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I haven't had time to read this entire thread and I'm not sure if this has been mentioned but this was an OUT-OF-COURT settlement.

This means that our infamous pirate was presumably given legal advice that the 1.5 million was a pretty good deal and that going to court could have resulted in even more severe punishment. Nintendo didn't have to offer him a deal and if it went to court they could have buried any lawyer this guy could have secured.