiving the subscriber information, defendants . . . made phone calls 

and sent letters to the subscribers associated with targeted IP Addresses in 

which they threatened overwhelming financial penalties—the copyright 

statute permits plaintiffs to recover damages of up to $150,000 per 

infringement—and public disclosure unless the purported infringers agreed to 

pay a settlement of approximately $4,000. Many of the individuals who 

received defendants’ letters and phone calls agreed to pay the settlement rather 

than incur the expense of defending the lawsuit—which would undoubtedly 

exceed the settlement amount—or risk being publicly shamed for allegedly 

downloading pornographic movies.

The indictment alleges that Hansmeier and Steele started by monitoring filesharing websites to look for potential infringers. Beginning in April 2011, however,

the two men began directing their agents “to upload their clients’ pornographic 

movies to BitTorrent file-sharing websites, including a website named the Pirate 

Bay, in order to entice people to download the movies and make it easier to catch 

those who attempted to obtain the movies.” Once Hansmeier and Steele identified 

potential infringers who downloaded the movies, they took the same steps of seeking 

early discovery, sending settlement demands, and receiving payments from alleged 

infringers. Hansmeier and Steele told neither the courts in which they sought 

discovery nor the alleged infringers that they were responsible for making the films 

available on the file-sharing sites. 
-4-

Several months later, Hansmeier and Steele again modified their strategy. 

First, in November 2011, they “caused Prenda Law to be created.” Though the firm 

was nominally owned by their associate, the two men exerted de facto control over 

it and used the firm to pursue their copyright infringement litigation. The indictment 

alleges that Hansmeier and Steele “on multiple occasions falsely denied to various 

courts any direct involvement with or control over Prenda Law.” Next, they created 

the organizations AF Holdings and Ingenuity 13. Hansmeier and Steele represented

to the courts that these organizations were owned and controlled by other individuals

and used the names of an acquaintance and of a paralegal they employed. But in 

reality, Hansmeier and Steele controlled both. Under their direction, these 

organizations obtained copyrights to a number of pornographic films and then served 

as Hansmeier and Steele’s clients as the two men pursued their copyright litigation. 

Unknown to both the courts and the alleged infringers, Hansmeier and Steele were 

thus the direct beneficiaries of all settlement payments made out to AF Holdings and 

Ingenuity 13. 

In May 2012, Hansmeier and Steele began creating pornographic films 

themselves. Contracting with adult film actresses, Hansmeier and Steele produced 

multiple short films and transferred the copyrights to Ingenuity 13. They did not 

distribute the movies commercially, but instead posted them exclusively on filesharing websites and monitored the downloads. Using these entities and films, 

Hansmeier and Steele continued to pursue their settlement-focused litigation 

strategy. In doing so, they failed to disclose their involvement to either the courts or 

the alleged infringers. 

The indictment alleges that, in order to carry out their litigation strategy, 

Hansmeier and Steele deceived both the courts in which they sought discovery and 

the alleged infringers they sued. Specifically, the indictment accuses Hansmeier and 

Steele of deliberately concealing from the courts “their role in distributing the 

movies, as well as their significant personal stake in the outcome of the litigation.” 

This concealment, the indictment alleges, was done with the purpose of gaining 

access to downloaders’ identifying information, in order to “garner quick settlements 
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from individuals who were unaware of the defendants’ role in uploading the movie, 

and often either too embarrassed or could not afford to defend themselves.” The 

indictment also characterizes the threatened lawsuits as legally baseless, suggesting 

that Hansmeier and Steele had provided legal authorization to download the movies 

when they caused them to be uploaded to file sharing sites. Accordingly, the 

indictment claims, any representations Hansmeier and Steele made to the courts or

the alleged infringers that they and their clients had legitimate copyright 

infringement claims or had suffered damages from that infringement were also false. 

Around October 2012, “after courts had begun limiting the discovery [they] 

could obtain through copyright infringement suits,” Hansmeier and Steele developed 

a new way to seek copyright settlements. This involved the creation of three new 

organizations: Guava, Livewire Holdings, and LW Systems. As with AF Holdings 

and Ingenuity 13, though Hansmeier and Steele represented that these companies

were owned by other individuals, Hansmeier and Steele actually controlled each 

company. Under their new strategy, Hansmeier and Steele filed lawsuits alleging 

that certain John Does had hacked these companies’ computer systems. This, the 

indictment claims, was a lie: while the John Does in question had apparently

downloaded the pornographic films, they had not hacked into any computer systems. 

