1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Paul J. Cambria, Jr. (NY Bar No.1430909, admitted pro hac vice)

Erin E. McCampbell Paris (NY Bar No. 4480166, admitted pro hac vice)

LIPSITZ GREEN SCIME CAMBRIA LLP

42 Delaware Avenue, Suite 120

Buffalo, New York 14202

Telephone: (716) 849-1333

Facsimile: (716) 855-1580

pcambria@lglaw.com

emccampbell@lglaw.com

Attorneys for Michael Lacey

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

United States of America,

 Plaintiff,

vs.

Michael Lacey, et al., 

 

 Defendants.

NO. CR-18-00422-PHX-SMB

DEFENDANT MICHAEL LACEY’S 

SUPPLEMENT TO RULE 29 MOTION 

CONCERNING COUNT 100 AND 

JOINDER IN RULE 29 SUPPLEMENTS 

OF JOHN BRUNST AND SCOTT 

SPEAR

(Oral argument requested)

Defendant Michael Lacey, by and through his undersigned counsel, files the instant 

supplement to his oral motion for acquittal of the international concealment money laundering

charge (“Count 100”) under Rule 29 of the Federal Rules of Criminal Procedure, and additionally, 

joins in the Rule 29 supplements filed by Defendants John Brunst and Scott Spear for all other 

counts for all the same reasons stated in their supplements, which are incorporated by reference 

Case 2:18-cr-00422-DJH Document 2004 Filed 12/04/23 Page 1 of 14
2

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

herein as to Michael Lacey. As discussed in greater detail below, with respect to Count 100, there is 

insufficient proof of the following requisite elements: (1) concealment of any attribute of the funds

at issue; (2) intent to conceal; and (3) knowledge that the funds at issue were the proceeds of specified 

unlawful activity. 

DISCUSSION

Under 18 U.S.C.§ 1956(a)(2)(B)(i), it is unlawful to engage in international concealment 

money laundering. However, it is well-settled that money spending, alone, is not unlawful 

under Section 1956. See United States v. Caldwell, 560 F.3d 1214, 1222 (10th Cir. 2009) (“Money 

laundering requires more than simply writing a check with the proceeds of unlawful 

activity. We have repeatedly stated that § 1956 is not a ‘money spending statute.’”); see also 

United States v. Olaniyi-Oke, 199 F.3d 767, 771 (5th Cir. 1999) (“Money spending is not criminal 

under § 1956(a)(1).”); United States v. Shoff, 151 F.3d 889, 892 (8th Cir. 1998) (“[T]he money 

laundering statute may not be so broadly construed that it becomes a “money spending 

statute.”).

To obtain a conviction for international concealment money laundering under 18 

U.S.C.§ 1956(a)(2)(B)(i), the government must establish that the defendant: (1) “attempted to 

transport funds from the United States” to a foreign county; (2) “knew that these funds 

represented the proceeds of some form of unlawful activity,” and (3) “knew that such 

transportation was designed to conceal or disguise the nature, the location, the source, the 

ownership, or the control of the funds.” Cuellar v. United States, 553 U.S. 550, 561 (2008). With 

respect to concealment, the Supreme Court explained that “hiding funds during transportation 

is not sufficient to violate the statute, even if substantial efforts have been expended to conceal 

the money.” Id. at 563. Under this Section 1956, the term “‘design’ means purpose or plan, 

i.e., the intended aim of the transportation.” Id. The Court explained that “[t]here is a 

difference between concealing something to transport it, and transporting something to 

conceal it; that is, how one moves the money is distinct from why one moves the money.” Id

at 566 (emphasis in original). Thus, “a conviction under this provision requires proof that the 

Case 2:18-cr-00422-DJH Document 2004 Filed 12/04/23 Page 2 of 14
3

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

purpose—not merely effect—of the transportation was to conceal or disguise a listed 

attribute.” Id. at 567; see also United States v. Ness, 565 F.3d 73, 78 (2d Cir. 2009) (reiterating 

that “why” the money is moved is more important than “how” the money is moved).

