UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

___________________

United States of America, )

 ) 

 Plaintiff, ) NO. 2:18-cr-00422-DJH

v. ) 

 ) Phoenix, Arizona

Michael Lacey, et al., ) September 27, 2023

 ) 12:45 p.m.

 Defendants. )

_____________________________)

BEFORE: THE HONORABLE DIANE J. HUMETEWA, JUDGE

REPORTER'S TRANSCRIPT OF PROCEEDINGS

JURY TRIAL DAY 13

P.M. SESSION

Official Court Reporter: 

Teri Veres, RMR, CRR

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

401 West Washington Street, Spc. 38

Phoenix, Arizona 85003-2151

(602) 322-7251

Proceedings Reported by Stenographic Court Reporter

Transcript Prepared by Computer-Aided Transcription

UNITED STATES DISTRICT COURT

Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 1 of 129
 1 A P P E A R A N C E S

 2 For the Plaintiff:

UNITED STATES ATTORNEY'S OFFICE

 3 By: Kevin M. Rapp, Esq.

 Andrew C. Stone, Esq.

 4 Peter Shawn Kozinets, Esq.

 Margaret Wu Perlmeter, Esq.

 5 40 North Central Avenue, Suite 1800

Phoenix, Arizona 85004-4408

 6

 7 For the Defendant Michael Lacey:

LIPTSUTZ GREEN SCIME CAMBRIA, LLP

 8 By: Paul J. Cambria, Jr. Esq.

42 Delaware Avenue, Suite 120

 9 Buffalo, New York 14202

 10 For the Defendant Andrew Padilla:

DAVID EISENBERG, PLC

 11 By: David S. Eisenberg, Esq.

3550 North Central Avenue, Suite 1155

 12 Phoenix, Arizona 85012

 13 For the Defendant Scott Spear:

KESSLER LAW OFFICE

 14 By: Eric Walter Kessler, Esq.

6720 North Scottsdale Road, Suite 210

 15 Scottsdale, Arizona 85253

- and -

 16 FEDER LAW OFFICE, PA

By: Bruce S. Feder, Esq.

 17 2930 East Camelback Road, Suite 160

Phoenix, Arizona 85016

 18

 19 For the Defendant John Brunst:

BIRD MARELLA BOXER WOLPERT NESSIM DROOKS

 20 By: Gary S. Lincenberg, Esq. 

 Gopi K. Panchapakesan, Esq.

 21 1875 Century Park E, Suite 2300

Los Angeles, California 90067

 22

 23 For the Defendant Joye Vaught:

JOY BERTRAND, ESQ, LLC

 24 By: Joy Malby Bertrand, Esq. 

P.O. Box 2734

 25 Scottsdale, Arizona 85252-2734

UNITED STATES DISTRICT COURT

2

Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 2 of 129
 1 I N D E X

 2

 3 GOVERNMENT WITNESS: PAGE 

 4 CARL FERRER

Continued Cross-Examination by Mr. Lincenberg..............

 5

 6 Sidebar discussion..........................................96

 7

 8 EXHIBITS

 9 EXHIBIT RECEIVED

 10 NO. DESCRIPTION

 11 6189 Classified Solutions Ltd. eMerchantPay 75

 Merchant Application Form 

 12 DEFENSE 024742-024749

 13 6194 01.26.16 Email from M. Gage to 81

 C. Ferrer re: “PostFastr.com”

 14 DOJ-BP-0002885636-0002885637

 15 474 Email from Ferrer to Hansen re American 111

 Express, 07/22/2015, DOJ-BP-0005064739- 

 16 DOJ-BP-0005064740

 17

 18

 19

 20

 21

 22

 23

 24

 25

UNITED STATES DISTRICT COURT

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 3 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 P R O C E E D I N G S

 2 (Whereupon the proceedings began at 12:34 p.m.)

 3 COURTROOM DEPUTY: All rise, court is now in 

 4 session.

 5 THE COURT: All right, please be seated. We can

 6 have Mr. Ferrer back on the witness stand, and we'll retrieve 

 7 our jury. 

 8 All rise for the jury.

 9 (Jury in at 12:48 p.m.)

 10 THE COURT: Please be seated. The record will 

 11 reflect the presence of the jury. Mr. Ferrer is on the 

 12 witness stand. Mr. Lincenberg, you may continue. 

 13 MR. LINCENBERG: Thank you, Your Honor. 

 14 We were in the middle of talking about Exhibit 6243. 

 15 If we could publish the organizational chart again.

 16 CONTINUED CROSS-EXAMINATION

 17 BY MR. LINCENBERG:

 18 Q. Mr. Ferrer, we discussed the 2011 Village Voice Media 

 19 holding corporate structure. We blew up the middle part, 

 20 which is where Backpage is located. 

 21 Let's move to the left-hand side. If we can blow that 

 22 up, and does this appear to be where Mr. Lacey -- the 

 23 organizational chart involving Mr. Lacey on the left-hand 

 24 side? 

 25 MR. RAPP: Objection as to foundation.

UNITED STATES DISTRICT COURT

4

Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 4 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 THE COURT: Sustained.

 2 BY MR. LINCENBERG:

 3 Q. Well, sir, you -- do you recognize this as an 

 4 organizational chart involving Village Voice Media holdings 

12:49p 5 2011? 

 6 A. I do recognize it as an organizational chart for Village 

 7 Voice.

 8 Q. And let me ask you this: Did you understand that 

 9 Mr. Lacey supervised somebody named Christine Brennan, an 

12:50p 10 Executive Managing Editor, involving the newspapers?

 11 A. Yes, I do.

 12 Q. And that he would also have editors in News Weekly, 

 13 publishers reporting to him? Was that your general 

 14 understanding?

12:50p 15 A. Yes, it is.

 16 Q. Okay. So now let's look at the right-hand side, if we 

 17 can, of this. And do you know who Mr. Mars was?

 18 A. Yes.

 19 Q. Okay. And Mr. Goroski, Chief Information Officer?

12:50p 20 A. Yes.

 21 Q. And Diana Fraser?

 22 A. Yes.

 23 Q. And then business managers, did you understand that the 

 24 seventeen newspapers that Village Voice holding company owned 

12:50p 25 at the time had business managers? Did you have that 

UNITED STATES DISTRICT COURT

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 5 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 understanding?

 2 A. Yes.

 3 Q. And did you understand that these were the folks who 

 4 reported up to Mr. Brunst at that time?

12:50p 5 MR. RAPP: It's still unclear as to what the 

 6 foundation is.

 7 THE COURT: I think he asked in reference to 2011? 

 8 MR. LINCENBERG: Yes.

 9 MR. RAPP: That's what he's saying. He's just 

12:51p 10 saying that. There's no foundation. He doesn't even 

 11 recognize this. So what's the foundation? 

 12 THE COURT: Yes, so lay some more foundation, 

 13 please.

 14 BY MR. LINCENBERG: 

12:51p 15 Q. Well, Mr. Ferrer, I believe I'm focusing on the Village 

 16 Voice Media holdings organizational chart in 2011 and asking 

 17 you did you understand this to be the organizational chart in 

 18 Village Voice Media holdings in 2011?

 19 A. I don't believe I've seen this organizational chart. 

12:51p 20 However, I understand the personnel. I know the personnel and 

 21 I know some of their job descriptions.

 22 Q. Okay, thank you. 

 23 MR. LINCENBERG: We can take 6243 down now. 

 24 BY MR. LINCENBERG:

12:51p 25 Q. And just to give you a time period let's just stick with 

UNITED STATES DISTRICT COURT

6

Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 6 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 2011. Did Backpage have ledgers -- let me back up. 

 2 Do you know what an accounting ledger is?

 3 A. You would use P & L statements, is that what you mean?

 4 Q. Well, do you understand -- within Backpage -- did 

12:52p 5 somebody in Backpage record transactions -- record financial 

 6 transactions in the books?

 7 A. Did somebody at Backpage record transactions in 2011?

 8 Q. Yes.

 9 A. Yes, the accountant.

12:52p 10 Q. Okay. And when you say "the accountant," you're not 

 11 referring to Mr. Brunst, are you?

 12 A. No.

 13 Q. Now, in 2013 Backpage hired somebody named Nathan 

 14 Kopecky, correct?

12:53p 15 A. Correct.

 16 Q. And was Nathan Kopecky's title when he was hired Chief 

 17 Financial Officer of Backpage?

 18 A. Yes, it was.

 19 Q. All right. And where did Mr. Kopecky come from, do you 

12:53p 20 recall?

 21 A. He came from a recruiter that Jed Brunst knew.

 22 Q. Okay. And then you interviewed him?

 23 A. Not exclusively.

 24 Q. Right. Mr. Brunst also interviewed him, correct?

12:53p 25 A. Yes.

UNITED STATES DISTRICT COURT

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 7 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. My question is simply did you interview him?

 2 A. Yes.

 3 Q. All right. And did he then serve as the Chief Financial 

 4 Officer of Backpage until Mr. Gage was -- later became CFO?

12:53p 5 A. Yes, he did.

 6 Q. All right. And did Mr. Gage become the CFO of Backpage 

 7 after you bought Backpage in 2015?

 8 A. Yes, he did.

 9 Q. All right. And was Mr. Gage somebody who you had had -- 

12:54p 10 was referred to you by Trent Voigt?

 11 A. Yes.

 12 Q. And just to remind the jurors, I think we saw his name in 

 13 some e-mails, but was Trent Voigt somebody who worked for a 

 14 payment processor call Jetpay?

12:54p 15 A. Yes.

 16 Q. All right. And did you then hire Mr. Gage as the CFO of 

 17 Backpage post 2015 sale?

 18 A. It was a decision to hire between Jed Brunst and myself.

 19 Q. Okay. By adding that Mr. Brunst was involved in the 

12:54p 20 decision, are you saying that you did or did not hire him for 

 21 Backpage?

 22 A. I'm saying there's no way I could higher a CFO

 23 independently without Jed Brunst's approval. 

 24 Q. Okay. So Mr. Brunst approved your hiring of Mr. Gage; is 

12:55p 25 that correct?

UNITED STATES DISTRICT COURT

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 8 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 A. Yes.

 2 Q. All right. So you hired Mr. Gage, correct?

 3 A. The company hired Mr. Gage. 

 4 Q. Okay. And Mr. Gage came out of the payment processing 

12:55p 5 world; is that right?

 6 A. Yes.

 7 Q. He had some background, expertise in that area, correct, 

 8 your understanding?

 9 A. Yes.

12:55p 10 Q. All right. And that was something that was important to 

 11 you at the time, to have somebody who could help secure 

 12 payment processing for Backpage; is that right?

 13 A. It was important for the company, yes.

 14 Q. Okay. Now, earlier I believe you confirmed that 

12:55p 15 Mr. Brunst never had a Backpage e-mail address to your 

 16 knowledge; is that correct?

 17 A. No, he did not.

 18 Q. And was it your understanding that he also never had an 

 19 e-mail address for any of the other seventeen newspapers that 

12:56p 20 were owned by the holding company?

 21 A. I think he did at one time.

 22 Q. At what time?

 23 A. Oh, let's say e-mail address -- what time?

 24 Q. Was it --

12:56p 25 A. Probably 2000 -- before the Village Voice Media merge he 

UNITED STATES DISTRICT COURT

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 9 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 used a New Times e-mail address.

 2 Q. Well, that was a New Times holding company that he worked 

 3 for, not the Phoenix New Times newspaper, correct?

 4 A. Okay.

12:56p 5 Q. Okay. To your knowledge, did he ever have a e-mail 

 6 address from the San Francisco Weekly, for example?

 7 A. Not to my knowledge.

 8 Q. All right. Or the -- there was a Cleveland newspaper, I 

 9 believe, that was owned by the holding company. To your 

12:56p 10 knowledge, did he have an e-mail address from the Cleveland 

 11 newspaper?

 12 A. No, he did not -- 

 13 Q. All right.

 14 A. -- to my knowledge.

12:57p 15 Q. Let's talk about budgets, et cetera, budget meetings that 

 16 you testified to. So, first of all, I believe your testimony 

 17 was that they would happen once a year; is that right?

 18 A. The main budget.

 19 Q. The annual budget?

12:57p 20 A. The annual budget once a year.

 21 Q. Let's talk about the annual budget meeting. That would 

 22 happen once a year; is that right?

 23 A. Yes.

 24 Q. And was that generally near the end of the year?

12:57p 25 A. Correct.

UNITED STATES DISTRICT COURT

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 10 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. Okay. And would those meetings -- they would take place 

 2 -- was it a -- on one day, is that -- is that right?

 3 A. Yes.

 4 Q. Okay. And I believe your testimony was that -- talking 

12:57p 5 generally -- we'll focus on some particular years, but talking 

 6 generally your general testimony is that Mr. Brunst 

 7 participated in those annual budget meetings, correct?

 8 A. Yes.

 9 Q. Okay. And was it your understanding that he also 

12:58p 10 participated in annual budget meetings near the end of the 

 11 year for all eighteen companies that were owned by the holding 

 12 company?

 13 A. What year is this?

 14 Q. Well, let's pick the year 2008. Is that your 

12:58p 15 understanding?

 16 A. In 2008 that is my understanding.

 17 Q. Okay. So in the month of December your understanding -- 

 18 I understand you were not in those meetings, but your 

 19 understanding was that Mr. Brunst was participating in some 

12:58p 20 eighteen different budget meetings for different businesses 

 21 owned by the holding company, fair?

 22 A. Well, I -- I don't know.

 23 Q. Okay.

 24 A. He might have offloaded some of that work to the 

12:58p 25 controller.

UNITED STATES DISTRICT COURT

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 11 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. Okay. That would be speculation if that happened?

 2 A. That's right, so I don't know.

 3 Q. Just asking about your understanding. 

 4 Is that your understanding?

12:59p 5 A. It's likely.

 6 Q. All right. And let's focus on 2007 since that was the 

 7 subject of one of the exhibits. 

 8 So let's focus on 2007, and when I say 2007 I'm talking 

 9 about a meeting which ostensibly took place in December of 

12:59p 10 2007 for a 2008 budget. Fair enough?

 11 A. Yes.

 12 Q. And I believe your testimony was that you would prepare, 

 13 with the help of others, budgets and revenue projections in 

 14 anticipation of that meeting; is that right?

12:59p 15 A. No, Scott Spear would prepare the budget.

 16 Q. Okay. Wasn't your testimony that Mr. Spear would help 

 17 with that?

 18 A. He would lead it.

 19 Q. Okay.

01:00p 20 A. I -- I would -- I would help.

 21 Q. All right. So you helped Mr. Spear prepare budget and 

 22 revenue projections for the 2007 meeting as best you recall?

 23 A. Yes.

 24 Q. All right. And Mr. Larkin, I believe you said, would be 

01:00p 25 present at budget meetings; is that right?

UNITED STATES DISTRICT COURT

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 12 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 A. Yes, he would.

 2 Q. All right. And Mr. Larkin was the CEO of the holding 

 3 company for which we just looked at the organizational chart. 

 4 Backpage reported up to him, right?

01:00p 5 A. Yes, he was the CEO of the holding company.

 6 Q. All right. And as a general description of Mr. Larkin's 

 7 job duties, would it be fair to say that he oversaw overall 

 8 business operations as the CEO?

 9 A. It's my understanding.

01:01p 10 Q. All right. And, again, let's focus on 2007 with regard 

 11 to marketing. Mr. Spear, as best you could recall, was 

 12 present at annual budget meetings?

 13 A. Yes, he was.

 14 Q. All right. And he -- his job, I think you said, was 

01:01p 15 overseeing marketing; is that right?

 16 A. I'm sorry, Mr. Spear?

 17 Q. Yes. What was -- how would you describe his role there?

 18 A. He's the supervisor of -- of the entire Backpage 

 19 operation and I report to him.

01:01p 20 Q. Okay. And as far as you recall, Mr. Brunst was present 

 21 at this meeting that may have taken place sixteen years ago, 

 22 correct?

 23 A. Mr. Brunst was always in attendance for the budget 

 24 meetings.

01:02p 25 Q. All right. And so the answer's "yes" as far as you 

UNITED STATES DISTRICT COURT

13

Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 13 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 recall?

 2 A. Yes.

 3 Q. All right. And Mr. Brunst's role would be to look at the 

 4 overall projected expenses versus revenue that was projected; 

01:02p 5 is that fair?

 6 A. What year are we? 

 7 Q. 2007.

 8 A. At that time looking at expenses and revenue, yes.

 9 Q. Okay. And when I say looking at expenses and revenue -- 

01:02p 10 or when you say "looking at expenses and revenue," it really 

 11 was looking at the overall numbers, correct?

 12 A. It's looking at the overall numbers and how a sale 

 13 strategy will achieve those numbers.

 14 Q. And in terms of any line items, there were occasions when 

01:02p 15 Mr. Brunst might raise a question about, let's say, executive 

 16 salaries, correct?

 17 A. That would be one item.

 18 Q. Okay. Do you recall any instance in which Mr. Brunst 

 19 ever questioned any other budget line item? 

01:03p 20 And I'm asking for a specific recall. Do you 

 21 specifically recall any instance in which Mr. Brunst ever 

 22 questioned any budget line item other than persons' salaries?

 23 A. Other than persons' salaries? So what line item would 

 24 there be without salaries? Usually that's the main 

01:03p 25 discussion.

UNITED STATES DISTRICT COURT

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 14 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. Okay. And did -- in preparing for your testimony, did 

 2 you review any e-mails in which you're asking Mr. Brunst to 

 3 review any particular line item?

 4 A. No, that's above my pay grade. That would be Scott 

01:04p 5 Spear.

 6 Q. All right. So since it's above your pay grade, I'm going 

 7 to interpret your answer as being "no."

 8 A. And the question was: Did I e-mail Jed Brunst directly 

 9 with concerns about the budget? 

01:04p 10 Q. No, no, no. The question was: Did you ever have an 

 11 e-mail with Mr. Brunst about any particular line item? And 

 12 your answer was to talk about what Scott Spear may or may not 

 13 have done, and I'm asking if that answer means that your 

 14 answer is "no"?

01:04p 15 A. Well, I -- I don't know. I'm -- I just don't know.

 16 Q. Okay. You don't know, but as we sit here today having 

 17 reviewed a lot of exhibits that the Government wanted to show 

 18 you in preparing, do you recall ever seeing anything like that 

 19 in any e-mail that the Government showed you, "yes" or "no"?

01:05p 20 A. There are e-mails, but they're not focused on the budget. 

 21 They're different -- different items about the business -- 

 22 Q. Of course.

 23 A. -- like when we were selling the business --

 24 Q. And we'll -- we're gonna cover the sale. Let's focus on 

01:05p 25 the question, not veer off into some other topic. Okay?

UNITED STATES DISTRICT COURT

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 15 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 All right. Now, with regard to compliance department 

 2 budgets or add moderation if that's easier for you -- if 

 3 that's a term that's easier for you to focus on, did you ever 

 4 seek advice from Mr. Brunst regarding the budget for the 

01:05p 5 moderation department? Did you ever seek his advice on that?

 6 A. For the budget, specific to the budget, I can't recall.

 7 Q. Fair enough. Let me ask you a couple questions about 

 8 Mr. Moon. He came up in your testimony. 

 9 Mr. Moon you described as a board member of the holding 

01:06p 10 company, correct?

 11 A. That was my understanding.

 12 Q. All right. And just to put some time frame on this, was 

 13 this beginning around 2012 or so?

 14 A. When I first met Don Moon or --

01:06p 15 Q. When he got on the board.

 16 A. I don't -- I thought he'd been on the board much longer. 

 17 I don't know.

 18 Q. All right. Over the years did you ever -- let me start 

 19 general and then we'll get specific. 

01:06p 20 Did you ever have discussions with Mr. Moon about the 

 21 business of Backpage?

 22 A. Generally?

 23 Q. I'm asking you generally. We're gonna get more specific 

 24 in a minute. 

01:07p 25 A. Yes.