Indeed, the companies had no computer systems to hack. 

In reality, according to the indictment, Hansmeier and Steele brought these 

lawsuits in a renewed attempt to learn the identities of alleged infringers and to send 

them settlement demands. In this effort, Hansmeier and Steele recruited “ruse 

defendants.” These defendants were people Hansmeier and Steele had caught 

downloading movies for which they (or their purported “clients”) possessed 

copyrights. In exchange for Hansmeier and Steele waiving their copyright claims 

against them, the ruse defendants agreed to be sued for hacking the companies’ 

computer systems. This then allowed the two men to seek discovery about the ruse 

defendants’ alleged co-conspirators in the computer hacking. In reality, these “coconspirators” were just other downloaders of copyrighted movies whose IP 

addresses Hansmeier and Steele identified through the file sharing sites. Once 
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Hansmeier and Steele gained subpoena authority for the supposed co-conspirators’

information, they sent them the same copyright-based settlement demands described 

above. 

Eventually, courts grew suspicious of Hansmeier and Steele’s litigation

techniques and started denying their subpoena requests, dismissing their lawsuits, 

imposing sanctions, and notifying state attorney disciplinary bodies and other courts. 

The indictment includes language from a federal district court order imposing 

sanctions against both men, in which the court states that the two “have demonstrated 

their willingness to deceive not just this Court, but other courts where they have 

appeared” and that their “deception was calculated so that the Court would grant 

[their] early-discovery requests, thereby allowing [them] to identify [alleged 

copyright infringers] and exact settlement proceeds from them.” The responses from 

the courts effectively ended Hansmeier and Steele’s operation. But between 2011 

and 2013, before they faced this increased scrutiny, Hansmeier, Steele, and their 

entities received more than $6 million in copyright settlement payments, half of 

which went to Hansmeier and Steele themselves. 

B. 

On December 14, 2016, a federal grand jury charged Hansmeier and Steele

with conspiracy to commit wire and mail fraud; multiple instances of mail and wire 

fraud between December 2011 and April 2013; conspiracy to commit money 

laundering; and conspiracy to commit and suborn perjury. Hansmeier moved to 

dismiss all but the perjury count, arguing that the facts alleged did not constitute 

criminal fraud. See Fed. R. Crim. P. 12(b)(3)(B) (authorizing pretrial challenges to 

indictments that “fail[] to state an offense”).4 The magistrate judge recommended 

the motion be denied, and the district court adopted the recommendation.

4

Because the theory of money laundering charged was premised on Hansmeier 

and Steele committing mail and wire fraud, this count was included in the motion to 

dismiss. 
-7-

Following the district court’s order, Hansmeier entered into a conditional plea 

agreement with the government, pleading guilty to one count of conspiracy to 

commit mail and wire fraud and one count of conspiracy to commit money 

laundering, reserving the right to appeal the denial of his motion to dismiss. 

 

At sentencing, the district court heard evidence about restitution. In support 

of its proposed restitution amount, the government called Jared Kary, a special agent 

with the FBI. Agent Kary described Hansmeier and Steele’s settlement strategy, 

explaining that the settlements their targets agreed to pay typically “ranged between 

$2,500 and $3,400,” though were sometimes lower. Based on his review of 

Hansmeier and Steele’s financial documents, Agent Kary estimated that, between 

2010 and 2013, the alleged infringers Hansmeier and Steele targeted paid over $6 

million total in settlements. Agent Kary then summarized a spreadsheet the FBI 

created to estimate the proper restitution amount. The spreadsheet did not include 

all of the settlement money that came in over this time period. Rather, it was limited

to payments made after April 2011, which is when there was evidence that 

Hansmeier and Steele posted to file-sharing websites a movie to which they held the 

copyright—in other words, when, under the government’s theory, their fraud scheme 

began—and to payments that he could link to specific victims. Based on these 

parameters, he calculated a restitution figure of $1,541,527.37. 