In Cuellar, the Supreme Court vacated the defendant’s conviction because the 

government failed to establish the third element – that the defendant “knew that such 

transportation was designed to conceal or disguise the nature, the location, the source, the 

ownership, or the control of the funds.” In that case, the defendant was stopped at the border, 

and upon inspecting his vehicle, a secret compartment with $81,000 in cash was found. The 

cash was bundled in plastic with animal hair spread around nearby, likely to evade detection 

of drugs. Id. at 553-54. The Court noted that “[a]lthough the evidence suggested that 

petitioner’s transportation would have had the effect of concealing the funds, the evidence did 

not demonstrate that such concealment was the purpose of the transportation.” Id. at 567. 

Instead, the proof at trial indicated that “the purpose of the transportation was to compensate 

the leaders of the operation.” Id. at 566. 

In United States v. Adefehinti, 510 F.3d 319 (D.C. Cir. 2007), a case cited favorably by the 

Ninth Circuit, the Court explained that “[t]he money laundering statute criminalizes behavior 

that masks the relationship between an individual and his illegally obtained proceeds; it has 

no application to the transparent division or deposit of those proceeds.” Id. at 322

(emphasis added). Instead, “the necessary intent to conceal requires something more than 

the mere transfer of unlawfully obtained funds, though that something more is hard to 

articulate.” Id. (quotations omitted, emphasis added). The Court explained that the 

“subsequent transactions must be specifically designed to hide the provenance of the funds 

involved” noting that “simple transactions that can be followed with relative ease, or 

transactions that involve nothing but the initial crime” are not concealment money laundering. 

Id. at 323. Consequently, the Court vacated the domestic concealment money laundering 

conviction involving a defendant who moved proceeds among various accounts he or his 

corporation controlled because “an observer who reads the endorsement on the initial check 

Case 2:18-cr-00422-DJH Document 2004 Filed 12/04/23 Page 3 of 14
4

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

and studies the names and numbers on the subsequent deposit slips and checks could discern 

the money trail with ease.” Id. 

I. There is no proof of concealment.

“Evidence of concealment must be substantial.” United States v. Johnson, 440 F.3d 1286, 1291 

(11th Cir. 2006). Concealment is satisfied when there is proof that a defendant used “fictitious 

names” on bank accounts, structured a transaction to avoid detection of reporting requirements,

transferred funds through accounts of shell companies with numerous signatories, or transferred 

funds through bank accounts that had been opened with misleading applications. See id. at 1291-93. 

In contrast, there is no proof of concealment when the case involves “simple and straightforward 

banking transactions, easily discovered through a cursory review of [the defendant’s] bank 

accounts.” Id. at 1293.

Here, there is no proof of concealment by Michael Lacey for two reasons. First, it is 

undisputed that all bank accounts accurately reflected that the funds at issue belonged to Michael 

Lacey because he was the owner or the beneficiary of each of the bank accounts at issue. Mr. Thai 

testified that all of the accounts had accurate names for the account holders. (Day 19 AM Tr. at 62.) 

Mr. Thai testified that he was able to trace the flow of funds from account to account. (Id.) He 

testified that an attorney IOLTA account is “an account held in the name of a client . . . [b]y an 

attorney.” (Id. at 64-65.) Michael Lacey’s transparent relationship to the funds at issue was 

documented in the government’s own exhibit, Trial Exhibit 1479. The final page of that exhibit 

shows that: (1) Michael Lacey had five bank accounts in his name with his attorney, John Becker, 

identified as the account Trustee; (2) Becker consolidated the funds held in those five accounts into 

his IOLTA account, which, as Mr. Thai testified, is “an account held in the name of a client . . . [b]y 

an attorney”; and then (3) Becker transferred the funds to a bank in Hungary that the government’s

own proof shows was a bank account “for the benefit of LACEY.” (Ex. 1479.) 

As discussed above, when accounts are held in the proper name of an individual and the 

individual’s relationship to the account is transparent, as it was here, concealment is absent as a 

matter of law. See Adefehinti, 510 F.3d at 323 (vacating concealment money laundering conviction 

Case 2:18-cr-00422-DJH Document 2004 Filed 12/04/23 Page 4 of 14
5

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

and recognizing that “simple transactions that can be followed with relative ease” do not involve 

concealment); accord United States v. Esterman, 324 F.3d 565, 571 (7th Cir. 2003) (concluding that the 

“government’s proof” of concealment “fell short” because all the defendant did was “simply ma[ke] 

deposits into other bank accounts that were correctly identified”); see also United States v. Enbry, 644 

F. App’x 565, 570 (6th Cir. 2016) (recognizing that there is no proof of “a ploy to disguise the nature, 

location, source, ownership, or control of the proceeds” when the defendant’s “name was on the 

account at issue).

