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United States District Court

2:18-cr-00422-DJH, October 31, 2023 A.M.

 UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

_______________ 

United States of America, )

 )

 Plaintiff, )

vs. )

 ) 2:18-cr-00422-DJH 

Michael Lacey, et al., )

 ) 

 Defendants. )

 ) October 31, 2023 

 ) 8:43 a.m. 

__________________________________ )

BEFORE: THE HONORABLE DIANE J. HUMETEWA, JUDGE

REPORTER'S TRANSCRIPT OF PROCEEDINGS

JURY TRIAL - DAY 27 A.M. 

Official Court Reporter: 

Elaine Cropper, RDR, CRR, CCP

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

401 West Washington Street, SPC 35 

Phoenix, Arizona 85003-2151 

elaine_cropper@azd.uscourts.gov 

Proceedings Reported by Stenographic Court Reporter

Transcript Prepared by Computer-Aided Transcription

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MISCELLANEOUS NOTATIONS

Item Page 

 Proceedings outside the presence of the jury 5

 Juror 4 dismissed 14

 Defendant Spear's closing argument 15

 Defendant Brunst's clsoing argument 44

RECESSES

 Page Line 

(Recess at 8:54; resumed at 9:05.) 11 8

(Recess at 9:07; resumed at 9:20.) 12 15

(Recess at 10:37; resumed at 11:01.) 44 10

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A P P E A R A N C E S 

For the Government: 

 KEVIN M. RAPP, ESQ.

PETER S. KOZINETS, ESQ.

ANDREW C. STONE, ESQ.

MARGARET WU PERLMETER, ESQ.

 U.S. Attorney's Office

 40 N, Central Ave., Ste. 1800 

 Phoenix, AZ 85004-4408 

 kevin.rapp@usdoj.gov 

peter.kozinets@usdoj.gov 

andrew.stone@usdoj.gov 

margaret.perlmeter@usdoj.gov 

AUSTIN M. BERRY, ESQ.

U.S. Department of Justice 

Child Exploitation and Obscenity Section 

1301 New York Ave., NW, 11th Fl. 

Washington, D.C. 20005 

austin.berry2@usdoj.gov 

For the Defendant Michael Lacey: 

 PAUL J. CAMBRIA, JR., ESQ.

 Lipsitz Green Scime Cambria, L.L.P.

 42 Delaware Ave., Ste. 120

 Buffalo, NY 14202

 pcambria@lglaw.com

 

For the Defendant Scott Spear: 

 BRUCE S. FEDER, ESQ.

 Feder Law Office, P.A.

 2390 E. Camelback Road, Ste. 160

 Phoenix, AZ 85016

 bf@federlawpa.com

 ERIC W. KESSLER, ESQ.

 Kessler Law Office

 9237 E. Via De Ventura, Ste. 230 

 Scottsdale, AZ 85258

eric.kesslerlaw@gmail.com 

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A P P E A R A N C E S (Continued) 

For the Defendant John Brunst: 

 GOPI K. PANCHAPAKESAN, ESQ.

 GARY S. LINCENBERG, ESQ.

 Bird Marella Boxer Wolpert Nessim Drooks 

Lincenberg & Rhow, P.C.

 1875 Century Park E. Ste. 2300

 Los Angeles, CA 90067

 gpanchapakesan@birdmarella.com

glincenberg@birdmarella.com 

For the Defendant Andrew Padilla: 

 DAVID S. EISENBERG, ESQ.

 David Eisenberg, P.C.

 3550 N. Central Ave., Ste. 1155

 Phoenix, AZ 85012

david@deisenbergplc.com 

For the Defendant Joye Vaught: 

 JOY MALBY BERTRAND, ESQ.

 Joy Bertrand, Esq., L.L.C.

 P.O. Box 2734

 Scottsdale, AZ 85252-2734

 joy@joybertrandlaw.com 

 

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P R O C E E D I N G 

(The defendants are present and out of custody.)

(Proceedings begin at 8:43.)

(With the jury not present, the following occurred in

open court.)

THE COURT: All right. Please be seated.

MR. RAPP: Judge, I just --

THE COURT: Let me make sure we have all counsel, Mr.

Rapp. I don't think we do.

All right. Go ahead.

MR. RAPP: This involves Exhibit 171. This is an

exhibit that I believe was just a three-page document which was

a letter drafted by the president of NCMEC, John Ryan. It was

admitted through John Shehan. Unbeknownst the me, at least in

the presentation mode of my Trial Director, I only had this

three-page document. That's what I felt was the entirety of

Exhibit 171.

In the hard copy there obviously is this other

document which is a memo from Don Bennett Moon to John Ryan and

some other NCMEC representatives.

When this letter was admitted, the defense, Ms.

Bertrand and then Mr. Cambria, objected to its admission. The

Court allowed it under notice evidence. In the balance of the

Government's case the defense never raised this other memo that

is part of 171. And then in the defense case they never raised 08:44:52

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this.

And so for first time they produced this memo from

Don Bennett Moon and attempted to use it in their closing

argument.

And so obviously the memo is hearsay. In addition,

it includes a lot of the references to things like the CDA,

First Amendment, case law that the Court has precluded under

the previous orders.

Also when it was admitted, there was no request under

106 that the balance of the exhibit be admitted.

So I didn't know that that was in there. I don't

think the defense knew that that was in there until after the

close of both the Government and the defense case and so I made

a mistake on the record. I should have just admitted the first

three pages of 171. That's what I'd like to amend the record

to conform with, the way the evidence was admitted.

If the Court is not inclined to do that, I have other

ideas about what I can do -- what -- suggestions what should be

done in fairness with that exhibit.

THE COURT: Who wishes to be heard from defense?

MR. FEDER: I'll start. Fairness, funny word. All

trial, Judge, as the Court knows, we have been talking about

Rule 106. We have been talking about the unfairness of

allowing some part, not whole part of information to be used

against us as notice allegedly, not for the truth. 08:46:52

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Number one, this Court -- Mr. Rapp brought up the

exhibit, admitted it over our objection, true; used it in a way

that was adverse to us. Then the Court required everyone to

certify the exhibits which the Government and the defense did.