UNITED STATES DISTRICT COURT

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 16 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. All right. And was that primarily in the 2012 onward 

 2 time frame?

 3 A. I believe so.

 4 Q. All right. And in those conversations with Mr. Moon do 

01:07p 5 you recall talking to Mr. Moon about the fact that Mr. Brunst 

 6 didn't really know or understand the business well?

 7 MR. RAPP: Objection to the extent it calls for -- 

 8 the question itself calls for hearsay.

 9 MR. LINCENBERG: This is not offered for the truth.

01:07p 10 MR. RAPP: Well, it can't be offered for any other 

 11 reason.

 12 THE COURT: Sustained.

 13 BY MR. LINCENBERG:

 14 Q. Sir, did you -- did you have discussions with anybody 

01:07p 15 about the fact that when it came to business operations of 

 16 Backpage, that Mr. Brunst did not know or understand that 

 17 business very well?

 18 MR. RAPP: Objection, foundation and hearsay.

 19 THE COURT: Sustained.

01:08p 20 BY MR. LINCENBERG:

 21 Q. Did Mr. Moon ever say to you that in his view, in 

 22 connection with these business discussions, that Mr. Brunst 

 23 didn't understand the business operations well? 

 24 MR. RAPP: Objection, the question itself is 

01:08p 25 hearsay. Move to strike it.

UNITED STATES DISTRICT COURT

17

Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 17 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 MR. LINCENBERG: This is not calling for the truth 

 2 of the matter, Your Honor.

 3 THE COURT: It's sustained.

 4 MR. RAPP: To strike it, Judge?

01:08p 5 THE COURT: Yes, the question will be stricken and 

 6 the jury will disregard.

 7 MR. LINCENBERG: All right. Let's turn to Exhibit 

 8 23 in evidence, and if we can start by -- we can just publish 

 9 the first page for the moment.

01:09p 10 BY MR. LINCENBERG:

 11 Q. Okay. So we're looking at a document entitled 2008 

 12 Budget and Business Plan For Backpage Overview.

 13 Is that correct?

 14 A. Yes, it is.

01:09p 15 Q. And when you were asked who authored it, I believe part 

 16 of your answer was that Mr. Spear was the main author; is that 

 17 right?

 18 A. I'm looking at Page 1 and I can tell you that Mr. Spear 

 19 wrote this. I -- I -- I didn't write it.

01:09p 20 Q. Well, did you contribute to it?

 21 A. It's possible.

 22 Q. Did you testify two weeks ago -- did my mic go off?

 23 Did you testify two weeks ago that you contributed to 

 24 this document?

01:10p 25 A. Yes, I would contribute reports and information --

UNITED STATES DISTRICT COURT

18

Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 18 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. Okay.

 2 A. -- to go into the document.

 3 Q. And did you testify that Jess Adams contributed to this?

 4 A. Yeah, I'm not exactly sure what date Jess Adams is 

01:10p 5 working, but the Backpage accountants are contributing.

 6 Q. All right. Did you testify that you got some data for 

 7 this document from Mr. Hyer and Mr. Padilla?

 8 A. This is 2008?

 9 Q. Yes.

01:10p 10 A. Yes, I assume so.

 11 Q. All right. And as you testified, those are the people 

 12 you recall contributing to preparing this document; is that 

 13 fair?

 14 A. Yes.

01:10p 15 Q. All right. And was the -- this would have been used in 

 16 preparation for a meeting with some of the owners; is that 

 17 right?

 18 A. This is the annual budget meeting in which Jim Larkin and 

 19 Jed Brunst need to approve the budget for 2008.

01:11p 20 Q. All right. So the answer's "yes"?

 21 A. Yes.

 22 Q. Okay. And Mr. Larkin was the CEO, correct?

 23 A. Yes, he was.

 24 Q. All right. He was the person who you would have been -- 

01:11p 25 who would have been overseeing any discussion of the business 

UNITED STATES DISTRICT COURT

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 19 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 operations as the CEO; is that right?

 2 A. Yeah -- well, what was the question again? 

 3 I'm sorry, I was reading this document.

 4 Q. Yeah. As the CEO -- fair to say that discussion about 

01:11p 5 the business operations would have been directed to the CEO of 

 6 the holding company in connection with this meeting?

 7 A. I always thought we were directing it to both.

 8 Q. Okay. With regard to issues like we talked about earlier 

 9 about expenses, projected revenues, that's something that you 

01:12p 10 recall Mr. Brunst would be looking at, correct?

 11 A. Mr. Brunst would look at expenses, but I have to tell you 

 12 he also commented --

 13 Q. Well, you don't have to tell me. You can just answer my 

 14 question and then volunteer whatever you want on redirect, 

01:12p 15 okay?

 16 A. May I ask --

 17 Q. The question is: Would he be reviewing expenses and 

 18 forecasts?

 19 A. May I answer the question? 

01:12p 20 Q. That question. 

 21 THE COURT: Okay, stop. Don't speak over one 

 22 another, please, for purposes of our court reporter. It's 

 23 very difficult for her to do that when you're talking over one 

 24 another. Simply pause, let him answer if he can. Mr. Ferrer 

01:12p 25 will do the same, let you ask the next question. Just don't 

UNITED STATES DISTRICT COURT

20

Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 20 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 talk over one another.

 2 MR. LINCENBERG: Okay.

 3 THE COURT: You may proceed.

 4 MR. LINCENBERG: All right.

01:13p 5 BY MR. LINCENBERG:

 6 Q. Now, where did this 2000 -- with regard to this meeting 

 7 in December 2007, do you recall anything particular -- look at 

 8 me please, sir. I'm not asking about the document for the 

 9 moment.

01:13p 10 A. Okay.

 11 Q. Do you recall -- do you recall any piece of conversation 

 12 that took place in this meeting that apparently took place 

 13 sixteen years ago?

 14 A. I cannot -- I remember conversations, but I can't tie 

01:13p 15 them to specific years for this specific meeting.

 16 Q. Fair enough, and I'm not trying to test you here. 

 17 This is sixteen years ago, but just so the jury 

 18 understands, your testimony that you're giving in connection 

 19 with this is basically reviewing the document and then trying 

01:14p 20 to reconstruct what might have taken place in a meeting; is 

 21 that fair?

 22 A. Well, no, it's not fair.

 23 Q. All right. Well, let me ask you this: Do you remember, 

 24 for example, where you were seated during this meeting in 

01:14p 25 December of 2007?

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 21 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 A. Well, this is -- this would have been December of 2007? 

 2 Q. Yeah, do you remember where you were seated?

 3 A. No.

 4 Q. Do you remember if anybody was present by telephone? 

01:14p 5 Do you remember if anybody was present by telephone in 

 6 this meeting in December of 2007?

 7 A. I don't believe there's -- I've ever had a budget meeting 

 8 where someone only attended by telephone.

 9 Q. Do you remember whether or not you handed Exhibit 23 to 

01:14p 10 somebody at the meeting or perhaps e-mailed it to them ahead 

 11 of time? Do you remember that?

 12 A. I believe that we did e-mail, but also handed it out at 

 13 the meeting.

 14 Q. And when you say you believe, fair to say you're just 

01:15p 15 thinking about maybe what you generally did but really have no 

 16 specific memory about this meeting?

 17 A. No, it's protocol to, you know, e-mail it in advance and 

 18 then hand it out at the meeting. I just wasn't sure if I 

 19 handed it out or Jess Adams did.

01:15p 20 Q. Okay. You're testifying now about what you remember the 

 21 protocol being, but not really what was done on December 20th 

 22 of 2007, correct?

 23 A. I -- I -- I don't understand that question because this 

 24 is -- we have a budget. We print out the budget. We hand it. 

01:16p 25 We have Scott's -- or we have Scott Spear, myself, Jess Adams, 

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 22 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Jim Larkin, Jed Brunst and we go through the budget and we try 

 2 to get their approval. That's -- that's the process.

 3 Q. And I'm not debating with you what your protocol or 

 4 process was. I'm asking if you have any memory of this 

01:16p 5 particular meeting. That's all I'm asking you. 

 6 A. There's nothing eventful that I remember -- 

 7 Q. Okay.

 8 A. -- in this meeting.

 9 Q. Now, when the prosecutor asked you about this meeting on 

01:16p 10 September 13th you testified, quote, "We were all excited." 

 11 Remember that testimony from two weeks ago?

 12 A. And what year? 

 13 Q. This -- with regard to this 2007 meeting about the 2008 

 14 budget. Do you recall that testimony, sir?

01:17p 15 A. And you're saying that I said I was excited about the 

 16 budget? 

 17 Q. Your testimony was, quote, "We were all excited." 

 18 Do you recall -- first of all, if you can just look at me 

 19 for a moment. 

01:17p 20 A. Yeah.

 21 Q. Do you recall testifying to that?

 22 A. I've testified a lot. I -- I don't recall. 

 23 Q. So then just say you don't recall.

 24 A. Okay.

01:17p 25 THE COURT: I'm sorry, was there an answer? 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 MR. LINCENBERG: I believe there was. 

 2 THE WITNESS: I said, "I don't recall."

 3 THE COURT: Okay, thank you.

 4 BY MR. LINCENBERG:

01:17p 5 Q. So as you sit here today on September 27th, your best 

 6 testimony is you have no recollection about whether people at 

 7 this meeting were all excited, fair? 

 8 Just asking about.

 9 A. You know, it's not fair because, actually, the best thing 

01:18p 10 the company had going for it was backpage.com. So every year 

 11 was exciting because the company was growing -- 

 12 MR. LINCENBERG: Your Honor --

 13 THE WITNESS: -- substantially.

 14 MR. LINCENBERG: -- I move to strike the answer as 

01:18p 15 non-responsive.

 16 THE COURT: And the answer will be stricken as 

 17 non-responsive. I think you can reask your question and if 

 18 you can answer it "yes" or "no" or "I don't know" or however, 

 19 but listen to the question. Answer the question if you can 

01:18p 20 answer it.

 21 THE WITNESS: Okay. 

 22 BY MR. LINCENBERG:

 23 Q. Let me ask you this, sir: Do you recall anything that 

 24 Mr. Brunst said in this December 2007 meeting as you sit here 

01:19p 25 today? 

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 24 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 A. No, I cannot.

 2 Q. Okay. Do you recall any reaction -- do you recall him, 

 3 for example, saying, "Yippy, I'm all excited," or jumping up 

 4 and down? Any reaction -- do you recall any reaction of 

01:19p 5 excitement from this meeting?

 6 A. I -- I cannot.

 7 Q. Okay. And in -- you were -- in your 30 interviews with 

 8 the Government, did you ever make the statement to Mr. Rapp 

 9 that the people at this meeting were all excited?

01:19p 10 A. I -- I may have. I'm describing the mood because the 

 11 company was growing.

 12 Q. So your testimony is that you may have stated that to 

 13 Mr. Rapp?

 14 A. It's -- yes, it's very likely.

01:20p 15 Q. Okay. And if it's very likely, let me break it down.

 16 After April of -- I believe it was established that the 

 17 last time that agents wrote down what you said in terms of 

 18 what was provided to the defense counsel, that that was April 

 19 of 2020. 

01:20p 20 Is it your memory that you said this to Government 

 21 counsel after April of 2020?

 22 A. No, I don't recall saying that -- 

 23 Q. Okay.

 24 A. -- but. . .

01:20p 25 Q. Let me ask you this: In the past three-plus years since 

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 25 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 April of 2020 I believe you indicated your best estimate was 

 2 that you maybe had 30 interviews?

 3 A. I -- that's what I had said. It was many is what I'm 

 4 comfortable testifying to.

01:21p 5 Q. And you reviewed a lot of documents with the Government 

 6 in those post April 2020 interviews; is that fair?

 7 A. Yes.

 8 Q. You provided them new information regarding your memory 

 9 of documents that you were reviewing, for example, fair?

01:21p 10 A. New information?

 11 Q. Yeah, you'd give them answers. They'd show you documents 

 12 they hadn't showed you in earlier meetings and you'd provide 

 13 answers, right?

 14 A. I would -- yes.

01:21p 15 Q. Okay. 

 16 A. That I would do.

 17 Q. And did Government counsel ever show you notes or 

 18 typewritten interviews from those 30 or so interviews that 

 19 took place after April 2020?

01:21p 20 MR. RAPP: Objection, this is a compound question.

 21 THE COURT: Sustained.

 22 BY MR. LINCENBERG:

 23 Q. Did you ever see any memorandum of interview for a 

 24 meeting that took place between you, Mr. Rapp and his 

01:22p 25 colleagues after April of 2020 where it was recorded what you 

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 26 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 told them? 

 2 A. I -- I'm not sure about all the dates.

 3 Q. When you say "all the dates," any meeting after April 

 4 2020?

01:22p 5 A. I might be mistaken, but I don't believe I saw any 

 6 written notes after April 2020.

 7 Q. Okay. So if you would have said this to the Government 

 8 during an interview after April 2020, they would have never -- 

 9 they never ran it by you to confirm whether you said that or 

01:22p 10 not; is that right?

 11 A. What are we saying that I said?

 12 Q. Well, we were focusing for the moment on this testimony 

 13 that "we were all excited," whether that was ever said in any 

 14 interview; and right now I'm focusing to see if it was said in 

01:23p 15 any interview that we never got a report of.

 16 A. Okay, what was the question? 

 17 Q. Did you ever -- that you never -- you were never shown 

 18 any notes of statements by you for statements you made to the 

 19 prosecutors or statements you made after April of 2020, 

01:23p 20 correct?

 21 A. I've answered that, yes.

 22 Q. All right. Getting back to Exhibit 23, let's go to the 

 23 bottom of Page 1 and the top of Page 2. 

 24 Okay, so let's just focus for a moment in this document. 

01:24p 25 It says, "In May in New York we launched a paid rentals 

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 27 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 section following Craigslists' entry into this paid arena a 

 2 few months prior." Do you see that?

 3 A. I do.

 4 Q. And then you see where it says, "While our actual revenue 

01:24p 5 did not meet our original projections, the initiative has 

 6 built significant revenue..." Let's pause there. 

 7 Now, was that statement accurate?

 8 A. That's what it says, but in comparison to revenue in 

 9 adult it was not that significant.

01:24p 10 Q. Well, I believe your testimony on direct examination was 

 11 that none of the areas other than adult were ever significant 

 12 at all, correct?

 13 A. They were -- correct.

 14 Q. All right. So fair to say that in your view, then, this 

01:25p 15 is a false statement?

 16 A. It's -- I wouldn't call it false. I would say that it's 

 17 hopeful, hopeful that maybe we could compete with Craigslist 

 18 in a non-adult category.

 19 Q. So when the statement says the initiative, quote, "...has 

01:25p 20 built significant revenue..." your interpretation of that is 

 21 that this is hopeful as opposed to what has been done?

 22 A. It is and I can explain.

 23 Q. I'm just asking if that's your interpretation of what's 

 24 in this report that you presented to the audience of 

01:25p 25 Mr. Larkin and Mr. Brunst?

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 28 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 A. Well, I -- I need to explain the context.

 2 Q. No, you don't need to explain the context. You can do 

 3 that later. I'm asking you the question of whether or not 

 4 your interpretation of "has built" is hopeful?

01:26p 5 A. Yes, I would describe it as hopeful.

 6 Q. Okay, all right. And so in presenting this to Mr. Larkin 

 7 and Mr. Brunst you're saying you were not attempting to lie in 

 8 this statement?

 9 A. I didn't write this.

01:26p 10 Q. Well, you presented it, right? You helped prepare it? 

 11 You reviewed it beforehand, right?

 12 A. I've got Scott Spear as a co-presenter.

 13 Q. Okay. So in response to my question your answer is just 

 14 "I didn't write this," fair?

01:26p 15 A. I'm a -- state it --

 16 Q. Is that your response?

 17 A. What --

 18 MR. LINCENBERG: I'll withdraw and move on, Your

 19 Honor. 

01:27p 20 BY MR. LINCENBERG:

 21 Q. Let's look at Page 11, analysis of expenses. So maybe 

 22 let's zoom in on this part here where it's "Total Proposed 

 23 Expense Increase" year over year. Do you see that?

 24 A. I do.

01:27p 25 Q. All right. And to your understanding, is that sort of -- 

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 29 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 is that the type of number that would be the focus of the 

 2 ownership that is reviewing the budget?

 3 A. That would be one number.

 4 Q. Okay.

01:27p 5 A. There are others.

 6 Q. All right. Let's go to Page 15 and I'm gonna run through 

 7 seriatim Pages 15 through 21. Maybe Page 16? Okay, yeah, 

 8 let's go back to Page 15 for a moment. 

 9 So this is a section dealing with "Premium Position 

01:28p 10 Sponsorship," and on the bottom it says examples of the 

 11 Premium Position Sponsorship. Do you see that?

 12 A. I do.

 13 Q. And what did you understand Premium Position Sponsorship 

 14 to mean?

01:28p 15 A. It was a product we were trying to build for the papers 

 16 so that they could sell a position.

 17 Q. Okay. So then if we then move to Page 16, we're now 

 18 seeing some examples of Premium Position Sponsorship and these 

 19 are samples of -- relating to marketing work, for example, 

01:28p 20 right?

 21 A. This is a real screenshot. We did sell that ad as a 

 22 premium sponsor.

 23 Q. Okay. And I know it's hard to read this but, for 

 24 example, this is dealing with cabinets and wood bedrooms and 

01:29p 25 furniture and the like; is that right?

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 30 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 A. Well, those are the two sponsor ads on top.

 2 Q. Okay. And let's look to the next page and blow that up a 

 3 little bit. This seems to also deal with furniture as 

 4 examples of the Premium Position Sponsorship program; is that 

01:29p 5 right?

 6 A. No, it's not right.

 7 Q. Okay. Let's go to the next page, and this is also a 

 8 sample page involving furniture, correct?

 9 A. This is the -- it's not a sample page. It's a real ad 

01:30p 10 that we -- that we created for this customer, and this is the 

 11 ad page that you would see when you click the sponsor ad.

 12 Q. Okay. And this real ad is an example that is included in 

 13 the annual budget presentation that you're making to the CEO 

 14 and CFO of the holding company in talking about a Premium 

01:30p 15 Position Sponsorship program that you're doing at Backpage, 

 16 right?

 17 A. Correct.

 18 Q. All right. So let's look at the next one, maybe try to 

 19 blow this up. You know, it's hard for me to read this at all, 

01:30p 20 but I think that I can read "lingerie," for example. 

 21 Do you see that where I underlined?

 22 A. I do see that word.

 23 Q. Okay. And is this another example of a program -- of a 

 24 ad that was run in your Premium Position Sponsorship program 

01:31p 25 that does not involve escort services?

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 31 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 A. Was this included in the budget?

 2 Q. Yeah, this was page -- I think we're up to Page 19. 

 3 A. Yeah, it's -- it's kind a hard for me to read, but I 

 4 think it is another example.

01:31p 5 Q. All right. And let's just quickly run through the last 

 6 two. The next one, "lingerie," do you see that?

 7 A. I do.

 8 Q. All right. And let's just run to the last one, if we can 

 9 blow that up. Boy, I have a hard time reading this, but you 

01:32p 10 recall that these examples of ads that have been used as part 

 11 of the Premium Position Sponsorship that you were putting in 

 12 the proposal -- the 2008 budget proposal for Mr. Larkin did 

 13 not involve ads for prostitution?

 14 A. Agreed.

01:32p 15 Q. All right. And just to show you that's the last one, 

 16 let's go to the next page. I think it moves on to the next 

 17 topic.

 18 All right. Now, in this 2007 time period -- so just 

 19 before, let's focus on 2006. Do you recall that that was when 

01:33p 20 the New Times holding company bought the Village Voice?

 21 A. Yes.

 22 Q. Okay. And I don't expect you to remember the exact 

 23 numbers, but do you recall that being approximately a 125 

 24 million dollar transaction?

01:33p 25 A. I was not privy to those numbers.