To the extent that there can be any argument made that the consolidation of the five grantor 

trust bank accounts into the IOLTA account somehow concealed an attribute of the funds – and 

this argument is meritless because, as Mr. Thai stated, an IOLTA account is “an account held in the 

name of the client” – Michael Lacey had nothing to do with that consolidation. Critically, the funds 

at issue – the five grantor trusts that were consolidated into the IOLTA and then transferred to 

Hungary – were under Becker’s control when in the United States, not Lacey’s. (Day 23 PM at 70, 

131.) Becker testified that he “transferred [his] client’s money into the [IOLTA] account” from the 

five separate accounts, and then he “wired it out” to Hungary. (Id. at 114.) Becker testified that the 

only way Lacey could have sent the funds himself would have been if Becker, as trustee, had written 

checks to Lacey from the five grantor trust bank accounts, and Lacey then deposited the checks into

a new account, and then wired the funds from that new account. (Id. at 131.) As a result, Lacey had 

no involvement in Becker’s decision to consolidate the accounts and that act cannot provide a basis 

for the conviction. However, even if Lacey had been involved in the decision to consolidate – and 

the proof is the opposite – Mr. Thai testified that he was able to trace the flow of funds from account 

to account even with use of the IOLTA account (Day 19 AM Tr. at 62) – which means that the 

proof on concealment was insufficient as a matter of law. In fact, even if Lacey had taken the step 

of depositing the funds into an account held in the name of a relative, rather than an IOLTA account 

held in his name for his benefit – as long as the bank account properly identified the relative as the 

account holder, there would be no proof of concealment. See Johnson, 440 F.3d at 1293 (concluding 

Case 2:18-cr-00422-DJH Document 2004 Filed 12/04/23 Page 5 of 14
6

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

that defendant’s transfer of funds from his accounts to his mother’s bank account in Luxemburg

was insufficient to establish concealment because the transactions were simple and transparent). 

Second, the formation of the offshore trust, the location of the trust, its monetary value, and 

its associated tax payer – Michael Lacey – were reported to the government through the timely filing 

of a form entitled, “Foreign Bank Account Report.” (Ex. 5541, see also Exs. 5545, 5546.) Mr. Thai 

testified that people who own offshore bank accounts use a Foreign Bank Account Report 

(“FBAR”) “[t]o report the existence of a foreign bank account” to the federal government. (Day 19 

AM Tr. at 63; see also Day 23 PM Tr. at 81 (Becker testified that the filing of an FBAR “puts the 

government on notice that a U.S. taxpayer has established a foreign account.”).) By filing the FBAR, 

Michael Lacey informed the government of the attributes of the funds, rather than concealed them. 

(See Exs. 5541, 5545, 5546.)

Notably, in United States v. Gotti, 457 F. Supp. 2d 411 (S.D.N.Y. 2006), the District Court 

rejected the government’s claim of concealment when the defendant had put the government on 

notice about the attributes of the funds at issue. See id. at 427-29. In that case, the defendant pleaded 

guilty to an earlier indictment and, as part of the plea, had admitted that one of his properties had 

been purchased with proceeds of racketeering. Under the terms of the plea, Gotti was able to keep 

the property and pay the government a monetary forfeiture of equal value. At some time after the 

plea had concluded, he sold the property and used the proceeds to pay living expenses and legal fees. 

The government then charged him with concealment money laundering based on those purchases. 

The District Court found that “it strains credulity for the Government to suggest that Gotti is now 

somehow attempting to conceal” facts that were disclosed to the government. Id. at 428. But even 

if Gotti had not disclosed the attributes of the funds as part of his plea, the Court went on to find 

that the transactions at issue bore “very little indicia of concealment or deception, and none [had] 

the effect of making the illicit origin of the funds any less apparent than before.” Id. This was 

because the transactions at issue were “open and obvious,” and transactions “that can be followed 

with relative ease . . . do not constitute money laundering.” Id. at 428-29. 