Mr. Rapp referred to 171 in his closing argument and then Mr.

Cambria did, too. And now minutes before I am supposed to

start my closing argument they want to withdraw it. It's an

admitted exhibit. It's in evidence. It would be -- I can't

think of the word I would like to use -- I can think of the

word I would like to use but I'm not going to. It would be

improper, unfair, inappropriate, and without precedent I think

to withdraw it at this point in time.

They put it in. I intend to use it thoroughly in my

closing argument unless the Court prevents me from doing that.

So I think that's all there is to say about it. They

made an -- they tried to use an inference that there was no

response to this letter and there was and it's in evidence and

we should be able to use it as Mr. Cambria was able to use it

in his initial closing and as the Government tried to use it in

its closing.

MR. LINCENBERG: Your Honor, two quick additions.

First, it was always a part of Exhibit 171 in both the soft

copy that was sent to us as well as the hard copy and, second,

Mr. Rapp's argument really baited it. He basically said NCMEC

sent this letter, asked for these suggestions, and said -- and 08:48:56

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that was sort of the last of it. NCMEC gave it to them and

goodbye, as if there was no response. And this letter shows

that there was a response. It's relevant to that as well as

other issues that Mr. Cambria argued and we would also like to

reference it.

THE COURT: Anyone else?

All right. Well, it is true that when the Government

moved for the admission, I looked at the transcript, I actually

asked to see the second page of the document, assuming it was

only two pages but it's actually a three-page NCMEC letter.

And so I myself assumed that it was only a

two-page -- actually a two-page letter and that's what I was

shown. The objection to the mission was indeed related to 106

in relation to completeness. But I will say that the

Government has had several years to perfect these exhibits and

this one got through. It should have, at a minimum, been

redacted. I don't think the Government believed it was

introducing the entirety of the memo but it's in. I'm not

inclined to change the fact that this is in evidence at this

juncture.

Mr. Cambria relied on it, the Government certified

these exhibits as being admitted in the form and fashion that

they reviewed, but I will say consistent with the Court's prior

order, while the document may go back to the jury, no counsel

may either highlight or refer to the matters that are 08:51:03

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Case 2:18-cr-00422-DJH Document 1959 Filed 11/01/23 Page 8 of 78
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predominantly contained in Section 3 which deal with the legal

issues related to the CDA, Section 230 or related to any prior

litigation.

This memorandum is replete with legal analysis and

reference to prior cases and so in any summation argument,

remove reference to the CDA, legal analysis regarding Section

230 or prior court decisions related to any of the Dart

litigation or any of the prior Washington state litigation,

anything having to do with that.

And I don't believe Mr. Cambria read any of that in.

And again, remember this is summation. It's not necessarily a

time for lengthy reading of documents to the jury. They will

have the exhibit.

And so that is my ruling.

All right. And so we will have our jury in at nine.

If there's nothing more, then we will stand in adjournment

until then.

MR. FEDER: Judge, one other thing. Is the Court

going to allow me to publish this like the Government did a

number of their exhibits, like Mr. Cambria did a number of his

exhibits during closing?

THE COURT: Well, what are you going to publish?

MR. FEDER: I'm going to publish the letter and go

through some of it.

THE COURT: Well, you are not going to do through any 08:52:42

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of the material predominantly in Section 3 which deals with the

legal analysis. You're not going to mention the CDA. You're

not going to mention or show any prior reference to litigation

or cases. There's references to Tennessee cases, Washington

state cases. You're not going to reference any of those

because I will not permit you to do so as previously ruled.

That is no surprise.

MR. FEDER: I'm not -- I hope I'm not looking

surprised. I'm not surprised. I'm just saying my eyebrows

sometimes go off on their own.

THE COURT: They are still affixed.

MR. FEDER: But we don't have time, candidly, unless

the Court is going to give us time to try to put redactions on

this letter. So if I bring -- I'm going to need to bring it

up. There is a part where Mr. Moon is talking about, for

example, age verification procedures which I would certainly

want to talk about.

THE COURT: Well, you're not going to talk about it

in reference to any sort of new statute or the legislature

bringing in new statutes or anything of that nature.

MR. FEDER: He discusses it. It's a pretty short --

as I recall, it's a pretty short paragraph.

THE COURT: Well, I don't care how long or short it

is, Mr. Feder. The rules have been set by the Court in terms

of admission of those types of evidence or testimony and so 08:54:07

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adhere to them and you won't run into any problems. I don't

want to be in a situation, Mr. Feder, where I'm shutting off

your PowerPoint. That's not going to look good in terms of

your presentation or before the jury.

So you better make a decision whether or not you're

going to put something forward or describe it.

All right. We'll stand in adjournment.

(Recess at 8:54; resumed at 9:05.)

(Court was called to order by the courtroom deputy.)

THE COURT: All right. Please be seated.

Before we bring in our jury, we are still waiting for

a juror who is about six to eight minutes out. But I have been

informed that juror number four has, unfortunately, contracted

COVID. And so that still gives you an additional two

alternates. And so the decision is, number one, if you're

inclined not to release juror number four, who will be out for

the duration of the week, then we can certainly inquire as to

whether juror number four is well enough to again participate

by video for the summation arguments, of course understanding

if summation arguments conclude today and the jurors are handed

the case, that they won't be able to necessarily participate in

that way.

But in any event, the decision that you have then is

to -- whether or not you're inclined to release the juror.

So I'll give you a few moments to discuss that 09:07:04

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amongst yourselves. We'll recheck in with our other juror who

is tardy and let you know when they come in. When I come back

then, you will let me know what your decision is with juror

number four.

MR. FEDER: Judge, can I inquire whether or not the

other jurors have been informed that one of their fellow jurors

is exposed?

THE COURT: They have been informed.

MR. FEDER: And four is in the back?

THE COURT: Four is seated in the back row, yes.

MR. FEDER: Okay. Thanks.

