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GLENN B. McCORMICK

Acting United States Attorney

District of Arizona

KEVIN M. RAPP (Ariz. Bar No. 014249, kevin.rapp@usdoj.gov) MARGARET PERLMETER (Ariz. Bar No. 024805, margaret.perlmeter@usdoj.gov) PETER S. KOZINETS (Ariz. Bar No. 019856, peter.kozinets@usdoj.gov) ANDREW C. STONE (Ariz. Bar No. 026543, andrew.stone@usdoj.gov) Assistant U.S. Attorneys

40 N. Central Avenue, Suite 1800

Phoenix, Arizona 85004-4408

Telephone (602) 514-7500

DAN G. BOYLE (N.Y. Bar No. 5216825, daniel.boyle2@usdoj.gov) 

Special Assistant U.S. Attorney

312 N. Spring Street, Suite 1400

Los Angeles, CA 90012

Telephone (213) 894-2426

KENNETH POLITE

Assistant Attorney General 

Criminal Division, U.S. Department of Justice

REGINALD E. JONES (D.C. Bar No. 1620183, reginald.jones4@usdoj.gov) 

Senior Trial Attorney

Criminal Division, U.S. Department of Justice

1400 New York Ave N.W., Suite 1200

Washington, D.C. 20005

Telephone (202) 616-2807 

Attorneys for Plaintiff

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

United States of America,

Plaintiff, 

v. 

Michael Lacey, et al.,

Defendants.

No. CR-18-422-PHX-DJH

UNITED STATES’ [PROPOSED]

SURREPLY TO DEFENDANTS’ MOTION TO PARTIALLY VACATE 

SEIZURE WARRANTS AND 

RELEASE FUNDS (Doc. 1366)

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INTRODUCTION

In camera review is the exception, not the rule. It is certainly not a tool for a criminal 

defendant to avoid the adversarial process while trying to release funds including tens of 

millions of dollars in criminal proceeds his coconspirators have already agreed to forfeit

pursuant to guilty pleas. And yet, that is exactly what defendants are attempting here. 

Courts regularly refuse to consider new arguments and evidence raised for the first 

time on reply, and the Court should deny the defendants’ motion outright. If the Court

nonetheless chooses to consider this new argument and evidence, however, the Court 

should deny defendants’ request for in camera review, order that defendants publicly file

copies of the in camera declarations within 48 hours, and grant the government 14 days to 

file a supplemental response in accordance with L.R. Civ 7.2(e)(1). No further replies 

should be permitted, as defendants have plainly abused that privilege. 

ARGUMENT

“The district court need not consider arguments raised for the first time in a reply 

brief.” Zamani v. Carnes, 491 F.3d 990, 997 (9th Cir. 2007); see also United States v. 

Bigley, No. 2:14-CV-0729-HRH, 2015 WL 854474, at *2 (D. Ariz. Feb. 27, 2015) (“This 

new argument is procedurally defective because it was raised in defendants’ reply, thereby 

depriving plaintiff an opportunity to respond to the argument.”). While the prejudice of 

raising new arguments or evidence on reply can at times be cured by permitting a surreply, 

that is not the case here, where defendants are not only presenting new arguments and 

evidence, but are also offering those same new arguments and evidence in camera, so the 

government cannot reasonably respond to them. Even now, the government can only 

speculate as to whether defendants have made their required showings, and this prejudice 

is magnified by the troublingly-brief explanation of these in camera filings disclosed in 

defendant’s reply, which barely consists of one paragraph. See Doc. 1390, at 4. Defendants 

are attempting to deny the United States an opportunity to challenge their purported Sixth 

Amendment injury: first defendants claimed they did not need to make such a showing in 

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their opening brief (Doc 1366, at 8), then they purported to make this showing in their reply 

brief (Doc. 1390, at 4), but only in camera, while saying as little as possible. Id. This is an 

affront to the adversarial process. The Court should refuse to consider this new purported 

evidence and deny defendant’s Motion (Doc. 1366) for this reason alone. 

Second, defendants cite no precedent – at all – justifying their attempt to make a 

Monsanto showing in camera. This issue was recently analyzed in United States v. Kolfage, 

where a defendant similarly attempted to make a Monsanto showing ex parte, and the 

Kolfage court denied this request, noting that courts have a general policy of “disfavoring 

ex parte submissions to resolve the Fifth and Sixth Amendment tensions.” No. 20 CR. 412, 

2021 WL 1792052, at *7 (S.D.N.Y. May 5, 2021).

1 Similarly, in United States v. Bokhari,

the court held that “[s]ubmissions for the Monsanto hearing may be filed under seal, with 

permission of the reviewing judge, but, absent compelling circumstances, they may not be 

filed in an ex parte manner” and that a court must “balance the proffered need for an ex 

parte filing and the scope, purpose, and design of the Monsanto hearing ... bearing in mind 

the presumption against ex parte submissions in our adversarial system.” No. CR 14-

30044-MGM, 2015 WL 7303535, at *7 (D. Mass. Nov. 19, 2015). In a related context, in 

United States v. Keyes, the court considered whether a challenge to the accuracy of a 

defendant’s sealed CJA Financial Affidavit should be addressed in camera, and concluded 

that “in balancing the interests at issue, contested appointments of counsel under the CJA 

Act are best decided in an adversarial proceeding. It is only through this process that the 

accuracy of the information provided by the defendant can be accurately tested.” 675 F. 

