Exhibit A

Case 2:18-cr-00422-DJH Document 1272-1 Filed 09/06/21 Page 1 of 87
UNITED STATES DISTRICT COURT

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

_________________

United States of America, )

) No. CR-18-0422-PHX-SMB

Plaintiff, )

)

vs. ) Phoenix, Arizona

) September 3, 2021 

Michael Lacey, ) 1:15 p.m.

James Larkin, ) 

Scott Spear, )

John Brunst, )

Andrew Padilla, )

Joye Vaught, )

)

Defendants. )

_____________________________ )

BEFORE: THE HONORABLE SUSAN M. BRNOVICH, JUDGE

REPORTER'S TRANSCRIPT OF PROCEEDINGS

TRIAL - DAY 3 - P.M. SESSION

Official Court Reporter:

Christine M. Coaly, RMR, CRR

Sandra Day O'Connor U.S. Courthouse, Suite 312

401 West Washington Street, Spc 37 

Phoenix, Arizona 85003-2151

(602) 322-7248

Proceedings Reported by Stenographic Court Reporter

Transcript Prepared by Computer-Aided Transcription

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UNITED STATES DISTRICT COURT

A P P E A R A N C E S

For the Government:

U.S. ATTORNEY'S OFFICE 

By: Mr. Peter S. Kozinets

Mr. Kevin M. Rapp

Ms. Margaret Wu Perlmeter

Mr. Andrew C. Stone

40 North Central Avenue, Suite 1200 

Phoenix, Arizona 85004 

U.S. DEPARTMENT OF JUSTICE 

By: Mr. Reginald E. Jones

1400 New York Avenue, NW, Suite 600

Washington, DC 20530 

U.S. ATTORNEY'S OFFICE

By: Mr. Daniel G. Boyle 

312 North Spring Street

Los Angeles, California 90012

For the Defendant Lacey:

LIPSITZ GREEN SCIME CAMBRIA 

By: Mr. Paul J. Cambria, Jr.

Ms. Erin E. McCampbell-Paris

42 Delaware Avenue, Suite 120

Buffalo, NY 14202

For the Defendant Larkin:

BIENERT KATZMAN

By: Mr. Thomas H. Bienert, Jr.

Ms. Whitney Z. Bernstein 

903 Calle Amanecer, Suite 350

San Clemente, CA 92673

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UNITED STATES DISTRICT COURT

For the Defendant Spear:

FEDER LAW OFFICE

By: Mr. Bruce S. Feder

2930 East Camelback Road, Suite 160

Phoenix, AZ 85016

For the Defendant Brunst:

BIRD MARELLA BOXER WOLPERT NESSIM DROOKS

LINCENBERG & RHOW

By: Mr. Gopi K. Panchapakesan 

1875 Century Park E, Suite 2300

Los Angeles, CA 90067

For the Defendant Padilla:

DAVID EISENBERG, PLC

By: Mr. David S. Eisenberg

3550 North Central Avenue, Suite 1155

Phoenix, AZ 85012

For the Defendant Vaught:

JOY BERTRAND, LLC

By: Ms. Joy M. Bertrand

P.O. Box 2734

Scottsdale, AZ 85252 

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P R O C E E D I N G S

THE COURT: Please be seated. 

And we are back on the record with the jury present. 

Mr. Jones, your opening. 

MR. JONES: Thank you, Your Honor. 

Her 14-year-old daughter had been missing for more 

than six months. After months of posting missing person 

flyers, as well as physically searching for her daughter, upon 

the recommendation of a neighbor, the mother, Mrs. Pride, began 

to search for her daughter online. 

And in searching for her daughter online, she came 

across an advertisement in the adult services section of the 

website Backpage.com that showed an image of her daughter. It 

was apparent by looking at the Backpage ad that her 14-year-old 

daughter was offering sexual services in exchange for money. 

Upon locating her daughter's ad on Backpage.com, the 

mother immediately contacts the police who open an 

investigation. But police aren't moving quickly enough for the 

mother, so out of desperation, she contacts the number listed 

in her daughter's Backpage ad and attempts to buy sex with her. 

Upon contacting the number listed in her daughter's 

Backpage ad, a woman, whose voice Ms. Pride didn't recognize, 

answers the call, and asked her how many folks were going to be 

having sex with the girl, and she needed payment in cash. The 

mother responded that two folks were going to be having sex 

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with the girl and she was willing to pay in cash. 

At this point, the woman on the other end of the line 

who, evidence will show, was the 14-year-old girl's pimp, 

instructed the mother that she could meet her daughter at a 

local bus station, keep her for approximately two hours for 

$250. 

Soon thereafter, the mother arrives at the bus 

station, and she hides in between cars to ensure she isn't 

being followed. When her daughter arrives, she jumps out from 

in between the cars and approaches her. Upon realizing that it 

is her mom, the 14-year-old girl drops down to her knees -- 

MR. BIENERT: Objection, Your Honor, Rule 401 and 403. 

THE COURT: The objection is sustained. 

MR. JONES: Ladies and gentlemen of the jury, what I 

just shared with you is just one example, one of numerous 

examples you will hear about by the close of this trial of 

women and children being sold for sex on the website 

Backpage.com, a website these six defendants ran with the 

intent to promote and facilitate prostitution. And when the 

United States refers to prostitution throughout the course of 

this trial, we mean sexual services in exchange for money, a 

crime in all 50 states. 

And the evidence will show that Backpage.com didn't 

just promote, and these defendants didn't just promote by 

running Backpage.com, adult prostitution, but Backpage.com 

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served as a platform where countless women and children were 

sold for sex. 

You're probably asking how? How could these 

defendants create and run this website for nearly 14 years 

knowing that they were facilitating this illegal conduct? 

Well, they ran it through deception and concealing the truth. 

You're also likely asking why? Why would these 

defendants want to create and run this website, a website where 

countless women and children were sold for sex? Greed. 

Evidence will show that Backpage.com generated hundreds of 

millions of dollars during its years of operation, which in 

turn meant millions of dollars in many of these defendants' 

pockets. 

Now let's talk about what was Backpage.com. 

Backpage.com was a classified advertising website where you 

could offer various goods and services for sale. I'm sure some 

of you have heard of the classified advertising website 

Craigslist. Well, similar to Craigslist, for example, if you 

have a sofa in your home, you wanted to offer it for sale, you 

could take a photo of that sofa, place it on Backpage and offer 

it for sale. But, ladies and gentlemen of the jury, evidence 

will show that the vast majority of these folks visiting 

Backpage.com weren't looking to buy themselves a sofa. 

Backpage.com was the internet's leading hub, leading website 

for prostitution. At its peak, it operated in more than 400 

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cities here in the U.S. 

Some of you have a good understanding of how the 

website operated and how you could post ads on Backpage. I 

want to show you some clips done by a recording from supervisor 

Special Agent Brian Fichtner of the California Department of 

Justice as part of his 2015 undercover investigation into 

Backpage. 

And as part of Agent Fichtner's undercover 

investigation of Backpage, he posted two fake ads on the 

website, one offering a sofa for sale, and the other ad 

offering so-called escort services. 

What you're looking at on your screen now is the -- 

Agent Fichtner typed in Backpage Sacramento. I mentioned that 

Backpage operated in more than 400 cities here in the U.S. 

Agent Fichtner was based out of Sacramento, California, which 

is where his undercover investigation took place. 

What you're looking at now is the homepage of 

Backpage, local places, community, buy, sell, trade, where you 

can buy, sell appliances, auto parts, and furniture. In the 

middle you see rentals and real estate, where you can offer 

various condos or apartments for sale. And then to the right 

you see the adult services of the website, escorts, body rubs, 

male escorts, and adult jobs. 

What you're looking at now is various titles of ads in 

the so-called Sacramento escort section of Backpage from 

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March 2015. Let's look at a few of these ads a bit closer. 

Young, sexy, still in town, enjoy some tytee time. 

Best lips in the city. Exotic freak. Gone in an hour. $60 

for a quick special. 

$60, 100, $180 hot hottie special. Sweet sexy greeneyed beauty. Ask about my two girl shows. And, thirsty, come 

drink my water. Fine too. 

And this is the advertisement where we just looked at 

some of the titles, exotic freak, gone in an hour. And you see 

the images associated with that advertisement, as well as the 

text. 

As far as the text, you see ebony out and in calls. 

Ladies and gentlemen of the jury, evidence will show that in 

the prostitution industry, an out call is a -- it's when that 

buyer of sex, he -- the prostitute goes to his location for -- 

to engage in sexual services for money, and an in call is where 

the buyer of sex goes to the prostitute that provides the 

hotel, motel room, or house to engage in sex for money. 

Sweet, sexy green-eyed beauty, and images associated 

with this ad in the so-called escort section of Backpage 

Sacramento. Hey, I'm Jessica. I'm the hottie you will be 

hooking up with tonight, and the images associated with 

Jessica's ad. 

And what you're looking at here is how you would write 

an ad to be posted on Backpage.com. You see place for the 

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title, descriptions we just looked at, you know, in calls and 

out calls, descriptions of that. There is also a place for 

age. And then there is also, shows you you can input your 

e-mail address where, the evidence will show, a buyer looking 

for sexual services for money can contact you via e-mail or 

telephone. You see here it costs $10 in March of 2015 to post 

a so-called escort ad in Backpage Sacramento's escort section. 

The page you're looking at now you see the browse 

menu, you can attach images to your ad. We looked at some of 

these images in the escort section of Backpage Sacramento. And 

at the bottom you see upgrade. Evidence will show that because 

of the vast array of prostitution ads on Backpage, individuals 

could pay extra to have their ads moved to the top. We looked 

at some of the titles.

So you wanted to have your ad moved to the top every 

so often to increase the visibility of your ad, the likelihood 

of folks looking for sex for money could contact you, you could 

pay for all the reposts. 

Similar to this, you see sponsor ads. Sponsor ads 

were also -- cost extra. You could pay for that upgrade where 

your ad would be posted to the right of the page and 

highlighted in yellow, again, increasing the visibility of the 

ads. 

Evidence will show that Backpage generated a large 

amount of their revenue based on charging these individuals to 

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post their prostitution ads, charging them for upgrades. 

And what you're looking at now is the payment screen 

where you could input your credit card information and post 

your ad to be published on Backpage.com. 

Ladies and gentlemen, these are some of the images 

associated with the so-called Sacramento escort section of 

Backpage. 

Again, additional images. Additional images. 

The image you're looking at now, no GFE, ladies and 

gentlemen of the jury, evidence will show that, in the 

prostitution industry, GFE is a sex-for-money code word that 

means girlfriend experience. What girlfriend experience means, 

evidence will show, that in addition to having sexual services 

in exchange for money with a buyer, that prostitute, that the 

buyer would also engage in emotional intimacy, French kissing 

and the like. Evidence will show that these defendants became 

aware that GFE was a sex-for-money code word, but continued to 

allow ads with GFE to be posted on Backpage.com. 

This image you're looking at now, no GFE, just means 

this prostitute, this provider is only offering sex for money 

with no girlfriend experience. 

Additional image Backpage Sacramento. Here not even 

attempting to hide what's being offered for sale. 

What you're looking at here is the Sacramento 

furniture for sale section. You see for Friday, March 6th, one 

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ad for furniture, $150 sofa for sale. Ladies and gentlemen of 

the jury, evidence will show that that one furniture ad was the 

fake ad Agent Fichtner posted as part of his undercover 

investigation of Backpage. One ad for furniture. You looked 

at the vast amount of prostitution ads in the Sacramento escort 

section of Backpage. 

Now that you have an idea of how the website operated, 

how it was laid out, and how you could post ads in the adult 

services section of the website, as evidence will show, were 

nothing less than prostitution ads, and these defendants, 

knowing this, took steps to facilitate the prostitution crimes 

being committed by folks who were posting these ads on 

Backpage. 

Speaking of defendants, let's talk about each one of 

them briefly individually. 

Defendant Michael Lacey, creator and cofounder of 

Backpage, and at times owned a 45 percent interest in the 

company. 

Defendant Jim Larkin, also a creator and cofounder of 

Backpage, and at times owned a 43 percent interest in the 

company. 

Defendant Jed Brunst, former chief financial officer 

of Backpage, and at times owned a six percent interest in the 

company. 

Defendant Scott Spear, former executive vice president 

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of Backpage, and at times owned a four percent interest in the 

company. 