THE COURT: All right. We'll be in recess for a few

minutes.

COURTROOM DEPUTY: All rise.

(Recess at 9:07; resumed at 9:20.)

(Court was called to order by the courtroom deputy.)

THE COURT: All right. Please be seated. And it

appears that Mr. Feder made an inquiry as to whether or not

juror number four would have the capacity to appear remotely or

what his health status was, if it would prevent him from doing

so.

Juror number four has the capacity to appear by Zoom

but confessed to being very foggy, very much under the weather

and so how do you wish to proceed? Let me inquire first of the

Government. 09:21:35

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MR. RAPP: We have no objection to him being excused.

MR. FEDER: I'm sorry. I didn't hear what the

Government said.

THE COURT: They have no objection to having juror

number four be excused.

MR. FEDER: We would like him to participate and then

we can deal with things later.

THE COURT: Well, I'll remind you early on when we

did have the similar situation, defense objected to a remote

appearance and, again, here we have to assume that the juror is

medicated, professes to feeling foggy and then the second issue

then becomes how does the juror deliberate.

And so I think there are multiple layers and, again,

we do have the two additional alternates.

MR. FEDER: I understand what the Court is saying.

Our preference is that he at least listen to the closings and

then we can handle what the Court just said at a later time.

THE COURT: Well, I, frankly, don't think that it is

fair to require the juror to participate in the state of being

ill. Obviously early in the trial we had to delay a week for

one of the defendant's because they had COVID and they were not

in a position to appear remotely.

This gentleman, obviously, is in quarantine. I don't

believe it is appropriate to require a juror to participate in

that state. And so I am going to release the juror from 09:23:57

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further service. We have two alternates. We will continue on

with those additional alternates.

And now I will say that should this happen again, if

there's going to be another juror who is ill or comes down with

COVID, we will necessarily have to delay the proceedings but

because we don't -- I don't think we have the ability to lose

more than the two alternates. So that is how we will proceed.

MR. FEDER: If the Court would note our objection.

THE COURT: I'm sorry?

MR. FEDER: The Court would note our objection but

thank you.

THE COURT: Yes. It is duly noted.

All right. So all of our jurors are present and so

we will bring in the jury.

All rise for the jury.

(Jury enters at 9:25.)

THE COURT: All right. Please be seated. Welcome

back, members of the jury, and I appreciate the patience as we

addressed the issue of juror number four who, unfortunately,

has taken ill. But we will forge ahead.

And so as you will recall, we have heard from one

defense counsel, Mr. Cambria, and we will continue on with

summation arguments.

Mr. Feder, are you prepared?

MR. FEDER: I am, thank you. 09:26:59

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THE COURT: You may moved forward.

MR. FEDER: Do re mi. Can everybody hear me?

THE COURT: We'll turn you up just a little bit.

Perhaps move that lapel mic up.

MR. FEDER: Do re mi? Yes.

May it please the Court, counsel, ladies and

gentlemen, we haven't talked in about two months. Please

forgive me if I take you back to that time. When we last

talked, I discussed with you the fictional detective Sherlock

Holmes and said that the police dog nose is long and straight

but it points in only one direction.

We also talked about when you are a plaintiff, which

is what the prosecutor is in this case, that you are supposed

to or should present all of the evidence because your burden is

so high that you should trust in the jury to -- that the

strength of your case is so high that you can put everything

out on the table. That has not happened here and there is

maybe a more apt description of what's happened in this trial.

Hopefully all of you have seen a movie called the

Wizard of Oz. One of the great movies. If you have, there's a

scene at the end of the movie where Dorothy, Judy Garland, has

returned from liquefying the wicked witch. She and her friends

are in the chamber where the Wizard of Oz is. The Wizard of Oz

is up on the screen with smoke and light and noise and then

Dorothy's dog Toto is -- a little curtain room over to the side 09:29:04

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and goes over and pulls the curtain open and there is the

little real wizard moving his levers to try to convince Dorothy

and her friends that they need to do more.

That's what's happened in this case. All of the

evidence has not been presented. Much of the evidence that has

been presented has been intended to misdirect your attention

from what is really important, what are the really two issues

in this case. First, are the 50 ads that define the conspiracy

charge and the 50 substantive charges themselves on their face

prostitution ads?

Second, is there any evidence whatsoever that

Mr. Spear, my client, and the others, ever saw any of these ads

much less had the intention to commit a crime with them?

By now I think you know the answer to both of those

questions is the Government has not proven that in any way.

There has been no evidence of that, notwithstanding they had

two witnesses, Mr. Ferrer, and Mr. Hyer, who could have said

that, because they were willing to say most anything that the

Government wanted them to say but they didn't. Scott Spear is

not only not guilty, he is innocent because there has been no

crime committed. These ads are not on their face anywhere

close to being prostitution ads. You've heard the witnesses

tell you that.

Before we get into that, let's talk about what the

standards are, the rules that the judge has read to you and 09:31:14

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that you will use to try to deliberate on this case.

Can everybody see this? You heard from a number of

police officers who said the three that the Government brought

and the one that we brought talk about a concept called

probable cause. In the United States a citizen cannot be

arrested unless the police officer believes he or she has

something called probable cause. It was defined for you but it

is the lowest burden of proof in the criminal justice system.

After probable cause, the next standard of proof in

our justice system is the preponderance of the evidence. That

is where red car hits green car, the green car driver is

injured, he wants compensation so there is litigation over

that. The plaintiff, the green car, has to prove that the

other car is liable to him by a preponderance of the evidence

frequently defined as greater than 50 percent.

Next something called clear and convincing evidence.

That is a more serious civil -- not criminal, civil case where

the standard is even higher than preponderance. I don't know

that it's ever been defined. Many people think it's 75, 80,

85, even 90 percent.

Finally in the criminal justice system, Government

must prove guilt beyond a reasonable doubt. Let me try to give

you at least the guide to presumption of innocence and

reasonable doubt.