Hansmeier objected to this calculation on the basis that the FBI’s spreadsheet 

did not distinguish between settlement payments that came from “legitimate 

lawsuits” and those that came from fraudulent ones. The court found the defense’s 

arguments unconvincing, noting “there does not appear from the testimony and from 

the facts admitted at the plea . . . any more than potentially a negligible amount of 

what could be reasonably considered money coming from a source other than the 

overall fraudulent scheme. And so this is a pretty conservative restitution amount.” 

The court ultimately accepted the government’s evidence and imposed restitution in 

the amount of $1,541,527.37. 

Hansmeier now appeals. 
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II. 

We review de novo a defendant’s motion to dismiss an indictment for failure 

to state an offense. See United States v. Steffen, 687 F.3d 1104, 1109 (8th Cir. 

2012). In doing so, we accept the allegations stated in the indictment as true, Farm 

& Home Sav. Ass’n, 932 F.2d at 1259 n.3, and ask whether they can form the basis 

of the charged offense. See United States v. Hayes, 574 F.3d 460, 472 (8th Cir. 

2009) (“An indictment will ordinarily be held sufficient unless it is so defective that 

it cannot be said, by any reasonable construction, to charge the offense for which the 

defendant was convicted.” (quoting United States v. Sewell, 513 F.3d 820, 821 (8th 

Cir. 2008))). A slightly greater level of detail is required for the bank, mail, or wire 

fraud statutes, for which an indictment must “specify facts . . . with such reasonable 

particularity as will apprise the defendant, with reasonable certainty, of the nature of 

the accusation and as will enable the court to say that the facts stated are sufficient 

in law to support a conviction.” Steffen, 687 F.3d at 1113 (cleaned up). The 

question of whether the facts alleged in an indictment adequately state an offense

therefore turns on the elements of that offense. See United States v. Flute, 929 F.3d 

584, 587 (8th Cir. 2019). 

The mail and wire fraud statutes at issue here prohibit the use of interstate 

mail or wire facilities to effect “any scheme or artifice to defraud, or for obtaining 

money or property by means of false or fraudulent pretenses, representations, or 

promises.” 18 U.S.C. §§ 1341, 1343. As Hansmeier notes, the term “scheme to 

defraud” initially may seem slightly amorphous. See, e.g., United States v. Britton, 

9 F.3d 708, 709 (8th Cir. 1993) (per curiam) (defining a scheme to defraud as “a 

departure from fundamental honesty, moral uprightness, or fair play and candid 

dealings in the general life of the community” (quoting United States v. Goldblatt, 

813 F.2d 619, 624 (3d Cir. 1987))). But cases from this circuit and the Supreme 

Court have offered more concrete guidance on what the mail and wire fraud statutes 

require.
-9-

To prove the existence of a fraudulent scheme, the government must establish:

“(1) there was a deliberate plan of action or course of conduct to hide or misrepresent 

information; (2) the hidden or misrepresented information was material; and (3) the 

purpose was to get someone else to act on it.” United States v. Luna, 968 F.3d 922, 

926 (8th Cir. 2020) (cleaned up). As this definition indicates, for criminal liability 

to attach, a scheme to defraud must consist of material misrepresentations: 

misrepresentations that have “a natural tendency to influence, or [are] capable of 

influencing, the decision of the decisionmaking body to which [they are] addressed.” 

United States v. Heppner, 519 F.3d 744, 749 (8th Cir. 2008) (quoting Preston v. 

United States, 312 F.3d 959, 960 (8th Cir. 2002) (per curiam)); see also Luna, 968 

F.3d at 926 (“To defraud someone requires material, affirmative misrepresentations 

or active concealment of material information for the purpose of inducing action.”). 

However, a scheme to defraud need not involve affirmative lies. 