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 32 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. Okay. And were you aware that in connection with that 

 2 large transaction that Mr. Brunst was very busy working with 

 3 the bankers and the lawyers in connection with the accountants 

 4 in connection with that transaction?

01:33p 5 A. I don't know.

 6 Q. All right. And do you recall, also, that not long after 

 7 that there were transactions where New Times sold some of the 

 8 newspapers -- four newspapers?

 9 MR. RAPP: Objection, foundation.

01:34p 10 THE COURT: Sustained. Lay some foundation.

 11 MR. LINCENBERG: Will do, Your Honor.

 12 BY MR. LINCENBERG:

 13 Q. Do you know whether or not New Times ever sold any of its 

 14 newspapers?

01:34p 15 A. I think they did.

 16 Q. All right. And do you know or recall -- we're going back 

 17 many years, but do you recall that one such transaction before 

 18 the rest of them were sold was a sale of about four 

 19 newspapers?

01:34p 20 A. I -- I don't remember four. I remember two.

 21 Q. Okay. Was it your understanding that part of 

 22 Mr. Brunst's role was to be heavily engaged in transactions 

 23 involving the sales of newspapers?

 24 A. I don't know. I really wasn't involved or I didn't sit 

01:35p 25 in on any meetings. I don't know.

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 33 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. Okay. But was it your understanding that that was 

 2 consuming a lot of his time in that time period, if you know?

 3 MR. RAPP: Objection, asked and answered.

 4 THE COURT: Sustained.

01:35p 5 BY MR. LINCENBERG:

 6 Q. And do you recall when the San Francisco Weekly paper had 

 7 -- went bankrupt? 

 8 MR. RAPP: Objection, relevance.

 9 THE COURT: Well, I'll overrule the objection and 

01:35p 10 we'll see.

 11 THE WITNESS: Do you have a time frame? 

 12 MR. LINCENBERG: In the -- one moment. 2010.

 13 THE WITNESS: I guess I wasn't involved and I can't 

 14 recall it.

01:36p 15 BY MR. LINCENBERG: 

 16 Q. Forget about the date. Do you recall at all Mr. Brunst 

 17 being consumed by involvement in the San Francisco Weekly

 18 bankruptcy?

 19 MR. RAPP: Objection, foundation.

01:36p 20 THE COURT: Sustained.

 21 BY MR. LINCENBERG:

 22 Q. Now, you testified to a couple of Google Analytics 

 23 reports. Do you recall that?

 24 A. Yes.

01:36p 25 Q. Okay. And I believe that some e-mails showed that one of 

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 34 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 the persons who received e-mails that contained Google 

 2 Analytics reports at least at some point was Mr. Brunst. 

 3 Do you recall that?

 4 A. You're asking if Mr. Brunst received any Google 

01:37p 5 Analytics -- 

 6 Q. Right. 

 7 A. -- reports by --

 8 Q. I can show you the e-mails, but I believe that was your 

 9 testimony. 

01:37p 10 A. Okay, yes.

 11 Q. And in connection with any Google Analytics reports that 

 12 you sent to Mr. Brunst, let me ask you the following: Did you 

 13 ever receive an e-mail response from Mr. Brunst talking about 

 14 any of the content of those reports?

01:37p 15 A. By e-mail only?

 16 Q. Starting with e-mail.

 17 A. I don't recall.

 18 Q. Okay. Did you ever e-mail Mr. Brunst asking him to 

 19 analyze any of those reports?

01:37p 20 A. No.

 21 Q. All right. Did you ever receive any e-mail from 

 22 Mr. Brunst providing analysis to you regarding any Google 

 23 Analytics report?

 24 A. What time frame?

01:38p 25 Q. At any time frame. Did you ever receive any e-mail from 

UNITED STATES DISTRICT COURT

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 35 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 my client, Jed Brunst, providing you any analysis of any 

 2 portion of these Google Analytics reports?

 3 A. Well, there were some e-mails but I -- right around the 

 4 attempted first sale of Backpage that involved Google 

01:38p 5 Analytics reports and traffic.

 6 Q. We know that you sent the reports at different times to 

 7 various people, including Mr. Brunst. You can focus on my 

 8 question. My question is: Did you ever receive any e-mail 

 9 from Mr. Brunst providing an analysis of any of the Google 

01:39p 10 Analytics reports?

 11 A. No, but he did request analysis.

 12 MR. LINCENBERG: Your Honor, I move to strike the 

 13 portion after "no."

 14 THE COURT: All right. The portion after "no" will 

01:39p 15 be stricken and the jury will disregard.

 16 BY MR. LINCENBERG:

 17 Q. Now, these Google Analytics reports, I believe you 

 18 testified that for a large time frame they were provided for 

 19 free, correct?

01:39p 20 A. Yes.

 21 Q. All right. And by the way, do the reports say anything 

 22 about the content of a given ad?

 23 A. The Google Analytics reports? 

 24 Q. Right. Do they, for example -- do the reports say, 

01:39p 25 "Here's an analysis of ads that you have where prostitutes are 

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 36 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 advertising their services," anything like that?

 2 A. With the Google -- what are you saying that the Google 

 3 Analytics reports would say?

 4 Q. Repeat the question. The question is: Did the Google 

01:40p 5 Analytics reports ever provide any breakdown, for example, 

 6 which said, "Here's an analysis of prostitution -- prostitutes 

 7 who are seeking to advertise on Backpage"?

 8 A. That's not something that Google Analytics reports would 

 9 do.

01:40p 10 Q. Okay. Did anyone at Google ever say to you in providing 

 11 these reports that Google was facilitating prostitution?

 12 MR. RAPP: Objection. Relevance, foundation, and 

 13 then the question itself is hearsay.

 14 MR. LINCENBERG: I'm asking --

01:40p 15 THE COURT: Sustained.

 16 MR. LINCENBERG: Okay. Let me ask if we could 

 17 publish Exhibit 1925, which is in evidence. It's a December 

 18 4th, 2013, e-mail and there's an e-mail chain.

 19 BY MR. LINCENBERG:

01:41p 20 Q. On the bottom we see there's an e-mail from you, which I 

 21 think leaks onto the next page, and then there is an e-mail in 

 22 the middle and then an e-mail from you and then an e-mail from 

 23 Mr. Brunst and it relates to the subject line of "Google 

 24 Analytics premium." Do you see that?

01:41p 25 A. Yes.

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 37 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. All right. And I believe that within this chain -- and 

 2 maybe we can just focus in here -- there's a discussion about 

 3 a charge that Google wants to charge. It talks about 

 4 different tiers which could run up to $330,000 a year. 

01:42p 5 Do you see that?

 6 A. That's correct.

 7 Q. All right. And because -- and you were considering 

 8 whether or not to spend that money, correct?

 9 A. I think I'm seeking approval -- 

01:42p 10 Q. Okay.

 11 A. -- from Brunst to spend that money.

 12 Q. Right. So you were -- did you want to spend that money?

 13 MR. LINCENBERG: We can go back to the full document 

 14 so Mr. Ferrer can see it.

01:42p 15 THE WITNESS: I didn't think we would have any 

 16 choice.

 17 BY MR. LINCENBERG:

 18 Q. Okay. The -- and Mr. Brunst at some point on the top of 

 19 the e-mail chain responds by asking you what's the benefit. 

01:43p 20 Do you see that?

 21 A. I -- I see what he wrote to me.

 22 Q. Okay. And was there ever any discussion with Mr. Brunst 

 23 in your e-mails back and forth about ads for prostitution?

 24 A. In this e-mail?

01:43p 25 Q. Right. 

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 38 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 A. No.

 2 Q. All right. And I take it you didn't find it unusual that 

 3 somebody reviewing budgets would ask for a cost benefit 

 4 analysis on a potential $330,000 expenditure, did you?

01:43p 5 A. I thought it was usual to ask how an expenditure would 

 6 increase revenue.

 7 Q. Okay. 

 8 MR. LINCENBERG: And let's look at Exhibit 1151a, 

 9 which is in evidence, and I ask that that be published. I 

01:44p 10 think there's an e-mail -- let's go to 1151, which I think is 

 11 the e-mail that attaches 1151a.

 12 BY MR. LINCENBERG:

 13 Q. Okay. So this is an e-mail -- e-mail exchange between 

 14 you and Jess Adams; is that right?

01:44p 15 A. Yes, it is.

 16 Q. All right. And this is fourteen years ago, correct?

 17 A. Yes.

 18 Q. And it notes that there's a list of referring sites in 

 19 the Google Analytics report that was attached to it, right?

01:44p 20 A. Yes.

 21 Q. And did you ever discuss with Mr. Brunst that list of 

 22 referring sites?

 23 A. Yes, I did.

 24 Q. When did you discuss with Mr. Brunst that list of 

01:45p 25 referring sites?

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 39 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 A. I discussed this with Mr. Brunst in a meeting with Jim 

 2 Larkin in a conference room where I pulled up these reports 

 3 and I described the sites that were referring to Backpage.

 4 Q. So that was what meeting? What year did you do that?

01:45p 5 A. Somewhere 2007, 2008, 2009. It was right around that 

 6 time.

 7 Q. Okay. So you don't recall what meeting that was?

 8 A. No, I can -- I recall the meeting. I just can't recall 

 9 the exact time 'cuz we were in Building B --

01:45p 10 Q. Okay.

 11 A. -- conference room and I pulled it up on the screen and 

 12 we're just amazed by how much traffic was being referred to us 

 13 by The Erotic Review.

 14 Q. So this testimony that you've just given today, in the 

01:46p 15 ten or twelve interviews that you had with Mr. Rapp and his 

 16 colleagues between April of 2018 and April of 2020, did you 

 17 ever say that during those interviews? 

 18 Seems like pretty significant testimony. Did you ever 

 19 say that during those interviews?

01:46p 20 A. I -- I'm certain that I talked about The Erotic Review 

 21 and my disclosure to my supervisors about The Erotic Review's 

 22 success.

 23 Q. Well, your supervisor was Mr. Spear, right?

 24 A. I always felt I had three bosses.

01:46p 25 Q. Oh, okay. You told the Government that your supervisor 

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Case 2:18-cr-00422-DJH Document 1833 Filed 09/28/23 Page 40 of 129
CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 was Mr. Spear?

 2 A. Actually, I misspoke. Four bosses. The owners are the 

 3 boss.

 4 Q. So you told the Government that your supervisor was 

01:46p 5 Mr. Spear, correct? Correct?

 6 A. Yeah, he's my direct supervisor.

 7 Q. And we saw an organizational chart where Mr. Larkin is -- 

 8 was the supervisor over Mr. Spear, correct?

 9 A. Correct.

01:47p 10 Q. Okay. But you're now telling the Members of the Jury 

 11 that Mr. Brunst was always one of your supervisors or at least 

 12 that's what you always felt; is that your testimony?

 13 A. I never -- I didn't say that.

 14 Q. Okay. And this -- getting back to my question, whether 

01:47p 15 in any interview with the Government, 30-plus interviews, did 

 16 you ever tell the Government that you discussed the source of 

 17 referrals with Mr. Brunst?

 18 A. Yes.

 19 Q. Okay. And was that in one of the interviews that was 

01:47p 20 typed up that you reviewed?

 21 A. I don't know if it's there.

 22 Q. Okay. 

 23 MR. LINCENBERG: Thanks, Christina. We can take

 24 that down.

01:48p 25 BY MR. LINCENBERG:

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. Let's talk a little bit more about The Erotic Review. So 

 2 I believe your testimony was that you met with Mr. Elms around 

 3 2007 to negotiate a business deal. 

 4 Was that the right time frame?

01:48p 5 A. I think so.

 6 Q. All right. Mr. Brunst was not at that meeting, correct?

 7 A. He was not.

 8 Q. And I believe we already confirmed, I won't harp on it, 

 9 that Mr. Brunst was not a part of any conversations or 

01:48p 10 meetings or e-mails Mr. Elms; is that correct?

 11 MR. RAPP: Objection, asked and answered.

 12 THE COURT: Sustained.

 13 BY MR. LINCENBERG: 

 14 Q. And the Government showed you several e-mails in their 

01:48p 15 direct examination and at least with regard to the e-mails 

 16 that the Government picked to show you, which were, I'll note 

 17 for the record, Exhibit 570, 837 and 1172, those were e-mails 

 18 between you and Mr. Elms. Mr. Brunst was not copied on any of 

 19 those, correct?

01:49p 20 MR. RAPP: Same objection.

 21 MR. LINCENBERG: Specifically talking about e-mails.

 22 THE COURT: Well, I think the problem here, 

 23 Mr. Lincenberg, is you're asking about exhibits that are not 

 24 before this witness when you're asking the question and you're 

01:49p 25 noting for the record what those exhibits are. 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 So I'm going to strike the entirety of the question 

 2 and you can start over.

 3 MR. LINCENBERG: Okay, I was just trying to expedite 

 4 it. If we can put Government Exhibit 570 in evidence on the 

01:49p 5 screen.

 6 BY MR. LINCENBERG:

 7 Q. 570 was a 2009 e-mail between you and Mr. Elms, correct?

 8 A. Correct.

 9 Q. Mr. Brunst is not a part of that e-mail exchange, 

01:49p 10 correct?

 11 A. He is not.

 12 Q. We can go to Exhibit 837, and just go to the top. It's 

 13 cut off a little bit but Mr. Elms -- Mr. Brunst is not part of 

 14 that e-mail exchange, correct?

01:50p 15 A. Correct.

 16 Q. And Exhibit 1172. Mr. Brunst is not part of this e-mail 

 17 exchange, correct?

 18 A. He's -- he's not copied on this e-mail.

 19 Q. All right. Let's take a look at Exhibits 567 and 567a. 

01:50p 20 So let's start with 567.

 21 So this is an invoice -- it says from you to Jess Adams 

 22 and here is David's January invoice for TER banner. 

 23 Okay, and if we can now move to 567a, the attachment, and 

 24 it contains an invoice that was for $4,000. Do you see that?

01:51p 25 A. I do.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. All right. And the invoices, by the way, don't say 

 2 anything about adult or anything. It's just "ad placement," 

 3 correct?

 4 A. Correct.

01:51p 5 Q. All right. And in connection with this invoice you 

 6 testified in response to questions from Mr. Rapp that what you 

 7 then do, "I have to have this invoice and then do a request 

 8 for payment for Scott Spear and Jed Brunst to approve." 

 9 Did you review this document with the Government prior to 

01:51p 10 your testimony?

 11 A. I believe so.

 12 Q. And was your testimony on September 13th the first time 

 13 that you ever told the Government that you went to Jed Brunst 

 14 for approval of this invoice?

01:52p 15 A. I don't know.

 16 Q. Do you recall as you sit here today ever making that 

 17 statement to anybody prior to your testimony in this courtroom 

 18 that you went to Jed Brunst for approval of this invoice?

 19 A. It's -- it's likely that I did state that this invoice 

01:52p 20 would have to be paid. It has to get approved by Scott Spear 

 21 and Jed Brunst.

 22 Q. It's likely that you stated that to the Government?

 23 A. Yes.

 24 Q. So if you did state that to the Government, it's either 

01:52p 25 in one of the written memorandum of interview received or it 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 wasn't documented by the Government? One of those two 

 2 alternatives, correct?

 3 A. Yes.

 4 MR. LINCENBERG: Okay, we can take this down.

01:53p 5 BY MR. LINCENBERG:

 6 Q. Now, you testified -- in connection with financial 

 7 institutions you testified about -- I think you used the term 

 8 "KYC" at one point, right?

 9 A. Correct.

01:53p 10 Q. And KYC, just to remind the jurors, stands for "know your 

 11 customer," correct? 

 12 A. Yes.

 13 Q. And your understanding is that you can't get a bank 

 14 account without having to go through a KYC process, correct?

01:54p 15 A. Correct.

 16 Q. And your understanding is that in going through that 

 17 process the banks might have reputational concerns. I believe 

 18 you used the term "reputational" several times, correct?

 19 A. Correct.

01:54p 20 Q. And, frankly, banks might also have anti-money laundering 

 21 obligations, right?

 22 A. Yes.

 23 Q. Right. You understood that banks have AML departments, 

 24 correct?

01:54p 25 A. I believe they do.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. And that they're required to under the Bank Secrecy Act; 

 2 is that your understanding?

 3 A. I've heard of the act. I guess I don't have a full 

 4 understanding of that act, though.

01:54p 5 Q. Okay. And when you fill out a contract -- let's focus 

 6 for a moment on a contract for payment processing -- and spend 

 7 months getting contracts vetted by the acquiring bank, by 

 8 their attorneys, you're not disguising your transaction, are 

 9 you?

01:55p 10 A. What -- what time frame?

 11 Q. Well, did you ever, ever, disguise your transactions, 

 12 your applications for -- to acquiring banks or processors?

 13 A. Process --

 14 MR. RAPP: Objection, foundation.

01:55p 15 THE COURT: Sustained.

 16 BY MR. LINCENBERG:

 17 Q. Well, sir, you -- you yourself prepared some 30 

 18 applications over -- over the course of the years to different 

 19 payment processors, correct? 

01:55p 20 A. I believe that's correct.

 21 Q. And in preparing those applications you knew that they 

 22 were gonna -- you understood that they were going to be 

 23 vetted, correct?

 24 MR. RAPP: Same objection as to foundation. When?

01:56p 25 MR. LINCENBERG: At all times.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 THE COURT: With respect to the -- 

 2 MR. LINCENBERG: The 30.

 3 THE COURT: -- the 30?

 4 MR. LINCENBERG: Yes.

01:56p 5 THE COURT: Well, maybe for clarity of the record 

 6 you can lay some foundation as to the time frame that you're 

 7 talking about.

 8 MR. LINCENBERG: Okay.

 9 BY MR. LINCENBERG: 

01:56p 10 Q. Over what time period did you submit applications to -- 

 11 for payment processing?

 12 A. So I submitted and signed applications for payment 

 13 processing after the transaction in April of 2015.

 14 Q. You're saying you never submitted them prior to April of 

01:56p 15 2015?

 16 A. I didn't -- I couldn't sign them prior to 2015.

 17 Q. Didn't ask if you signed them, asked if you prepared -- 

 18 asked if you were -- let's use the word "involved" in 

 19 preparing to submit them prior to April of 2015?

01:57p 20 A. Yes, I was involved in preparing.

 21 Q. You couldn't sign them. What you're getting at is that 

 22 the signature -- it needed a signature of -- I think you used 

 23 the term "UBO," ultimate business owner, correct?

 24 A. Correct.

01:57p 25 Q. So even if you were preparing an application for payment 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 processing, it would need a signature from Larkin, Lacey, 

 2 Spear or Brunst, correct?

 3 A. Correct.

 4 Q. All right. And there were times when Mr. Brunst signed 

01:57p 5 those applications that you were submitting on the -- in the 

 6 area that required a signature from a UBO, an ultimate 

 7 business owner, correct?

 8 A. At what time frame?

 9 Q. Well, at any time frame whether prior to 2015 or after 20 

01:57p 10 -- let's -- let's break it down. 

 11 A. He wouldn't sign them after 2015.

 12 Q. So prior to 2015?

 13 A. Yes.

 14 Q. Okay. And in preparing those applications you wanted to 

01:58p 15 make sure you were telling the truth in those applications, 

 16 correct?

 17 A. We wanted to position us in the most favorable light, but 

 18 I wouldn't describe those applications as being transparent.

 19 MR. LINCENBERG: Your Honor, for the witness' eyes 

01:58p 20 only I'd like to pull up on the screen -- not publish, but 

 21 pull up on the screen Exhibit GL-CF-04, which is the May 10th, 

 22 2018, "Memorandum of Interview" at Paragraph 132.

 23 THE COURT: Okay. You're going to have to wait for 

 24 Liliana to distribute the exhibit.

01:59p 25 MR. LINCENBERG: Yes.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 THE COURT: Did you put that slash on the screen? 

 2 There's a hash mark on the screen.

 3 MR. LINCENBERG: I'm sorry, I didn't hear you, Your 

 4 Honor.

01:59p 5 THE COURT: There's a hash mark on the screen.