Case 2:18-cr-00422-DJH Document 2004 Filed 12/04/23 Page 6 of 14
7

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Finally, to the extent that there is any concern that an extension was sought for the filing 

deadline for the first FBAR, and that extension somehow reflects an effort at concealment, that fact 

has no relevance to Count 100. It is undisputed that John Becker sought an automatic extension of 

the filing decision (Day 23 PM Tr. at 79, 132; see also Exs. 5540, 5542), and that such automatic 

extensions are available to all taxpayers. 1 The decision to seek the extension was solely Becker’s. 

Lacey had nothing to do with that decision. (Day 23 PM Tr. at 132.) The first reporting of the trust 

was due in April 2018, but was filed in August 2018 based on the automatic extension. (Day 23 PM 

Tr. at 124.) Any assertion that Lacey should have filed in April 2017 (id. at 123) is false and 

misleading. Taxpayers file forms and pay taxes at the close of the year based on all taxable events 

that occurred during the previous calendar year. It is undisputed that Lacey transferred the funds to 

Hungary on January 3, 2017 (see Ex. 1479), which means that his disclosures and tax filings were not 

due until April 2018. (Day 23 PM Tr. at 124 (“So the documents are required to be filed for the first 

year. So they need to be filed in 2018, not 2017.”).) 

II. There is no proof of intent to conceal any attribute of the funds at issue.

There is no proof of intent to conceal, and instead, proof of intent to disclose the attributes 

of the funds to the federal government. First, the idea of an offshore account did not originate with 

Michael Lacey. John Becker testified that he had assisted Michael Lacey with estate planning for 

years and that, at one point, Lacey informed Becker that he had been experiencing difficulty

stabilizing banking, with banks closing his accounts. (Day 23 PM at 67.) Becker controlled five 

grantor trust accounts for Lacey with distributions due to Lacey, and no domestic bank that would 

accept and keep the funds. (Id. at 70.)2 Becker suggested to Lacey that he “he may want to look 

 1 See Report of Foreign Bank and Financial Accounts (FBAR), available at: 

https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bankand-financial-accounts-fbar (last visited Nov. 21, 2023) (“The FBAR is an annual report, due 

April 15 following the calendar year reported. You’re allowed an automatic extension to 

October 15 if you fail to meet the FBAR annual due date of April 15. You don’t need to 

request an extension to file the FBAR.”).

2 Becker’s testimony concerning Lacey’s difficulty in maintaining banking was 

corroborated by Lin Howard, a banker who testified that her bank ended its relationship with 

Case 2:18-cr-00422-DJH Document 2004 Filed 12/04/23 Page 7 of 14
8

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

into a structure where the accounts are outside of the United States in order to keep them 

open and from being closed.” (Id. at 67) Becker referred Lacey to Jacob Stein, an attorney 

from California who specialized in offshore trusts at banks where his accounts would not be 

closed. (Id. at 68.) Becker and Lacey met with Stein. (Id. at 68-69.) From that point, Becker 

worked with Stein to form and fund a Hungarian trust which identified Michael Lacey’s sons 

as beneficiaries. (Id. at 69; Ex. 5516 at 17.) Thus, from the inception, the creation and 

formation of this offshore trust was on the advice of counsel. 

Second, there is no proof that the purpose of the transfer was to conceal any attribute 

of the funds. Instead, the purpose of the transfer was to deposit the grantor trust distributions 

into a bank that would not close the account thereby causing further banking instability, and 

to fund a trust that had been created for Lacey’s sons. (Day 23 PM Tr. at 67-70, Exs. 1, 5516

at 17.) Because these purposes are not concealment, there is no viable concealment money 

laundering charge here, just as there was no viable claim in Cuellar. See Cuellar, 553 U.S. at 553-

66 (vacating conviction for international concealment money laundering even though the 

$81,000 was stowed in a secret compartment in a car, bundled in plastic with animal hair 

nearby, because the purpose of the secretive transportation of the funds was not concealment, 

but instead, “to compensate the leaders of the [drug] operation”). Becker testified that his 

“client’s motivation” for forming and funding the Hungarian trust was “to place his monies 

in an account that won’t be closed.” (Id. at 121.) Critically, the act of transferring funds to be 

able to have access to the funds demonstrates an intent to access funds, not an intent to 

conceal attributes of the funds. See United States v. Blankenship, 382 F.3d 1110, 1129 (11th Cir. 