Supp. 2d 988, 991 (D. Ariz. 2009) (citing United States v. Harris, 707 F.2d 653, 662–63 

(2nd Cir.1983))). Finally, in United States v. Wetselaar, which appears to be the lone incircuit case where defense counsel was permitted to file certain Monsanto documents in 

1 The Kolfage court held that its decision “was not leaving the defendant in an 

untenable spot” as the government would not be permitted to use any such submissions in 

its case in chief a trial, if such information was not otherwise available. Id. The government 

has no objection to a similar condition here.

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camera, the defendant was still ordered to provide the government with redacted versions

of these same documents (apparently redacting the billing diaries reflecting counsel’s 

specific work), and the court nonetheless found that the defendant had failed to make a 

sufficient showing under Monsanto, because a “bare assertion of financial need is 

insufficient to justify a Monsanto hearing.” No. 2:11-CR-00347-KJD, 2013 WL 8206582, 

at *20 (D. Nev. Dec. 31, 2013) (permitting “defense counsel to file an affidavit regarding 

billing for in camera review and provide the Government with a redacted copy”), report 

and recommendation adopted, No. 2:11-CR-00347-KJD, 2014 WL 1366722 (D. Nev. Apr. 

7, 2014). 2 Defendants have cited no precedent for their attempt to subvert the adversarial

process by making their required Monsanto showing in camera. For this reason, the Court 

should refuse to consider this new evidence and deny the Motion. 

Third, there is simply no reason for defendants to be permitted to make their

Monsanto showing in camera, as the details of a defendant’s ability to pay counsel are the 

very facts in controversy in a Monsanto (or Luis) motion. It would make little sense for a 

court to permit defendants to file in camera information which the court would necessarily 

disclose in any order which granted the relief requested. See, e.g, United States v. 

Bonventre, 720 F.3d 126, 132-133 (2d Cir. 2013) (detailing assets disclosed in defendant’s 

Monsanto submission including incoming payments, current assets, and expected trial 

costs). Indeed, the point of a Monsanto showing is that a defendant lacks sufficient assets 

2 Neither is the attorney-client privilege a basis for in camera review: the privilege 

governs communications between an attorney and client, so it plainly would not protect a 

defendant’s disclosure of his own financial information to the Court. Neither would any 

attorney affidavits generally describing their total billing, hours worked, schedules of 

payments, prior expenses, or amounts owed be privileged. See United States v. Amlani, 169 

F.3d 1189, 1194 (9th Cir. 1999) (“[T]he identity of the client, the amount of the fee, the 

identification of payment by case file name, and the general purpose of the work performed 

are usually not protected from disclosure by the attorney-client privilege.”). At most, like 

in Wetselaar, counsel might be permitted to redact the descriptions of their work billed 

which might reveal litigation strategy or client communications. But like in Wetselaar and 

as discussed herein, attorney bills can at most show that counsel is not being paid, but they 

cannot show whether or not defendants actually have unseized funds to pay counsel.

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to pay counsel of choice – i.e. she should have little to no wealth to disclose. Permitting 

defendants to make their purported showing in camera simply ensures that the United 

States has no chance to respond to such information until after it appears in the Court’s 

decision, at which point the United States would be left with no option but to seek 

reconsideration if these figures are inaccurate or conflict with the government’s evidence.3

Fourth, while the United States can only speculate as to what defendants are seeking 

to submit in camera, what little they have disclosed suggests they are still attempting to 

avoid their burden under Monsanto, which the United States should be allowed to 

challenge. Defendants have not disclosed who these in camera declarations are sworn by, 

only writing vaguely that “[a]s set forth in the declarations, defense counsel are currently 

owed substantial amounts of earned legal fees for work that has already been done and 

costs that have already been incurred” and that they “also provide an estimate for the cost 

of a second trial.” Doc. 1390, at 4. But if these in camera declarations are simply counsel 

swearing that they have not been paid,4 then that proves little more than their argument did 

in the Motion – for whatever reason, defendants are not paying their counsel. Perhaps 

defendants truly lack funds, or perhaps they simply prefer to keep their remaining funds 

hidden to hedge their bets on the outcome of their criminal trial. But in any event, and as 

3 As one example, an estimated $1,170,000 in luxury vehicles, jewelry, art, and 

personal effects were returned to the defendants last year, see Docs.1036-1037, but

defendants do not explain why they are not seeking to use this returned property to fund 

their defense, and they have never requested permission to liquidate this property to pay 

their counsel. If these assets are not disclosed in the in camera filings, this might be one 

potential basis for reconsideration of any order granting the Motion. 