And the final two defendants, defendant Andrew 

Padilla, former operations manager at Backpage, and his 

assistant, Joye Vaught, assistant operations manager at 

Backpage. 

Two individuals who aren't on trial, but you'll also 

hear played significant roles in operating Backpage during this 

14 years of existence, are former CEO and cofounder Carl 

Ferrer, and sales and marketing director Dan Hyer. 

You'll hear from both Ferrer and Hyer during this 

trial. They were cooperating witnesses with the government. 

Ferrer and Hyer will tell you that the vast majority of 

advertisements in the adult section of Backpage.com were 

nothing less than prostitution ads. And, knowing this, they 

conspired, they agreed with these defendants to facilitate the 

prostitution crimes being committed by folks who were posting 

ads on the website. Why? Greed. 

Evidence will show that Backpage generated hundreds of 

millions of dollars during its years of operation, the vast 

majority of which came from fees they were charging to post 

their prostitution ads on the website, which meant tens of 

millions of dollars to many of these defendants' pockets. 

Now, let's talk about how Backpage was started and 

grew to be the internet's leading forum for prostitution. In 

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or around 1970, defendants Lacey and Larkin founded alternative 

newspapers here in Phoenix, Arizona. And over the years, they 

acquired additional alternative newspapers under the entities 

New Times Media and Village Voice Media. Evidence will show 

that the defendants Brunst and Spear were executives at these 

entities. 

In or around 1996, former CEO Carl Ferrer was hired by 

Village Voice Media as a classified advertising director, and 

in or around 1998, Dan Hyer was hired as an account executive. 

In or around the year 2000, with the rise of the 

internet, in particular the classified advertising website 

Craigslist.com began to cut in on Village Voice Media's print 

classified advertising business. So in order to respond to 

this threat, defendants Lacey, Larkin, and Carl Ferrer created 

Backpage.com in 2004. 

In between 2004 and 2010 when Craigslist shut down its 

adult services section, Craigslist was Backpage's biggest 

competition when it came to prostitution ads. In fact, 

evidence will show that these defendants engaged in a process 

they called internally as content aggregation in the early 

years in order to, evidence will show, grow the prostitution 

ads on Backpage. 

And what this content aggregation process entailed was 

going on other prostitution websites, mainly the erotic 

services section of Craigslist, taking prostitution ads off 

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Craigslist and recreating those same prostitution ads on 

Backpage in order to grow the content on the site in the early 

years. 

And you'll hear from former sales and marketing 

director Dan Hyer. He will tell you that the goal in the early 

years was to increase the content on the site, because if you 

increase the content, you increase the customers to 

Backpage.com. 

An example of how the content aggregation process 

worked. This is an e-mail exchange between Carl Ferrer, Dan 

Hyer, and defendant Scott Spear, where they talk about 

following the guidelines to secure content on Backpage. 

Script. Hi. I saw your ad on the internet. Have you 

ever tried posting it on Backpage.com? I can post your ad 

today so that you can try out our site. It costs you nothing. 

I do all the work here. Can I have your e-mail address, 

please? 

And, ladies and gentlemen, you'll hear from Dan Hyer 

that in the early years these defendants didn't even contact 

customers and get their permission before taking the 

prostitution ads off Craigslist and recreating those same 

prostitution ads on Backpage. 

And this creating prostitution ads on Backpage with 

the content aggregation process was successful in generating 

revenue for the company. In fact, a couple months after they 

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exchanged this e-mail, these defendants met to discuss 

Backpage-related developments. And part of the agenda item for 

that meeting included how the Dallas section of Backpage, where 

Hyer was based, how it grew to more than $40,000 in revenue a 

month. And next agenda item, creating adult content online, in 

other words, creating prostitution ads on Backpage through the 

content aggregation process. 

This e-mail you're looking at now is an e-mail in 

November of 2008 defendant Larkin sends to Carl Ferrer 

congratulating Ferrer on Backpage having its best month ever in 

terms of revenue. To which Carl Ferrer replies, Hyer has done 

an awesome job with his marketing. Ladies and gentlemen, that 

awesome job Hyer was doing was creating prostitution ads on 

Backpage through the content aggregation process. 

And you'll hear that in fall of 2010 when Craigslist 

shut down its adult services section of its website, these 

defendants didn't need to aggregate content in the U.S. 

anymore, because evidence will show that overnight the folks 

who were posting their prostitution ads on Craigslist, migrated 

to posting those same prostitution ads on Backpage. 

But that didn't end anything. Evidence will show that 

even after Craigslist shut down its site, these defendants 

engaged in content aggregation overseas in order to grow and 

expand their criminal enterprises overseas, hiring individuals, 

contractors overseas called content aggregators who would visit 

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prostitution websites overseas, take prostitution ads off of 

those websites -- 

MR. FEDER: Objection. Relevance. 

MR. JONES: -- create the same ads on Backpage -- 

THE COURT: Your objection is overruled.

Go ahead. 

MR. JONES: -- creating those same ads on Backpage in 

order to grow and expand their criminal enterprises and their 

businesses overseas. 

But, ladies and gentlemen of the jury, evidence will 

show that creating prostitution ads on Backpage through the 

content aggregation process was just the tip of the iceberg in 

deceptive strategies and schemes these defendants devised to 

grow and expand their criminal enterprises. 

Beginning in around 2007, and continuing until at 

least 2010, these defendants engaged in business arrangements 

with other prostitution websites which they called reciprocal 

link agreements. One website you'll hear that the defendants 

had a reciprocal link agreement with was the prostitution 

review site The Erotic Review. Evidence will show that The 

Erotic Review is the prostitution review site where buyers of 

sex could rate their experiences with prostitutes, including 

their sexual encounters with them. 

Evidence will show that these defendants have a 

reciprocal link agreement with Erotic Review, where if someone 

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was on The Erotic Review looking at a prostitute's profile, 

they could click on a link which would take them to that 

prostitute's advertisement, take them to the prostitute's 

prostitution ad on Backpage.com. And, similar to this, if an 

individual was on Backpage looking at the adult services 

section looking at a prostitution ad, they could click on a 

link which would take them to that prostitute's profile on The 

Erotic Review. 

An example of how this worked. This document you're 

looking at now is an example of a review on the prostitution 

review site Erotic Review. Alica's profile, TER, The Erotic 

Review, and the link is how do you know. And then you see the 

ID number, the ad website, Backpage, female escorts, you see 

general information. And you see the types of services Alica 

offers: Sex, blow job, touch pussy, cum in mouth, lick pussy, 

anal, full, no rush sex. 

Ladies and gentlemen, evidence will show that the 

individual on the Erotic Review looking at the profile for 

Alica, they could click on that ad website link which would 

take them to Alica's prostitution ad on Backpage.com. And, 

ladies and gentlemen, these defendants were well aware of 

Backpage's relationship with The Erotic Review, and were 

even -- even generating Google analytics reports that showed 

how successful the Erotic Review was in referring customers to 

Backpage. 

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What a Google analytics report is, if I'm Nike.com and 

I'm trying to advertise in the New Times Air Jordans, I can 

advertise on Facebook or Google, so if a person goes to 

Facebook and they click on that Nike Jordan ad, it will take 

them to Nike.com and they can purchase those shoes. Nike, in 

turn, could generate a report that shows which websites it was 

advertising the Nike Air Jordans on was referring the most 

business to Nike.com. 

Or similar to this, evidence will show that these 

defendants generated Google analytics reports to show which 

websites were referring the most business to Backpage. Ladies 

and gentlemen of the jury, the number one source of referral 

was the prostitution review site The Erotic Review. 

In fact, this Google analytics report you're looking 

at now, for the month of January 2009, evidence will show that 

The Erotic Review was responsible for more than 500,000 visits 

to Backpage. In other words, more than half a million folks 

who were on The Erotic Review looking at profiles like Alica's, 

clicked on that ad link to take them to that prostitution ad on 

Backpage.com. 

And, ladies and gentlemen of the jury, these 

defendants were well aware that The Erotic Review was a 

prostitution website. In fact, what you're looking at now is 

an e-mail defendant Larkin sends defendant Spear and Carl 

Ferrer in 2009 telling them about an article that discussed a 

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recent prostitution bust here in Phoenix, Arizona, where 48 

individuals had been arrested for solicitation of prostitution. 

The article went on to note that many of the folks charged have 

provided reviews of their encounters with prostitutes on the 

website The Erotic Review, a website the article described as a 

prostitution website. 

Ladies and gentlemen of the jury, in addition to 

creating prostitution ads on Backpage through the content 

aggregation process, and intentionally soliciting prostitutionrelated business from prostitution review sites like The Erotic 

Review, evidence will show that these defendants also have 

relationships with individuals they call internally as super 

posters, or super affiliates. 

Evidence will show that a super poster or a super 

affiliate were individuals who owned local prostitution 

businesses, and in some cases, evidence will show, paid 

hundreds of thousands of dollars in order to promote their 

prostitution businesses in the adult services section of 

Backpage.com. You'll hear about some of these super posters, 

Dollar Bill, New York Platinum, and Sean Kim, throughout the 

course of this trial. 

This e-mail you're looking at here is sales and 

marketing director responding to super poster Sean Kim's 

complaint that another super poster was getting a higher 

discount than him. Evidence will show that because these super 

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posters were paying hundreds of thousands of dollars to post 

ads on Backpage, they received a discount on their ad fees. 

So this super poster is complaining that another super 

poster is getting a higher discount than him. To which Dan 

Hyer responds that we just cut you a check for $20,000, and if 

someone is getting a bigger discount, please tell us who. 

Ladies and gentlemen of the jury, Dan Hyer will tell 

you that in order for super poster Sean Kim to be cut a check 

for $20,000, he had to have posted at least $200,000 worth of 

prostitution ads in the adult services section of Backpage.com. 

So in addition to creating prostitution ads on 

Backpage with the content aggregation process, the reciprocal 

link agreements with websites like Erotic Review, the 

intentionally promoting the prostitution businesses of super 

posters like Sean Kim, evidence will show that these defendants 

also devised deceptive strategies in an attempt to conceal the 

fact that prostitution ads were rampant all over the website by 

using both computer filters as well as human moderators. 

And you'll hear the term moderators used frequently 

throughout the course of this trial. And what a moderator was 

was a former Backpage employee whose job was supposed to be 

preventing illegal ads, preventing prostitution ads from being 

posted on Backpage.com, but let's look at a few e-mails and 

documents, internal documents that show that instead of 

preventing these ads from being posted on Backpage.com, they 

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were instructed by these defendants to conceal the fact that 

prostitution ads were rampant on Backpage. 

This document you're looking at here is an exchange 

between defendants Spear and Carl Ferrer in 2007 discussing how 

to instruct these moderators to moderate content on Backpage. 

Edit ads for explicit sexual content. Do not include any 

verbiage that has suck your or lick your. You may edit the ad 

to read, I enjoy oral, but do not include the vulgar language. 

He goes on to tell them to take out anything questionable. 

Now, ladies and gentlemen of the jury, stripping out 

or taking out suck your or lick your and then posting the 

sanitized version of the advertisement on Backpage.com did 

nothing to change the true nature of what was being offered. 

It was still a prostitution ad. 

This document you're looking at here is an exchange 

between Carl Ferrer and staff in April of 2008 where Ferrer is 

instructing staff that he's under pressure to clean up the 

adult services section here in Phoenix, but he is unwilling to 

delete any, what evidence would show, are prostitution ads, 

because it would put Backpage in an uncompetitive position with 

Craigslist -- this is before Craigslist shut down its adult 

section in 2010 -- and also will result in considerable loss of 

revenue. 

So he instructs the moderators to ad these terms to 

the filter where they will be stripped or removed instead of 

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the version of advertisement posted on the website: Pop, cum, 

oral, back door, full service and blow. Again, ladies and 

gentlemen, stripping out these terms, posting the sanitized 

version of the advertisement on Backpage.com did nothing to 

change the true nature of what was being offered. Still a 

prostitution ad. 

Evidence will also show that on September 5th, 2010, 

Carl Ferrer, defendant Andrew Padilla, as well as Hyer, 

exchanged e-mails about needing to clean up the website because 

of the many new users that are going to be checking out 

Backpage.com. 

Andrew Padilla responds that these words you're 

looking at now were currently being filtered, in other words, 

stripped from ads, and the sanitized version posted on the 

website: Barely legal, holes, cum, pussy, fuck, cunt, blow. 