2004) (concluding that the defendant’s creation of a d/b/a account to have an account to 

deposit funds when the defendant knew that he could not deposit the funds in his personal 

account “strongly suggests that his purpose . . . was not to conceal the money or its origins, 

but simply to be able to access it”; which is not concealment money laundering).

 

Lacey for no reason other than that “he wasn’t the type of customer that we wanted.” (Day 

17 PM Tr. at 15.) 

Case 2:18-cr-00422-DJH Document 2004 Filed 12/04/23 Page 8 of 14
9

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Moreover, the use of funds, even if the funds at issue are proceeds of crime (and that 

has not been established in this case against Michael Lacey), is not proof of intent to conceal

when the transaction is straightforward and easy to follow. For example, in United States v. 

McGahee, 257 F.3d 520 (6th Cir. 2001), the Sixth Circuit vacated thirteen concealment money 

laundering convictions because the defendant’s use of funds held in a corporate account for a 

corporation that he controlled for expenses like payment of his personal mortgage did not 

reflect an intent to conceal, but instead, was proof of “the intent to sustain his personal living 

quarters.” Id. at 527; see also United States v. Rockelman, 49 F.3d 418, 422 (8th Cir. 1995) (This 

straightforward real estate transaction and Rockelman's conspicuous connection with the 

property bought with the proceeds of his drug sales convinces us that the evidence here cannot 

support a finding that Rockelman had the necessary intent to conceal that would satisfy the 

money laundering statute.”). Here, too, Lacey’s open and obvious connection to the funds to 

fund a trust, even if the funds can be labelled proceeds, does not reflect an intent to conceal.

In fact, there is insufficient proof of purpose or intent to conceal as required under 

Cuellar, even when the method of transportation of the funds is covert or secretive so long as 

there is proof of a non-concealment purpose. In United States v. Garcia, 587 F.3d 509 (2d Cir. 

2009), the Second Circuit vacated a conviction for domestic concealment money laundering

because the proof of intent or purpose to conceal was insufficient as a matter of law under 

Cuellar. See id. at 517-19. In that case, the defendant transported approximately two million 

dollars in cash in two duffle bags in a van from Pennsylvania to either California or Texas. See 

id. at 512. He was convicted of domestic concealment money laundering. The Second Circuit 

vacated his conviction because the government failed to meet its burden of proof of purpose 

of intent to conceal the attributes of the funds as required under Cuellar. Although the 

defendant transported the funds in a secretive manner, and knew that the recipient would not 

be reporting the funds as income, there was no proof of intent to conceal any attribute of the 

funds because the intent of the defendant was to pay off a debt to a drug dealer. 

Case 2:18-cr-00422-DJH Document 2004 Filed 12/04/23 Page 9 of 14
10

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

The government may claim that Lacey’s isolated statement to Lin Howard and his email 

to Becker (Ex. 1) reflect an intent to conceal; but that claim is meritless when Lacey’s full 

communication is considered. In both communications, Lacey was emphatic that he did not 

want to avoid taxes. (See Day 17 P.M. at 11 (Howard testified that: “[H]e wanted to make it 

clear that he wasn’t looking to avoid paying taxes, that he had a BDO he directed to make sure 

that all taxes were paid and no tax shelters were taken.”); Ex. 1 (“I think I am ready to move

forward with the visit to the Los Angeles lawyer you recommended who has expertise in off-shore. 

[T]o revisit for just a moment, I am not interested in any tax avoidance.”).) The act of paying taxes 

is a declaration to the government of what you have. (Day 17 PM Tr. at 17.) If you want to 

hide an offshore asset from the government, you would not have the intent to pay taxes on 

the asset because the information that would be disclosed on the tax return would identify and 

disclose the asset to the government. Further, Lin Howard testified that Lacey did not ask for 

help concealing anything. (Day 17 PM Tr. at 16, 22.) When, like here, “nothing about the 

transaction suggests a motive to conceal the existence or source of the funds or [the 

defendant’s] relationship to them,” there is no intent to conceal. See Blankenship, 382 F.3d at 

1129 (vacating concealment money laundering convictions because there was no concealment 

when the defendant transferred funds into and out of a d/b/a account to ultimately deposit 

them in his personal account).