Scott Spear and every person over here is presumed, 09:34:12

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assumed, to be innocent. Think about the person that you trust

and love the most in your life, could be your mother, your

father, your spouse, brother, sister, whoever. And think about

if that person was accused by these people of committing a

crime. Now, you've known that person your whole life. You

trust them implicitly. You never would think that they would

do anything wrong.

The presumption of innocence means how much evidence

you would have to have just to get to zero on whether or not

they have done something wrong.

Taking that same person, let's say that they become

ill and you take them to the hospital and out comes Dr. Ferrer

and Dr. Hyer and some of the other witnesses that the

prosecutors have put up on that stand and they tell you that

their diagnosis is cancer and that they need to take them into

surgery right now, cut off their arms and legs or some of their

organs in order to save them.

Now you know all of the things that you now know

about Mr. Ferrer and Mr. Hyer, that they are singing for their

supper. They need to impress these people in order to try to

avoid prison. You know that Mr. Ferrer couldn't answer a

yes-or-no question because he was so geared up by what he was

supposed to say that he tried to tell you anything and anything

that he could do to harm these people (indicating) in order to

impress these people (Indicating). 09:36:13

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You know a lot of the things that they did and the

question four, what is reasonable doubt? The instruction is in

a matter important to your life whether or not you would

hesitate to act. Hesitate to act means that with logic,

reason, common sense, experience, what standard would you use

in the most important events in your life? Liberty, medical

emergency and the question then for you is, would you listen to

Mr. Ferrer and Mr. Hyer and approve a surgery or would you get

a second opinion? If you would get a second opinion, that is

reasonable doubt and there is substantial overwhelming

reasonable doubt in this case on a number of issues.

Would you even a buy house from Mr. Ferrer and Mr.

Hyer knowing what you know about them? If they told you there

was no defects in that house, would you buy the house from

them? And that is just a financial decision, not a life and

death decision. Would you even buy a car from those people?

That's your goal. That's your issue.

Mr. Rapp told you in his closing that this is a

simple case. For once I think we agree. It is a simple case

except it's simple in a different way. He talked to you about

the opinions of religious leaders and politicians who are in

office about what they didn't like about Backpage. What he

didn't talk to you about, what he didn't lay out on the table

is whether or not there is any evidence that the ads on their

face are an illegal prostitution ad, number one; and number 09:38:15

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two, did any of these folks ever see those ads --

MR. RAPP: Objection. Misstates the law.

THE COURT: Overruled. And, again, as I did last

week, members of the jury, what the lawyers say in their

closing summation arguments is not evidence and your memory

will control of what the evidence and testimony is. 

And so let's continue on, Mr. Feder.

MR. FEDER: Thank you.

Can everyone see that?

So what has been the evidence on these two particular

issues. Officers Fritze, Griffen, Murry, and Snyder. What did

they testify to under oath? And three of those were hostile to

Backpage. But what did they all tell you? That they did not

have probable cause to make an arrest on the face of any ad,

any ad; and a couple of them saw what we believe is the worst

ad of the 50 and that is a woman named Anya Beck but I'm sure

you remember her but I'll talk about her in a moment.

Cannot tell. Why? Because the ad, as one of those

gentlemen said, is only the first step. They then have to make

the call to the person that is posting. Then they have to go

out and meet the person to see if a solicitation for a

prostitution act is made. Then and only then is there even

probable cause to arrest.

What the prosecution is asking you to do, make a

decision on these 50 ads of the conspiracy that those are 09:41:11

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prostitution ads on their face beyond a reasonable doubt with

no evidence with these four witnesses telling you what they

said.

What about the posters? Well, they brought in Anya

Beck and several other people who admitted that they had

committed acts of prostitution. Curiously, Ms. Beck did have

to admit, though, that on a couple of occasions people

responded to her ad and came out and they didn't want to have

sex. They wanted to go for a walk and have a talk and gave her

a massage. Obviously not always prostitution.

What did some of the officers tell you? Mr. Snyder,

same thing, that frequently or on occasion, people will come to

their undercover situations and they don't want sex. They

don't want sex for money. They want something different, so

they turn them away.

What about Dr. Mehlman-Orozco? She told you under

oath that, one, she is an expert, she's a Ph.D., master's, et

cetera, et cetera, on this very exact subject that you are here

to decide, that you cannot tell from an ad because of all of

the other things that could be going on with that ad. Unless

it is explicitly on its face sex-for-money, you can't tell and

sometimes even then you can't tell.

What about -- I'm using the term abolitionists

because there was a witness called Brad Myles from Polaris and

Polaris is a religious organization. The Auburn Theological 09:43:21

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Association is a religious organization. They wanted Backpage

to close because they thought their ads were prostitution

oriented. Did any of those people testify to you? The guy

from NCMEC, the guy from Polaris, the Auburn Society, anybody

tell you that they had ever talked to a poster, somebody who

placed an ad on Backpage and paid them five bucks to put it

there? Did they ever say that they ever talked to anybody ever

to try to follow up and get the information that they would

need to make a valid decision? No.

Let me talk to you about the abolitionists because

it's a really interesting issue. Mr. Myles was kind enough to

say we, the religious organizations, the NCMECs, the Attorney

General's Association, we are abolitionists. If there are bad

ads on Backpage, we want to abolish the site. We're not

willing to messaged. We're not willing to have them improve

unless they can have a zero percent mistake and they are gone.

We want them gone. We want them out of our society versus, he

said, the people who are regulators who know that anything made

by humans is not perfect, never going to be perfect, but that

they can improve and improve until they are the very best that

they can be in trying to keep things off the media, out of

newspapers, out of websites that are inappropriate. That's

what the Backpage people were.

Did any poster tell you that -- they can only testify

to their own experience and you know what that is. I'm not 09:45:23

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going to bore you with going back through their testimony. And

then there's Mr. Ferrer and Mr. Hyer. Was there any testimony

that they ever had any contact with a poster, an advertiser?

The people that were paying them five bucks or ten bucks? No.

But they came in and testified under oath that all of these ads

were prostitution. Wonder why they would say something like

that. Why would they say something like that?