Again, stripping these words out and posting the sanitized 

version of the advertisement on Backpage.com, again, ladies and 

gentlemen of the jury, did nothing to change the true nature of 

what was being offered. It was still a prostitution 

advertisement. 

You want to know why Carl Ferrer was instructing them 

that the website needed to be as clean as possible when many 

new users checked out the site? Well, evidence will show, a 

few days prior to him sending that e-mail, Craigslist had shut 

down its adult services section, which I stated before meant 

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overnight those who are posting their prostitution ads on 

Craigslist migrated to posting those same prostitution ads on 

Backpage, which represented a tremendous revenue growth for the 

defendants. However, it also meant that all eyes from law 

enforcement, the public, and crimes against children 

organizations were going to be focused on these defendants. 

And, ladies and gentlemen of the jury, that is exactly what 

happened. 

Less than two weeks after Ferrer sends that e-mail, 

and Padilla talking about stripping out these terms, the 

National Association of Attorneys General, an organization made 

up of every state attorney general here in our nation, all 50 

sent these defendants a letter signed by 21 states attorney 

generals. They sent it to Samuel Fifer, who, evidence will 

show, is the defendants' public relations representative, 

telling these defendants pointblank that ads for prostitution, 

including ads trafficking children, are rampant, are all over 

Backpage. And in light of Craigslist's decision to shut down 

its adult services section of its website, and because these 

defendants cannot or will not adequately screen for these ads, 

they should shut down the adult services section of the 

website. 

The AGs, attorneys generals, went on to tell them that 

they understood that this will result in considerable loss of 

revenue for these defendants, but they reiterate to them that 

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no amount of revenue, no amount of revenue could justify the 

scourge of illegal prostitution and the misery of the women and 

children who will continue to be victimized by the ads posted 

on Backpage.com. 

And speaking of revenue, evidence will show that 

during the time of this letter at the end of 2010, these 

defendants were generating -- Backpage was generating 

$30 million a year in revenue, the vast majority of which, more 

than 94 percent, from fees they were charging customers to post 

their prostitution ads on the website. 

So while they were telling the AGs and others that 

they were doing everything they could to prevent these ads from 

being posted on the website, let's look at a few more of the 

e-mails to show that, in fact, they were doing quite the 

opposite. 

This e-mail you're looking at here is from defendant 

Andrew Padilla, the operations manager, that he and defendant 

Joye Vaught send the moderation staff a couple weeks after this 

AGs' letter urging them to shut down the website, threatening 

to -- 

MS. BERTRAND: Objection. Misstates the document.

MR. JONES: -- fire --

THE COURT: The objection is sustained. 

MR. JONES: -- threatening -- Padilla threatening to 

fire any moderator who acknowledges that a customer is a 

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prostitute. And defendant Vaught is also copied on this 

e-mail. Leaving notes on our site that imply that we are aware 

of prostitution or in any position to define it is enough to 

lose your job. He goes on to tell them, if you don't agree 

with what I'm saying, you need to find another job. 

Evidence will also show a couple weeks after Padilla 

sends this e-mail, he sends moderation staff another e-mail, 

again, to which defendant Vaught, as well as Carl Ferrer and 

Hyer, were copied on. In this e-mail he tells moderation 

staff -- he includes a PowerPoint attachment, as well as an 

Excel spreadsheet. And in this PowerPoint he lists 37 images 

and instructs staff that if an image had approved next to it, 

those images were all okay to be posted in the adult services 

section of Backpage.com. 

He then instructs staff if an image had a fail next to 

it, don't fail the ad if it -- if somebody posted an ad with an 

image that had fail next to it, simply strip out the image and 

post the sanitized version of that ad on Backpage.com. And 

then he tells them to only remove the entire ad if an image had 

graphic sex act next to it. Let's look at a few of these 

images. 

Approved. Topless is okay. 

Legs spread is okay but genitalia is covered by 

clothing, so an ad -- an image included like this were okay to 

be posted in the adult section of Backpage.com. 

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Approve. Female frontal nudity with legs spread but 

not extremely spread. Another image like this okayed to be 

posted in the adult services section of Backpage.com. 

Fail. Hand too far past waistband of panties. Now, 

again, ladies and gentlemen of the jury, fail didn't mean if an 

individual posted an ad with an image like this to fail the ad. 

Fail meant strip out that image and post the sanitized version 

of that advertisement on Backpage.com. Again, changing nothing 

about the true nature of what was being offered. Still a 

prostitution ad. 

Approve. Mouth on own breast is okay. Another image 

okay to be posted in the adult services section of Backpage. 

Approve. Rear shots okay. 

This rear shot, more graphic than the previous slide, 

but the amount of nudity is still okay. 

Approve. Transparent wet panties okay. Again, 

another image, now this image okay to be posted in the adult 

section of Backpage.com. 

Fail. Exposed anus. Now, ladies and gentlemen of the 

jury, again, if an individual posted an ad with an exposed anus 

like this, evidence will show, that that ad wouldn't fail, it 

wouldn't be prevented from being posted on Backpage, but these 

defendants instructed moderation staff to strip out that image 

and post the sanitized version of that ad on Backpage. Again 

here, changing nothing about the true nature of what was being 

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offered here. 

Fail. Using toy in a sexual manner. Again, image 

stripped out, sanitized version of the ad posted on 

Backpage.com. And he tells them to only remove the entire ad 

for graphic sex act. 

But that's not it, ladies and gentlemen of the jury. 

Padilla goes on in this e-mail to instruct staff. He tells 

them that, images aside, it's the text, it's the words in the 

ads that's killing us with the AGs, the attorney generals. A 

couple weeks after the AGs had just sent them this letter 

urging them to shut down the website because of the 

trafficking, the prostitution taking place in there, so he 

tells staff, try to ban or strip out these terms from ads 

before posting the sanitized version of the advertisement on 

the website.

Ladies and gentlemen, stripping out any of these 

terms: Pegging, pussy, quicky, rape, rimming, did nothing to 

change the true nature of what was being offered. It was still 

a prostitution ad. 

These defendants knew, they knew that the vast 

majority of advertisements on Backpage.com were prostitution. 

Sometimes it's all about the journey and the destination -- 

destination. Erectile dysfunction, GFE provider. I don't care 

for reviews, but they insist on leaving them anyway. You can 

find a few current reviews on The Erotic Review and the ID 

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number associated with that advertisement. 

I love men. I'm a GFE. Out call and in call, with 

the exception of in call. 

Stacked college co-ed with the best mouth ever, GFE, 

and the prices associated with her time. Ladies and gentlemen, 

these defendants knew that these were prostitution ads, but 

they didn't shut down the website. They didn't try to prevent 

these ads from being posted on the website. Why? Greed. They 

were generating -- the vast majority of the revenue came from 

fees they were charging customers to post these prostitution 

ads on the website. 

A couple months after Padilla sends out that e-mail, 

the PowerPoint and the Excel document, these defendants, 

evidence will show, that staff were told that the website 

needed deep cleaning because the news media outlet CNN was 

getting ready to run a broadcast about children being sold for 

sex on Backpage.com. 

That's right, ladies and gentlemen, it wasn't just 

crimes against children organizations, the public, and law 

enforcement, but news media outlet also put these defendants on 

notice -- 

MR. BIENERT: Objection, Your Honor. Rule 401, 403. 

THE COURT: The objection is overruled. 

MR. JONES: -- put these defendants on notice, as one 

letter told them pointblank, that Backpage was a hub for 

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prostitution. But the thing is, these deep cleaning, these 

stripping out words and images indicative of prostitution and 

posting the sanitized version of the advertisement on the 

website, it still didn't work to clean up the website. 

One organization that you'll also hear about that put 

these defendants on notice that they were promoting 

prostitution, including prostitution of children by running 

Backpage.com, was the National Center for Missing and Exploited 

Children, or NCMEC. NCMEC is a nonprofit organization based in 

Washington, D.C., whose mission is to find missing and 

exploited children, reduce the sexual exploitation of 

children -- 

MR. BIENERT: Objection, Your Honor. 

MR. JONES: -- and prevent the victimization of 

children. 

THE COURT: The objection is overruled. 

MR. JONES: Since 1996, NCMEC has served as a 

clearinghouse, a central location where crimes against children 

can be reported, where cyber tips can be reported. 

And what a cyber tip is, is suppose you're on the 

internet and you come across a website where you suspect a 

child is exploited. You could submit that information to NCMEC 

via the 800 number, it's often done online now, you know, where 

you found this image, the date and location, NCMEC will 

disseminate that information to law enforcement who will 

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further conduct an investigation. 

Well, ladies and gentlemen, the evidence will show 

that more than 70 percent of all child sex trafficking cyber 

tips reported to NCMEC involved Backpage.com, the website these 

defendants ran. And because of it, NCMEC met with these 

defendants to try to work with them to implement safety 

measures to reduce or eradicate children from being sold for 

sex on the website. 

But while they were asserting to NCMEC and others that 

they were doing all they could to prevent the illegal ads from 

being posted on the website, evidence will show that these 

defendants' main concern was making money. And, boy, evidence 

will show the money began to roll in about this time. Evidence 

will show that these defendants were often given revenue 

reports, Larkin, Brunst, Spear, and others, showing how much 

revenue Backpage is generating, also what sections of Backpage 

was generating the most revenue. And, ladies and gentlemen of 

the jury, the vast majority of revenue Backpage was generating, 

more than 94 percent, came from fees they were charging 

customers to post prostitution ads. 

For example, this pie chart you're looking at here 

shows Backpage revenue from October 2010 to December 2010, the 

first three months post Craigslist shutting down their adult 

services section. As you can see, Backpage generated 

$8.5 million during this three-month period of time, the vast 

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majority, more than 94 percent, came from fees they were 

charging customers to post these prostitution ads on the 

website. 

So while they were asserting that they were doing all 

they could to prevent these ads from being posted on the 

website, the proof is in the pudding. They were devising these 

deceptive strategies to conceal the fact that prostitution ads 

were rampant on the website because of greed. 

I mentioned just briefly that CNN was getting ready to 

run a report about children being sold for sex on the website. 

Well, evidence will show before CNN ran this broadcast, they 

contacted the defendants through their representative, 

defendants Lacey and Larkin specifically, and asked them if 

they wanted to comment on this troubling issue. 

And the evidence will show that these defendants, 

through their PR representative, sent CNN a quote that Backpage 

is steadfast in its opposition of its website being used for 

criminal activity, and they also included a so-called safety 

and security background, which included recent so-called safety 

measures that they had implemented to ensure or attempt to 

prevent illegal ads from being posted on the website, including 

a new no nudity policy. 

Well, ladies and gentlemen of the jury, evidence will 

show after a week, after they responded to CNN with that quote 

and that new no nudity policy, defendants sent staff an e-mail 

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entitled, Stricter Guidelines for Nudity, this e-mail exchange 

between Padilla, Ferrer, and also the manager of the moderation 

staff. In it Padilla tells them that now breast must be 

covered with clothing and thongs can't be below the butt crack. 

He tells them that if images are posted like this, these are 

terms of use violations on Backpage. 

But he goes on and tells staff to don't remove ads if 

an individual posts an ad with their breast uncovered and 

thongs below the butt crack, but he tells them to strip out the 

image and post the sanitized version of the advertisement on 

Backpage.com. And he goes on at the end to tell them, nudity 

violations will always be a part of this business. Deception. 

Concealing the truth. And a week after they had just sent CNN 

this so-called no nudity policy they had implemented. 

Evidence will show a week after Padilla sends this 

e-mail, CNN runs the broadcast entitled, Selling the Girl Next 

Door, that talked about children as young as 13 being 

trafficked on Backpage. You will hear evidence that these 

defendants discussed that broadcast in person, as well as 

e-mails, Lacey, Larkin, and others at Backpage. 

You'll also hear that a week after CNN aired this 

broadcast, these defendants, through their PR representative, 

sent CNN a cease and desist letter demanding that they not 

re-air the broadcast. They also told CNN that Backpage was 

steadfast in its opposition of its website being used for 

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criminal activity, including prostitution. 

They also, in essence, challenged CNN to find any ad 

on Backpage that could be an indicator of a child being sold 

for sex. And, ladies and gentlemen of the jury, you will hear 

from a senior vice president at CNN. He'll tell you that they 

took Backpage and these defendants, they took these defendants 

up on that challenge, and for one day pulled more than 12,000 

ads that they indicated to these defendants could be indicators 

of a child being sold for sex. 