Third, contemporaneous records demonstrate that both before and after the transfer of 

funds to Hungary, Lacey expected the location and existence of the trust and itsfunds to be reported 

to the government. On July 29, 2016, approximately six months before the transfer of the funds to 

Hungary, Lacey emailed Becker stating: “I think I am ready to move forward with the visit to the 

Los Angeles lawyer you recommended who has expertise in off-shore. [T]o revisit for just a 

moment, I am not interested in any tax avoidance.” (Ex. 1 (emphasis added).) Then, on 

February 21, 2017, approximately six weeks after Becker transferred the funds to Hungary, Lacey 

wrote to Becker asking: “do you or jacob stein do the reporting to gov’t on the money that 

was moved?” (Ex. 6264.) Becker responded that same day, stating that: “I believe Jacob Stein will 

Case 2:18-cr-00422-DJH Document 2004 Filed 12/04/23 Page 10 of 14
11

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

receive the information needed for the report, and your accountants will prepare it from the 

information he furnishes.” (Id.) Lacey’s contemporaneous concern about complying with all tax 

and reporting requirements reflects an intent to put the government on notice of the location of the 

trust and its funds, not to disguise or conceal that information. 

Lacey’s indication that he wanted to comply with all tax and reporting requirements was 

consistent with Becker’s advice on the transaction. Becker advised Lacey that “if he was going 

to structure an account overseas, he has to comply with all of the disclosures required by the 

Treasury Department. Not only does he have to provide all the disclosures, he must report 

the income on his tax return,” and that Becker aided Lacey in accomplishing each of those 

requirements. (Id. at 69-70; see also id. at 90 (“I advised him it needed to be -- we needed to 

satisfy all of the U.S. filing requirements, and I advised him that we need to report all of -- he 

needs to report all of the income on his individual income tax return.”).) 

Finally, Becker advised Lacey that all the requirements were satisfied. (Id. at 90-91.) 

Becker testified that the transaction was “absolutely legal” and he made sure that all of the 

reporting requirements were satisfied. (Day 23 PM Tr. at 69-70, 132.) There were no liens or 

restraints on the funds that were transferred. (Day 17 PM Tr. at 19.)

III. There is no proof that Lacey had knowledge that the funds at issue were the 

proceeds of specified unlawful activity.

There is no proof of this requisite element. Becker testified that Lacey told him that 

the source of the funds was revenue from the sale of Backpage. (Day 23 PM Tr. at 117.) This 

statement cannot be equated with knowledge that the funds at issue were the proceeds of 

specified unlawful activity, meaning the proceeds from one of the 50 charged ads. There is 

no proof that Michael Lacey knew that the funds were the proceeds of one of the 50 charged 

ads or even that he knew that the funds were the proceeds of prostitution in general. This 

lack of proof as to his knowledge of the specified unlawful activity at issue in this case is 

reinforced the jury’s refusal to convict him of any of the conspiracy or Travel Act charges.

Case 2:18-cr-00422-DJH Document 2004 Filed 12/04/23 Page 11 of 14
12

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Critically, there was no proof that Lacey had ever seen any of the charged ads, had ever 

spoken to anyone associated with the ads, had conspired with Ferrer or any other party to 

facilitate prostitution concerning the 50 charged ads, or in general, had ever heard of Dollar 

Bill or The Erotic Review, had any knowledge of marketing or moderation practices, or that 

he had ever reviewed the website when it was operational. Instead, the proof demonstrated 

that he ran the Editorial side of the parent company to Backpage and that, as a matter of 

journalistic ethics, the Editorial and publishing sides of the company did not interact, with 

Backpage located under the publishing side of the company. This division was described as 

being as sacred as separation of church and state. In the words of the government’s lead 

witness, Lacey was a “layer away” from Backpage. (Day 27 A.M. Tr. at 11.) Ferrer’s 

interactions with Lacey were limited to Lacey gathering information from Ferrer either for his 

own curiosity or to write something for the newspapers about Backpage. During one such 

communication, Ferrer told Lacey, “I do not have prostitution ads.” (Ex. 115b at 9.) Another 

long-term Backpage employee who testified for the government, Daniel Hyer, testified that in 

his twelve years working for Backpage, he had never even met Michael Lacey. (10/19/23 P.M. 