 6 MR. LINCENBERG: Oh, got it, okay.

 7 MR. LINCENBERG: Has Your Honor had a chance to 

 8 review Exhibit 132? 

 9 THE COURT: As best I can. It's a multiple-page

02:00p 10 document.

 11 MR. LINCENBERG: Is the Court focused on the part on 

 12 the screen, which is the part we're using, which is Paragraph 

 13 132? 

 14 THE COURT: Yes, I've seen it.

02:00p 15 MR. LINCENBERG: Your Honor, I'd like to read that 

 16 top portion, those three sentences in 132 for purposes of 

 17 impeachment.

 18 THE COURT: Was there a question before the witness? 

 19 MR. LINCENBERG: Yes, the question was -- 

02:00p 20 Mr. Ferrer's testimony was that he was deceptive in these 

 21 applications. 

 22 MR. RAPP: I don't think that's accurate. 

 23 Objection, improper impeachment.

 24 MR. LINCENBERG: It is accurate.

02:01p 25 THE COURT: Well, I'm going to sustain because I 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 don't have that recollection.

 2 MR. LINCENBERG: Let me -- let me then go back to 

 3 it, your Honor. 

 4 THE COURT: Should we go back into the record and 

02:01p 5 ask the court reporter to state what his answer is? 

 6 MR. LINCENBERG: We can do that, that'd be great.

 7 THE COURT: Is it the question immediately preceding 

 8 this introduction of the exhibit? 

 9 MR. LINCENBERG: I think so. 

02:02p 10 If the court reporter can read the question and 

 11 answer.

 12 (Whereupon the question and answer were read back.)

 13 THE COURT: I think it's consistent for the 

 14 proffer -- 

02:02p 15 MR. LINCENBERG: Okay.

 16 THE COURT: -- and I'm going to sustain the 

 17 objection.

 18 MR. LINCENBERG: Let me get back in to it.

 19 BY MR. LINCENBERG:

02:02p 20 Q. Sir, in preparing these applications is it true that you 

 21 knew that you could not lie on the applications?

 22 A. We could not have an obvious lie on the applications.

 23 Q. So your testimony is you could have a lie as long as it 

 24 wasn't obvious?

02:02p 25 A. We did -- was that a question?

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. So is your answer that you could lie on these 

 2 applications as long as it wasn't obvious? 

 3 Is that your testimony?

 4 A. No.

02:02p 5 MR. RAPP: Well, object. That wasn't his testimony.

 6 MR. LINCENBERG: Your Honor, that was his testimony; 

 7 but I'd ask the Court to admonish Mr. Rapp he can make his 

 8 objection without coaching. 

 9 THE COURT: Overruled as to that. It wasn't 

02:03p 10 coaching, but let me look at the prior objection.

 11 I think we can move on. I'll overrule the 

 12 objection, but move on. 

 13 MR. LINCENBERG: Do we have an answer? 

 14 THE REPORTER: "No."

02:03p 15 THE COURT: He stated "no."

 16 BY MR. LINCENBERG:

 17 Q. And, sir, is it true that you took care to not provide 

 18 information that was false? 

 19 A. There's just a lot of applications, and I'm having to 

02:04p 20 think about them. This is at what time frame?

 21 Q. It's in connection with what you told the Government 

 22 about merchant applications and agreements between 2010 and 

 23 2018 that you signed and submitted some 30 applications. 

 24 A. And your question was?

02:04p 25 Q. Is it true that you took care not to provide information 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 that was false?

 2 A. I'd have to look at each individual application.

 3 Q. Did you tell the Government that you'd have to look at 

 4 each individual application before telling them that you took 

02:04p 5 care to not provide information that was false?

 6 THE WITNESS: I don't really understand that 

 7 question.

 8 MR. LINCENBERG: Your Honor, this is straightforward 

 9 impeachment.

02:05p 10 THE COURT: Well, no. You stated in your question 

 11 testimony that he did not give.

 12 MR. LINCENBERG: I stated exactly what he stated. 

 13 Sir, let me -- let me see if I can address the 

 14 Court's concern.

02:05p 15 BY MR. LINCENBERG: 

 16 Q. In discussing merchant applications and agreements, you 

 17 were telling the Government in your interviews that Backpage 

 18 submitted some 30 applications for merchant accounts, correct?

 19 A. Correct.

02:05p 20 Q. And you noted that many were turned down because of what 

 21 you called "death by Google search," correct?

 22 A. Correct.

 23 Q. And by that you meant that in performing their "know your 

 24 customer" functions, banks could easily go on Google and see 

02:06p 25 all sorts of publicity involving Backpage that was negative, 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 correct?

 2 A. Correct.

 3 Q. And in discussing the applications, did you advise the 

 4 Government that they knew that they couldn't lie on the 

02:06p 5 applications?

 6 A. I -- I may have said that.

 7 Q. Did you -- and was that a true statement?

 8 A. We couldn't lie, but that doesn't mean we didn't 

 9 misdirect.

02:06p 10 Q. We're gonna get to the misdirection in a moment. So I'm 

 11 not going to move to strike the part that's non-responsive. 

 12 We're going to get to that; but you knew you couldn't lie, 

 13 correct?

 14 A. We knew we couldn't lie.

02:07p 15 Q. Right. 

 16 A. We knew that you shouldn't lie on these bank 

 17 applications, correct.

 18 Q. And you knew that you -- you took care to provide -- to 

 19 not provide information that was false, correct?

02:07p 20 A. "Took care," I wouldn't describe it as that.

 21 Q. Okay. 

 22 MR. LINCENBERG: Well, Your Honor, I'd like to 

 23 impeach the witnesses with the statement -- the first phrase 

 24 of the second sentence of Paragraph 132. We're gonna get to 

02:07p 25 the third part of it. Right now I'd like to impeach the 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 witness while it's timely with this. 

 2 THE COURT: Show me the exhibit again.

 3 MR. LINCENBERG: Can we put for Court's eyes, for 

 4 counsels' eyes.

02:08p 5 THE COURT: You may ask the question.

 6 MR. LINCENBERG: What I'd like to do is read in the 

 7 statement. He's already --

 8 THE COURT: You can ask it -- ask him a question.

 9 BY MR. LINCENBERG: 

02:08p 10 Q. Sir, you stated to the Government in this interview of 

 11 May 10th, 2018, first, that you knew you couldn't lie on the 

 12 applications, we covered that; and, second, you took care that 

 13 you were not providing information that was false. 

 14 I'm going to get to the next sentences. Focus on what 

02:08p 15 I'm asking you first, and then I'll get to the next sentence. 

 16 Is that true?

 17 A. What was the first question?

 18 Q. Did you tell the Government that you took care that you 

 19 were not providing information that was false?

02:08p 20 A. Yes.

 21 Q. All right. Now, let's get to -- you also told the 

 22 Government that you -- that you presented information in the 

 23 most favorable light to your application, correct?

 24 MR. LINCENBERG: We can take this down now.

02:09p 25 THE WITNESS: Correct.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 BY MR. LINCENBERG:

 2 Q. All right. And so, for example, if I'm applying for a 

 3 job and my résumé says that I have great grades, but I don't 

 4 tell them that I got a "D" in accounting, but it's accurate 

02:09p 5 that I had great grades, that's making sure I'm accurate but 

 6 also not highlighting other aspects of my résumé. 

 7 Fair analogy?

 8 MR. RAPP: Objection, there's more to this 

 9 paragraph.

02:09p 10 MR. LINCENBERG: Oh, I'm gonna get to it all -- or 

 11 you can get to it.

 12 THE COURT: Well, is there an objection to the prior 

 13 question? 

 14 MR. RAPP: Yes, improper impeachment is the 

02:09p 15 objection.

 16 MR. LINCENBERG: Right now we're not impeaching,

 17 we're asking a question.

 18 MR. RAPP: Well, I don't know what we're doing by 

 19 reading this.

02:09p 20 MR. LINCENBERG: We're asking a question. 

 21 THE COURT: Well, his question starts out if I'm

 22 applying for a job and my résumé says X, Y and Z, that's the 

 23 question before the witness. 

 24 So perhaps the court reporter can re-read the 

02:10p 25 question that was asked, and if Mr. Ferrer can answer he can 

UNITED STATES DISTRICT COURT

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 try to do that.

 2 BY MR. LINCENBERG:

 3 Q. Fair analogy? 

 4 THE COURT: Well, I asked the court reporter to 

02:10p 5 re-read -- 

 6 MR. LINCENBERG: Oh, I'm sorry. 

 7 THE COURT: -- your question. 

 8 MR. LINCENBERG: Thank you.

 9 (Whereupon the question was read back.)

02:10p 10 THE WITNESS: It seems like you're presenting grades 

 11 in a favorable light, yes.

 12 MR. LINCENBERG: Okay.

 13 BY MR. LINCENBERG:

 14 Q. Now, we've also previously stated that there was no 

02:11p 15 evidence of fraudulent merchant bank applications, correct?

 16 A. Is it possible to see this? 

 17 Q. Yes.

 18 A. Because you seem --

 19 Q. I will show you that, but let me ask you if you remember 

02:11p 20 stating it?

 21 A. I don't know if I used those exact words.

 22 Q. Okay. I'm going to show you the question -- the prior 

 23 statement in a moment, but let me ask: Is it true as you sit 

 24 here today and the testimony to this jury under oath that you 

02:11p 25 stated in the past that there was no evidence of fraudulent 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 merchant bank applications?

 2 A. What time frame? Does it have a time frame? Ever? 

 3 Q. You made the statement in May of 2017.

 4 A. Well, I guess I need to see the context of it. I'm -- 

02:12p 5 I'm -- I don't remember.

 6 Q. Okay. 

 7 MR. LINCENBERG: Your Honor, I'd like to place for 

 8 the witness' eyes GL-CF-37. There's an e-mail at 36 which 

 9 relates to 37, but I think we can focus on 37.

02:13p 10 MR. RAPP: Could we have an identification of this 

 11 document?

 12 MR. LINCENBERG: These are Mr. Ferrer's comments in 

 13 response to allegations made against him by the California 

 14 Attorney General, and I'm looking for the comment -- let me -- 

02:13p 15 let's keep this document handy because I don't see it on this 

 16 page. I may have the page wrong so let's come back to this in 

 17 a moment.

 18 THE COURT: You can ask one more question and we'll 

 19 take our afternoon break.

02:14p 20 BY MR. LINCENBERG:

 21 Q. Sir, did you also make the statement that a money 

 22 laundering charge is really an attempt to legislate by 

 23 prosecution via payment service providers which is the weak 

 24 link the Government pressures to cut off unpopular speech? 

02:14p 25 MR. RAPP: I'm going to object to this. I have no 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 idea what this document is, and he has to identify it.

 2 THE COURT: That's sustained.

 3 MR. LINCENBERG: We can go through that. I don't 

 4 think the Court wants me to go through it on the record, but 

02:14p 5 we can or we can do it at the break.

 6 THE COURT: Well, let's go ahead and take our 

 7 afternoon break. We've been at it for, by my count, an hour 

 8 and a half. We'll take our usual 20-minute break and aim to 

 9 end at 4:30. 

02:15p 10 Members of the jury, again, just remember the 

 11 admonishment and we will stand in recess. 

 12 Please all rise for the jury.

 13 (Jury out 2:15 p.m.)

 14 THE COURT: Mr. Ferrer, you may step down. 

02:15p 15 Please be seated. I guess, Mr. Lincenberg, just a 

 16 note when you ask him whether he made a prior statement, it's 

 17 helpful if you give some context so this witness can try to 

 18 recall. I think he's trying to do his best to do that, and 

 19 when you put forward a statement that he made that may not 

02:16p 20 have to do with any testimony that he's given, I think it's 

 21 entirely helpful that you do that. So just be cognizant. 

 22 All right, we'll stand in recess.

 23 MR. LINCENBERG: Your Honor, it might be helpful if 

 24 I can address the question Mr. Rapp asked.

02:16p 25 THE COURT: You can discuss whatever it is you wish

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 to discuss out of my presence.

 2 MR. LINCENBERG: Okay.

 3 COURTROOM DEPUTY: All rise.

 4 (Recess taken at 2:16 p.m.)

02:38p 5 COURTROOM DEPUTY: All rise, court is now in 

 6 session.

 7 (Back on the record at 2:38 p.m.)

 8 THE COURT: Please be seated. 

 9 We have the witness back on the stand.

02:38p 10 MR. RAPP: Judge, can we just be heard on this last

 11 effort to --

 12 THE COURT: Can you turn your microphone on? 

 13 MR. RAPP: I'm sorry. I think it's on, I just was 

 14 not standing close enough. 

02:38p 15 So this -- the exhibit -- and I apologize, I don't 

 16 -- for the record, I don't know what the exhibit number is -- 

 17 MR. LINCENBERG: For the record, it's GL-CF-37 and 

 18 the attached e-mail is 36.

 19 THE COURT: There's an attached e-mail? 

02:39p 20 MR. LINCENBERG: 36 is just an e-mail of 37.

 21 MR. RAPP: Yeah. So here's -- here's our objections 

 22 to the use of this, Judge: If you look at this document -- 

 23 first of all, this is an unsigned document. There's nowhere 

 24 anywhere on this document that Carl Ferrer has signed this 

02:39p 25 document. That's the least of the problems, though. 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 It is specific answers -- if you look the way this 

 2 is laid out, this is specific answers, I guess, imputed to 

 3 Carl Ferrer in response to the specific allegations in the 

 4 California indictment, and so for that reason alone it is 

02:39p 5 irrelevant. 

 6 He is commenting on the specifics of the allegations 

 7 in a state criminal proceeding involving different statutes 

 8 and, more importantly, different elements and different 

 9 specified unlawful acts as a predicate for money laundering. 

02:40p 10 That's -- that should be enough to prevent the defense from 

 11 using these comments to attempt to impeach Mr. Ferrer.

 12 The second problem with this is this is a document 

 13 that was prepared in conjunction with the attorneys for 

 14 Backpage and Mr. Ferrer will say that, and this is privileged 

02:40p 15 information that we have not had access to. 

 16 As the Court might be aware from the history of 

 17 litigation in this case is they have a joint defense agreement 

 18 that they have used as a shield for a number of documents. 

 19 It's just now that Mr. Ferrer isn't part of that, they're now 

02:40p 20 using it as a sword against him. So that reason alone, this 

 21 has now invaded Mr. Ferrer's privilege with the attorney that 

 22 assisted him in creating these answers to these various 

 23 allegations.

 24 MR. LINCENBERG: A couple things. First, the 

02:41p 25 Government had as part of their cooperation effort that 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Mr. Ferrer would plead guilty to money laundering charges in 

 2 California. So, number one, they've put in issue his play -- 

 3 they want to tag us with Pinkerton liability, and he's 

 4 claiming -- he went into court and said, "I've committed money 

02:41p 5 laundering," when, in fact, he has made statements to the 

 6 opposite. That's number one.

 7 Number two, most important, is that these are prior 

 8 statements, not just in relation to a specific allegation. 

 9 These are statements by him that says when you fill out a 

02:42p 10 contract. It has nothing to do with the particular contract. 

 11 Spend months vetting contracts vetted by the 

 12 acquiring bank and processor. You are not disguising your 

 13 transaction. That's impeachment to his testimony. He says 

 14 there was no evidence of fraudulent merchant bank 

02:42p 15 applications. That's impeachment to his testimony. 

 16 When he says a money laundering charge is really an 

 17 attempt to legislate by prosecution, that is impeachment 

 18 testimony and that it's done in order to cut off unpopular 

 19 speech. 

02:42p 20 It doesn't matter the proceeding. I'd be happy to 

 21 go into the proceeding. I was purposely avoiding it because I 

 22 was trying to be mindful of the Court not wanting me to get 

 23 into that.

 24 Now, let now address the last point about the 

02:42p 25 privilege, and this is really set out at Docket 180-1. There 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 is a declaration there from Jim Grant. So in connection with 

 2 a motion to disqualify the Davis --

 3 THE COURT: I don't know -- I don't know what docket 

 4 you're referring to. In -- in this proceeding? 

02:43p 5 MR. LINCENBERG: Yes, in this proceeding.

 6 THE COURT: So what is it?

 7 MR. LINCENBERG: 180 -- I have down 180-1. 

 8 So to give the Court some background, the Government 

 9 moved to disqualify the Davis, Wright and Tremaine firm from 

02:43p 10 further representation in this case. Davis, Wright and 

 11 Tremaine represented Backpage. I believe it represented, I 

 12 think, Mr. Ferrer as well; and that was opposed and the Court 

 13 ruled that they're not disqualified. 

 14 But in connection with that, Mr. Grant, who's a 

02:43p 15 lawyer at Davis, Wright and Tremaine, submitted a declaration 

 16 and at Page 78 -- and, really, it's really what he attaches. 

 17 He attaches Mr. Ferrer's proffer agreement in which 

 18 he waives privileges with regard to, for example, this 

 19 document; and the proffer agreement at Paragraph 2 says 

02:43p 20 Mr. Ferrer voluntarily waives all claims of attorney-client 

 21 privilege, whether in his personal or official capacity, as 

 22 the Chief Executive Officer of Backpage.com LLC, as whether in 

 23 his personal or official capacity, as the CEO of Backpage as 

 24 to communications with any attorney or law firm that 

02:44p 25 represented Backpage or any related entity when such 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 communications concern or related to backpage.com or any 

 2 related entity. 

 3 Now, I don't need to go into all that background. I 

 4 have a statement that he has lied under oath here directly 

02:44p 5 contradicting prior statements that he's made. I should be 

 6 entitled to use that statement to impeach him, and it doesn't 

 7 negate the impeachment value simply because, well, it was a 

 8 California case. There were, you know, other counts of money 

 9 laundering that we didn't specifically name here. 

02:44p 10 His testimony has been about deceiving banks and 

 11 he's -- he's running away from his prior statements.

 12 THE COURT: Let me -- let me just comment on that. 

 13 We can move on and have our jury in. 

 14 Number one, I think -- pay close attention to what 

02:45p 15 this witness says in response to your answers. There's 

 16 already been two or three times when you've proffered 

 17 impeachment exhibits when the testifying witness has not made 

 18 an inconsistent statement. So that's number one, and I didn't 

 19 see that here. That's -- that's why I sustained the 

02:45p 20 objection, okay.

 21 Number two, I look at this exhibit and it is 

 22 non-descript to me. There are strikeout lines in here. I 

 23 don't know what the authenticity of this document is or what's 

 24 -- you know, there's -- you know, Count 6, there's strikeout 

02:45p 25 in red and -- so I don't know where this comes from. 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 I don't know what it's in relation to, and if you're 

 2 relying on Docket No. 180-1 I'd like to a moment to review 

 3 that.

 4 MR. LINCENBERG: That's fine.

02:46p 5 THE COURT: And so you won't bring this in in the 

 6 next round of questions -- 

 7 MR. LINCENBERG: Fair enough.

 8 THE COURT: -- and so you can move on -- 

 9 MR. LINCENBERG: Fair enough.

02:46p 10 THE COURT: -- to something else.

 11 MR. LINCENBERG: Can I just flash on the screen for 

 12 the Court to answer part of the questions which is CF -- 

 13 GL-CF-36, which is the e-mail that that's attached to, 

 14 comment_transcript.

02:46p 15 MR. RAPP: It says "attorney-client privileged" on 

 16 it.

 17 MR. LINCENBERG: Yeah, it was and he waived it.

 18 THE COURT: Well, that -- that's fine. But, again, 

 19 the document itself, whatever it is, I don't know what this 

02:46p 20 is. It on the top of it says, "NOTE: Many Blank Pages below. 

 21 You need to page thru them. My comments in yellow highlight."

 22 I don't know what this is -- 

 23 MR. LINCENBERG: Well, that's for --

 24 THE COURT: -- or where it comes from.

02:47p 25 MR. LINCENBERG: That's for me to explore -- let him 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 answer where it is.