Mr. Ferrer and Mr. Hyer worked for Backpage from 2004

until 2018. Mr. Hyer and Mr. Ferrer, throughout that period of

time and even for the newspapers they worked for before that

time, did what? They attended meetings. They testified under

oath for prosecutors like this in other federal criminal cases.

They signed affidavits that you heard where they said this site

is clean. We are doing the best we can. We are doing things

that we are legally operating this site. The ads are okay. We

make mistakes but that's human. But they never talked to any

of the posters, the advertisers.

The police officers of course saw many posters

because they went out and did their investigations and met with

them and talked to them and sometimes arrested them.

Dr. Mehlman-Orozco, she testified under oath that she

met with hundreds, thousands of people in her studies for her

books in order to come to her conclusions that you cannot tell

from the face of the ad that it is an ad for prostitution.

Even Anya Beck whose ad had "$80 for head" on it. 09:47:57

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What is something else that we learned about

Dr. Mehlman-Orozco? That the prosecutors didn't bring in an

expert to try to counter her and not only would that expert

have to counter her, under the reasonable doubt standard, they

would have to overwhelm them.

If there's one thing you know about the federal

government, they have all of the resources and all of the

power, more power and more resources than most any other entity

in this country. Do you think for any minute that if they

could find an expert that could counter Dr. Mehlman-Orozco that

they would have had him or her or ten of them testifying to

you?

Mr. Rapp talked about inferences. Let me give you a

real inference. The inferences, they could not find an expert

that would testify on their behalf because they refused because

what they are trying to sell to you is not valid.

And so because it's not valid, they have to try to

distract you, like the Wizard of Oz, to other things that

really don't equate to what the questions are before you.

Mr. Hyer never said, "I saw those 50 ads." No.

Mr. Ferrer, did he say, "I saw those 50 ads"? Nope. And as

you will see, those 50 ads and the alleged conspiracy that are

in the instructions that you have been given, they didn't start

until 2013. There are some ads that are 2013, 2014 and then in

2015 where the rest of them are up to 2018. And what happens 09:50:01

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in 2015, ladies and gentlemen? What is significant about that

year. These folks sell Backpage to Mr. Ferrer.

How can these folks look you in the eye and tell you

that any of these people ever saw those ads after the sale of

Backpage to Ferrer or, more appropriately, is there any

evidence that they ever did that? None, zero.

If you find that the 50 ads have not been proven

beyond a reasonable doubt on their face to be an ad for an

illegal transaction of prostitution, that's the end of your

deliberations. Same for the conspiracy charge. Same for the

money laundering because the money laundering charges follow

the alleged illegal proceeds from the 50 ads and the

conspiracy.

Let's talk about some of the other things that came

up in this trial. Moderation. Backpage, like many other

sites, wasn't just going to let any old ad go on their site so

they decided that they were going to start to impose their

terms of use and their posting rules trying to prevent improper

suggestive ads from going on their site.

If you recall, Backpage began as a hoped-for

competitor to Craigslist so they pretty much followed what

Craigslist was doing. And when these folks began, none of them

had any experience in operating a website. That's why

Mr. Ferrer was put in charge of it. But they started

moderating those ads first by having a few human moderators 09:53:12

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looking at the terms and the ads and either deleting those ads

or getting rid of words in them so that they didn't even

suggest a sex act.

Then as Backpage grew and the amount of ads grew, he

hired more and more moderators and more and more moderators

until they had 100, 200 people until most of the people of

Backpage were moderators. Even that wasn't good enough for

them, wasn't satisfactory. So they collaborated with a company

called Desert Net, which is a company down in Tucson, which is

like a computer company, and they created some screens, some

filters so that all of the ads that were coming into Backpage

would go through this automatic filter. And as you saw, the

type of words and phrases and acronyms that they allowed on

that grew from a few to hundreds. Probably in the thousands as

they tried to clean their site up more and more and more. The

list of words, acronyms and terms grew more and more and more

and the automatic filter would say the ad goes through and

takes out "hole" so that you're left with the ad "put it in the

blank $100."

I asked one of the police officers that the

Government brought in whether or not that was a prostitution ad

and he said yes. Just in case, if you want to know if there

was any bias among the police officers and the other witnesses

that the prosecutors brought to testify remember, in my opening

this was just an example I pulled out of the air for a 09:55:24

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billiards parlor having a tournament. Put it in the hole for

$100. A one night stand for $100. That's a furniture company

in Phoenix. You've probably seen their billboards.

Prostitution ads or just suggestive ads like we have

throughout our society. Sex is actually okay as long as it's

not illegal, at least as to everybody else other than these

folks.

Scott Spear was put in kind of an unfortunate

position. As you heard, he worked at New Times for 20 plus

years and did a lot of work for them flying all over the

country to their various papers doing their real estate

contracts, et cetera, et cetera. Then when Backpage came into

being, he was asked to be the supervisor of Mr. Ferrer, which

he did to the best of his ability, and the best of his ability

was he was the person who wanted stricter and stricter

standards, not only to try to keep sex-for-money ads, to try to

keep suggestive ads off, but also to oppose their taste

standards. Ferrer and Hyer even admitted to it, that they had

taste standards that were Playboy versus Hustler.

Now, looking at some of these ads, that may not be

how you see it but that's what they tried to do.

Could you bring up 6212? Starting in 2005, this is

Mr. Spear telling Mr. Ferrer clean the site up. I don't want

it the way it is and Mr. Ferrer saying, as he would ordinarily

say, oh, it's already clean. Whether or not that was truthful 09:57:55

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we don't know, but it goes to Mr. Spear's intention that that's

what he wanted to do with this site to the best of his ability,

as ignorant as he was about this kind of stuff, is to make the

site look like it's supposed to look and try to keep off as

best as he could ads for sex that were improper or that they

didn't like the look of.

Could you bring up 551? These are in evidence,

ladies and gentlemen. Same thing. Spear, hey, clean up the

site. Let's make posting rules. Let's make terms of use.