Tr. at 112.) 

Further, the government’s own proof failed to overcome the presumption that the ads 

were 50 instances of protected expression. The evidence shows that law enforcement could 

not make arrests based on the face of an ad, even with respect to the one ad that arguably 

referenced an exchange of sex for money. The evidence shows that there are many forms of 

lawful commercial sex that are not prostitution and even a commercial sex expert would not 

know that a particular ad was affiliated with prostitution or one of those lawful forms of 

commercial sex unless the expert contacted and met with the person who posted the ad. As 

a result, even if there was some awareness after publication that a particular ad was associated 

with wrong-doing, Lacey was in no better position than law enforcement or a commercial sex 

expert to know that fact prior to Backpage’s publication of the ad – an activity with which 

Lacey had no involvement as stated by the government’s own witnesses. But even if he had 

Case 2:18-cr-00422-DJH Document 2004 Filed 12/04/23 Page 12 of 14
13

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

been involved with Backpage’s operation (and he was not), Backpage and its operators 

understood that the operation of a platform for third-party speech and the third-party speech 

itself was First Amendment protected activity, as discussed in detail in the memorandum from 

Don Moon, counsel for Backpage, to NCMEC. (See Ex. 171.)

Finally, as set forth in greater detail in the Brunst supplement, there is no proof that 

any of the funds associated with Count 100 were the proceeds of specified unlawful activity. 

Lacey was not convicted of conspiracy or any Travel Act count. The transfer at issue in Count 

100 occurred on January 3, 2017 – nearly two years after the sale of Backpage to Ferrer. The 

only Travel Act convictions are those of co-defendant Scott Spear, and in addition to the proof 

of those charges being patently insufficient, the publication of those ads pre-dated the sale of 

Backpage, and there is no proof of revenue generated by those ads, and whether that revenue 

is in any way traceable to the funds at issue in Count 100.

CONCLUSION

This case does not involve the smuggling of cash covered in animal hair in a secret 

compartment of a vehicle over international borders, which, as the Supreme Court has 

explained, is insufficient as a matter of law to maintain a conviction for international 

concealment money laundering. Count 100 is premised on a substantially different and lesser 

record on concealment. Here, the proof demonstrates that Count 100 involved a simple and 

straightforward international transfer of funds for which Michael Lacey sought, obtained, and 

followed the advice of two lawyers. He authorized his attorney to undertake that international 

transfer to solve the practical problem of unstable banking and to fund a trust that he had formed 

for his two sons. The government’s own proof demonstrates that Michael Lacey was identified as 

being the owner of the funds in each account that held the funds at issue and that the government 

was able to follow the flow of funds. These facts do not demonstrate an intent to conceal any 

attribute of the funds, but instead, the attributes of the funds were readily identifiable every step of 

the way. More importantly, the contemporaneous documentation of Michael Lacey’s intent was the 

intent to disclose the existence of the offshore funds to the government through reporting and tax 

Case 2:18-cr-00422-DJH Document 2004 Filed 12/04/23 Page 13 of 14
14

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

filings. And he did just that. Over and over again. The conviction for international concealment 

money laundering must be changed to an acquittal. 

 RESPECTFULLY SUBMITTED this 4th day of December, 2023, 

Paul J. Cambria, Jr.

Erin McCampbell Paris

LIPSITZ GREEN SCIME CAMBRIA LLP

By: /s/ Paul J. Cambria, Jr. 

Paul J. Cambria, Jr.

Attorneys for Michael Lacey

On December 4, 2023, a PDF version

of this document was filed with

Clerk of the Court using the CM/ECF

System for filing and for Transmittal

Of a Notice of Electronic Filing to the

Following CM/ECF registrants:

Kevin Rapp, kevin.rapp@usdoj.gov

Peter Kozinets, peter.kozinets@usdoj.gov

Daniel Boyle, daniel.boyle2@usdoj.gov

Margaret Perlmeter, margaret.perlmeter@usdoj.gov 

Andrew Stone, andrew.stone@usdoj.gov

Austin Maxwell Berry, austin.berry2@usdoj.gov

Case 2:18-cr-00422-DJH Document 2004 Filed 12/04/23 Page 14 of 14