 2 THE COURT: Well, so at the moment we're not going 

 3 to go into it. I'm going to look at Docket 180-1. I'll see 

 4 whether or not the privilege was waived. But, again, here I 

02:47p 5 don't -- these are statements that are -- or comments that are 

 6 put in underneath a particular declaratory statement, and so 

 7 it's out of context. So that's another problem. So let's 

 8 move forward. Let's have the jury in.

 9 (Jury back in at 2:48 p.m.)

02:48p 10 THE COURT: All rise for the jury.

 11 All right, please be seated. Thank you for your

 12 patience. We've had some matters to discuss out of your 

 13 presence, but I will note the presence of the witness; and, 

 14 Mr. Lincenberg, you may continue.

02:49p 15 MR. LINCENBERG: Thank you, your Honor. 

 16 BY MR. LINCENBERG:

 17 Q. Sir, we were talking about payment processing 

 18 applications, and I'd like to return to that topic.

 19 Now, there was some discussion in your testimony in 

02:49p 20 response to Mr. Rapp's questions about establishing European 

 21 companies and did you under -- and, in fact, there was a 

 22 European company established, I believe, in the Netherlands, 

 23 for example, correct?

 24 A. Say again, I'm sorry.

02:49p 25 Q. There was a company established in the Netherlands?

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 A. Yes.

 2 Q. Okay. Do you recall the name of that company?

 3 A. I do.

 4 Q. What was that?

02:49p 5 A. Payment Solutions BV.

 6 Q. And when Payment Solutions was established, were some of 

 7 the requirements for establishing that that there be a Dutch 

 8 director?

 9 A. Yes.

02:50p 10 Q. And did that director have to sign off on everything 

 11 involving that company?

 12 A. I think, yes, possibly a co-signature with Jed Brunst.

 13 Q. Okay. And did you understand that in order to establish 

 14 certain banking relations in Europe, there were laws in Europe 

02:50p 15 that required there to be a European entity? 

 16 Do you recall that?

 17 A. That's what I said, required? 

 18 Q. (Nodding of the head.)

 19 A. Did I say "laws"? I think it's a different word.

02:51p 20 Q. What word did you use?

 21 A. The banks -- European banks require a European company.

 22 Q. Okay. And in -- let's just say, for example, the -- 

 23 let's pick a time period, late 2015, Backpage was trying to 

 24 build business in Europe, correct?

02:51p 25 A. Correct.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. Now, in connection with efforts to get payments 

 2 processed, did you state that you had endless discussions with 

 3 Don Moon?

 4 A. Probably.

02:51p 5 Q. Did you describe Mr. Moon as your financial payment 

 6 method therapist?

 7 A. I don't recall that. I guess I'd want to see it.

 8 Q. Okay. And did -- well, let's show that to you. 

 9 Let's look at GL-CF-22, which is a July 10th, 2019, 

02:52p 10 interview at Paragraph 21. 

 11 Take a look at Paragraph 21 from that interview, and does 

 12 that help refresh your memory that you described Mr. Moon as 

 13 your financial payment method therapist?

 14 A. That's what it states.

02:53p 15 Q. And it states that -- that's an interview that you 

 16 reviewed and didn't change that statement, correct?

 17 A. Yes.

 18 Q. So when you say "that's what it states," just so the jury 

 19 understands, that's what the Government agent's memorandum of 

02:53p 20 your interview states and then you reviewed it and made no 

 21 changes to that, correct?

 22 A. Well, I'm not sure the time frame. Mr. Moon had a 

 23 variety of roles with the company.

 24 Q. And one of them was, as you described it, your financial 

02:53p 25 payment method therapist?

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 A. Correct.

 2 Q. And I believe you also indicated -- we can take this 

 3 down, thank you. 

 4 You also indicated that Mr. Moon at one point threatened 

02:53p 5 Litle, L-i-t-l-e, Litle with litigation. Do you recall that?

 6 A. Litle with litigation?

 7 Q. Let's put up the same document, GL-CF-24, Paragraph 21. 

 8 THE COURT: I think that was 22.

 9 MR. LINCENBERG: 21.

02:54p 10 THE COURT: You said CF-24 -- 

 11 MR. LINCENBERG: Oh.

 12 THE COURT: -- and it's 22.

 13 MR. LINCENBERG: Got it, sorry.

 14 BY MR. LINCENBERG:

02:54p 15 Q. So did you have endless discussions with Mr. Moon over 

 16 the phone?

 17 A. We did --

 18 MR. RAPP: Objection, foundation.

 19 THE COURT: Sustained.

02:54p 20 BY MR. LINCENBERG:

 21 Q. Well, did you tell the Government that you had -- on July 

 22 10th of 2019 that you had endless discussions with Mr. Moon 

 23 over the phone throughout this process and described him as 

 24 your financial payment method therapist? 

02:55p 25 MR. RAPP: Objection, asked and answered.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 THE COURT: Sustained.

 2 BY MR. LINCENBERG:

 3 Q. Well, did you make statements to the Government on July 

 4 10th, 2019, about your endless discussions with Mr. Moon?

02:55p 5 A. Yes.

 6 Q. Okay. And were those discussions involving payment 

 7 processing?

 8 A. Yes, they were.

 9 Q. Okay.

02:55p 10 MR. LINCENBERG: We can take that down.

 11 BY MR. LINCENBERG:

 12 Q. Now, you recall -- just to refresh the jury's memory, I 

 13 think you mentioned a company named Litle. 

 14 Can you just remind the jury who Litle was? 

02:55p 15 A. So Litle was a payment processor for Backpage for at 

 16 least a couple of years. 

 17 Q. Did that end around 2013?

 18 A. I believe so.

 19 Q. And did Litle terminate that relationship?

02:56p 20 A. Yes, they did.

 21 Q. And did they -- did Litle advise you that they were 

 22 terminating that relationship because of quote "reputational 

 23 risk"?

 24 A. Yes.

02:56p 25 Q. And when you use the term "reputational risk," are you 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 referring to sort of a phrase that captures the idea that 

 2 we're gonna look bad if we continue dealing with you?

 3 A. Yes.

 4 Q. All right. And after -- and Litle told you they didn't 

02:56p 5 have any other complaints about doing business with Backpage, 

 6 it was just that things were getting -- things were too hot 

 7 and they didn't want to be associated with Backpage, right?

 8 A. I don't think he used the expression "too hot." Just 

 9 simply saying, "What are you doing about reputational risk?" 

02:57p 10 and I took that to mean how are we staying out of Google news 

 11 with all of the arrests and how are we ensuring that we don't 

 12 have illegal transactions.

 13 Q. Okay. And just to clarify for the jury, when you say 

 14 "all of the arrests," you're not aware of Mr. Brunst ever 

02:57p 15 being criminally charged in any case, are you?

 16 MR. RAPP: Objection, relevance.

 17 MR. LINCENBERG: I want to clarify what he means.

 18 THE COURT: Well, I'll overrule the objection.

 19 THE WITNESS: I'm talking about the arrest -- 

02:57p 20 BY MR. LINCENBERG:

 21 Q. Answer my question, simple question. 

 22 You're not referring to Mr. Brunst?

 23 MR. RAPP: Objection --

 24 BY MR. LINCENBERG: 

02:57p 25 Q. You don't know of any arrest of Mr. Brunst?

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 MR. RAPP: Objection, foundation.

 2 THE COURT: Sustained.

 3 BY MR. LINCENBERG:

 4 Q. Do you -- when you said your conversation with Litle and 

02:58p 5 all of the arrests out there, you don't know of Mr. Brunst 

 6 ever being arrested, correct?

 7 A. Correct.

 8 Q. All right. Now -- and reputational risk was the only 

 9 problem that Litle had with Backpage, correct?

02:58p 10 A. That's what they told me.

 11 Q. Okay. All right. So after Litle ceased doing business 

 12 with Backpage, the company needed another payment processor, 

 13 correct?

 14 A. Correct.

02:58p 15 Q. All right. And you worked somebody named Trent Voigt to 

 16 help in connection with payment processing by his company 

 17 Jetpay, correct?

 18 A. Correct.

 19 Q. And is it true that you were the primary contact from 

02:58p 20 Backpage with Mr. Voigt?

 21 A. With Mr. Voigt? 

 22 Q. Yeah.

 23 A. Not initially.

 24 Q. Did you socialize with Mr. Voigt?

02:59p 25 A. I did have lunch with him.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. Did you go to baseball games with him?

 2 A. I think I did go to one baseball game.

 3 Q. All right. And during this time frame when you're 

 4 dealing with Mr. Voigt, Michael Gage, who you hired as CFO for 

02:59p 5 Backpage, had been Jetpay's CFO, correct?

 6 A. Yes, he had been.

 7 Q. All right. And you openly disclosed to Jetpay that 

 8 Backpage was the primary business that you were involved with, 

 9 correct?

02:59p 10 A. I --

 11 Q. Let me re -- let me shorten it. Did you tell Mr. Voigt 

 12 that you were with Backpage?

 13 A. Yes.

 14 Q. Okay. Now, during the 2010 to 2018 time frame, I believe 

03:00p 15 your estimate was that you signed and submitted some 30 

 16 applications from merchant accounts with payment processors, 

 17 correct?

 18 MR. RAPP: Objection, asked and answered.

 19 THE COURT: Sustained.

03:00p 20 MR. LINCENBERG: Okay.

 21 BY MR. LINCENBERG: 

 22 Q. Over these years there was lots of negative press 

 23 involving Backpage, correct?

 24 A. Correct.

03:00p 25 Q. And Backpage also had faced different lawsuits during 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 that time that were in the press, right?

 2 MR. RAPP: Objection, relevance.

 3 THE COURT: Sustained.

 4 BY MR. LINCENBERG:

03:00p 5 Q. So when you say that many of the applications were turned 

 6 down due to death by Google search, there's different things 

 7 that people would have seen on Google search that might have 

 8 said, "You know what, I just don't want to deal with these 

 9 guys." Reputational reasons, right? 

03:01p 10 A. Sorry, you kinda just cut in and out and I could barely 

 11 hear you.

 12 Q. I'm sorry. The -- let's take a look at one exhibit in 

 13 particular, one of the merchant pay applications. 

 14 MR. LINCENBERG: If we could place before the 

03:01p 15 witness Exhibit 6189 for identification.

 16 BY MR. LINCENBERG:

 17 Q. Sir, do you recognize 6189 for identification as a 

 18 merchant application form for eMerchantPay? And if you need 

 19 to look at any pages of it, we can -- we can flip through 

03:01p 20 them. 

 21 A. I'd like to see the page with the date -- 

 22 Q. Sure. 

 23 A. -- on it. 

 24 MR. LINCENBERG: Maybe we can go to Page 2. Let's 

03:02p 25 see, I have a hard time here. 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 I don't see a date in this exhibit. I don't see it 

 2 in the application. Maybe we can show the witness -- 

 3 MR. RAPP: Judge, I don't have an objection to this 

 4 being admitted and published.

03:02p 5 MR. LINCENBERG: -- some of the pages to see if you

 6 recognize it.

 7 THE COURT: Wait. Mr. Rapp said something and I

 8 didn't hear him. Can you -- what is it that you said, 

 9 Mr. Rapp?

03:02p 10 MR. RAPP: I don't have an objection -- sorry for 

 11 the delay. I don't have an objection to this coming in and 

 12 being published.

 13 MR. LINCENBERG: We move to admit it.

 14 THE COURT: Well, I think the witness asked to be 

03:03p 15 shown a particular page.

 16 MR. LINCENBERG: Well, I -- I think I offered to

 17 show him different pages. He asked if there was a date on it, 

 18 and on the pages I have in front of me I don't see a date.

 19 THE COURT: So I do believe -- you can ask another 

03:03p 20 question if he recognizes it and so on and so forth, but I 

 21 think that was going to help him in that.

 22 MR. LINCENBERG: Okay.

 23 BY MR. LINCENBERG:

 24 Q. First of all, do you recall submitting an application for 

03:03p 25 payment processing to eMerchantPay?

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 A. Yes, I do.

 2 Q. Okay. And in the application did you note -- I'm 

 3 directing you just to look at Page 1, for example -- that the 

 4 legal name of the company submitting it was Classified 

03:04p 5 Solutions?

 6 A. That is the European company -- 

 7 Q. Okay.

 8 A. -- that is being used.

 9 Q. All right. And you recall -- if we can go lower on that 

03:04p 10 -- that Page 1. Do you recall application that involved owner 

 11 of account Website Technologies, bank name BMO Harris Bank?

 12 A. Yes, this is the information Jed would have put in.

 13 MR. LINCENBERG: Your Honor, we'd move it in to 

 14 evidence.

03:04p 15 THE COURT: Yes, it may be admitted.

 16 (Exhibit No. 6189 admitted in to Evidence.)

 17 BY MR. LINCENBERG: 

 18 Q. Now, if we go to Page 2 under "Contact Information," is 

 19 the contact information Page 2 -- if we can highlight where it 

03:05p 20 -- okay.

 21 All right. If we look at my lower circle, is the primary 

 22 contact person noted Carl Ferrer at backpage.com?

 23 A. Correct, I was to be the contact.

 24 Q. Okay. And so in this application, which was for this 

03:05p 25 Classified Solutions entity located in the UK, you weren't 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 concealing that Backpage was connected with this application, 

 2 were you?

 3 A. No, there's a different kind of concealment.

 4 Q. Were you concealing that Backpage was connected with this 

03:06p 5 application?

 6 A. No, 'cuz my e-mail address has backpage.com in it.

 7 Q. All right. And the idea that there was an overseas 

 8 entity established in connection with this application had to 

 9 do with a requirement, as you understood it, that there be an 

03:06p 10 overseas entity, correct?

 11 A. Well, there's more to that than just that requirement -- 

 12 Q. I know -- 

 13 A. -- and I'd like to --

 14 Q. -- I'm asking about this particular requirement. 

03:06p 15 Is that correct?

 16 A. This processor requires you to have a European company 

 17 doing European transactions, and we don't have many.

 18 Q. All right. Did you ever make a prior statement where you 

 19 stated that you established non-US companies because you had 

03:07p 20 non-US sites, non-US employees pay taxes to non-US governments 

 21 and take transactions in other currencies?

 22 MR. RAPP: Objection, relevance.

 23 THE COURT: Overruled, but it is compound.

 24 THE WITNESS: And the time frame of that statement? 

03:07p 25 MR. LINCENBERG: Well, I'm asking if you ever made 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 such a statement, but the Court would like me to break it 

 2 down.

 3 BY MR. LINCENBERG: 

 4 Q. Did you ever -- isn't it true that one of the reasons you 

03:07p 5 established non-US companies is because, one, you had non-US 

 6 employees, right?

 7 A. That was by design to hire non-US employees.

 8 Q. So the answer's "yes" you had non-US employees?

 9 A. But not at this time.

03:08p 10 Q. You had about twenty employees in 2017 working outside of 

 11 the United States?

 12 A. Yeah, but I think this application's 2013 or '14.

 13 Q. Well, I'm just giving you a time frame to -- in 2017 did 

 14 you have twenty employees working outside of the United 

03:08p 15 States?

 16 A. We did.

 17 Q. All right. Did you pay rent overseas?

 18 A. We did.

 19 Q. Okay. And did you pay taxes to non-US governments?

03:08p 20 A. Eventually, yes, but not at this time frame.

 21 Q. All right. And we can take this document down.

 22 I want to get back to -- we had talked earlier about this 

 23 term "ultimate business owner verification." Do you recall 

 24 that, UBO verification, where one of the owners -- prior to 

03:09p 25 2015 one of the owners of the holding company of Backpage had 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 to sign on applications. Do you recall that?

 2 A. Yes, a UBO an owner needs to sign the application.

 3 Q. And in connection with any document that Mr. Brunst 

 4 signed as a UBO, was there -- do you recall there being 

03:09p 5 anything in there that was factually false on those

 6 applications?

 7 A. Once -- once again, I'd like to see the application.

 8 Q. Well, I'm asking you generally. 

 9 A. Okay. Well, I can tell you generally that when we're 

03:10p 10 opening up accounts with European banks and using a European 

 11 company, we don't have European transactions, that that is a 

 12 deception to the banks.

 13 Q. So -- so in the applications you were submitting to banks 

 14 in Europe, you were deceiving them?

03:10p 15 A. No, we described ourselves more as a work in progress. 

 16 We're gonna try to build up international, but the banks came 

 17 first, you know. We had some, but not very many.

 18 Q. So "no" you were not deceiving them?

 19 A. Let's just say I don't think we were transparent.

03:10p 20 Q. Well, just pick an answer. Were you deceiving them or 

 21 not deceiving them?

 22 A. I think I just did pick an answer.

 23 Q. All right. And so in your testimony over the prior two 

 24 weeks did you point to any false statement made by Mr. Brunst 

03:11p 25 in connection with any payment processing application, do you 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 recall?

 2 A. I don't recall pointing to anything specific.

 3 Q. Okay. Now, let's talk about PostFastr. PostFastr, as I 

 4 understand it, was a company that Backpage dealt with, 

03:11p 5 correct?

 6 A. You mean created? We created that company, PostFastr.

 7 Q. Okay. And PostFastr allowed users to post across the web 

 8 at once; is that right?

 9 A. It never did do that.

03:11p 10 Q. All right. 

 11 MR. LINCENBERG: I'd like to place before the 

 12 witness for his eyes only, not the jury's eyes, document 

 13 GL-CF-05.

 14 BY MR. LINCENBERG:

03:12p 15 Q. Sir, did you write an e-mail in June of 2014 to Scott 

 16 Spear, Jim Larkin and Jed Brunst about PostFastr?

 17 A. Yes, I do.

 18 Q. Did you state in it that e-mail that PostFastr allows 

 19 users to post across the web at once? Did you state that?

03:12p 20 A. That's what it says.

 21 Q. Well, let's explore your answer "that's what it says."

 22 So when you say that's what it says, are you saying that 

 23 was a lie or was that the truth.

 24 A. I'm saying that I'm gonna need to explain what that 

03:12p 25 means, because obviously you can't post across every web site.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. So you're saying it was false?

 2 A. What I'm saying is this is an intent, you know. I'm 

 3 writing the intent of PostFastr. That's the description. It 

 4 says here, "Scott, can you help me file an intent to use for 

03:13p 5 PostFastr?" and then I'm providing a description. So I'm 

 6 asking for help from my boss, Scott Spear.

 7 Q. Okay. And --

 8 A. So it's not a lie.

 9 Q. It's not a lie, okay. 

03:13p 10 And was the description also that it's ideal for 

 11 employees, property managers, buyers and sellers seeking 

 12 increased response and traffic to their posting?

 13 A. Yes, that's the family friendly description.

 14 Q. Okay. 

03:13p 15 MR. LINCENBERG: And if we can look at Exhibit 6194

 16 for identification. Let me just blow it up so Mr. Ferrer can 

 17 read it.

 18 BY MR. LINCENBERG:

 19 Q. Mr. Ferrer, do you recognize Exhibit 6194 for 

03:14p 20 identification as an e-mail from Michael Gage to you in 

 21 January of 2016?

 22 A. Yes, I do.

 23 Q. And was that an e-mail regarding PostFastr?

 24 A. Yes, that's the subject line.

03:14p 25 Q. All right. 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 MR. LINCENBERG: Your Honor, I would move in to 

 2 evidence 6194 for ID. 

 3 MR. RAPP: No objection.

 4 THE COURT: 6194 may be admitted and it may be 

03:14p 5 published.

 6 MR. LINCENBERG: Thank you, Your Honor.

 7 (Exhibit No. 6194 admitted in to Evidence.)

 8 BY MR. LINCENBERG: 

 9 Q. Now, let's just focus in on the timing here. This is 

03:14p 10 January 2016. That was post sale, right?

 11 A. Yes.

 12 Q. And as part of this effort during that time is Mr. Gage 

 13 helping to arrange payment processing?