While nondisclosure of a relevant fact, “characterized by mere silence,” is not 

enough for fraud, active concealment—“deceptive acts or contrivances intended to 

hide information, mislead, avoid suspicion, or prevent further inquiry into a material 

matter”—can form the basis of a fraudulent scheme. Steffen, 687 F.3d at 1114

(quoting United States v. Colton, 231 F.3d 890, 898–99 (4th Cir. 2000)); see also

United States v. Kidd, 963 F.3d 742, 751 (8th Cir. 2020) (recognizing that “evidence 

of active concealment could prove a scheme to defraud”). Finally, though fraud 

necessarily involves misrepresentations made with the “object” of obtaining money 

or property from victims, Kelly v. United States, 140 S. Ct. 1565, 1572 (2020), it 

is not the case that the victims targeted must be the direct recipients of the materially 

deceptive statement or concealment, see Kidd, 963 F.3d at 749 (“The gravamen of 

the offense is not a false representation to a victim, but the development of a scheme 

to defraud.” (emphasis added)). Rather, we have held that the misrepresentations

may be made to third parties, where the third parties are used to further the scheme 

to defraud the ultimate victims. See, e.g., United States v. Blumeyer, 114 F.3d 758, 

768 (8th Cir. 1997) (recognizing a scheme to defraud where the defendant made 

false representations to a regulatory agency with the goal that the agency’s actions 

would bolster his “scheme to obtain money or property from others”). 
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Hansmeier’s indictment identifies two related litigation strategies that

Hansmeier and Steele employed between late 2011 and 2013 and that form the basis 

of the government’s fraud allegation. Both meet the elements of a fraudulent 

scheme. In the first, Hansmeier and Steele brought copyright infringement lawsuits 

and requested discovery on behalf of their supposed clients seeking the identities of

alleged copyright infringers but did not disclose (1) that they directed agents to make 

the copyrighted works available on websites known for illegal downloading; and (2) 

that the clients were in fact companies that Hansmeier and Steele set up in order to

personally profit from anticipated settlements. On its face, this alleged conduct 

meets the elements required for a fraudulent scheme. See Luna, 968 F.3d at 926. 

By posting the movies, Hansmeier and Steele took steps to ensure that they would 

have a pool of potential copyright infringers to target through litigation. And by

having separate companies that they controlled act as their clients, they obscured 

their personal and financial involvement in those lawsuits. Hansmeier and Steele’s 

choice to conceal from the courts their full involvement in the lawsuits thus

constitutes a “deliberate plan of action . . . to hide or misrepresent information.” Id. 

at 926. 

The information they misrepresented was also material. Had the courts known 

that Hansmeier and Steele intentionally posted the films on websites used for illegal 

file sharing or that the two men were in fact the personal beneficiaries of their 

“clients’” copyright claims, they would have treated the subpoena requests with far 

greater skepticism—indeed, the indictment alleges that Hansmeier and Steele faced

dismissals of their lawsuits and sanctions when the extent of their involvement

eventually came to light. See Heppner, 519 F.3d at 749. That Hansmeier and Steele

created multiple organizations under the names of their associates in order to pursue 

litigation, rather than naming themselves as the copyright holders, itself suggests 

that they knew how relevant the courts would find this information. And the courts’

skepticism about Hansmeier and Steele’s level of personal involvement and financial 

interest in the litigation would have been likely even if, as Hansmeier argues, their

claims did involve actionable copyright infringement. Cf. Luna, 968 F.3d at 927 
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(holding that, in an insurance fraud case, it did not matter whether some of the claims 

may have been independently valid, because “with a fuller picture of the clinic’s 

practices, insurers would have investigated” and that “[t]his fact alone shows that 

the information withheld had a tendency to influence their actions, even when it had 

no effect on whether they ultimately paid”). 

Finally, the indictment makes clear that the purpose of Hansmeier and Steele’s

concealment was to induce the courts to act, in the form of granting their subpoena 

requests. And the ultimate object of those requests—and the deceptive tactics 

leading up to them—was to obtain settlement payments from a pool of alleged 

infringers. Putting the different elements together, the indictment alleges that

Hansmeier and Steele (1) developed and executed a plan that depended on them (2) 

deliberately concealing material information from the courts, (3) with the purpose 

of convincing those courts to grant their discovery requests and (4) with the ultimate 

object of obtaining settlement payments from alleged infringers they identified 

through those discovery requests. This conduct meets the elements of criminal 

fraud. 