MR. BIENERT: Objection. Rule 401, Rule 403. 

THE COURT: The objection is overruled. 

MR. JONES: And they included the words like: 

Schoolgirl, young, fresh, teenage, tight. CNN also told these 

defendants, they gave them examples of recent arrests all 

around the country of pimps and traffickers who had been 

arrested and prosecuted for selling children for sex through 

ads placed on Backpage.com. 

CNN also told these defendants in this letter that 

many of the ads on Backpage included the ID number in links to 

the prostitution review site The Erotic Review, which was 

another strong indicator that the ads were for prostitution. 

But, of course, they didn't tell CNN that they had a reciprocal 

link agreement with the prostitution review site The Erotic 

Review. Deception. Concealing the truth. 

What you'll also hear, ladies and gentlemen of the 

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jury, that a week after CNN sent them that letter, they sent 

moderation staff another e-mail. This exchange between 

defendant Padilla, Vaught is also copied on this e-mail, 

defendant Vaught, as well as the moderation team manager. And 

they tell them that, effective immediately, any variation of 

TER, The Erotic Review, is banned on Backpage. But, ladies and 

gentlemen of the jury, they don't tell them that if an 

individual posted an ad with Erotic Review, to fail or prevent 

that ad from being posted on the website. They simply tell 

them to strip out TER, Erotic Review, and post the sanitized 

version of that on the website, changing nothing about the true 

nature of what was being offered. It was still a prostitution 

ad, a week after CNN had just told them about the ads with The 

Erotic Review. Deception. Concealing the truth. 

You'll also hear that these defendants apologize to 

customers for having to remove images and text associated with 

their ads. 

This ad you're looking at here, evidence will show a 

user that went by the name of Licks a Lot contacted Backpage's 

staff in February 2011 complaining that she was tired of 

spending her hard earned money posting ads on Backpage.com only 

to have her text and her images removed from her ads. 

Ladies and gentlemen of the jury, these defendants 

didn't prevent Licks a Lot's ads from being posted on the 

website, in fact, guaranteed low mileage, boys, nice, round, 

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firm bottom, and the two images associated with this ad, 

evidence will show that they apologized to Licks a Lot that her 

images and texts had been deleted, allowed this ad to remain on 

Backpage.com, and even gave Licks a Lot free upgrades, free 

moves to the top in sponsor ads for all of her trouble. 

I mentioned earlier that these defendants met with 

National Center for Missing and Exploited Children who were 

trying to work with them to implement measures to reduce or 

prevent children from being trafficked on their site. Well, 

the evidence will show that on March 1st, 2011, defendant 

Lacey, Larkin, Spear, Carl Ferrer, and others at Backpage met 

with the National Center for Missing and Exploited Children. 

But before this meeting, evidence will show that at defendants 

Larkin and Carl Ferrer's request, defendant Padilla pulled more 

than 600 terms that were currently being filtered or stripped 

from ads, a week before meeting with the National Center for 

Missing and Exploited Children. 

And you will hear that they met with NCMEC, and during 

this meeting, NCMEC showed these defendants images of known 

missing children, and then those same children posted in ads in 

the adult services section of the Backpage.com. 

NCMEC also showed these defendants images of known 

missing children, and then profiles of these children on the 

prostitution review site The Erotic Review, but, again, like 

CNN, they didn't tell NCMEC they had had a reciprocal link 

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agreement with The Erotic Review. Deception. Concealing the 

truth. 

You'll also hear that later that day these defendants 

also met with Polaris Project, another anti-human trafficking 

organization based in Washington, D.C., whose mission is to 

prevent women and children from being sold for sex. And you'll 

hear from a representative from Polaris during the course of 

this trial. He'll tell you that during this meeting with 

Larkin, Spear, Ferrer, and others at Backpage, that Polaris 

spread out Backpage ads across the table and went ad for ad 

giving these defendants instances, indicators of women and 

children being sold for sex. 

But approximately nine days after meeting with 

National Center for Missing and Exploited Children and Polaris, 

evidence will show that these defendants met to discuss 

Backpage related developments. And a part of the agenda items 

for the meeting included how they could be more flexible and 

allow more coded terms. You'll also see about a week after 

that meeting Padilla sends moderation staff, sends an e-mail to 

defendant Vaught and moderation manager Monita Mohan entitled 

Relaxed Image Standards. And he tells them that the first and 

last image you're looking at, that these images were okay to be 

posted in the adult services section of Backpage.com. 

And the evidence will show for the second and third 

image, staff were instructed to strip out the image and post 

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the sanitized version of the advertisement on Backpage.com, 

again, changing nothing about the true nature of what was being 

offered. 

Also, the day before Padilla sends this e-mail, 

defendant Vaught also sends staff an e-mail entitled Adult 

Moderation. And she tells staff that we're going to allow 

users to post pictures with their hands near their crotch 

again. And she goes on to tell them that we still want to 

delete the pictures where they have their hands in their 

panties. Again, ladies and gentlemen, a perfect example of how 

these defendants are trying to do everything they could to keep 

law enforcement, crimes against children, and others off their 

backs, while not upsetting their customers, because that's 

where the vast majority of the revenue Backpage was generating 

were coming from, fees they were charging customers to post 

these prostitution ads on the website. 

And deleting pictures, deleting images, the individual 

who posted with hands inside their panties, did nothing to 

change the true nature of what was being offered. It was still 

a prostitution advertisement. Defendant Vaught knew that, as 

well as her other five coconspirators. In knowing this, they 

intentionally facilitated the prostitution crime being 

committed by folks who were posting these ads on the website. 

And why? Greed. 

Evidence will also show that because of the mounting 

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pressure these defendants were receiving from the public and 

these crimes against children organizations and others, they 

hired individuals they called internet safety experts, in a socalled attempt to work with them to reduce or eliminate 

prostitution ads, ads offering sex for money, from being posted 

on their website, as well as the trafficking of children. 

Ladies and gentlemen of the jury, evidence will show 

that these defendants didn't even implement the safety measures 

recommended to them by their own internet safety experts. For 

example, this document you're looking at here was sent to 

defendant Larkin, Spear, and others at Backpage from their 

safety experts telling them that the phrase new in town was 

often used by pimps who shuttle children to locations where 

they don't know anyone and can't get help. 

Evidence will also show that these defendants were 

told that the phrase AMBER Alert, that's right, the national 

child abduction phrase, to be on the lookout for this phrase 

because it also could be an indicator of a child being sold for 

sex. But, ladies and gentlemen of the jury, evidence will show 

that even after being told this, these defendants continued to 

allow ads with new in town to be posted on the website. And 

the evidence will show that AMBER Alert was simply added to the 

strip term from ad filter. So if a user or somebody posted an 

ad that included AMBER Alert, the AMBER Alert would be stripped 

from the ad, and the sanitized version of the advertisement 

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posted on Backpage.com, changing nothing about the true nature 

of what was being offered. 

These defendants were also told by their internet 

safety experts to determine if a user was using the same credit 

card or the same phone number to post multiple ads in the adult 

services section of Backpage, because this could also be an 

indicator of a prostitution or human trafficking situation. 

But even after being told this, they continued to allow users 

to post multiple ads with the same credit card, as well as post 

multiple ads using the same phone number. 

You'll also hear that during this time these 

defendants exchanged e-mails, defendant Larkin and others at 

Backpage, including former CEO Carl Ferrer, about implementing 

age verification. So before posting an ad in the adult 

services section of Backpage, you have to input your -- verify 

with your driver's license or some other type of identification 

information. Ladies and gentlemen of the jury, evidence will 

show that although age verification would have only cost 

between 79 and 99 cents a query, these defendants determined 

that it wasn't cost effective to implement.

Now, let's look at the revenue they were generating 

during this time, July 2011 where they're exchanging e-mails 

about implementing age verification. Backpage had generated 

$40 million a year -- $40 million in just a nine-month period 

of time, from October when Craigslist shut down to that next 

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July, $40 million, 94 percent from fees they were charging 

customers to post prostitution ads on their website, but they 

didn't even want to pay 79 or 99 cents a query to implement age 

verification. Greed. 

You'll also hear that these defendants met with -- 

continued to meet with states attorney generals who put them on 

notice that they were promoting prostitution by running 

Backpage.com. 

You'll hear that in one meeting with the Washington 

State Attorney General's Office, you'll hear from a Washington 

state representative, you'll hear from Professor Paula Selis. 

Professor Selis will tell you that she asked a Backpage 

representative during this meeting, she asked them pointblank, 

you mean to tell me that the folks contacting individuals in 

the adult services section of Backpage, the women that they're 

contacting are offering to go out for coffee? To which she'll 

tell you the Backpage representative told her, we can't deny 

the undeniable. 

That's right, ladies and gentlemen, these defendants 

can't deny that they knew that the vast majority of the ads on 

Backpage.com were nothing less than prostitution ads. And 

knowing this, they intentionally facilitated the prostitution 

crimes being committed by folks who were posting these ads on 

the website because of greed. 

You'll also hear during this time these defendants 

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continued to brag about Backpage's contribution to the 

prostitution industry. This document you're looking at here is 

an excerpt from a draft editorial entitled Backpage Understood. 

In it defendant Lacey states, eliminating our adult advertising 

will in no way eliminate or even reduce the incidents of 

prostitution in this country. 

He goes on to say, for the very first time, the oldest 

profession in the world has transparency, recordkeeping, and 

safeguards. 

Ladies and gentlemen, the evidence will show that 

defendant Lacey sends this draft editorial to defendant Larkin, 

who forwards it on to former CEO Carl Ferrer. And Larkin tells 

Ferrer, he says, Carl Ferrer, I want you to think about any of 

the information, any of the information Lacey just sent him 

being made public. We need to stay away from the very idea of 

editing the posts, as you know. Deception. Concealing the 

truth. 

You'll hear that Carl Ferrer removed Lacey's comments 

about bragging about Backpage's contributions to the 

prostitution industry before finalizing that document. 

Evidence will also show that in August of 2011 the 

National Association of Attorneys General, I told you they sent 

them -- the defendants a letter signed by 21 AGs in September 

2010. Well, in 2011 they sent these defendants another letter, 

this time signed by every attorney general in the state -- in 

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the United States, all 50, telling these defendants pointblank 

that naked persons in provacative positions are featured in 

nearly every ad on Backpage.

The AGs go on to tell these defendants that it doesn't 

take forensic training to know that these are prostitution ads. 

They also tell them that this hub for illegal services has 

proven particularly enticing for those seeking to sexually 

exploit minors. But even after this letter signed by every 

attorney general in the state -- in the United States, they 

still didn't shut down the website. Why? Greed. By the end 

of 2011, evidence will show Backpage had generated nearly 

$60 million, more than 94 percent from fees they were charging 

customers to post prostitution ads on the website. 

Evidence will also show that in January of 2012 Auburn 

Theological Seminary, a faith-based organization based out of 

New York City, who have met in person with defendant Larkin, as 

well as defendant Lacey, to try to work with them to implement 

safety measures to reduce or eliminate children and women from 

being sold for sex on Backpage, but after still finding the 

same ads on Backpage, they sent Lacey and Larkin a seven-page 

letter specifically addressed to them telling them that a 

cursory, a brief review of Backpage shows customers selling 

sex. 

They also went on to give these defendants examples of 

children as young as 12 being sold for sex, and pimps and 

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traffickers convicted through ads placed on Backpage.com. 

A couple of months after this e-mail, evidence will 

show, in April 2012, a mother contacted Backpage staff and told 

them that a 17-year-old minor who had an ad posted in the 

escort section of Backpage.com was trying to recruit her 

15-year-old daughter into prostitution. And the evidence will 

show these defendants, defendant Padilla, told staff that we 

can't do anything -- don't do anything about this ad because 

she didn't claim her own daughter is being depicted in the ad. 

You'll also hear that that same month another mother 

contacted Backpage staff and included a link to her daughter's 

ad on the -- on the website called Backpagepics.com. And she 

tells staff that the link included images of her daughter who 

had been drugged and taken against her will, and urged Backpage 

to shut down, take down those ads. To which the response for 

her was that, we don't own Backpagepics.com so we can't do 

anything about that. 