Let's make sure that the advertisers at least have to go

through some gauntlet of some type in order to get on the site.

They have to avow that they are over 18. They have to say that

they are not going to put illegal stuff on it. Since they --

"they" meaning the Backpage people -- they don't have any

contact with these posters, this is all on the Internet.

That's how it was then and for you who are on the Internet

today, that's how it is today. You have to go through some

rules and check the box that says I'm going to use your site

appropriately.

Please put up 1841. Mr. Spear had a lot of jobs but

he was looking with the time that he had to make sure that

things were going the way they were supposed to go. So down at

the bottom, he's saying these things don't even pass muster.

They need to be cleaned up daily, every day. Is that proof

that he's intending to commit a crime or intending to try to 10:00:24

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keep the site as legal and clean as possible?

Please bring up 574. All right. How about 574a?

No? Okay.

How about 49? Here is Scott Spear, according to the

Government, intending to commit the crime they are alleging

against him, pushing me hard to get the site as clean as

possible in the next seven days. Now, maybe they were trying

to make the site look good so that they could fool other people

as Mr. Ferrer suggests.

But these are regulators, not abolitionists and they

are doing what they believe they are supposed to do legally is

to not put overtly, directly, sex-for-money ads on their site

and that's what they were doing. That's what they did in good

faith every day to try to operate a legal site.

Please put up 918. Here's some improvements that

Mr. Ferrer is suggesting. Did Mr. Spear go, no, no, we don't

want to do that. We want to have more advertisers so let's

have our standards be looser. We don't want any more

advertisers. No. Approve. Go get em. If he was asked for

finances to get more moderators, more things that would keep

the site clean, that's what he did. At the same time he has an

obligation as a person trying to operate a successful business

to grow the site. That's what most businesses do, they try to

stay within the law but they also want to grow because in the

United States, companies, at least for-profit companies, they 10:03:15

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are supposed to make a profit. There's absolutely nothing

wrong with that. Maybe the Government is saying that's

inappropriate. That's the American dream. That's what

companies do in this country is they try to make money but they

try to stay legal.

Put up 1928, please. You all may remember Hemu

Nigam, the person that Backpage hired, the former prosecutor,

the person that was on the NCMEC board, the person who consults

with website companies to try to help them clean their sites up

or make it legal, make it appropriate.

So Mr. Nigam and Mr. Spear, look in the middle there,

what are they doing? Are they trying to make the site more

illegal or less illegal to get inappropriate terms off or keep

them on so that they can attract more advertisers? Well, terms

strip out or ban per Scott and Hemu and me begrudgingly, "me"

meaning Mr. Ferrer, the guy who is trying to turn around what

he was and point the finger at everybody else like they were

doing what he was doing.

Please bring up 2004. Same thing. These are not

easy distinctions to make. Many of you may not like any

discussion of sex and sex terms.

MR. RAPP: Judge, I'm going to object. I don't have

that exhibit in evidence.

THE COURT: It's not in evidence.

MR. FEDER: No. Sorry. My mistake. 10:05:45

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How about Exhibit 6063? Do you remember this one?

This is from Andrew Padilla to Carl Ferrer. Look up at the

top: I love waking up to the Executive Vice President of

Village Voice Media telling me I suck. The Executive Vice

President is Scott Spear.

Down at the bottom he is telling him that they had

some ads appear that he came upon and said: What the heck is

going on? How did this get through moderation? What are you

doing, work harder, do better. Is that somebody who is

intending to commit a crime? Is there any evidence of that?

No.

How about Exhibit 93? I'm not sure why I brought

this up other than to say the moderators are human and they

make mistakes, that's on page two where they are talking to

Mr. Ferrer, an unhappy advertiser that they have moderated her

ads go strictly and she's not happy. If they were really

trying to get everybody on their site, why not let anything go?

Why do any moderation? Why not say, "Sorry, we'll put your ad

up"?

You heard evidence about the Attorney General's

organization and Polaris and other people that were suggesting,

hey, you only get rid of The Erotic Review. You ought to get

red of GFE. You ought to do this, you ought to do that. We

think that's what you ought to do and if you don't do it, they

think you ought to chose your site. They did some of that. 10:08:19

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They didn't do all of it because those people have no control

over them and they are abolitionists at heart, not regulators

because that's their interest, but they did, they tried to

moderate. They tried to accommodate people that were

criticizing them like good businesses do. If you're not doing

things the way other people think -- I mean everybody is

subject to what other folks think about them. So they did.

Bring up 93, please, page two. Same one, sorry.

625. Page two, please.

MR. RAPP: I'm going to object, Your Honor. We do

not have this exhibit in evidence.

THE COURT: It's not in evidence.

MR. FEDER: Well, before we bring up, how about 1657?

COURTROOM DEPUTY: What number?

MR. FEDER: 1657.

MR. RAPP: I object to this as well. We do not have

it moved in evidence.

THE COURT: It is not in.

MR. FEDER: How about 647?

MR. RAPP: That is in.

MR. FEDER: We have a winner. Is there any way of --

Can you guys see this on your screens? Thanks.

The end of TER or at least the beginning of the end.

This was at the suggestion of some of the folks that -- some of

the organizations that you've heard about. Did they have to do 10:10:44

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this? No, but they did because they wanted to accommodate

other opinions.

Later in 2011 you heard testimony that John Moon,

lawyer board member, came into a lot more active role on

Backpage and then on February of 2012 another lawyer named Liz

McDougall was hired full time to take over moderation and the

other aspects of the ads on Backpage relieving Mr. Spear of the

duties that went with that.

What else happened in 2012 that further reduced

Mr. Spear's responsibilities? Well, New Times was sold. The

three owners over here sold the New Times newspapers, 15, 17,

however many there were, to some of the editors. So

Mr. Spear's duties went from way up to way down. He didn't

have any more papers to deal with. He didn't have moderation

to deal with. So his duties went to being a budget person,

dealing with the real estate that was still involved, and

things hike that. And with the exception of a few things, the

few exhibits that you will see, pretty much his role was done

in 2012.