The second litigation strategy utilized by Hansmeier and Steele, which began 

in the fall of 2012, shared many features of the first, including the use of discovery 

to obtain identifying information for alleged infringers and the deployment of that 

information to then obtain settlement payments. While the second approach

similarly involved misleading courts by concealing material information in order to 

subpoena downloaders’ identifying information, Hansmeier and Steele also began 

actively lying to the courts. As the indictment describes, the two men falsely accused 

a number of “ruse defendants” of hacking into their clients’ systems and, through 

these false accusations, convinced the courts to provide them with the requested 

discovery. Thus, and for the same reasons outlined above, the indictment’s 

presentation of Hansmeier and Steele’s conduct involving ruse defendants is 

sufficient to support fraud charges—the only difference is that the deception there 

came in the form of affirmative misrepresentations. 
-12-

In sum, the conduct recounted in the indictment constitutes a “scheme . . . for 

obtaining money or property by means of false or fraudulent pretenses, 

representations, or promises.” 18 U.S.C. §§ 1341, 1343. Taking its allegations as 

true, the indictment lays out a sufficient basis for the government’s charge that 

Hansmeier committed fraud, and it informs the court and the parties involved of the 

facts underlying that charge. This is what is legally required of an indictment. See

Steffen, 687 F.3d at 1113. In his defense, Hansmeier was free to dispute the facts, 

offer alternative explanations for his conduct, or provide context to any of the actions 

alleged. In short, it was Hansmeier’s right to present any lawful defense available 

to him against the government’s effort to prove his guilt beyond a reasonable doubt. 

But Hansmeier’s possible defenses are not relevant to our consideration of whether 

the indictment itself properly stated the basis for the charged offenses.5

 Because the 

facts in the indictment, accepted as true, describe a fraudulent scheme prohibited by 

federal law, Hansmeier cannot succeed in his claim that it is facially insufficient. 

We affirm the district court’s denial of his motion to dismiss. 

III. 

Hansmeier also argues that the district court’s award of $1,541,527.37 in

restitution violated the Mandatory Victims Restitution Act (MVRA), 18 U.S.C. 

§ 3663A. Specifically, he claims that the district court erred in relying on a 

5

Disputing this conclusion, Hansmeier invokes the metaphor of a three-legged 

stool, arguing that, because none of the independent “legs,” viewed on its own, 

involves him lying to or concealing information from his ultimate victims, the theory 

of fraud laid out in the indictment fails. Even assuming this characterization of his 

conduct is accurate, there is no authority suggesting that courts should approach 

fraud charges in this fragmented manner. Indeed, such an approach would risk 

allowing more sophisticated fraudulent schemes, which may involve multiple, 

independently legal acts or falsehoods aimed at providing the perpetrators with legal 

or regulatory authority to pursue their victims, to go unchecked. Cf. Kidd, 963 F.3d 

at 747–50 (insurance fraud orchestrated by a licensed chiropractor); Blumeyer, 114 

F.3d at 766–68 (fraud committed by defendant who owned several insurance 

companies).
-13-

calculation that included not just losses by victims of the fraud scheme, but also 

“legitimate” settlement payments from the same period (i.e., those paid by people 

who downloaded copyright-protected movies posted on file-sharing websites by

people other than Steele and Hansmeier). 

The government first responds that Hansmeier waived any right to challenge 

the application of the MVRA in the terms of his plea deal. The agreement specifies:

Defendant understands and agrees that the Mandatory Restitution Act, 18 

U.S.C. § 3663A, applies and that the Court is required to order the defendant 

to pay the maximum restitution to the victims of his crimes as provided by 

law. The defendant understands and agrees that the Court will order him to 

make restitution for the entire loss caused by his fraud scheme and that the 

restitution order will not be limited to the counts of conviction.

We do not read this provision as a waiver of Hansmeier’s right to appeal the 

restitution award. Nor is it a pledge to pay the “$3 million in fraudulent proceeds” 

identified elsewhere in the agreement. Unlike in the cases on which the government 

relies, Hansmeier did not agree to pay “any restitution ordered by the District Court,”

United States v. Lester, 200 F.3d 1179 (8th Cir. 2000), or agree to pay restitution 

“up to” a certain amount, United States v. Bartsh, 985 F.2d 930 (8th Cir. 1993). 

Here, Hansmeier simply agreed that the MVRA would apply and that the court 

would order him to pay restitution. He did not, in doing so, waive his right to 

challenge any perceived error in the ultimate restitution amount imposed. Cf. United 

States v. Polukhin, 896 F.3d 848, 852 (8th Cir. 2018) (holding that defendant did not 

waive her right to appeal restitution when she made no agreement to pay whatever 

the court ordered).