Well, ladies and gentlemen of the jury, evidence will 

show that this same mother contacted Backpage a few days later, 

again, this time with her daughter's -- a link to her 

daughter's ad on the website Backpage.com, a website these 

defendants ran, urging them to take down the ads of her 

daughter who had been drugged and taken against her will. 

Nothing happened. The mother again the next day, and finally 

the ads were taken down. The evidence will show that this 

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e-mail exchange was ultimately forwarded from Carl Ferrer to 

defendant Larkin, to which Larkin replied, CF, Carl Ferrer, 

that's a good, solid response. 

Now, ladies and gentlemen of the jury, you'll hear 

from victims during the course of this trial. They'll tell you 

how Backpage made it easy to sell them for sex. They'll also 

tell you how everybody in the prostitution industry knew that 

Backpage was a website to visit to connect with folks offering 

sexual services in exchange for money. 

They'll also tell you about how their pimps and 

traffickers took photos of them and placed those photos in ads 

and posted them on Backpage.com offering them for sex. 

They'll also talk to you about some of the code words 

used in the prostitution industry, as well as how important the 

upgrades, the move-to-the-tops in the sponsor ads were, because 

of the prevalence of prostitution ads on Backpage. 

You see, evidence will show that this case isn't just 

about these defendants generating tens of millions of dollars 

off facilitating prostitution. The lives of countless women 

and children have been forever changed by their running 

Backpage.com for 14 years. 

You'll hear -- you'll hear from that mother of that 

14-year-old who had to attempt to buy sex with her daughter to 

rescue her from being sold for sex. 

MR. BIENERT: Objection, Your Honor, 401, 403. 

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THE COURT: The objection is overruled. 

MR. JONES: You'll hear from a father who had to 

contact Backpage staff to urge them to take down ads of his 

daughter. And you'll also hear, you'll hear that these 

defendants likely submitted thousands of cyber tip reports to 

NCMEC about a possible trafficking occurring on Backpage. 

You'll hear that they were sometimes quick to respond to law 

enforcement requests for information to further trafficking 

investigations, and also that they prevailed in some court 

hearings and proceedings in regards to Backpage. 

But, ladies and gentlemen of the jury, evidence will 

show the courts, if NCMEC, if the law enforcement, if they only 

knew, if they only knew what we know now about how these 

defendants were creating prostitution ads on Backpage and the 

content aggregation process; how they were intentionally 

soliciting prostitution-related business from prostitution 

review sites like The Erotic Review; how they were 

intentionally promoting the prostitution businesses of these 

super posters like Sean Kim; how they were constantly changing; 

how they were instructing staff to moderate these ads based on 

the pressure they were receiving from the public; how they were 

about to strip terms from ads, because if they only knew. Why? 

Greed. 

You'll hear from -- you'll hear from Destiny and 

Naomi. Naomi here, Naomi who was sold for sex beginning at the 

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age of 14, she'll tell you that her traffickers told her 

pointblank that they were using prepaid cards to post ads of 

her on Backpage, cards you could buy from CVS or Walgreens, 

because they didn't -- they couldn't be tracked. They didn't 

allow them to be tracked, or didn't link back to any bank 

account information as identifying them as the ones posting her 

on Backpage offering her for sex. 

These NCMEC, their own internet safety experts urged 

them to implement not allowing customers to pay -- to post with 

these prepaid cards. 

You'll also hear from Destiny who was trafficked at 

the age of 15. Destiny will tell you that if you attempted to 

post an ad on Backpage with an age under the age of 18, you 

simply get an oops message and allowed to post that same ad by 

indicating that you were 18 or older. 

The defendants, they didn't stop allowing these 

customers to pay with these prepaid cards, they didn't 

implement age verification, something NCMEC and others had 

urged them to do, they didn't shut down the website. Why? 

Greed. 

By the end of 2012, they had generated $80 million a 

year, more than 94 percent from fees they were charging 

customers to post these prostitution ads on the website. 

That's why they didn't shut it down. 

You will also hear evidence that beginning in 2013 

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banks and credit card companies began to put these defendants 

on notice that they -- what they understood their customers to 

be using their cards to post for illegal services, in other 

words, prostitution ads on Backpage. In fact, in August of 

2013, Chase Bank, one of the largest financial institutions 

here in the country, sent Backpage staff an e-mail telling 

them -- telling them that beginning this month -- beginning 

September 1st, 2013, Chase was no longer accepting transactions 

from Backpage due to their involvement in human trafficking. 

And you will hear, evidence will show that this e-mail 

from Chase Bank was forwarded to defendant -- was sent to Carl 

Ferrer and Dan Hyer, who forwarded and sent this Chase Bank 

e-mail to defendants Larkin, Brunst, and Scott Spear. And 

Ferrer told them that I think our problem may get larger on 

Sunday -- Sunday, September 1st. 

And you will hear their response of these banks and 

credit card companies, stop processing Backpage associated 

payments. These defendants devised deceptive strategies to 

fool credit card companies into thinking their charges weren't 

-- their customers' charges weren't related to Backpage by 

creating seemingly unrelated entities. 

A couple you'll hear about throughout the course of 

this trial, Website Technologies, as well as Posting Solutions. 

Ladies and gentlemen of the jury, evidence will show that 

Website Technologies and Posting Solutions was simply 

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Backpage.com disguised under a different name. Deception. 

Concealing the truth. And it worked. Fooling credit card 

companies into thinking their charges weren't associated with 

Backpage, it worked.

By the end of 2013, evidence will show that Backpage 

had generated nearly $113 million from that year alone, the 

vast majority of which came from fees they were charging 

customers to post these prostitution ads on the website, more 

than 94 percent. 

You'll also hear -- let's look at defendants' 

individual incomes for 2013 from -- that they reported to 

Medalist Holdings, which is a parent company for Backpage. 

Defendant Lacey made nearly $39 million for 2013 alone; 

defendant Larkin, nearly 38 million for 2013 alone; defendant 

Brunst, more than $6 million; and defendant Spear, nearly 3 

million for just 2013 alone. 

Evidence will also show in 2014 these defendants 

continued to be put on notice as one payment processing company 

told them that they understood their customers to be using 

their credit cards to post prostitution ads on their website on 

Backpage. 

You'll also hear that in April of 2014 U.S. Bank, 

another large financial institution here in the U.S., sent 

these defendants a letter addressed specifically to former CFO 

Jed Brunst, telling them, please be advised that we have 

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elected to close your account with us. 

Evidence will also show the next day defendant Brunst 

sends this letter -- attaches this letter by U.S. Bank in an 

e-mail to Carl Ferrer, Scott Spear, and others, telling them 

that May 1st we will be completely out of U.S. Bank. We'll 

move all of our banking under Website Technologies at BMO. 

Ladies and gentlemen of the jury, Website Technologies was 

simply Backpage.com disguised as a different name. Deception. 

Concealing the truth. 

You'll also hear in 2014 that these defendants 

continued to meet to discuss Backpage developments, how to grow 

the site. And one of the agenda items for this meeting 

included that Backpage was able to grow because Craigslist shut 

down its adult erotic services section, and they were allowing 

customers to post on Backpage without leaving any meaningful 

identification. In other words, they could pay with these 

prepaid cards. 

You'll also hear that they continued to instruct staff 

on how to moderate these ads. This e-mail you're looking at 

here from defendant Vaught sent in April of 2014 where she 

tells staff that if they come across an add in the adult 

section of Backpage that included a link to a sex-for-money 

website, to strip out the link and post a sanitized version of 

the advertisement on Backpage.com. Again, changing nothing 

about the true nature of what was being offered. It was still 

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a prostitution ad. Oh, she tells them, don't bother removing 

it from the current ad. Deception. Concealing the truth. 

Also around this time the National Center for Missing 

and Exploited Children served these defendants with a brief 

criticizing their efforts to eradicate children from being sold 

on the website. And, ladies and gentlemen of the jury, NCMEC 

didn't know what we've discussed and what the evidence will 

show in this case, but they were exactly right. They didn't 

have all the internal documents and e-mails, the evidence to 

show, but they were exactly right in 2014 when they told these 

defendants pointblank that the unpleasant reality is that 

Backpage publicizes carefully selected operational processes as 

a subterfuge, as a means of deception and trickery to avoid 

increased scrutiny, while providing traffickers with easy 

access to an online venue to sell children for sex. 

NCMEC didn't have all this stuff, but they knew then 

what the evidence would show. Why? They still didn't shut 

down the website even after this brief being served to them by 

NCMEC. Why? Greed. By the end of 2014, Backpage had 

generated nearly $135 million, the vast majority of which, 

94 percent came from fees they were charging customers to post 

prostitution ads on the website. 

And let's look at some of these defendants' individual 

income for 2014. Defendant Lacey for one year alone for the 

parent company of Backpage made more than $50 million; 

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defendant Larkin, nearly 50 million; defendant Brunst, more 

than 10 million; and Spear, more than $4.3 million for this one 

year alone. 

You'll also hear that in 2014 defendants Lacey, 

Larkin, Brunst, and Spear, they entered into a so-called letter 

of intent to sell Backpage for $600 million. And I say socalled sale, because, ladies and gentlemen, it was a sham. It 

was bogus. The sale, it wasn't a sale. Evidence will show, in 

fact, after this so-called sale was complete in April 2015, 

these four defendants maintained significant financial and 

operational control over Backpage, including they're entitled 

to payouts on any future loans, a 30 percent participation in 

any future sale of Backpage above the purchase price. 

They were also -- ladies and gentlemen of the jury, 

evidence will show that this sham of a sale that I mentioned 

was these defendants loaning former CEO Carl Ferrer, they 

loaned him the $600 million to purchase Backpage. And in doing 

so, Carl Ferrer couldn't sell Backpage without these 

defendants' permission, but, ladies and gentlemen of the jury, 

he couldn't even hire an accountant without these four 

defendants' permission. 

They also had to approve the annual budget and 

business plan, and had full access to all of Backpage's books 

and records, as well as full access to all of Backpage's bank 

accounts even after this so-called sham of a sale was completed 

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in April 2015. 

You'll also hear that in April 2015 the financial 

institution Mastercard, again, a large financial institution 

here in the U.S., sent Backpage an e-mail, sent them a letter 

telling them that beginning May 1st that Mastercard might stop 

processing Backpage associated payments, in other words, they 

might stop allowing customers that used that Mastercard to post 

in the adult services section of Backpage. 

In response, evidence will show that Carl Ferrer sent 

former CFO and defendant Jed Brunst an e-mail telling him that 

we should route all the Mastercard transactions through an 

international bank so we can fool Mastercard into thinking that 

the customers' charges weren't related to Backpage. To which 

defendant Brunst replied, regarding MC, Mastercard, didn't we 

go down the Mauritius path, the bank in East Africa, didn't we 

go down that path once, and the banks have the same issue with 

our content. 

That's right, ladies and gentlemen, wasn't just the 

international -- wasn't just the U.S. banks that had a problem 

with their content, the international banks, evidence will 

show, also didn't want to do business with Backpage out of 

concerns that their customers were using their cards for 

illegality. 

Evidence will show that by the end of 2000 -- the 

summer of 2015, Visa, Mastercard, and Amex had stopped 

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processing Backpage associated payments. In other words, the 

customers weren't allowed to pay to post prostitution ads using 

their Visa, Amex, or Mastercard. 

And you will hear that these defendants referred to 

this time at Backpage as credit card Armageddon. And because 

of credit card Armageddon, Visa, Mastercard, Amex pulling out, 

evidence will show that these defendants stopped charging 

customers to post their prostitution ads on Backpage, and now 

only charged them for upgrades. We talked about the move to 

the top, as well as the sponsor ads. 

In order to pay for these upgrades, evidence will show 

that, led by Carl Ferrer, as well as former CFO Jed Brunst, 

they created these alternative payment methods where customers 

could pay using bitcoin credits, as well as checks and money 

orders. 

This document you're looking at now is a Backpage 

staff member, an e-mail a Backpage staff member sent a customer 

complaining that she is unable to use her credit card to post 

in the adult services section of Backpage. And the staff 

member tells this customer, this e-mail sent to defendant 

Vaught, if you would like to pay for upgrades, we can only 

accept checks or money orders made out to Posting Solutions. 

The staff goes on in this e-mail to state, please do 

not make your payments out to Backpage, as we will no longer be 

able to accept them. Deception. Concealing the truth. And it 

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worked. 

Evidence will show these defendants -- millions in 

checks and money orders were sent and deposited into the bank 

accounts. This image you're looking at now is at Backpage. 