The significance of that is the ads that are in play

here, the ones that you are going to make a decision on, and

the conspiracy, according to the instructions, begins March 28

of 2013. That's the pivotal date, at least one of them.

Moderation was a process that had the three tiers.

We've already talked about them but they did the best that they 10:13:16

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could and then when Liz McDougall came, she took it over and

while she changed it, it was a lot less: "I think this word

can be in, this word can be out." It kept on and she was the

one that was responsible from that point on until 2015 where

although she stayed there, then Backpage became the business of

Mr. Ferrer.

Let's talk about a couple of the other things that

the prosecutors put before you seemingly to distract you and

here's why.

First of all, there's The Erotic Review. You heard a

lots about The Erotic Review. But what was the status of The

Erotic Review at least as it pertains to ads on Backpage at or

before March 28, 2013? It was gone, by and large. You just

saw the email that did that.

Was TER a secret as these folks tried to push on you?

Nobody knew about their secret marketing strategy that Ferrer

and Hyer talked about. Do you remember when they kept asking

these witnesses that would have no idea what they were talking

about. "Hey, did you know about The Erotic Review? Did you

know about their secret marketing strategy? Did you know that

they aggregated? Did you know that they had super posters?"

As if those people had any clue what they were asking. They

didn't but they wanted to re-emphasize it over and over and

over again because you can take something that's ridiculous,

but if you repeat it enough times, human nature sometimes is 10:15:30

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you believe it's true. But it isn't.

So TER, this secret thing that Backpage was doing

that nobody knew and if the police officers had known about it,

why, they wouldn't have asked for Backpage's help. Those

hundreds of people that you have evidence of, they wouldn't

have wanted to associate with Backpage if they knew that they

were connecting with TER and putting a reciprocal link on their

site and vice versa. Of course they wouldn't do that, would

they?

Police officers that are in -- doing the sex work,

that they wouldn't know about The Erotic Review where they are

doing it every day, you don't think -- they wouldn't know about

that? It's absurd when you think about it but that's what is

being sold to you.

Could you bring up 1835? Wrong one, sorry. Was that

1835? Here we go. Remember this one. This is an email dated

September 25, 2007, talking about The Erotic Review. According

to New York magazine July 18, 2005, The Erotic Review, the

consumer reports of the escort industry. Playboy magazine,

July 2007, MSNBN. That must be an obscure TV channel. What is

that? They would they know about this secret? New York

magazine, July of 2005. You've got to look under the hood,

ladies and gentlemen, and see what you're getting sold.

What about aggregation? And I'm sorry, one other

thing on TER, look through the exhibits, please, and see if you 10:18:20

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see Scott Spear on any of the emails to and from TER other than

him authorizing them to get paid because his overall job was to

try to get ads onto the site.

And I'm sorry, before we leave TER, could you bring

up 311?

Do you remember these Google Analytics? They were

getting all of their business from TER. Look right here under

referring sites, The Erotic Review, 43,000 and change visits to

the website on that day, March 22, 2010. This was the secret

sauce as Mr. Ferrer testified under oath.

43,000 visits out of how many? A million seven 30.

Google, down under search engines, 290,000. Now,

43,000 is not chump change but it's not the secret sauce and to

suggest otherwise is just not accurate, especially when you

have the burden of proof beyond a reasonable doubt, that's

distraction, misdirection, not talking about the actual issues

that are before you.

Let's talk about aggregation for a moment and super

posters. Mr. Hyer, who has been in that area for a long time,

talked about aggregation is something that companies do,

websites do it, other companies do it. They look at the ads

that one company has and they try to contact those advertisers

to see if they want to come on their business and advertise

there so they contact them. Hyer said they also got approval

from every person that was -- had an ad to see if they wanted 10:20:43

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to come onto Backpage for a free visit essentially. Anything

wrong with that? No. Is the Government trying to make

something wrong out of that? Yes. You ask yourself why.

And where do they get these ads? Well, initially

they got them from Craigslist. That became a problem because

Craigslist didn't like them contacting, quote/unquote, their

advertisers as if they own them. Where did they go next? They

went to Google upon which these very same ads had these people

are telling you are prostitution ads later. Google is like a

vacuum cleaner of information. If those were illegal ads, is

Google in trouble for having those ads on their site?

And what else were you told about that? That any ad

that Backpage brought to their site got moderated to make sure

that it came up to their standards even if it was on Google in

some other adulterated form. Problem with that? The super

posters were like your airline miles. If you do a lot of

business with a company, what does that business typically want

to do with you? Give you a bonus, give you a discount,

something like that. Is Backpage supposed to go to every

person, every advertiser, every company that sends them

business and go through an investigation of them? That's a lot

to ask and certainly not required of any company, especially

the Internet where if you want to post an ad, you want it done

like that. You want to go through the site, check your boxes,

pay your five bucks and you want to see the ad then, not five 10:22:49

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days later. Misdirection.

Scott Spear did the best that he could. He tried his

hardest. He cracked the whip. He wasn't always successful in

keeping bad ads off his site -- it's not his site but he was a

manager and managers have responsibilities but was he doing it

to try to commit a crime? Did you see any evidence whatsoever

even with Mr. Ferrer and Mr. Hyer where you saw an email that

goes, hey, we're going to conspire to commit a crime. Hey,

let's do this and do that. Did you see that? And more

importantly, given their biases, given their needs to impress

these folks, did they testify that there was ever a discussion

to begin this conspiracy and continue it ever? Anywhere?

Do you think that they would say something like that

or wouldn't say something like that unless these guys and gals

told them to?

Remember Ferrer and Hyer how many times they talked

to these folks in preparation, five years, multiple times, the

prosecutors and the agents flying all over the country to talk

to these witnesses for hours on end, no tape recordings,

sometimes no notes, no reports, no nothing. Do you think that

if they had that kind of evidence that those folks would have

said that to you over and over again to prove their case beyond

a reasonable doubt? Where is it? Bring it.