 14 A. He is.

03:15p 15 Q. All right. And this e-mail, Mr. Brunst is not copied on 

 16 this, correct?

 17 A. I don't believe he is.

 18 Q. Okay.

 19 MR. LINCENBERG: We can take this down, thank you.

03:15p 20 BY MR. LINCENBERG: 

 21 Q. Sir, are you familiar with the term "Operation

 22 Chokepoint"?

 23 MR. RAPP: Objection, relevance.

 24 MR. LINCENBERG: Well, the relevance, Your Honor, is 

03:15p 25 this deals with the whole credit card issue.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 THE COURT: He can answer if he's familiar with the 

 2 term "yes" or "no."

 3 THE WITNESS: I am.

 4 BY MR. LINCENBERG:

03:15p 5 Q. And do you recall there being an initiative in 2012 -- 

 6 federal initiative in 2012 that was attempting to ban 

 7 high-risk industries such as porn, firearms, dating and payday 

 8 loans from acquiring transactions? 

 9 MR. RAPP: Objection as to the relevance of this.

03:16p 10 THE COURT: Sustained.

 11 MR. LINCENBERG: Your Honor, the proffer of 

 12 relevance is that this is the -- this is what lays the 

 13 predicate for everything to come in the credit card part of 

 14 the testimony.

03:16p 15 THE COURT: Well, rephrase the question.

 16 MR. LINCENBERG: Okay.

 17 BY MR. LINCENBERG: 

 18 Q. Do you recall that there was a federal initiative in 2012 

 19 in an attempt to ban high-risk industries?

03:16p 20 MR. RAPP: Objection as to foundation as to his 

 21 basis of knowledge.

 22 THE COURT: Sustained.

 23 BY MR. LINCENBERG:

 24 Q. Well, were you familiar with Operation Checkpoint?

03:16p 25 A. No.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. It did not inform any of the work you were doing at 

 2 Backpage?

 3 A. Not Operation Checkpoint.

 4 Q. Okay. Oh, I'm sorry, I guess I misstated checkpoint. 

03:17p 5 Operation Chokepoint?

 6 A. Yes, I am.

 7 Q. Okay. And how did it inform your efforts at payment 

 8 processing?

 9 MR. RAPP: Objection to the extent it calls for 

03:17p 10 hearsay for his basis of knowledge.

 11 MR. LINCENBERG: Not asking for the truth.

 12 MR. RAPP: Well --

 13 THE COURT: Overruled. He can answer the question 

 14 if he can, how it informed his payment processing.

03:17p 15 THE WITNESS: And I'm -- I'm gonna have to explain.

 16 MR. LINCENBERG: Please do. I want you to explain 

 17 how you were informed.

 18 THE WITNESS: It's not a "yes" or "no" answer.

 19 MR. LINCENBERG: Yes. 

03:17p 20 THE WITNESS: So this comes back, once again, to 

 21 there's a lot of bad news in Google about different arrests 

 22 from the female escorts category of Backpage, which creates a 

 23 lot of risk for the banks and that the banks are held 

 24 accountable for the nature of the transactions, and so then 

03:18p 25 they choose not to do business with those businesses.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 BY MR. LINCENBERG: 

 2 Q. And your statement about Operation Chokepoint at the time 

 3 was your understanding was that they were targeting businesses 

 4 simply for reputational reasons, correct?

03:18p 5 A. Well, it's -- I know that they targeted Payday Loans -- 

 6 Q. Right. 

 7 A. -- and I suppose that the reputation was the interest 

 8 rate.

 9 Q. And you know that they targeted firearms dealers, right?

03:19p 10 A. Yes.

 11 Q. And porn, right?

 12 A. I'm speculating but. . .

 13 Q. You speculated in the past?

 14 A. It is a high-risk industry.

03:19p 15 Q. And dating sites, correct?

 16 A. Some dating sites.

 17 Q. And your response to Operation Chokepoint was that 

 18 Backpage doesn't create porn, it actively deletes porn 

 19 pictures, doesn't sell guns, we sell advertising, correct?

03:19p 20 A. Well, that's a very self-serving response on my part -- 

 21 Q. Okay.

 22 A. -- and not accurate.

 23 Q. All right. So your response to it was inaccurate?

 24 A. Well, what am I responding -- what am I responding to? 

03:20p 25 MR. LINCENBERG: Now, let me show you Exhibit 792 in 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 evidence and ask that it be published, Your Honor.

 2 BY MR. LINCENBERG:

 3 Q. Now, sir, this is an e-mail which the Government showed 

 4 you from April of 2015; and I believe the focus of their 

03:20p 5 questioning was about the top part where Mr. Brunst writes, 

 6 "Didn't we go down the Mauritius path once and the banks had 

 7 the same issue with our content." Do you recall that?

 8 A. Yes.

 9 Q. Okay. Now, let's look further down the page at the 

03:20p 10 preceding e-mail from you. Okay. So in the preceding e-mail 

 11 if we look towards the bottom of the page -- and maybe we can 

 12 just blow up -- let's try to -- well, let's blow up a bigger 

 13 portion for the witness to read. Let's just blow up this 

 14 part.

03:21p 15 So in the preceding e-mail from you, you're raising that 

 16 certain banks may not process Mastercard transactions; is that 

 17 right?

 18 A. I'm -- it wouldn't be some banks. Mastercard is 

 19 investigating Backpage and it could be we could lose 

03:21p 20 Mastercard completely.

 21 Q. Okay. So the -- and back -- and Mastercard was 

 22 investigating Backpage, in part, in response to threats from 

 23 Cook County Sheriff Dart, correct?

 24 A. I don't know that.

03:22p 25 Q. You don't know that?

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 A. It says April 1, 2015.

 2 Q. Right. 

 3 A. I didn't really link it with Dart at the time.

 4 Q. Okay. We'll get to -- we'll get to Dart. Let's focus 

03:22p 5 on -- on this. 

 6 So in the lower e-mail you suggest using a bank in 

 7 Mauritius to help advance credit card processing; is that 

 8 right?

 9 A. I'm sharing a recommendation from the consultant.

03:22p 10 Q. Okay. And there had been a previous attempt to get this 

 11 bank in Mauritius to do business with Backpage, correct?

 12 A. Correct.

 13 Q. And so what Mr. Brunst's response is, essentially, why 

 14 would you go to the same bank that already turned you down, 

03:23p 15 correct?

 16 A. Essentially that's what he says.

 17 Q. And Backpage did not move forward with that bank, 

 18 correct?

 19 A. I don't remember.

03:23p 20 Q. Okay. And did Mr. Brunst -- we can take this exhibit 

 21 down. 

 22 Did Mr. Brunst suggest contacting counsel to help with 

 23 the banking and credit card processing issue?

 24 MR. RAPP: Objection, Judge.

03:23p 25 MR. LINCENBERG: This is from a direct exam. This 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 was testimony that the Government brought out on September 

 2 21st at Pages 80 and 81.

 3 MR. RAPP: I'll have to look at it. I've got to

 4 know the context.

03:24p 5 THE COURT: He can answer "yes" or "no" if he knows.

 6 THE WITNESS: Could I have a date, please?

 7 MR. LINCENBERG: Well, you'll have to give me a 

 8 date. It involves Frick Bank. You'll have to give me a date. 

 9 It was your testimony.

03:24p 10 THE WITNESS: Yeah, I remember.

 11 MR. LINCENBERG: Okay.

 12 THE WITNESS: What was the question?

 13 BY MR. LINCENBERG: 

 14 Q. The question was: Mr. Brunst had suggested contacting 

03:24p 15 counsel to help address issues you were having specifically 

 16 with bank threat?

 17 A. He wanted counsel to get them to pay us.

 18 Q. Right. And did you see something -- did you see 

 19 something improper that Mr. Brunst was suggesting that if a 

03:25p 20 bank is not paying you, that maybe you should have counsel get 

 21 involved to assist in getting him paid? 

 22 I understand you disagreed with the suggestion, but did 

 23 you see that suggestion as something sinister, getting a bank 

 24 involved to help dealing with potential legal dispute there -- 

03:25p 25 get counsel involved to help you deal with potential legal 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 dispute?

 2 A. Counterproductive but not sinister.

 3 Q. Okay. Counterproductive, you just didn't -- you didn't 

 4 think it would work, correct?

03:25p 5 A. We were having a hard time getting banks. So threatening 

 6 them is not a good idea.

 7 Q. Okay. And you're using the word "threatening them," but 

 8 you referenced DLA Piper. DLA Piper was the law firm you're 

 9 referring to here, right?

03:25p 10 A. Yes.

 11 Q. DLA Piper's got, like, 4,000 lawyers around the world, 

 12 right?

 13 MR. RAPP: Objection, foundation.

 14 THE COURT: Sustained.

03:26p 15 BY MR. LINCENBERG:

 16 Q. You understood them to be a reputable law firm, correct?

 17 A. I did. 

 18 Q. Okay. And so you're not suggesting there's something 

 19 sinister about saying, "Well, if we're having a dispute with a 

03:26p 20 bank, let's see if counsel can help out," are you?

 21 MR. RAPP: Objection, asked and answered.

 22 THE COURT: Sustained, and I think it's a 

 23 misstatement of the testimony; but the jury will make that 

 24 ultimate decision.

03:26p 25 MR. LINCENBERG: Well, if it's a misstatement, then

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 it wasn't asked and answered.

 2 THE COURT: Well, no, your including what he said is 

 3 a misstatement of what he -- what Mr. Ferrer --

 4 MR. LINCENBERG: I want this to be clarified.

03:26p 5 THE COURT: Well, he testified it was not sinister.

 6 MR. LINCENBERG: Right.

 7 THE COURT: And you incorporated that in your 

 8 question.

 9 MR. LINCENBERG: Right.

03:26p 10 THE COURT: So that's the part.

 11 MR. LINCENBERG: Okay, okay.

 12 BY MR. LINCENBERG: 

 13 Q. You also discussed banking issues with Mr. Moon, correct?

 14 A. Yes --

03:26p 15 MR. RAPP: Objection, asked and answered.

 16 MR. LINCENBERG: No, I asked about payment --

 17 THE COURT: Overruled.

 18 MR. LINCENBERG: Sorry.

 19 BY MR. LINCENBERG: 

03:27p 20 Q. Is that correct?

 21 A. Yes.

 22 Q. Okay. And Mr. Moon also suggested seeking legal help to 

 23 address any issues that might be outstanding with financial 

 24 institutions, correct?

03:27p 25 MR. RAPP: Objection, the question itself is 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 hearsay.

 2 THE COURT: Sustained.

 3 BY MR. LINCENBERG:

 4 Q. Well, sir, you've testified on direct examination about 

03:27p 5 this idea of having people involved in assisting with disputes 

 6 with banks. 

 7 I'm asking if, in part, that was also something that you 

 8 had discussed with Mr. Moon? 

 9 MR. RAPP: Objection, asked and answered.

03:27p 10 THE COURT: Sustained.

 11 BY MR. LINCENBERG:

 12 Q. So let's focus on the major credit card companies, and 

 13 we'll break it down a little bit, but for starters AmEx, Visa 

 14 and Mastercard.

03:28p 15 From 2004 until around June of 2015 did all three of 

 16 those credit card companies allow their cards to be used to 

 17 buy ads on Backpage?

 18 A. Yes.

 19 Q. And after June of 2015 did that all change as a result of 

03:28p 20 Sheriff Dart sending threatening letters to them?

 21 MR. RAPP: Objection, foundation.

 22 THE COURT: Sustained.

 23 BY MR. LINCENBERG:

 24 Q. Was that your understanding? 

03:28p 25 MR. RAPP: Same objection.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 THE COURT: Sustained.

 2 MR. LINCENBERG: Well, sir, you -- Your Honor, I'm 

 3 trying to avoid getting into areas that the Court has had 

 4 orders on, which is part of the way of laying the foundation. 

03:29p 5 So I'd ask the Court for some liberty here so that I don't get 

 6 into certain things.

 7 THE COURT: Well, you're not going to get into those 

 8 things that I ordered you not to get into.

 9 MR. LINCENBERG: Right, but --

03:29p 10 THE COURT: Ask him a proper question.

 11 MR. LINCENBERG: That's why I'm asking the Court so 

 12 that I don't have to because that's part of foundation to give 

 13 me some leeway here.

 14 BY MR. LINCENBERG: 

03:29p 15 Q. So, sir, in the summer of 2015 your understanding was 

 16 that Visa buckled to the reputational risk pressure from 

 17 Sheriff Dart, correct?

 18 MR. RAPP: Objection. Foundation, relevance and

 19 previous Court order.

03:30p 20 THE COURT: Sustained.

 21 MR. LINCENBERG: I'd like to place before the 

 22 witness Exhibit GL-CF-08, and I'll just generally indicate 

 23 that this is an August 2015 deposition testimony in a 

 24 different proceeding. I'd like to focus the witness on Page 

03:30p 25 93, Line 6 through 11.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 MR. RAPP: This is the wrong -- sorry.

 2 THE COURT: As Liliana works on that, I'll just say 

 3 there's no -- there's no question before the witness.

 4 MR. LINCENBERG: I know. I just wanted to place

03:31p 5 this before the witness and then ask the question. Sir --

 6 THE COURT: Well, he doesn't have it yet.

 7 MR. LINCENBERG: Do you have it on your screen? 

 8 MR. RAPP: He has it on the screen, we don't.

 9 BY MR. LINCENBERG: 

03:31p 10 Q. So in sworn testimony in response to a question of your 

 11 understanding of the reputational risk that Visa was hung up 

 12 on was being associated with Backpage -- 

 13 MR. RAPP: Judge -- 

 14 MR. LINCENBERG: -- your answer was that -- 

03:31p 15 MR. RAPP: -- I'm going to object.

 16 MR. LINCENBERG: I haven't asked the question yet.

 17 THE COURT: Wait.

 18 MR. LINCENBERG: -- the letters and the news that 

 19 broke from the result of those letters created a lot of bad 

03:31p 20 news, which was reputational risk? 

 21 THE COURT: Well, in the first instance, you're 

 22 reading from an exhibit that's not been admitted. 

 23 Number two, there was no question before this 

 24 witness prior to this exhibit being laid before him. 

03:32p 25 MR. LINCENBERG: Okay.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 BY MR. LINCENBERG:

 2 Q. Sir, let's go back to the cover page of this exhibit.

 3 Did you testify in Los Angeles, California, on August 

 4 18th, 2015, in a deposition?

03:32p 5 A. Yes, I did.

 6 Q. And was your testimony under oath?

 7 A. Yes.

 8 Q. Did you seek to tell the truth in that testimony?

 9 A. I did.

03:32p 10 Q. Okay. And in that testimony did you testify that the 

 11 letters and news from Sheriff Dart letter to credit card 

 12 companies -- 

 13 MR. RAPP: I'm going to -- 

 14 MR. LINCENBERG: -- created a lot of bad news, which 

03:32p 15 was reputational risk? 

 16 MR. RAPP: Objection, improper impeachment.

 17 MR. LINCENBERG: I'm not impeaching right now. I'm 

 18 asking if he testified to that.

 19 THE COURT: Well, he can answer the question if he 

03:33p 20 recalls.

 21 MR. LINCENBERG: We can go back and show the witness 

 22 93, Lines 6 through 11.

 23 THE WITNESS: And the question was?

 24 BY MR. LINCENBERG:

03:33p 25 Q. The question was: Did you testify as I indicated in my 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 question to you from a moment ago?

 2 A. I suddenly can't hear you.

 3 Q. I'll repeat it. In response to a question of your 

 4 understanding of the reputational risk that Visa was hung up 

03:33p 5 on being associated with Backpage, did you respond that the 

 6 letters, the news that broke from the results of those letters 

 7 created a lot of bad news, which was reputational risk? 

 8 A. That's what I stated.

 9 MR. LINCENBERG: We can take this down now, thank 

03:34p 10 you.

 11 BY MR. LINCENBERG: 

 12 Q. And this is what you referred to when you used the term 

 13 "credit card apocalypse," correct?

 14 A. Yes.

03:34p 15 Q. That these credit card companies had been hit with a 

 16 letter from a Sheriff of Cook County, and just from that 

 17 letter they stopped doing business with Backpage for 

 18 reputational reasons, right?

 19 MR. RAPP: Objection. Foundation, relevance, 

03:34p 20 previous Court order.

 21 THE COURT: Sustained.

 22 BY MR. LINCENBERG:

 23 Q. And by the way, this was after you purchased Backpage, 

 24 correct?

03:34p 25 A. It was two and a half months after I became the nominal 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 owner.

 2 Q. The nominal owner who made the decision to shut down the 

 3 Backpage site, right?

 4 A. Correct.

03:35p 5 Q. You didn't ask the non-nominal owners to do that, did 

 6 you?

 7 A. Well, I --

 8 Q. "Yes" or "no."

 9 A. To shut down the site or take down the category? 

03:35p 10 Q. To shut down the site. 

 11 A. Not at that time. I made the decision on my own.

 12 Q. All right. And in this time period your view of what 

 13 Sheriff Dart was doing was starting a campaign against 

 14 Backpage, correct?

03:35p 15 MR. RAPP: Okay, Judge, I'm going to object to this. 

 16 There's no foundation for it. It's irrelevant. There's 

 17 previous Court orders. I'd ask that counsel be admonished.

 18 MR. LINCENBERG: This is -- I ask that counsel be 

 19 admonished -- 

03:35p 20 THE COURT: Wait, wait, no.

 21 MR. LINCENBERG: -- for making that statement.

 22 THE COURT: I'm going to sustain the objection. 

 23 I'm going to sustain the objection.

 24 MR. LINCENBERG: Okay.

03:36p 25 THE COURT: Move on to a different area, 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Mr. Lincenberg.

 2 MR. LINCENBERG: All right.

 3 BY MR. LINCENBERG:

 4 Q. Now, sir, did -- did you work with somebody named Tom 

03:36p 5 Brown to respond to respond to the Sheriff Dart issues?

 6 MR. RAPP: Okay, Judge -- 

 7 MR. LINCENBERG: Can we have a sidebar, please.

 8 MR. RAPP: Objection -- 

 9 THE COURT: Yes, you may.

03:36p 10 (Following discussion held at sidebar.)

 11 THE COURT: Mr. Rapp was in the middle of making an 

 12 objection. What was the objection? 

 13 MR. RAPP: My objection is he is trying to smuggle 

 14 in an advice of counsel defense. This is a lawyer and this 

03:37p 15 lawyer -- of course, he hasn't complied with the requirement. 

 16 This lawyer has no idea what the internal prostitution 

 17 marketing strategies of Backpage are, and he's just simply 

 18 trying to smuggle in what we were concerned about in previous 

 19 hearings.

03:37p 20 THE COURT: Is this -- this is -- I assume you're 

 21 talking about the Dart litigation? 

 22 MR. RAPP: Yes.

 23 THE COURT: And that's the way I see it at this 

 24 juncture. Mr. Lincenberg, I told you yesterday you could 

03:37p 25 mention Dart -- 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 MR. LINCENBERG: Right.

 2 THE COURT: -- that Mr. Dart -- Sheriff Dart was

 3 sending subpoenas or making inquiries, but you're getting very 

 4 close to the line of having this witness testify related to 

03:37p 5 that litigation and so that is the reason I'm cutting you off.

 6 MR. LINCENBERG: Can I respond? 

 7 THE COURT: Yes.

 8 MR. LINCENBERG: Thank you.

 9 Your Honor, it's loud and clear to me -- 

03:38p 10 THE REPORTER: Mr. Lincenberg, I can't hear you.

 11 MR. LINCENBERG: It is loud and clear to me that the 

 12 Court is not allowing us to get in any complaints that were 

 13 filed against the Sheriff, the Court opinion that was in 

 14 response to that. 

03:38p 15 We are not -- for the umpteenth time, we are not 

 16 asserting an advice of counsel defense. My client never spoke 

 17 to any lawyer --

 18 THE COURT: Which has nothing to do with advice of 

 19 counsel. This is related to unrelated litigation.