You see all the checks and money orders the customers had sent. 

These checks and money orders, evidence will show, were 

deposited into accounts in the name -- millions of dollars into 

the name of Posting Solutions. Posting Solutions, again, 

Backpage disguised as a different name. 

Same thing with bitcoin. Evidence will show that 

individuals who paid for the -- paid for their upgrades and 

moved to the top of their prostitution ads that paid by 

bitcoin, this was deposited into Website Technologies' account. 

And the evidence will show this money that was deposited into 

Posting Solutions and Website Technologies, evidence will show 

this money was funneled to other bank accounts, including 

Serious Properties, to further conceal the fact that Backpage 

was involved in the transaction. 

But guess what the evidence will show were the 

authorized signers on the Serious Properties account, defendant 

Brunst and Spear. And the evidence will show that once this 

money reached Serious Property, it was funneled back out to 

defendants as well as Backpage. And it worked. 

By the end of 2015, let's look at the defendants' 

individual income, even after Visa, Mastercard, and Amex had 

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stopped processing Backpage associated payments, defendant 

Lacey in 2015 still made nearly $26 million for this one year 

alone; defendant Larkin, nearly 24 million; defendant Brunst, 

3.8 million, nearly 4 million; and defendant Spear, 2.8 million 

for 2015 alone. 

Evidence will show that these defendants continued, in 

2016, fooling credit card companies into thinking their charges 

weren't associated with Backpage, and allowing customers to pay 

with bitcoin, money orders, and checks. By the end of 2015 -- 

2016, Backpage had generated more than $128 million a year. 

Evidence will show, ladies and gentlemen, the vast majority of 

which, 94 percent came from fees they were charging customers 

to post these for these upgrades, the move-to-the-tops for 

their prostitution ads. 

Now, let's look at defendant Lacey's and Larkin's 

Backpage distributions for just this one year alone, between 

January 2016 and January 2017, defendant Lacey, more than 30 

million in Backpage distributions, and defendant Larkin, the 

evidence will show, and his family, more than $28 million for 

this one year alone. 

You'll also hear evidence that in January 2017, 

following a 17-month investigation, the U.S. Senate issued a 

report on Backpage. And the day this report was issued, these 

defendants stopped allowing customers to post ads in the adult 

services section of Backpage. But that didn't change anything. 

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They simply allowed customers to move from posting these 

prostitution ads in the adult services section of the site to 

posting these same prostitution ads in the personal section of 

Backpage where they remain until the website was seized and 

shut down by the United States in April 2018. 

By the end of 2017, evidence will show that Backpage 

had generated more than $135 million a year, the vast majority 

of which came from fees they were charging to post and pay for 

these prostitution ads even after the U.S. Senate's report in 

January of 2017. And in 2018, the first few months of 2018 

before the website was seized and shut down, more than 26 -- 

nearly $26 million. 

Ladies and gentlemen of the jury, I'll end my opening 

statement like I began when I told you about a mother, 

Mrs. Pride, that you'll hear from, who had to attempt to buy 

sex with her daughter in order to rescue her from being sold 

for sex through ads through Backpage.

And I'll end by telling you about another mother that 

you'll hear from throughout the course of this trial, Nacole 

Svengard. Nacole will tell you that after her daughter's 

trafficker had been arrested and convicted for selling her for 

sex through ads placed on Backpage, Nacole went -- this mother 

went on a mission to shut down Backpage. And this mission led 

her to meet with the mayor and the attorney general -- 

MR. BIENERT: Objection, Your Honor. Relevance. 

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MR. JONES: -- the National Center --

THE COURT: Counsel. 

MR. BIENERT: Your Honor, it also calls for hearsay. 

THE COURT: Well, it's not hearsay, but the 403 

objection is sustained, and relevance. 

MR. JONES: Nacole will also tell you that outside of 

the chambers of the U.S. Senate, she crossed paths with 

defendant Michael Lacey. And defendant Lacey told her, 

pointblank, that if these yahoos would keep their fucking mouth 

shut, we wouldn't have all these issues. Ladies and gentlemen 

of the jury, thankfully, these mothers, NCMEC, Auburn 

Theological Seminary, the U.S. Senate, these entities and 

individuals, thankfully, they didn't keep their mouth shut, and 

because of it, Backpage.com is shut down. 

And the government submits that after all the evidence 

is presented to you in this trial, that you find these 

defendants, hold these defendants accountable for their 

criminal conduct in running this website for nearly 14 years. 

The government submits that you find each six of these 

defendants guilty. 

Thank you. 

THE COURT: Okay. We're going to take a 15-minute 

recess. If you need more time to make sure you all get a 

restroom break, of course we'll wait, but as soon as you're 

ready, we'll come back in. 

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(Recess taken, 3:08 p.m. - 3:26 p.m.) 

THE COURT: Okay. I understand someone wanted to talk 

to me before we brought the jury back in. 

MR. CAMBRIA: Afternoon, Your Honor. 

Your Honor, at this time, I would move for a 

declaration of a mistrial on several grounds. 

First of all, the basic child theme throughout this 

summation, number of things about children being trafficked, he 

starts his -- his opening with a child situation, he ends it 

with a child situation, continues to talk about children being 

trafficked when there is no such charge. 

The next thing is a 404(b)(3) violation. Each one of 

those uncharged pictures or ads that he showed in his 

presentation, what constituted wrongful act under 404(b)(3), of 

which we should have had knowledge under subdivision 3 and 

notice, and we were not given any of that. 

The other thing that I base this on is he made a 

comment at one time, these defendants can't deny, which has 

been a fairly hot topic with the jury during selection. 

The other thing that's troublesome is that when he 

talked about the attorney generals' letter, he said, and all 50 

attorney generals signed it. And that is an issue that I 

thought the Court had discussed and was put to bed and would 

not be mentioned, but to say all 50 signed it, we have a lot of 

smart people on this jury. We have people with post-grad 

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degrees and so on, and -- and someone there may very well think 

that one of the signators was your husband. And I just think 

that, you know -- and how does that get any better? You say, 

oh, my husband didn't sign that. I mean, this just makes it 

worse. I was surprised to hear that. And I think it's 

unfortunate, but that, in connection with the other things, 

especially the 404(b)(3) and the comment on silence and the 

right to silence, is a problem. 

MR. BIENERT: If I can add one more, that is what 

jumps out at me the most, Your Honor has acknowledged several 

times, this is a specific intent crime. 

Your Honor has even said several times, when we have 

raised things about our concern that they're trying to make 

this general, or they're trying to make this about, quote, 

prostitution in general, you flat out said in various prior 

hearings, no, this isn't about just prostitution in general, 

it's about whether they can prove specific intent on the 50 ads 

charged. 

We can't un-ring this bell. What Mr. Jones did -- I 

mean, literally the entire opening was saying, these people 

were repeatedly told that they, in general, had prostitution on 

their site. They were repeatedly told after the fact that they 

had children who had been identified as already having been 

peddled, or they had women who did prostitution and were 

trafficked all after the fact. 

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What's amazing to me, he didn't show them one ad, not 

one, that he claimed any defendant had any knowledge of before 

it went out, because they don't have that evidence. And so 

what he has done here that has irreparably tainted this jury 

and is a clear error, is he basically said this is a general 

intent crime. You just need to find out that they know 

generally, because all of these do-gooders are telling them 

that you -- you're hurting children, you've got prostitution, 

therefore, they knew enough. And they are now supposed to, in 

advance, identify each and every potential criminal as opposed 

to the legal escort ads. 

Number one, that's impossible to do. Number two, it 

absolutely violates the law that this is specific intent. 

Number three, it violates what you have said repeatedly. This 

isn't about just saying they're promoting prostitution. It's 

about 50 specific ads and particular business enterprises. He 

did none of that. 

And I haven't -- other than, frankly, telling you -- 

telling the jurors what I'm telling you, Your Honor, which, of 

course, is saying, become a lawyer and a judge all at once, 

ladies and gentlemen of the jury, which we know they can't, I 

have no way of addressing this. 

So, unfortunately, after all this time and effort, I'm 

standing here thinking, this is all totally egregious, because 

these people have been told, convict our guys, didn't identify 

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a single one of them for a single one of the 50 ads, not one. 

It's outrageous. 

And we have been screaming, as Your Honor has said in 

denying some motions we made, this is obvious. We knew all 

along that your position is this is protected, it can't be 

general. No, they got -- they're going to get their day in 

court to show the specific counts in this indictment. It's not 

what he did. 

So on all the -- for all the reasons Mr. Cambria said, 

and especially he has now tainted the jury with the general 

intent presentation, we move for mistrial. 

THE COURT: Let me ask you something though before I 

hear. 

With respect to that issue, so this is not argument 

so -- 

MR. BIENERT: You know, Your Honor, I get it, but you 

can't cure this by saying, ladies and gentlemen, what the 

lawyers say isn't argument, you're going to hear -- and the 

reason is because he literally, and very persuasive -- I'll 

compliment him on a nice presentation -- the problem was it was 

just -- it was deceptive, to use his word, because that's not 

how the law works. And what he did was he repeatedly -- I 

counted -- I think I was up to 48 times that he said child 

trafficking. And after you rejected my objections, I think 

five times in a row, I said, all right, I'm not getting up 

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again. But we talked about this being a problem. We've all 

acknowledged, although he doesn't want to, this isn't a child 

trafficking case. 

So you can't un-ring this bell. You can't tell these 

guys, forget about this persuasive piece that Mr. Jones just 

told you about all the women and children who have been hurt 

because of these guys, when they never identified a single one 

that anybody knew about. 

THE COURT: Okay. 

MR. LINCENBERG: Your Honor, I'd like to add two 

points. First, you know, the emotional highlight at the 

beginning and the end where we're talking about a mother and 

children and their -- their quest to protect their children, 

they're listed as witnesses. They're not the subjects of any 

of the 50 counts in the case. 

And, you know, when the Court says, well, but -- 

THE COURT: Is it their daughters? 

MR. LINCENBERG: No, they're not the subject of any 

counts. My understanding is they're not the subjects of any of 

the 50 counts. 

And, you know, when the Court makes the comment to 

Mr. Bienert that, well, it's opening statement, you know, I 

mean, in a California state civil case they would call it a 

nonsuit, you know, the -- an opening statement is not 

irrelevant. It's very important. This is indelibly impressed 

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in the minds of jurors, and it was blatant mis -- blatant cause 

for a mistrial. 

The last point I want to make, and I think it's 

secondary to the earlier points, so I don't want to detract 

from them, but it's still important and it was still improper, 

was the references to CNN. You know, it's this effort to say 

-- it's this effort to throw mud that because so and so accused 

you, because the state attorney general wrote you a letter, or 

this organization, or CNN. You know, if -- if CNN said 

President Trump should be impeached, and they started listing, 

well, because he uses prostitutes like Stormy Daniels, and he 

engages in tax evasion and bribery, et cetera, and if President 

Trump doesn't respond to that, is that admissible evidence in 

an impeachment trial that he did not respond to something? And 

it -- it really, in a context of a criminal trial where we're 

sitting here, it's sort of a ruse to go over the line and -- 

and sort of comment on this idea that defendants are not 

responding to accusations. 

It's a clever way to plan this idea of not responding. 

It's an -- and it's impermissible. I mean, are we now left in 

a situation where somebody is going to come in from CNN and we 

should start cross examining them on, let's say, dozens of 

stories they've done where they've accused people of things 

that were incorrect in the end. Sometimes they may be correct, 

sometimes incorrect. It creates this whole sideshow that's 

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improper. 

THE COURT: Okay. I'm sorry. You're getting far off 

from the point as it relates to the opening statement. I 

understand what your concern is about cross-examination, but -- 

MR. LINCENBERG: So forget about the crossexamination, it's -- 

THE COURT: Yeah. 

MR. LINCENBERG: My main point is the impropriety of 

using that for the reasons I stated. 

THE COURT: Okay. Thank you. I have a line, a line 

behind you of people. 

MS. BERTRAND: Good afternoon, Your Honor. 

THE COURT: Good afternoon. 

MS. BERTRAND: We also move for a mistrial and note 

that no one wants to do this case twice, but we have a real 

problem with the government's argument. And I'm going to call 

it argument, it wasn't a statement. 