4 It also unclear whether these declarations disclose defense counsel’s billings and 

collections to date. Considering the caliber of the defense team and the number of filings 

in the Criminal, Civil, and Backpage Actions (collectively approaching 2000 docket 

entries), as well as three interlocutory appeals, the government estimates this amount likely 

runs well into the millions of dollars. Courts have found no Sixth Amendment injury in 

such circumstances. See, e.g., United States v. Patel, No. 5:11-CR-00031, 2018 WL 

6579989, at *6 (W.D. Va. Dec. 13, 2018) (defendant “did not need the restrained assets to 

retain counsel as he was represented by retained counsel of his choice and had already paid 

counsel fees in an amount the court considered to be sufficient to defend this case”).

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described in the United States’ Response, Monsanto relief is reserved for when a defendant 

cannot pay counsel due to the government’s seizures. See Doc. 1384, at 6-7, 10-11. The 

fact that counsel may have exhausted their retainers and may be cause for a motion to 

withdraw, but that alone does not justify Monsanto relief. Defendants are not entitled to 

hide their remaining assets in hopes of using seized assets to fund their defense instead.

5

Finally, there is a strong presumption of open access to judicial documents, and 

defendants have offered no explanation why this presumption should not apply here. Courts 

have recognized a “general right to inspect and copy public records and documents, 

including judicial records and documents.” Kamakana v. City & Cty. of Honolulu, 447 F.3d 

1172, 1178 (9th Cir. 2006) (citing Nixon v. Warner Commc'ns, Inc., 435 U.S. 589, 597 & 

n.7 (1978)). Defendants are seeking to release and spend tens of millions of dollars which 

might otherwise be available to pay Backpage’s substantial restitution order to victims, and 

the public and victims have a powerful interest in understanding why the Court might chose 

to grant such a request.6 It is not difficult to speculate why defendants with long histories 

of civil litigation and victim lawsuits might not want to publicly disclose their assets, but 

embarrassment or annoyance is no justification for deny public access to a judicial record. 

See Kamakana, 447 F.3d at 1179 (“[A] litigant’s embarrassment, incrimination, or 

exposure to further litigation will not, without more, compel the court to seal its records.”).

5 Nowhere in the reply do defendants explain what would become of any released 

funds which were ultimately not used to pay counsel, so presumably defendants have either 

ignored this point or argued it in camera. Whether under Monsanto or Luis, relief is limited 

to those funds actually needed to retain counsel of choice. Defendants are seeking to release 

an amount that runs well into the tens of millions of dollars, and even counsel of this caliber 

might be hard-pressed to spend every last dollar of this money.

6 The government submits that granting the Motion would effectively be dispositive 

of these assets, and thus the “compelling reasons” rather than “good cause” standard should 

apply, see Kamakana, 447 F.3d at 1180-1181, but under either standard, defendants have 

not attempted to meet their burden. See also United States v. Nicholas, 594 F. Supp. 2d 

1116, 1130 (C.D. Cal. 2008) (holding that closure of records and proceedings in a criminal 

action “although not absolutely precluded, must be rare and only for cause shown that 

outweighs the value of openness”). 

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CONCLUSION

For the reasons stated herein and in the United States’ Response (Doc. 1384), 

Defendants’ Motion to Partially Vacate Seizure Warrants and Release Funds (Doc. 1366) 

should be denied. Alternately, the Court should Order defendants to publicly file within 48 

hours all declarations and exhibits filed in support of their Reply (Doc. 1390), and permit 

the United States to file a supplemental response within 14 days of such a public filing. 

Respectfully submitted this 18th day of November, 2021.

GLENN B. McCORMICK

Acting United States Attorney District of Arizona

s/Dan G. Boyle DAN G. BOYLE

Special Assistant U.S. Attorney

KEVIN M. RAPP

MARGARET PERLMETER

PETER S. KOZINETS

ANDREW C. STONE

Assistant U.S. Attorneys

KENNETH POLITE

Assistant Attorney General 

U.S. Department of Justice 

Criminal Division, U.S. Department of Justice

REGINALD E. JONES

Senior Trial Attorney

U.S. Department of Justice, Criminal Division

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CERTIFICATE OF SERVICE

I hereby certify that on November 18, 2021, I electronically transmitted the 

attached document to the Clerk’s Office using the CM/ECF System for filing and 

transmittal of a Notice of Electronic Filing to the CM/ECF registrants who have entered 

their appearance as counsel of record.

s/Marjorie Dieckman

U.S. Attorney’s Office

Case 2:18-cr-00422-DJH Document 1398 Filed 11/18/21 Page 8 of 8