Andrew Crossley, the controversial solicitor who sent thousands of letters to alleged illegal file-sharers, has been suspended from the profession for two years.
At a disciplinary tribunal he was also ordered to pay costs of £76,326.55.
The court heard how Mr Crossley used his law firm ACS: Law to demand money in recompense for alleged copyright infringements.
The scheme unravelled when several cases went to court.
The Solicitors' Regulation Authority (SRA), which brought the case against Mr Crossley, welcomed the decision to uphold the allegations against Mr Crossley.
"Some of those affected were vulnerable members of the public and this matter has caused them significant distress," said an SRA spokesman.
"We hope that it serves as a warning to others. Solicitors have a trusted position in society and therefore have a duty to act with integrity, independence and in the best interests of their clients," he added.
It has taken two-and-a-half years for the case to come before the Solicitors' Disciplinary Tribunal.
The allegations included "acting in a way that was likely to diminish the trust the public places in him or in the legal profession" and "using his position as a solicitor to take unfair advantage of the recipients of the letters for his own benefit".
In mitigation, Mr Crossley said that he had already suffered as a result of the work he had undertaken and was now bankrupt. He said he was in danger of having his house repossessed and that his 15-year relationship had broken down because of the case.
Mr Crossley began the so-called speculative invoicing scheme in May 2009.
In total he sent about 20,000 letters to people identified as having downloaded content, often pornography, without paying for it. He claimed he was acting on behalf of MediaCAT, which in turn represented the copyright owners.
The letters threatened court action unless the recipient paid a one-off fee of about £500.
Consumer group Which? was one of the first to highlight the cases of people who claimed that they had been wrongly accused and had been upset by the threatening nature of the letters.
When a handful of cases came to court, the scheme came in for widespread derision, angering the presiding judge, Judge Birss, who turned the spotlight on Mr Crossley, accusing him of abusing the court process.
The lawyer for the defendants likened the case to Charles Dickens' Bleak House.
In a further twist, the ACS: Law website was hacked and huge amounts of sensitive data were exposed during attempts to get it up and running again.
Mr Crossley was fined by the Information Commissioner's Office for the data breach.
James Bench, founder of campaign group Being Threatened?, set up to represent those who received letters from ACS: Law, said he was pleased by the findings of the disciplinary hearing.
"The judgement will provide some satisfaction to those innocent members of the public that Mr Crossley relentlessly bullied in the operation of this scheme," he said.
"It was clear to all that Mr Crossley's speculative invoicing scheme lacked any legal merit," he added.
But he said that he was disappointed that the case had taken nearly three years to reach a conclusion.
It was revealed during the hearing that the SRA had asked Mr Crossley to stop the scheme within days of him setting it up, but he had refused.