03:38p 20 MR. LINCENBERG: Well, I disagree that it's 

 21 unrelated, but I accept that that's the Court's order. 

 22 My client's state of mind is at issue before this 

 23 jury. His good faith is at issue, and I want to get as close 

 24 to the line without crossing it as this Court will permit 

03:38p 25 because the -- and in response, for example, in my opening 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 statement I was very clear not to get into litigation. 

 2 I stated in my opening statement that as a result of 

 3 the way the dispute with Mr. -- or Sheriff Dart ended, 

 4 whatever my words were, that my client took comfort in the 

03:39p 5 further credit card processing and that work that was done.

 6 Now, in our view, the opinion is the most relevant 

 7 thing to my client's state of mind. The Court's not letting 

 8 me get there, but I'm trying to get in as much as I can. I 

 9 have no intention of raising a legal complaint, a legal 

03:39p 10 opinion; but this person, Mr. Ferrer, along with Larkin and 

 11 others, sent a letter to Sheriff Dart where they laid out 

 12 their response to his threats and include some things in it 

 13 like about the CDA that I'm not going to get into. It also 

 14 includes some things about the First Amendment.

03:40p 15 THE COURT: This is the lawyer letter? 

 16 MR. LINCENBERG: This is the lawyer letter from Tom 

 17 Brown.

 18 THE COURT: With multiple redactions? 

 19 MR. LINCENBERG: Right.

03:40p 20 THE COURT: And I was going to say that the majority 

 21 of that letter speaks to other legal issues that were 

 22 confusing. It's a voluminous letter laying out legal 

 23 analysis, and so that's not admissible for multiple reasons 

 24 and -- and I will say this: That you've come to that line.

03:40p 25 MR. LINCENBERG: Okay. So is the Court's order that 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 I cannot ask any further questions about Sheriff Dart?

 2 THE COURT: About the Dart -- no, I did not say 

 3 that -- 

 4 MR. LINCENBERG: I'm asking.

03:40p 5 THE COURT: -- about Sheriff Dart.

 6 MR. LINCENBERG: Okay.

 7 THE COURT: I'm talking about the line related to 

 8 litigation and how the claims were brought; but you can say, 

 9 "Did you meet with Sheriff Dart?" You know, "What was your 

03:40p 10 understanding of Sheriff Dart's concerns?" That's all 

 11 legitimate, but you're getting at the line where you're going 

 12 to start getting into this litigation and that's where we're 

 13 drawing it.

 14 MR. LINCENBERG: So the key point for me to 

03:41p 15 understand is: Can I bring out that the response that was 

 16 sent to Sheriff Dart was that the First Amendment -- that the 

 17 business is operating lawfully because of the First Amendment? 

 18 THE COURT: No.

 19 MR. LINCENBERG: Okay. 

03:41p 20 MR. CAMBRIA: Can -- can we also be heard on that, 

 21 Judge? I think what's happened here -- 

 22 THE COURT: On what? 

 23 MR. CAMBRIA: On this issue -- the same issue. 

 24 I think what's happened is there's -- it's been sort 

03:41p 25 of suggested to the jury that the reason the credit card 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 companies discontinued their service was because some -- 

 2 because Backpage people did something illegal when, as a 

 3 matter of fact, the Court found that it was Sheriff Dart who 

 4 did something illegal and so it seems to me that the problem 

03:41p 5 here is --

 6 THE COURT: Well, there's no -- I don't think there 

 7 was a finding -- 

 8 MR. CAMBRIA: A hundred percent.

 9 THE COURT: -- as to illegality in terms of the 

03:42p 10 Court's opinion. It was an order on the preliminary 

 11 injunction. That's what I understood it to be, but in any 

 12 event -- 

 13 MR. CAMBRIA: Well, what's happening, though, is

 14 there's this kind of suggestion out there, if you will, that 

03:42p 15 the reason that they shut down is because they were breaking 

 16 the law as opposed to they shut down because a -- an official 

 17 threatened them, which eventually the Court found was 

 18 inappropriate, but that somebody threatened them. 

 19 That was key here that the jury should know that it 

03:42p 20 wasn't because the credit card companies thought they were 

 21 doing something illegal. It was because they got threatened 

 22 by a sheriff. That's what happened.

 23 THE COURT: Well, but I've already made my ruling 

 24 with regard to that. You've made your record, and so let's 

03:42p 25 not keep the jury waiting.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 MR. LINCENBERG: Your Honor, I'm going to need a

 2 moment to look through my outline to see if there's any 

 3 questions I have in there that I don't think violate the 

 4 Court's order. It's going to take me a minute to look at 

03:43p 5 that.

 6 THE COURT: Yes, that's fine. 

 7 While I have you here, let me show you what I pulled 

 8 up. I don't know, you need to go look back at the docket. 

 9 This is what you cited to me, and this is not related to your 

03:43p 10 earlier argument.

 11 MR. LINCENBERG: 180-1.

 12 THE COURT: 180-1. There is no dash one to this. 

 13 In other words, there's no exhibit -- 

 14 MR. LINCENBERG: We'll pull that. 

03:43p 15 THE COURT: Okay.

 16 MR. LINCENBERG: I won't get in to it today.

 17 (End of sidebar discussion.)

 18 THE COURT: All right. Thank you, Members of the 

 19 Jury. I thought that was a pretty good stretch break as well. 

03:43p 20 So let's give Mr. Lincenberg a moment, and then we can 

 21 continue forward.

 22 BY MR. LINCENBERG:

 23 Q. Mr. Ferrer, in July of 2015 did you ever state that 

 24 Sheriff Dart's actions and termination of credit card services 

03:44p 25 harmed Backpage's efforts to police and preclude improper ads? 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 A. That sounds like the company narrative.

 2 Q. Did you make that statement under oath?

 3 A. I'd like to see it.

 4 Q. Sure. That is -- 

03:45p 5 MR. LINCENBERG: Can we show the witness GL-CF-07 

 6 and first show him the front page, and then if we can go to 

 7 Paragraph 29.

 8 BY MR. LINCENBERG:

 9 Q. Have you had a chance to review that?

03:45p 10 A. I have.

 11 Q. Okay. Is that a statement you made under oath?

 12 A. I did.

 13 Q. And when you volunteered that that was the company 

 14 narrative, did you do that to suggest that you could lie under 

03:45p 15 oath but it was somebody else's fault?

 16 A. No, it's not transparent.

 17 Q. Okay. 

 18 MR. LINCENBERG: We can pull that down.

 19 BY MR. LINCENBERG: 

03:46p 20 Q. A couple years earlier had Sheriff Dart recommended that 

 21 Backpage use credit cards because it could assist in 

 22 identifying people posting on the site?

 23 MR. RAPP: Objection as to foundation.

 24 THE COURT: Sustained.

03:46p 25 BY MR. LINCENBERG:

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. In 2013 do you recall learning that Sheriff Dart had 

 2 advised Backpage -- requested from Backpage to impose charges 

 3 and require users to pay by credit cards in order to 

 4 discourage improper postings and provide information for law 

03:47p 5 enforcement? 

 6 A. I recall we received letters from Sheriff Dart. I don't 

 7 recall specifically what was in those letters, and they seemed 

 8 to change from time to time.

 9 MR. LINCENBERG: I'd like to show you that same 

03:47p 10 declaration, GL-CF-07, the July 2015 declaration that you 

 11 signed. If we can put Paragraph 29 on the screen. 

 12 Let me ask you a question.

 13 BY MR. LINCENBERG:

 14 Q. Did you state under oath that Sheriff Dart's actions and 

03:48p 15 the termination of credit card services have harmed Backpage's 

 16 efforts to police and preclude improper ads? 

 17 A. Yes.

 18 MR. LINCENBERG: You can take this down.

 19 BY MR. LINCENBERG: 

03:49p 20 Q. And did you previously state that two years prior, 

 21 meaning 2013, that Sheriff Dart had sent Backpage a letter 

 22 demanding that it require reliance on credit cards for all 

 23 adult advertisements? 

 24 A. I -- I don't recall that, but I do know we received 

03:49p 25 letters from Sheriff Dart in 2013 asking us to do a number of 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 things, some of which we were already doing.

 2 Q. Let me direct your attention to Exhibit 6025 -- I'm 

 3 sorry. Yeah, let me direct your attention to Exhibit 6025 for 

 4 identification, July 21st, 2015, e-mails between you and Trent 

03:50p 5 Voigt regarding the Visa, AmEx, Dart issues. 

 6 Do you recognize this redacted exhibit?

 7 A. I do.

 8 Q. As an e-mail exchange between you and Mr. Voigt?

 9 A. Yes.

03:50p 10 Q. And did it involve Mastercard and Visa and Dart?

 11 A. Yes, it did.

 12 MR. LINCENBERG: Your Honor, before we move it into 

 13 evidence, I would direct the Court's attention to the top 

 14 e-mail if the Court wishes to review that first sentence under 

03:51p 15 -- regarding Mastercard and advise whether the Court will 

 16 admit this into evidence.

 17 MR. RAPP: Obviously we want to be heard.

 18 THE COURT: Well, is there an objection to the 

 19 exhibit coming in as is? 

03:52p 20 MR. RAPP: It's the Court's previous order. It's 

 21 riddled throughout this.

 22 THE COURT: Yes, I think it should be redacted. The 

 23 second -- 

 24 MR. LINCENBERG: Well, before -- before we -- I'm 

03:52p 25 sorry.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 THE COURT: The second sentence under "regarding

 2 Mastercard."

 3 MR. RAPP: And also, Judge, even further down, the 

 4 entirety of that.

03:52p 5 MR. LINCENBERG: Before we get further down, Your 

 6 Honor, by "the second sentence," are you referring to the "we 

 7 think" or "we will know" sentence? 

 8 THE COURT: "If we..."

 9 MR. LINCENBERG: Okay. With those redactions, we're 

03:52p 10 not going to move it into evidence.

 11 MR. RAPP: I'm sorry, I didn't hear that.

 12 MR. LINCENBERG: We're not -- we're not moving it in 

 13 if that's redacted.

 14 MR. RAPP: Oh.

03:52p 15 THE COURT: I misspoke, Mr. Lincenberg. It's the 

 16 first portion of that sentence but it's --

 17 MR. LINCENBERG: "We think..."?

 18 THE COURT: It does then take it out of context 

 19 somewhat but. . .

03:53p 20 MR. LINCENBERG: When you say "the first portion" --

 21 THE COURT: Up to the comma.

 22 MR. LINCENBERG: Is it what's been blacked out now? 

 23 THE COURT: Yes.

 24 MR. LINCENBERG: Okay, then we'll move that in.

03:53p 25 MR. RAPP: Judge, there's -- there's a lot of -- 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 first of all, this is a three-page e-mail and there's quite a 

 2 bit of information that is subject to the Court's order.

 3 MR. LINCENBERG: Well, I don't -- I don't believe 

 4 there's anything else subject to the Court's order on the 

03:53p 5 other pages. Can I have a moment to consult with Mr. Rapp?

 6 THE COURT: Yes.

 7 (Counsel confer.)

 8 THE COURT: Why don't -- why don't you take the 

 9 evening to visit on the exhibit, and if you can come to some 

03:54p 10 agreement you can take it up in the morning.

 11 MR. LINCENBERG: Well, that's fine; but in light of 

 12 the Court's order I'm not disagreeing with the other two 

 13 parts.

 14 THE COURT: Yes.

03:54p 15 MR. LINCENBERG: So can I do my exam without 

 16 introducing it? 

 17 THE COURT: Yes, yes.

 18 MR. LINCENBERG: Okay, thank you.

 19 BY MR. LINCENBERG: 

03:54p 20 Q. So, sir, on July 21st of 2015 did you advise Mr. Voigt 

 21 regarding Mastercard and Dart, "We think they will come back 

 22 once Visa is back..." and then after the redacted portion, 

 23 "then Visa has cover for protected speech"? 

 24 Did you advise that?

03:55p 25 A. I was told this information -- 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. Did you advise him of that?

 2 A. -- and I advised him.

 3 Q. Okay. You were told -- I don't think the Court's order 

 4 permits you to get into who told you this. I'm just asking if 

03:55p 5 you advised him, "yes" or "no"?

 6 A. I -- I gave him this advice.

 7 Q. Okay. 

 8 MR. LINCENBERG: Can we go back to the document, the 

 9 full document, Christina. Thank you. 

03:55p 10 Can we go to the second page. 

 11 Can we go to the third page.

 12 BY MR. LINCENBERG:

 13 Q. And on the third page, prior to your response to 

 14 Mr. Voigt, did Mr. Voigt write to you and ask --

03:56p 15 MR. RAPP: This would be hearsay. So I'd object to

 16 this on a hearsay ground.

 17 MR. LINCENBERG: Well, it goes to explain his 

 18 response.

 19 MR. RAPP: Well, no, it's still hearsay. He's 

03:56p 20 offering it for the truth.

 21 MR. LINCENBERG: It's not offered for the truth. It 

 22 gives context to his response.

 23 THE COURT: Well, in the context of the e-mail the 

 24 question was did he write to you and ask; and so he can answer 

03:56p 25 as to what's on the e-mail, yes.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 MR. LINCENBERG: So do you understand the question, 

 2 sir? 

 3 THE WITNESS: No.

 4 MR. LINCENBERG: Do you want me to repeat it?

03:56p 5 THE WITNESS: (Nodding of the head.)

 6 BY MR. LINCENBERG: 

 7 Q. So prior to your response to Mr. Voigt, had he asked you 

 8 on July 21st, "When are you guys meeting with Visa? Can you 

 9 give me a status on what you are doing with MC? Also what 

03:57p 10 happened with AmEx?" Do you see that?

 11 A. Correct, that's what I see.

 12 Q. So you're having conversations with Mr. Voigt openly 

 13 discussing the issues that Sheriff Dart is raising, correct?

 14 A. Yes.

03:57p 15 Q. And you had discussions with Mickey Hansen of American 

 16 Express about these same issues, correct?

 17 A. I did.

 18 Q. And fast forwarding -- in your -- in your interviews with 

 19 the Government there were, as I counted, over 30 times when 

03:58p 20 you broke things down into sort of pre-Dart and post-Dart 

 21 communications. Do you recall that?

 22 A. Yes.

 23 Q. And so just "yes" or "no," post Dart did you gain any 

 24 comfort in the legality of the credit card processing in the 

03:58p 25 post-Dart setting? I can't state more in my question. 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 MR. RAPP: Objection. Relevance, foundation, and it 

 2 implicates the Court order.

 3 MR. LINCENBERG: Well, I'm trying to avoid the 

 4 Court's order.

03:59p 5 THE COURT: I'll sustain the objection.

 6 BY MR. LINCENBERG:

 7 Q. And, sir, in this post-Dart time period were -- was 

 8 Mr. Moon -- well, were you guided by Mr. Moon in your efforts 

 9 to get credit card processing? 

04:00p 10 MR. RAPP: Objection, it calls for hearsay.

 11 MR. LINCENBERG: Not offered for the truth.

 12 THE COURT: Well, he can say "yes" or "no" but -- 

 13 and then we'll see what Mr. Lincenberg's next question is.

 14 MR. LINCENBERG: "Yes" or "no," sir.

04:00p 15 THE WITNESS: He was one of multiple individuals.

 16 MR. LINCENBERG: And then let me show you Exhibit 

 17 474 for identification. If we can just make it a little 

 18 bigger for Mr. Ferrer to see on the top.

 19 BY MR. LINCENBERG:

04:01p 20 Q. Did you have an e-mail exchange in July of 2015 with 

 21 Mickey Hansen of American Express?

 22 A. I do.

 23 Q. And had Mr. Hansen raised concerns that AmEx cards being 

 24 used to buy credits on Backpage?

04:01p 25 A. He did.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. At this point, July 22, middle of Dart, did -- is it fair 

 2 to say that AmEx did not want their credit cards used for 

 3 adult ads?

 4 A. Yes.

04:01p 5 Q. And did you attempt to comply with that?

 6 A. Well, we actually attempted to not comply.

 7 Q. Okay. 

 8 MR. LINCENBERG: I'd like to place before this 

 9 witness GL-CF-08, which is that August 2015 deposition 

04:02p 10 testimony, Page 109, Line 20 through 110/Line 7.

 11 BY MR. LINCENBERG:

 12 Q. Sir, if you look -- you can read the question beforehand. 

 13 I'm going to focus you on Lines 5 through 7, which after a 

 14 lengthy statement did you testify under oath that you did your 

04:02p 15 best to comply with Mickey Hansen's request?

 16 A. Is that a question?

 17 Q. Yes. Did you testify under oath that you did your best 

 18 to comply with Mickey Hansen's request?

 19 A. We did it incrementally and dragged it out to get as much 

04:03p 20 processing time as we could and then we complied.

 21 MR. LINCENBERG: Move to strike as non-responsive.

 22 THE COURT: All after "we did it incrementally" will 

 23 be stricken and the jury will disregard.

 24 MR. LINCENBERG: And just to go back to Exhibit 474 

04:03p 25 for identification, I'd move this in to evidence, Your Honor. 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 It is a Government exhibit. 

 2 THE COURT: It is, but let me make an observation. 

 3 It is also part of 6025 that we just looked at.

 4 MR. RAPP: How many pages is this? 

04:04p 5 MR. LINCENBERG: Which one was 6025? 

 6 Right, this is further -- I'm not sure if part of 

 7 the string is a part of this, but this is further parts of the 

 8 string.

 9 THE COURT: Well, in any event, does the Government 

04:04p 10 have an objection to Government's 474? 

 11 MR. RAPP: No objection.

 12 THE COURT: Yes, it may be admitted and it may be 

 13 published.

 14 MR. LINCENBERG: Thank you, your Honor.

04:05p 15 (Exhibit No. 474 admitted in to Evidence.)

 16 BY MR. LINCENBERG:

 17 Q. One single question for Mr. Ferrer. Was Mr. Brunst a 

 18 part of this e-mail exchange that you were having with Mickey 

 19 Hansen?

04:05p 20 A. No, he's not.

 21 Q. Okay. 

 22 MR. LINCENBERG: All right. I'd like to place 

 23 before the witness Exhibit 177, which is in evidence and 

 24 publish it. This is a March 10th, 2014, e-mail from 

04:05p 25 Mr. Brunst to several folks.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 BY MR. LINCENBERG:

 2 Q. So this came up on your direct examination, and this 

 3 deals with Website Technologies. Do you recall that?

 4 A. Yes, I do.

04:06p 5 Q. All right. And Joe -- Joe Backpage is Joe Kaiping, 

 6 K-a-i-p-i-n-g?

 7 A. Yes, he is.

 8 Q. He was a Chief Technology Officer?

 9 A. Yes.

04:06p 10 Q. And on the bottom he writes that Carl and I, I being Joe, 

 11 were discussing company names and the possibility of updating 

 12 our e-mail addresses to Website Technologies.com.

 13 Do you see that?

 14 A. I do.

04:06p 15 Q. And Mr. Brunst responded, "We need to think this thru or 

 16 all the work to separate it from Backpage will be lost." 

 17 Do you see that?

 18 A. I do see it.

 19 Q. Now, Website Technologies was a company that you 

04:06p 20 recommended forming, correct?

 21 A. I think I recommended the name, yes.

 22 Q. Okay. You also spent money developing a Website 

 23 Technologies business, correct?

 24 A. You know, Website Technologies was started before I took 

04:07p 25 over the site so --

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. Right, Jed -- 

 2 A. -- so Jed spent money having content.

 3 Q. Website Technologies was a company which provided 

 4 services to -- or let's say potentially provided services to 

04:07p 5 different web companies, correct?

 6 A. No, it only provided services to Backpage.com and it was 

 7 a -- sort of separate the reputational risk from Backpage.

 8 Q. Now, do you recall going to a conference in the 

 9 Netherlands for an AIM group?

04:08p 10 A. For a what group? 