Because Hansmeier did not waive the issue, we will “review the district 

court’s decision to award restitution for an abuse of discretion and the district court’s 
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finding as to the amount of loss for clear error.” United States v. Frazier, 651 F.3d 

899, 903 (8th Cir. 2011).6

The MVRA requires that sentencing courts order restitution in all cases where 

“an identifiable victim or victims has suffered a physical injury or pecuniary loss” 

“as a result of the commission of an offense.” 18 U.S.C. § 3663A(a), (c). Restitution 

“must be based on the amount of loss actually caused by the defendant’s offense,” 

and the burden is on the government to “prove that the restitution awarded does not 

exceed the actual, provable loss caused by the offense.” United States v. Fonseca, 

790 F.3d 852, 854 (8th Cir. 2015). In fraud cases, restitution “may be ordered for 

criminal conduct that is part of a broad scheme to defraud, without regard to whether 

the defendant is convicted for each fraudulent act in the scheme.” United States v. 

Farrington, 499 F.3d 854, 860 (8th Cir. 2007) (quoting United States v. Ross, 279 

F.3d 600, 609 (8th Cir. 2002)). However, the actual loss requirement means that 

courts must be wary of over-inclusiveness—and particularly of setting payment 

amounts that encompass both losses caused by the fraud at issue and legitimate 

payments separate from the fraudulent scheme. See Luna, 968 F.3d at 930. But see

United States v. Karie, 976 F.3d 800, 806 (8th Cir. 2020) (“Where a defendant’s 

dealings are systematically tainted with fraud, a district court may determine that the 

total amount of payments equals the loss amount.” (cleaned up)). 

Here, the government met its burden of showing by a preponderance of the 

evidence that the $1,541,527.37 loss total was attributable solely to settlement 

payments from the fraud scheme. See United States v. DeRosier, 501 F.3d 888, 896

6

Hansmeier argues that the appropriate standard of review is de novo. 

However, de novo review applies only “to the extent the district court interpreted the 

[MVRA] to determine its obligations in awarding restitution.” Frazier, 651 F.3d at 

903. Here, the district court’s restitution decision did not involve a legal 

interpretation of the MVRA. Rather, the primary question before the district court 

was factual: how to determine whether payments sent to Hansmeier and Steele after 

April 2011 were from fraud victims or from alleged copyright infringers paying 

settlements in “legitimate” lawsuits. The district court’s decision to rely on the 

calculation provided by the government is therefore subject to clear error review. 
-15-

(8th Cir. 2007) (“The burden is on the government to prove the amount of restitution 

based on a preponderance of the evidence.”). The figure was based on calculations 

Agent Kary presented to the court at the sentencing hearing. In coming to his final 

loss amount, Agent Kary included only settlement payments from April 2011 on, 

when Hansmeier and Steele directed an associate to upload a movie called Sexual 

Obsession, which they held the copyright to and which they used in their fraudulent 

lawsuits, to file sharing websites. Agent Kary explained that Sexual Obsession

became the “go-to movie as far as gaining settlements from individuals.” He said 

that other movies were not a “significant” source of profit from that point on, 

constituting just “a few [payments] trickling in here and there.” Considering this 

information, the district court characterized potential payments from “legitimate” 

lawsuits over this period as making up no “more than potentially a negligible 

amount” of the money Hansmeier and Steele received. Cf. Karie, 976 F.3d at 806. 

Agent Kary further attempted to narrow his calculation to payments from 

fraud victims by excluding any payments that came in over this period that he could 

not tie to a specific person—suggesting that his estimate might in fact have been

under-inclusive of the total amount Hansmeier and Steele received from their fraud 

scheme. Agent Kary also showed his list of identified victims to Steele, who 

confirmed that only one or two names were not those of fraud victims. Finally, 

Hansmeier himself acknowledged in his plea agreement that, between 2011 and 

2014, he and Steele “received more than $3,000,000 in fraudulent proceeds” from 

their lawsuits. 

In light of the information the government presented at sentencing, the district 

court did not clearly err in concluding that the $1,541,527.37 figure was fairly 

representative of the actual loss caused by the fraudulent scheme. 

IV. 

We affirm the judgment of the district court. 

______________________________