The reference to sexual services for money as the 

working definition that the government has now told us to use, 

and has told these jurors to use, is flat wrong, and has not 

only now raised an issue of a mistrial, but also renews our 

concern about what the grand jury was instructed in this 

matter. 

If the government used that same definition of sexual 

services for money, which, by the by, has no basis in law, then 

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that grand jury was mis-instructed. They now have told us, 

just like they told us, what, two hearings ago, that's their 

definition -- three hearings ago -- and it's a real problem. 

Because just because things are sexual or sexy or titillating 

does not constitute prostitution. Here's some examples. 

I was stupid enough to incur over a hundred thousand 

dollars in law school debt only to learn in this case I could 

have been getting paid to have my feet rubbed. There is maid 

services here in the valley that have scantily dressed or 

undressed women come clean your house. Again, weird, but not 

sex, not intercourse, not someone's something going into 

someone's something else. That's sex, and that's prostitution. 

If this government has used this outrageously 

overbroad definition for prostitution, they misguided the grand 

jury, they've misguided this petit jury, and we have a 

mistrial. 

THE COURT: I am not equating sexual services with 

foot rubs. I'm not seeing your --

MS. BERTRAND: It's actually -- 

THE COURT: -- connection. 

MS. BERTRAND: Yeah, it's actually part of the adult 

services sections where women -- and there is all kinds of sex 

work. There is -- 

THE COURT: So that's adult services. 

MS. BERTRAND: Uh-huh, in a very sexual, stimulating 

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way. I'll give the example of the women who come clean house 

scantily clad or naked, that's not advertised with Merry Maids, 

it's advertised in the adult sections and it's sexual. It 

might be, for some people, very exciting. 

THE COURT: Okay. 

MS. BERTRAND: But it is not prostitution. And for 

them to continue to use this sexual services for money 

definition is misconduct and it is the basis for a mistrial. 

At the least, it is a basis to review the grand jury 

instructions that this government gave the grand jury. 

THE COURT: Okay. Thank you. 

MR. FEDER: Let's talk about a few more 404(b) issues. 

I objected to the one, it was overruled. They brought 

up the inter -- the international aspect of Backpage, which, of 

course, has absolutely nothing to do with this case, because 

some of the -- the -- even prostitution is legal, for instance, 

in Holland, but they brought it up anyhow, for reasons unknown. 

I don't know if they've got any evidence that they plan to 

present, but it's obviously 404(b), and it's improper, and it's 

another basis for a mistrial. 

Similarly, they brought up the Senate Subcommittee. 

Are we going to get into the Senate Subcommittee, the PSI 

report? They've listed nothing that I know of from the PSI 

report, but they brought it up anyhow right at the end. 

Kind of a little bit going back to the fact that they 

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didn't mention one of the 50 ads. They also didn't mention one 

of those 50 ads having any money associated with it to justify 

the money laundering charges. Why, because it doesn't fit into 

the narrative that they wanted to push to this jury, which is 

just to talk about general intent prostitution, and mostly 

child prostitution, and child -- you know, child facilitation, 

unfortunate, and a lot of stuff that's not in the evidence, a 

lot of stuff that shouldn't -- that, obviously, shouldn't be a 

part of this case, has never been noticed in this case, and all 

to inflame this jury on issues that this Court has written and 

talked about is improper. 

THE COURT: Is there anybody else? 

MR. CAMBRIA: Sorry, but one more thing. They never 

noticed this so-called statement on the part of my client 

either even though we requested them. 

THE COURT: Okay. From the government. 

MR. JONES: Your Honor, I don't quite know how to 

respond to this. 

The Court has instructed the jury, as it pertains to 

opening statements, you know, they objected. You know, they 

were given the government's PowerPoint a couple days before the 

opening. We listed the exhibits that we were going to 

reference. We did all we could to do that. They -- they stood 

here for nearly an hour before the opening objecting before I 

even had given it, and then now they're objecting again, Your 

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Honor, about some of the same things that the Court has already 

ruled on.

You know, the child sex trafficking, the Court 

instructed the defendants that they wanted to -- if they felt 

the government was getting out of line, they wanted to object, 

they could, and -- and they did, and Your Honor sustained and 

overruled some of those objections. 

You know, Bruce's point that we brought up the Senate 

PSI report, first of all, that's listed on our exhibit list. 

Second of all, I merely mentioned that the CSI issued their 

report. I didn't go into any of the details of the report. I 

just said they issued their report in January 2017, and the -- 

and they stopped accepting ads in adult and they moved to 

personals.

You know, Mr. Cambria's statement about none of the 

ads are referenced in the indictment, several of the ads in my 

PowerPoint are charged counts. And, again, Mr. Cambria had my 

PowerPoint two -- two days ago, Your Honor. And so if he had, 

you know, an issue with the ads or what they were, he could 

have -- could have -- should have brought that up with myself 

or the Court before post opening statements. 

And, you know, I don't -- you know, even with the 

notice letters, the two AG letters, Your Honor, these are 

things that have already been litigated, you know, and the 

Court have ruled that they were admissible to show notice, you 

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know.

And, again, these defendants -- and it looks like 

they're -- will attempt to do this the entire trial, Your 

Honor -- but relitigate issues that we spent the last three 

years litigating. And we are at trial now and the government 

is allowed to give its opening statement, just like Mr. Bienert 

and all these other five defendants are able to give their 

opening statements, you know.

And so we feel like -- is there a specific thing out 

of everything you just heard, Your Honor, you'd like the 

government to address, because there is so much? 

THE COURT: Yes. 

MR. JONES: Okay.

THE COURT: So one is their -- what they're defining 

as 404(b), and why that's not 404(b) that required notice. 

MR. JONES: We charged conspiracy from 2004 to 2018, 

and everything before that -- I mean, everything that 

encompasses that, Your Honor, is not 404(b). You know, they've 

been aware of that, of what we charged since April 2018. We 

charged conspiracy that began in 2004 and in or around 

April 2018. 

THE COURT: So it's your position that it's intrinsic 

evidence and not 404(b)? 

MR. JONES: Correct. Correct, Your Honor. It's 

closely related to the offense, correct. It's a part of the 

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conspiracy, Your Honor. 

THE COURT: The second thing is -- well, first, with 

respect to the comments about children trafficking, I've 

already ruled on that. And the government didn't cross the 

line on that issue, in my mind, because they didn't go into any 

of the details. It was merely the fact that this happened. 

The next thing I want a response from you about is the 

comment about the attorney generals, because their concern is 

-- well, I'm sure they have concerns about the content of the 

letter -- but their concern is that you've now associated that 

somehow with my husband. 

MR. JONES: Your Honor, we'll show both of those 

letters, the 2010 and the 2011 AG letter. They'll come in as 

part of our trial through witnesses. And so the jury will know 

who the Arizona Attorney General was during the time those 

letters were sent, so it will address that concern. Each 

attorney general that signed that letter, they'll be shown 

that. 

THE COURT: Let's see, and then the next one is their 

argument that you have now commented on the defendants' right 

to remain silent when you said these defendants can't deny. 

MR. JONES: That was a reference to they can't deny 

the undeniable. We'll have a witness to come in who has 

firsthand knowledge of that, and that's what a Backpage 

representative told her, and that was my reference to that. 

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And she'll testify at trial, Your Honor. 

THE COURT: And refresh my memory on who that was. 

MR. JONES: Professor Paula Selis. 

THE COURT: And with respect to your definition of 

prostitution, which, honestly, I don't recall you saying that 

this is the legal definition, that you phrased it in a general 

sense, but -- so I'd have to look back at that -- but what is 

your response to their argument that you have -- well, they 

actually accused you of misconduct by doing that. 

MR. JONES: Again, I mean, the judge will instruct the 

jury on -- on the law in this case, Your Honor. And, you know, 

my reference to, you know, prostitution is sex for money, I 

don't see how that in any way -- I didn't mention any type -- 

that it was a legal definition. It was just part of my opening 

statements. And if they want to rebut that, they could do so, 

you know, during trial, but that is certainly not misconduct on 

the government's part for -- for making that statement. 

THE COURT: Okay. And then the last thing is from 

Mr. Cambria who says that you never provided notice of the 

statement his client made. 

MR. RAPP: I'm happy to respond to that.

Well, first of all, there will be a lot of 

statements -- 

THE COURT: I can't hear you. 

MR. RAPP: Just as a general proposition, there will 

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be a lot of statements from these defendants that will come 

from witnesses that they don't necessarily have notice of, and 

I don't know what our obligation is. But we do have an 

obligation if they gave a statement in response to 

interrogation, but that's not the case here. 

They did get the report from the 302 from -- that is 

an interview of Nacole Svengard where she relates to running 

into Mr. Lacey at the Senate Subcommittee and making that -- 

him making that statement to her. 

THE COURT: So that statement is in the 302? 

MR. RAPP: The statement is in the 302, yes. And I'll 

tell you what we'll do, we'll be happy to send that to 

Mr. Cambria this weekend so he can have that, if he hasn't 

looked at it in discovery. 

THE COURT: Okay. 

MR. CAMBRIA: May I? 

THE COURT: Yes. 

MR. CAMBRIA: As to the last issue, they're obligated 

to give us notice when we ask for it, we did and they didn't. 

As to the 404(b), he never answered -- 

THE COURT: Wait. He just said he gave it to you in 

the 302. 

MR. CAMBRIA: No. He said it's in the 302, but no 

indication that it was something they planned to use. That's 

what we asked. 

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The other situation, the 404(b) -- 

THE COURT: Okay. What rule says that they have to do 

that? 

MR. CAMBRIA: It's 16, Your Honor. 

MS. BERNSTEIN: It's Rule 16(b)(1), Your Honor. 

THE COURT: Go ahead. 

MR. CAMBRIA: Yes. On the 404(b), his response is 

that's part of the conspiracy. It doesn't matter what it's 

part of. Subdivision 3 requires advance notice so that we can 

deal with it. And there was no such advance notice. And the 

way he presented it to everyone was in like: Each one of these 

is a violation too. So that's exactly what 404(b) is all 

about. So now he's showed all those pictures to them, 

basically telling them that these are all -- you know, more 

violations, and that's a classic violation of 404(b), classic 

violation. And he didn't give us notice. 

If we didn't give him notice, I'm sure we'd be hearing 

about it. He did not give us notice. And his response is, oh, 

it's part of the charge. Still, we're required to get notice. 

MS. BERNSTEIN: And, Your Honor, I've just been 

feeling left out, so I'd like to pile on, if I can. 

THE COURT: Okay. 

MS. BERNSTEIN: The first thing I would add to the 

record is that I believe Mr. Jones's response to the -- to the 

burden shifting in his opening statement by saying that we will 

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not be able to deny that we intentionally facilitated 

prostitution, that was never a comment that was made to 

Ms. Selis. The comment that was made to Ms. Selis was by a 

representative of Backpage who said, we can't deny the 

undeniable. I don't even know if that's true, but that's what 

the allegation has been. 

We did extensive pretrial litigation with Your Honor 

when the government filed this motion to admit every statement 

under the sun by every person under the sun who ever heard from 

any of these people sitting here. And we told Your Honor at 

that point that this was not contemplated by the rules of 

evidence, that it was prejudicial, that it was -- violated 401, 

violated 403. And Your Honor's ruling on that motion was to 

say that you would not pretrial admit any of that, you would 

wait until trial until it came out. 

Mr. Jones manipulated the statement that he is going 

to elicit from Ms. Selis, or that someone is going to elicit 

from Ms. Selis. She did not say -- no one ever said to her 

that our clients intentionally facilitated prostitution and 

they cannot deny that. It is extreme dangerous burden 

shifting. 

THE COURT: Okay. 

MS. BERNSTEIN: My second point -- if I can put this 

up on the Elmo. I'm curious. This was one of Mr. Jones's 

slides, adult versus non-adult. And I want to know if 

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everything in the adult section, if he contends and believes 

that to be prostitution, because I don't even think that's the 

government's contention. 

And, finally, while Your Honor was running through 

things with Mr. Jones, his entire 200-minute presentation was 

inverting the standard here, was making this a general intent 

crime in direct and stark contrast to your rulings when you've 

denied every motion we have brought on the topic. So I don't 

know what the government's response is to that either, but I 

did want to bring that back up. 

Thank you. 

THE COURT: Well, okay. Ms. Bertrand is standing 

behind you. 