 11 Q. AIM?

 12 A. No.

 13 Q. Do you recall being in the Netherlands and part of the 

 14 purpose for being there was to sell website services to 

04:08p 15 companies?

 16 A. I don't recall that at all.

 17 Q. Did you recall that you marketed that Website 

 18 Technologies was a company that could provide back room 

 19 technical support for Internet companies?

04:08p 20 MR. RAPP: I'm object to the foundation.

 21 THE COURT: Sustained.

 22 BY MR. LINCENBERG:

 23 Q. Did you recall marketing it as a company that had website 

 24 development capabilities? 

04:08p 25 MR. RAPP: Same objection.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 THE COURT: Well, is it -- you know, I'm going to 

 2 say that I'm going to reverse my prior ruling. The question 

 3 was, "Did you recall that you marketed that Website 

 4 Technologies was a company that could provide back room 

04:09p 5 technical support for Internet companies?" 

 6 He may answer if he recalls.

 7 THE WITNESS: I think we may have used that 

 8 description for something on Website Technologies; but, 

 9 really, it was just for our own companies, never a third-party 

04:09p 10 company.

 11 BY MR. LINCENBERG: 

 12 Q. So is it your testimony that Website Technologies had no 

 13 other businesses it did business with other than Backpage?

 14 A. No other -- well, I just want to be accurate. What was 

04:10p 15 that question again? 

 16 Q. Yes. Did Website Technologies sell services to any 

 17 company?

 18 A. Any company not owned by Backpage or affiliated to 

 19 Backpage? 

04:10p 20 Q. Right. 

 21 A. Like an outside third company?

 22 Q. Right. 

 23 A. Independent of Backpage, I can't recall any.

 24 Q. Did Website Technologies develop privacy controls? 

04:10p 25 Privacy controls?

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 A. Privacy controls?

 2 Q. Right. 

 3 A. I don't know what that is referring to.

 4 Q. Did you advise any of the owners of the holding company 

04:10p 5 that Website Technologies could create value apart from 

 6 backpage.com?

 7 MR. RAPP: Objection, foundation.

 8 THE COURT: Overruled.

 9 THE WITNESS: It's possible. Perhaps we thought

04:11p 10 about licensing the software, for example.

 11 BY MR. LINCENBERG: 

 12 Q. Now let's get back to this e-mail. So under sub point 1, 

 13 the CTO, Joe, is talking about, "If we keep the PCI audit 

 14 company as Backpage.com LLC, then the assessments and PCI 

04:11p 15 audit would just apply to Backpage.com and its immediate 

 16 holdings." Do you see that?

 17 A. Yes, I see it.

 18 Q. And then he writes, "Any PCI audits required for other 

 19 parent company holdings would then be performed separately." 

04:11p 20 Do you see that?

 21 A. Yes, I do.

 22 Q. Do you know what a "PCI audit" is?

 23 A. I do.

 24 Q. What is it?

04:12p 25 A. It's a -- it's something that you have to do annually to 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 verify that you're securing the credit card data.

 2 Q. And was being PCI certified a good thing, in your view?

 3 A. We had to do it annually, and that's what Joe is 

 4 referring to here.

04:12p 5 Q. Did you hear my question?

 6 A. I -- I'm sorry, I was reading this.

 7 Q. Okay. I know it's late in the day, but try to focus on 

 8 my question. 

 9 A. Go ahead, tell me the question again.

04:12p 10 Q. Did you review it as a good thing to be PCI certified?

 11 A. It's not just a good thing, it's a requirement.

 12 Q. And at this time Website Technologies was not PCI 

 13 certified, correct?

 14 A. I'm not sure what all of this really means. I mean --

04:12p 15 Q. Well --

 16 A. Why would Website Technologies be PCI certified? This is 

 17 the kind of thing that the CTO handled. I'm not an expert in 

 18 PCI compliance.

 19 Q. "PCI" stands for payment card industry and it deals with 

04:13p 20 data security standards as far as you understand, correct? 

 21 A. Yes.

 22 Q. And your CTO is saying in this e-mail that Backpage is 

 23 PCI compliant but Website Technologies is not, right?

 24 A. I think that means that the audit's in Backpage's name and 

04:13p 25 not Website Technologies' name.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. And there's a concern being discussed here that if you 

 2 cross pollinate the companies, that Backpage could lose its 

 3 certification -- its PCI certification, correct?

 4 A. Once again, you lost me. I don't really understand PCI 

04:13p 5 audits. 

 6 Q. All right. Well, --

 7 A. I don't understand what the impact is on cross

 8 pollinization. It's way beyond my scope.

 9 Q. All right. So this exhibit that you testified to on 

04:14p 10 direct examination you're saying is an exhibit for which you 

 11 really don't understand what you were talking about?

 12 A. No, I'm saying that the specifics of PCI compliance in 

 13 regard to holding companies -- or cross pollinization, as you 

 14 say, that part I don't really understand.

04:14p 15 Q. Okay. And so you don't understand if when Mr. Brunst 

 16 writes back, "We need to think this thru or all the work to 

 17 separate it from BP will be lost," you have no idea whether 

 18 what he's referring to is be careful because if a company is 

 19 PCI certified and it combines with a company that's not, the 

04:14p 20 company that's certified might lose its PCI certification, 

 21 right?

 22 A. That is not what Jed Brunst is referring to. He's 

 23 talking about reputation. He's talking about Backpage's bad 

 24 reputation bleeding over into Website Technologies; and then 

04:15p 25 we lose the company that handles payroll, retirement accounts, 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 the leases.

 2 Q. Okay. So when you say that Mr. Brunst in this e-mail is 

 3 talking about reputation, is there anything in the e-mail 

 4 below by Joe, the technology guy, that talks about 

04:15p 5 reputational concerns?

 6 A. I don't see Joe referring to it, and that's why Jed is 

 7 referring to it.

 8 Q. And when you say "Jed is referring to it," does he refer 

 9 in this to reputation? Does he talk about reputation here?

04:15p 10 A. All the work to separate it from BP will be lost.

 11 Q. Right. 

 12 A. Yes.

 13 Q. And this is in response to an e-mail about PCI audits, 

 14 right?

04:16p 15 A. Yes, but I believe Jed's referring to something else.

 16 Q. Okay.

 17 MR. LINCENBERG: We can take this down. Let's look 

 18 at Exhibit 178 in evidence.

 19 BY MR. LINCENBERG: 

04:16p 20 Q. Now, one of the companies that you guys had been dealing 

 21 with -- one of the banks you had been dealing with is US Bank; 

 22 is that right? 

 23 A. Yes.

 24 Q. And there came a point in time when US Bank cut off doing 

04:16p 25 business with Backpage, right?

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 A. I believe so.

 2 Q. And did you understand that New Times -- strike that.

 3 Did you understand that New Times and then Village Voice 

 4 Media holding company between them had had a long relationship 

04:17p 5 with US Bank?

 6 MR. RAPP: Objection, foundation.

 7 MR. LINCENBERG: I'm asking if he understood.

 8 THE COURT: Sustained.

 9 BY MR. LINCENBERG: 

04:17p 10 Q. And did you understand that with regard to Bank of 

 11 Montreal, that Bank of Montreal was also a bank that had done 

 12 business over the years with the holding company?

 13 A. What was that question again? 

 14 Q. Yes. Did you understand that there was a long-term 

04:17p 15 banking relationship with Bank of Montreal?

 16 A. I thought they might have invested money in the company.

 17 Q. They were a lender, right?

 18 A. They're a big bank.

 19 Q. And, for example, you understood that Bank of Montreal 

04:18p 20 was one of the major banks that had loaned money to New Times 

 21 on purchase the Village Voice newspaper in 2008, correct?

 22 A. Well, that I did not know until you just said it.

 23 Q. Okay. And did you understand that revenue from Backpage 

 24 and various newspapers was being used to repay loans from the 

04:18p 25 banks that had helped finance the purchase of the Village 

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Voice newspaper?

 2 A. Once again, way over my pay grade. I don't know.

 3 Q. Okay. In 2014 you discussed with Mr. Brunst contacting 

 4 Bank of Montreal to see if Bank of Montreal would bank 

04:18p 5 Backpage, correct?

 6 A. In what date? 

 7 Q. April of 2014.

 8 A. No, this is -- I -- I'm not -- at this time I'm not 

 9 leading any initiative to sign up bank accounts with BMO.

04:19p 10 Q. Well, were you involved in providing know your customer, 

 11 KYC, information to Bank of Montreal?

 12 A. Well, the kind of information like the ultimate business 

 13 owner of the company and the organization, that would have 

 14 been handled by Jed Brunst entirely.

04:19p 15 Q. Did you ever have any direct dealings yourself with 

 16 anybody at Bank of Montreal?

 17 A. I did years later after the transaction in April that 

 18 would put my name on the banking accounts.

 19 Q. And did you -- do you have any doubt in your mind as you 

04:20p 20 sit here today that for many years Bank of Montreal was fully 

 21 aware that Website Technologies' account was related to 

 22 Backpage's work?

 23 MR. RAPP: Objection, foundation.

 24 MR. LINCENBERG: Let me restate it.

04:20p 25 BY MR. LINCENBERG:

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 Q. Do you have any doubt that in April of 2014 that Bank of 

 2 Montreal was fully aware that Website Technologies was related 

 3 to Backpage?

 4 MR. RAPP: Same objection, plus speculation.

04:20p 5 THE COURT: Well, yes, as to those; but it's also a

 6 very confusing question and so I'll sustain the objection.

 7 MR. LINCENBERG: Let's move on to Exhibit 616a, 

 8 which is in evidence. This is a redacted version of a 

 9 November 2010 e-mails from Spear and Larkin to Mary Latta of 

04:21p 10 Bank of Montreal, right, if you look near the bottom. Let's 

 11 show the whole two pages of the document.

 12 BY MR. LINCENBERG:

 13 Q. So if we start on the bottom, we see that what's being 

 14 forwarded to Bank of Montreal is initially an e-mail from the 

04:21p 15 Backpage CEO, Jim Larkin. Do you see that?

 16 A. Yes, I do.

 17 Q. And he's copying -- he's sending that first to Tom 

 18 McGraw. Who is Tom McGraw?

 19 A. I don't know.

04:21p 20 Q. And Mary Latta, do you recall her being at Bank of 

 21 Montreal?

 22 A. I do. She would -- yes, I recall her name in future 

 23 e-mails.

 24 Q. And Steve Suskin was a lawyer at Village Voice Media 

04:22p 25 holdings?

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 A. Yes.

 2 Q. And so the -- what preceded this e-mail exchange was the 

 3 part which is all blacked out, right?

 4 A. Correct.

04:22p 5 Q. But as your testimony in introducing this was that this 

 6 was a record of Backpage and that the whole thing was 

 7 forwarded to the bank?

 8 A. Did I say the whole thing was forwarded to me? 

 9 Q. Well, this was the exhibit that the Government placed 

04:22p 10 before you and testified that this was your record of this 

 11 e-mail exchange. 

 12 A. No, I believe I testified to the e-mail addresses, that 

 13 I'm familiar with the e-mail addresses of Jed Brunst and Scott 

 14 Spear, Jim Larkin.

04:22p 15 Q. And with regard to Mary Latta's response to Jim Larkin 

 16 she writes, "Please just let me know what was suspended and 

 17 when it will be re-instated." Is that correct?

 18 A. That is correct.

 19 Q. All right. Her response doesn't question anything from 

04:23p 20 the lengthy e-mail from the CEO, does it?

 21 A. I don't know what the CEO had sent so I -- I guess I 

 22 don't see a question here -- well, yes, I do see a question. 

 23 "Please let me know what was suspended."

 24 Q. All right. And then Mr. Spear responds to Mary Latta on 

04:23p 25 the top, right?

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 A. Correct.

 2 Q. And I believe you noted in response to Mr. Rapp's 

 3 question that the e-mail did not go into a dissertation about 

 4 Backpage's marketing activities? 

04:24p 5 A. Not sure I used the word "dissertation," but it didn't 

 6 disclose the prostitution marketing activities.

 7 Q. And was there anything in the response from Mr. Spear to 

 8 Ms. Latta that, in your opinion, was false?

 9 A. It is very deceptive.

04:24p 10 Q. So just to be clear, you've used this term "deceptive" 

 11 because he's not talking about everything that Backpage did in 

 12 its business that you believe was deceptive, right?

 13 A. Well, I can -- can I explain what's deceptive with this?

 14 Q. How about answering my question whether there's anything 

04:25p 15 in this e-mail that you believe was false?

 16 A. Yes, I -- I think the e-mail in its entirety is a 

 17 falsehood.

 18 Q. Well, the e-mail in its entirety, we don't know what's 

 19 here because the Jim Larkin e-mail was blacked out, right?

04:25p 20 MR. RAPP: All right, I'm going to object to that.

 21 THE COURT: Sustained.

 22 BY MR. LINCENBERG:

 23 Q. And Mr. Brunst is copied on this e-mail, correct?

 24 A. Yes, he is.

04:25p 25 Q. And you understood that he was a person who was a

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 relationship contact with the bank, correct?

 2 A. I would later come to understand that, yes.

 3 Q. But in terms of the substance of whatever is being 

 4 discussed about the operations of the business unit, questions 

04:26p 5 and answers, they're being written by Larkin, Spear, back and 

 6 forth with Latta, correct?

 7 A. In this e-mail the reply to the bank is being written by 

 8 Scott Spear.

 9 Q. All right. And it's also forwarding whatever Mr. Larkin 

04:26p 10 said, correct?

 11 MR. RAPP: Objection, asked and answered.

 12 THE COURT: Sustained.

 13 MR. LINCENBERG: Well, let's take a look at Exhibit 

 14 616 for identification only, which is the unredacted November 

04:26p 15 2010 e-mail, and I'm going to direct your attention to sub 

 16 point four from Mr. Larkin's e-mail; and don't state anything 

 17 out loud because we have some court orders here, but I'm going 

 18 to ask you a specific question.

 19 BY MR. LINCENBERG:

04:27p 20 Q. Did you ever hear Mr. Larkin say that the Attorney 

 21 General -- 

 22 MR. RAPP: Objection, hearsay.

 23 MR. LINCENBERG: Wait a second, I haven't asked my 

 24 question.

04:27p 25 MR. RAPP: No, the question calls for hearsay.

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CARL FERRER - CONT'D CROSS EXAM BY MR. LINCENBERG

 1 THE COURT: Let him finish -- there's an objection. 

 2 Let him finish.

 3 MR. LINCENBERG: I don't know what it's to because I 

 4 haven't finished my question.

04:27p 5 MR. RAPP: Well, I got a good idea.

 6 THE COURT: Well, and that's what I was going to

 7 say. 

 8 MR. LINCENBERG: Okay.

 9 THE COURT: Let him finish the question, and if 

04:27p 10 there's an objection you can object, Mr. Rapp.

 11 BY MR. LINCENBERG:

 12 Q. Did you ever hear Mr. Larkin, your alleged -- one of your 

 13 alleged co-con conspirators in this matter, say that Attorney 

 14 General attacks on Backpage were a quote "political dance"? 

04:27p 15 Did you ever hear him use that terminology?

 16 MR. RAPP: Objection. Relevance, hearsay.

 17 THE COURT: Well, he can answer "yes" or "no" if

 18 he's heard it.

 19 THE WITNESS: I hadn't heard "political dance."

04:28p 20 BY MR. LINCENBERG: 

 21 Q. What did you hear?

 22 A. Well, I heard that we would engage with them in a slow 

 23 dance.

 24 Q. Okay. And do you recall Mr. Larkin regularly being 

04:28p 25 concerned that these letters from the Attorney Generals were 

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 1 being done by -- were being sent by political people who were 

 2 seeking higher office?

 3 MR. RAPP: All right, objection, hearsay, relevance.

 4 MR. LINCENBERG: They introduced a lot of Attorney 

04:28p 5 General letters.

 6 MR. RAPP: It's still hearsay.

 7 THE COURT: He can answer "yes" or "no" if he 

 8 recalls.

 9 THE WITNESS: What was that question again?

04:29p 10 MR. LINCENBERG: Yes, can we have it read back.

 11 (Whereupon the question was read back.)

 12 THE WITNESS: I had heard those words, but in a 

 13 different way, essentially the same meaning.

 14 MR. LINCENBERG: We can pull this off the screen, 

04:29p 15 thank you. Your Honor, how we doing time wise? 

 16 THE COURT: We're at 4:29 and so good observation 

 17 there.

 18 All right. So Members of the Jury, we will end our 

 19 trial for today and, again, just remember the admonishment. 

04:30p 20 We have one more 845 a.m. start tomorrow, which will be our 

 21 last day, and so do try to be here so that we can start on 

 22 time and then we'll continue. Please all rise for the jury.

 23 (Jury out at 4:30 p.m.)

 24 THE COURT: All right, please be seated. 

04:31p 25 Let me -- let me clarify for the record prior to the 

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 1 jury coming in for the afternoon session Mr. Lincenberg 

 2 referenced documents from the Court and I provided you with 

 3 what you referred to as Document 180-1 and -- 

 4 MR. LINCENBERG: Not document, docket.

04:31p 5 THE COURT: Docket, yes. 180-1, it does not have 

 6 exhibits attached to it. So please review whatever it was 

 7 that your exhibit was attached to, and let my chambers know 

 8 precisely where that is so that I can review that to see if it 

 9 is as Mr. Rapp indicates regarding his -- his concern and 

04:32p 10 objection.

 11 Let me also say that with regard to this Exhibit

 12 6025, I know we had a lengthy discussion about that exhibit 

 13 yesterday; and I'm going to go back and look at what I said 

 14 was permitted in this exhibit and, frankly, in looking at it 

04:32p 15 and looking at the redacted version I -- frankly, I can't 

 16 recall my precise ruling as to whether or not you could elicit 

 17 testimony about the exhibit and just not admit it or if I said 

 18 it was to be a question that I would resolve at the time. 

 19 You've added particular redactions to this now. So 

04:33p 20 I'm going to review that record in the light of the

 21 redactions.

 22 MR. LINCENBERG: Would it help the Court for 

 23 Mr. Rapp to note there were, I believe, two additional 

 24 redactions that I sidebarred with him that I was agreeing to. 

04:33p 25 THE COURT: And what would help me more is if you 

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 1 provide to me the redacted version.

 2 MR. LINCENBERG: Okay.

 3 THE COURT: Now, I will say that when I was looking 

 4 at Government's Exhibit 474 -- and maybe I'm wrong -- but I 

 5 believe that this second page of 6025 from -- and it ends 

 6 "Thanks, Mickey," is 474. So double-check that. 

 7 I want to make sure that I'm not misstating or 

 8 confusing the record. To me, it looked like the same precise 

 9 verbiage and all of that. So I want to make sure that the 

 10 record is clear.

 11 Okay, so -- and tomorrow, apparently the jurors have 

 12 lost a little track and familiarity with all counsel. So what 

 13 we're going to do -- we'll do it tomorrow, but we'll start 

 14 this as a regular practice at the beginning of the week of 

 15 trial is I'll have Government counsel introduce your 

 16 co-counsel and defense counsel may introduce themselves and 

 17 their clients in the morning session. They just want to get 

 18 familiar with faces again, all right? 

 19 Okay. All right, so we will stand in recess until 

 20 8:45 in the morning.

 21 (Whereupon the proceedings concluded at 4:35 p.m.)

 22

 23

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 1 REPORTER'S CERTIFICATION

 2

 3 I, TERI VERES, do hereby certify that I am duly 

 4 appointed and qualified to act as Official Court Reporter for 

 5 the United States District Court for the District of Arizona.

 6 I FURTHER CERTIFY that the foregoing pages 

 7 constitute a full, true, and accurate transcript of all of 

 8 that portion of the proceedings contained herein, had in the 

 9 above-entitled cause on the date specified therein, and that 

 10 said transcript was prepared under my direction and control.

 11 DATED at Phoenix, Arizona, this 28th of 

 12 September, 2023.

 13

s/Teri Veres

 14 TERI VERES, RMR, CRR 

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