If you're not familiar with Perfect 10 by now, it is a company that billed itself as a smutty porn magazine that was actually mostly in the far more immoral business of copyright trolling. Rather than peddling skin, Perfect 10 mostly peddled laughably frivolous copyright lawsuits against roughly everyone, managing in this process to suffer legal losses to Google, CCBill, Amazon, and Visa among others. One of those others was Usenet provider Giganews, which won big in its court battle with Perfect 10 to the tune of the latter being ordered to pay over $5 million in attorney's fees to the former. Perfect 10 immediately cried poor at that point, stating it didn't have the money to cover the award, leading the court to put its assets in receivership. At the time, Mike wrote:
In the most recent Perfect 10 case, we noted that Perfect 10 lost big time earlier this year. It had sued Usenet provider Giganews, but the court found that Perfect 10's legal arguments made no sense at all, and sided completely with Giganews. Most importantly, the court upheld the multimillion fee award that the court had dumped on Perfect 10 for filing such a bogus lawsuit. It turns out that Perfect 10 doesn't seem to have that kind of money, so all of its assets are now controlled by a court-appointed receiver.
Those assets were supposed to be sold off in order to pay the court ordered award to Giganews. According to a new lawsuit filed by Giganews against Perfect 10 not a single cent has been paid, with the porn company instead choosing to play a silly game of hide-the-assets in order to avoid having them sold off.
The claims center around an alleged conspiracy in which Perfect 10 transferred its funds and assets to Zada.
“As of now (over two years since the judgment), Perfect 10 has not voluntarily paid any amount of the judgment,” the complaint begins. “Instead, Perfect 10, through the unlawful acts of Zada and in conspiracy with him, has intentionally avoided satisfaction of the judgment through a series of fraudulent transfers of Perfect 10’s corporate assets to Zada’s personal possession.”
Norman Zada would be the owner of Perfect 10. The suit seeks $20 million for fraud and punitive damages, detailing how Zada made a habit since 2014, when the lawsuits including that against Giganews began to clearly go south for Perfect 10, of selling Perfect 10 physical assets for below-market sums of money and transferring company cash into his personal bank accounts. We're talking about millions of dollars in cash and assets moving around, as a court order to pay Giganews loomed over it all. This, to be as clear as possible, is not the sort of thing that the court looks favorably upon.
Giganews says that Perfect 10 transferred at least $1.75m in cash to Zada. Then, within weeks of the court ordering Perfect 10 to pay $5.6m in attorneys fees and costs, Giganews says that Zada “fraudulently transferred substantially all of Perfect 10’s physical assets” to himself for an amount that did not represent their true value. Those assets included a car, furniture, and computer servers.
Zada, for his part, has the following defense for himself on the record.
When Zada was questioned why the transfers took place, he admitted that “it would have been totally disruptive to have those [assets] seized” in satisfaction of the judgment. Indeed, the complaint alleges that the assets never moved physical location.
That's a fairly clear admission for defrauding the court with regard to its order to pay Giganews. Giganews is asking for the $1.75 million in cash that had been transferred and interest beginning from March of 2015. The fangs are clearly out, but one can hardly blame Giganews, which had to defend itself against what was clearly a frivolous lawsuit filed on behalf of a company that can't seem to figure out how to look anything other than shady in the extreme. To that end, Giganews is asking for another $20 million in punitive and exemplary damages. Here's hoping they get it.