MS. BERTRAND: The government's response to us saying 

they continue to mis-define what is prostitution under any 

jurisdiction, not to mention the independent jurisdictions in 

which each of these ads was placed, was to say just give the 

jury an instruction. So they -- that, to me, is a concession 

that they misstated the law, they misrepresented it to this 

petit jury. And based on the government's statements in this 

case over the summer, where, when challenged on this issue 

before, said prostitution is sex for money, without defining 

sex, without defining services, and that is a fundamental 

misrepresentation of the law. They can't take it back. 

THE COURT: Except that this is a general opening 

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statement. If he had said this in closing arguments, this is 

the definition of prostitution, and this is how we proved that 

there was sexual services and for money, that would be an 

issue, but to incorporate into a relatively short statement for 

all of the evidence that they expect based on what they showed, 

I don't see how it's a misrepresentation. 

MS. BERTRAND: It's a flat out misrepresentation of 

what the law is. And, more importantly, it is consistent with 

what the defense says likely was told to the grand jury as an 

instruction for what is prostitution. The government 

ferociously defended that request to either show us -- show us 

what you told the grand jury this is. 

THE COURT: Okay. So, counsel, how long do you think 

your opening is? 

MR. BIENERT: I really don't time them out, but I've 

got to think it's an hour-and-a-half. 

THE COURT: All right. So we're going to recess.

What? 

MR. BIENERT: Well, we're in a Hobson's choice here, 

Your Honor, because obviously we feel strongly about this, but 

as bad as it is now, if these jurors go home and percolate, 

Saturday, Sunday, Monday, Tuesday, for five days after this 

grossly inappropriate opening that basically mischaracterized 

the law -- 

THE COURT: Well, so I can -- we can start now if you 

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want, I just didn't think you would want to be interrupted. 

MR. BIENERT: I'll be honest, I don't know the 

standard. I mean, the truth is, this should be a mistrial and 

we should get that. 

THE COURT: Well, these are serious allegations, so 

there is a couple things I want to look at before I rule on it. 

MR. BIENERT: Okay. But may I do this, I was -- can I 

have five minutes to confer with everyone about whether, with 

our mistrial in place, I don't want to have this be some 

waiver -- 

THE COURT: No, no. 

MR. BIENERT: -- do I go ahead and just spend the last 

hour, so at least I've gotten something out, to try to talk 

about this or not. 

THE COURT: Sure. Take five minutes. 

MR. BIENERT: And I do want to just say this, because 

when you were questioning Mr. Jones, you, as always, very 

organized, but you never asked him at all about what, in my 

mind, is the biggest problem, mainly what he repeatedly said, 

which is that the reason our clients had knowledge and notice 

and are guilty is because of people anecdotally telling them 

these things are happening. And he never ever, not once, said, 

and here's a specific count where we're going to show you that 

one or some combination or all of these defendants knew it was 

an illegal prostitution ad before it was published. 

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And, you know, obviously, we've had our disagreements 

on the law with Your Honor, but the one area where we go home 

-- and we got our heads down because we think -- we think she's 

got the law wrong, she's seeing it different than us -- but the 

one area we've always said to each other, but she recognizes 

that they have to prove the 50 counts. You've said that at 

least twice in transcripts that we have. 

And what he just -- he didn't do any of that. And so, 

to me, in the many problems here, the single biggest issue is 

he told this jury, you can and should find them guilty because, 

in general, bad things happen to some people who are on 

Backpage. But he never said, and I'm going to show you that 

they had specific knowledge and intent of this ad right here, 

it's count 22 in the indictment, and they purposefully let it 

be published so they could help this prostitute's business 

venture. That's what you have said the case should be. 

And, frankly, while we've been skeptical, because 

every word that has come out of Mr. Rapp's mouth, Mr. Jones's 

mouth, and the reason we've been so fighting over it -- and in 

fairness to you, you don't hear all the evidence or see it like 

we do -- what we're seeing over and over again is these guys 

aren't planning on proving individual counts. They're just 

going to go in and say, the Senate said this is bad, a church 

group said this is bad, a bunch of AGs said this is bad. 

You know what's interesting, Your Honor, one of the 

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greatest tells of all, which -- at least for me -- when he 

talked about the 50 attorney generals -- attorneys general, he 

literally used the word, they urged Backpage to stop. 

Attorneys general don't urge, they -- they enforce the law. 

The reason they urged is every single law enforcement person 

with authority to charge, or every judge who has ever seen this 

case until now right here in this court, has recognized that 

you can't convict these guys just because you hear anecdotally 

that bad things are happening. 

THE COURT: Okay. 

MR. BIENERT: And that's what he told them, he's 

saying you can. And the jury has heard it. They can't un-ring 

that. And it's just fundamentally wrong. 

The indictment is wrong. It's just an invalid 

indictment. We shouldn't even be here. But more -- well, I'm 

not going to say more importantly -- equally importantly, what 

he just said is just grossly wrong under the law. And he never 

even addressed it and you didn't ask about it. 

So I'm confused by what you're saying the standard is, 

because, in my mind, what he is trying to do here is 

inconsistent with what even you've said the standard is on 

multiple times. And I would be curious to see how he tells us 

he's demonstrated that this isn't a general intent crime. 

THE COURT: Does he have to demonstrate that in 

opening statements? 

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MR. BIENERT: Absolutely, that's the legal standard. 

As it is, you know, Your Honor, we're sitting here 

with our hands tied behind our back because you haven't given a 

First Amendment instruction. That's your call, we think it's 

clear error, but we already have that.

But now in addition to that, we've got a bunch of 

people told, you know, if a bunch of people who are anti -- 

I'll call it adult sex or any kind of sex -- tell you stop, and 

you don't, you get hauled into court. 

You know, it's funny, I thought Mr. Lincenberg's thing 

about Trump was such a great analogy, because, the truth is, 

since he's such a lightning rod, if the standard for whether 

Mr. Trump could or couldn't be prosecuted was based on what CNN 

or the paper or people are saying he did that's illegal, the 

guy would have been prosecuted ten times over, but it's not the 

standard. But that's what they're making the standard here. 

In other words, this whole case -- they're bringing in CNN. 

How many trials do -- I have been doing this 35 years -- 

THE COURT: Okay. Can I hear Mr. Jones respond --

MR. BIENERT: Sure. 

THE COURT: -- to that. 

MR. JONES: One thing Mr. Bienert failed to mention, 

Your Honor, the first 40 or 45 minutes of my opening statement 

talked about how these defendants were engaging in content 

aggregation by creating prostitution ads on Backpage, how they 

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have -- how they're intentionally facilitating prostitution by 

business arrangements with prostitution review sites like The 

Erotic Review. 

The government also talked extensively about the super 

posters, how defendants were intentionally promoting the 

prostitution businesses of super posters as well. I mean, he 

mentions none of that when he talks about this general intent, 

Your Honor. You know, that -- those are instances of these 

defendants specifically intending to promote prostitution 

through running Backpage. And that was the first 40 or 

45 minutes of my opening statement. 

Moderation as well. We went through that, so -- 

MR. BIENERT: And I'll just say, Your Honor, that 

violates your, this isn't about general prostitution, ruling. 

THE COURT: Yeah. 

MR. BIENERT: That's exactly what he just described. 

It's got to -- it's got to be he's going to prove that my 

client specifically intended to help prostitute Sally Smith and 

the Smith Prostitution business, and he knew that she was 

advertising and he said, all right, I'm going to help you out. 

That's what he has to do. He hasn't even tried to do that and 

he's polluted the jury against us. 

THE COURT: Okay. So take a few minutes, because I 

need to know if you want to do your opening or not. 

MR. EISENBERG: Your Honor, excuse me, I haven't had a 

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chance to speak. I don't mean to be hiding.

I join my colleagues in the motion to dismiss the 

indictment, but I will add one thing that I don't think we've 

really considered, and that is whether the government has 

waived its right to go forward by not expressing the connection 

between what it seeks to prove in all of the counts that have 

been charged in this case, because, as we have said, there is 

no connection between what Mr. Jones has said and any of those 

counts, so therefore they have waived their right to go 

forward. 

THE COURT: Well, what do you mean by they've waived 

the right to go forward? 

MR. EISENBERG: They have an obligation in their 

opening statement to relate the government's evidence to the 

charges. And those -- there are some 52 substantive charges 

here. That's not just an idle comment. 

I don't have the legal research on it, but my 

understanding of what an opening statement is designed to do is 

to link the charges through the evidence that the government 

seeks to present to the jury. 

THE COURT: Okay. But what do you mean by they waive 

the right? 

MR. EISENBERG: Well, if they haven't done it in their 

opening, then they can't go forward, therefore, the case -- 

THE COURT: Ever? 

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MR. EISENBERG: Yes, Your Honor. 

THE COURT: Or it's cause for a mistrial? 

MR. EISENBERG: I'm sorry, mistrial. 

THE COURT: Okay. Thank you. 

MR. BIENERT: Your Honor, I think what we think should 

happen is we would ask that we get an expedited transcript. We 

would want to review the transcript and file a written motion. 

THE COURT: So we -- your request is that you not 

start your opening? 

MR. BIENERT: Correct. 

THE COURT: Okay. Also, in addition to the 

transcript, I want from the government the information about 

this statement about, we can't deny the undeniable, whatever 

you disclosed to the defense, I guess you can provide it. 

You can provide it. 

And I want that tonight so. As well as since I'm 

getting information, the 302 from the -- the woman, the mother 

that heard the statement from Mr. Lacey, and if you can tell me 

when it was disclosed to them. 

MR. CAMBRIA: Could I comment on that, Judge? 

Remember we have somewhere around 11 million documents that 

were disclosed to us. And to say that they discharged their 

duty under Rule 16 by now saying, oh, it was one of those 11 

million documents, I don't think cuts it. 

THE COURT: Okay. 

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MR. CAMBRIA: The other thing is I think what 

Mr. Eisenberg was talking about is that there are cases that 

say that if a prima facie case was not made out in the opening, 

the charge could be dismissed. And they, at no time, talked 

about the 50 ads that you said in your decision are the ones 

that they have to show specific knowledge of, and that they 

then furthered a business enterprise with. 

THE COURT: Okay. So the two things I asked for was 

the statement from the professor and the statement from the 

mother, and then I'll order the transcript, an expedited 

transcript. 

And we're coming back on Wednesday, right, because 

Monday is a holiday, Tuesday is a holiday, Wednesday. So if 

you're going to -- 

Let me ask you this, because I don't know, from your 

perspective, when you electronically file something, can you do 

that on a holiday? 

MR. STONE: Yes. 

THE COURT: Okay. So if you're going to file 

something, I need it on Monday so I can -- I mean, I'll start 

looking at the issues. I know what the issues are. The 

government knows what the issues are. 

MR. BIENERT: And, obviously, because -- I will say 

this. I assume -- I mean, we've been pretty good here, we've 

got pretty lengthy statements. I'm assuming that because we're 

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doing it quickly, I don't think we have to necessarily restate 

every single thing we've said. I assume Your Honor will have 

the transcript and incorporate a lot of that. It will allow us 

to do a shorter -- 

THE COURT: Yes. 

MR. BIENERT: -- brief, to get kind of the down and 

dirty to you. 

THE COURT: Yes. I'll have the transcript. I assume 

you'll have the transcript. 

MR. BIENERT: Yes, Your Honor. 

THE COURT: Okay. I'm just going to have Elaine tell 

the jury that we're recessing. 

And, Elaine, they have the calendar that says we're 

coming back on Tuesday, so make sure they know. 

COURTROOM DEPUTY: They asked me about getting a copy. 

Can I just print them a new copy or -- 

(An off-the-record discussion was held between the 

Court and the courtroom deputy.) 

THE COURT: We're at recess. Because my office is 

upstairs, I'm doing some work with Elaine here, so feel free to 

get up. 

(Proceedings concluded at 4:10 p.m.)

* * * 

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86

C E R T I F I C A T E

I, CHRISTINE M. COALY, do hereby certify that I am 

duly appointed and qualified to act as Official Court Reporter 

for the United States District Court for the District of 

Arizona.

I FURTHER CERTIFY that the foregoing pages constitute 

a full, true, and accurate transcript of all of that portion of 

the proceedings contained herein, had in the above-entitled 

cause on the date specified therein, and that said transcript 

was prepared under my direction and control.

DATED at Phoenix, Arizona, this 4th day of September, 

2021.

/s/ Christine M. Coaly_______

Christine M. Coaly, RMR, CRR

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