Scott in good faith did the best that he could. By

2012 after Liz McDougall, he's still there, he's still getting 10:25:11

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paid, he's still doing budgets, he still goes to a meeting or

two. He did his job in good faith.

And speaking of Scott, let's talk about Stan Cook and

Rick Yerman. Hopefully none of you have ever had to go through

this, something bad happens to you. You're ill, you're

bankrupt, you're divorced, your friends disappear. Nobody

wants to be around somebody that's down. Stan Cook has known

Scott since he was 12. They were 12. They grew up together.

They did their things. Stan Cook -- they went to weddings.

They went through divorces. Stan Cook even went on Scott's

wedding, honeymoon with him. Somebody like that probably knows

you pretty well.

When there's a disaster, very few people stick by you

but those two people did and what did they say about him?

Honest, law-abiding, wouldn't do something knowingly wrong.

Does that mean anything? It's up to you.

What about Rick Yerman? He's known Scott since the

1970s, 1980s. He went into business with him. Any of you

folks who have been in a business, you know that sometimes you

spend more time with your business partner than you do with

your spouse. So you really have to know them there because

then it involves money. And Rick Yerman was one of the editors

of West World, one of the other New Times papers in Denver for

a while. He knows Scott pretty well and they continued on to

be friends until the present date, even since he had been 10:27:29

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indicted in 2018.

What did he say? Law-abiding and honest, wouldn't do

something intentionally to violate the law. That on its own,

ladies and gentlemen, is reasonable doubt on top of all of the

other reasonable doubts that we hope I have talked about.

Let's talk about one final thing. Exhibit 171. You

heard about that during the Government's presentation. It was

a letter from somebody at NCMEC whose name is John Ryan to Don

Moon, June 6, 2013. It's in evidence. You will have the

opportunity to read that letter and the response to that

letter. What is significant about a response to that letter?

Throughout this trial, the Government has put on a lot of

evidence that will imply to you that there was a response but

you haven't seen it. You can see this one now.

Hey, says NCMEC, you're doing this, you're doing

that. We don't like what you're doing. What did Don Moon say

in four pages? Hey -- I'm sorry, more than that. I have been

criticized for my math so what is 62 to 77? That's 15 pages.

You're going to read all about what Mr. Moon says about these

folks and the New Times and how they are at heart First

Amendment protectors. They are not abolitionists. They are

regulators. They believe that the First Amendment should allow

people to see things even if nobody else likes them.

I'm not going to go through this chapter and verse

with you. That's hopefully up to you. But he talked about 10:30:35

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that what they are doing is protected by the First Amendment

and why it's protected by the First Amendment. And he talked

about something that came up a couple of times that I want to

highlight for you. Remember the testimony about age

verification techniques that this guy, this Seattle mayor and

the Washington Attorney General wanted Backpage to implement

age verification techniques. And some of the other folks at

NCMEC wanted age verification techniques be Mr. Ferrer, of

course, had seen all of the correspondence that came in to talk

about that. And he said, well, Backpage didn't want to do it

and I agreed with that because it would be too expensive.

This exhibit, that's not the truth, the whole truth

and nothing but the truth. You were misled. Age verifications

are unconstitutional on the First Amendment.

MR. RAPP: Objection. Misstates the law. Improper

argument.

THE COURT: Sustained. Members of the jury, you will

be instructed and have been instructed orally on the law and

you will have those instructions with you so be reminded that

those are the instructions on the law that you will apply.

Continue, Mr. Feder.

MR. FEDER: Thank you.

Well, ladies and gentlemen, you read 171 and see what

you think. The age verification techniques were not

appropriate and not required. That's what Mr. Ferrer could 10:32:27

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have said if he was telling you the whole truth and nothing but

the truth, but he didn't. He tried to make it sound like

Backpage wasn't doing what it should do as opposed to doing

what it is legally allowed to do or not do.

We live in the United States. It is arguable that

this is one of the greatest countries in history. We get a lot

of benefits from that. We have enjoyed the freedoms and

liberty for over 200 years. Our founders made some rules like

the instructions you're going to get about what was important

to them in creating this country. Number one on the list was

the First Amendment, freedom of speech, freedom of association,

freedom of the press.

Ironically, freedom of religion is also in the First

Amendment and it's ironic because Myles and Luria and some of

those other people that were trying to impose their religious

beliefs on Backpage didn't want them to have the same First

Amendment freedoms that these religious freedoms did. There's

also the fifth in line, due process and the sixth in line, fair

trial.

It has been said that in the criminal justice system

better 99 guilty people go free than one innocent person get

wrongly convicted. That's the backdrop of our criminal justice

system. When you live in this country and you get the benefits

that you do, you also have a few obligations.

First, taxes of course. We all hopefully pay taxes. 10:34:54

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But we don't get to choose what taxes we pay. We don't get to

choose how the taxes are used and what it pays for. There's

lots of things that we've seen in the news that upsets us

because of the way our Government spends those taxes.

Next, another obligation, voting. How many times

have we had to vote for the best of the worst candidate? But

we didn't get to pick the candidate. We only get to vote to

try to get the best that we can.

Third, military, it's another obligation. It used to

be that when young Bruce Feder was in his twenties that there

was a draft and if the letter came and said you've got to go,

then you've got to go.

Finally, there is jury duty and that is the place

where you all get the choice to do what you think is right

under the law, to find the facts. You have some power. This

will be part of your legacy. Scott Spear didn't do anything

wrong. He's not only not guilty, he's innocent. Please find

him so.

Thank you for your time.

THE COURT: Thank you, Mr. Feder.

Members of the jury, we've been at it for just over

an hour and I think it's appropriate that we at least take a

20-minute break. We will do that and we will hear an

additional summation.

And so just remember the admonition because we still 10:36:39

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have a number of lawyers that wish to provide their closing

argument and as I mentioned, then the Government has a final

summation that they can make to you. And just continue to keep

that open mind and not to discuss any of the matters amongst

yourselves or with anyone else.

Please stand in recess.

All stand for the jury.

(Jury departs at 10:37.)

THE COURT: All right. We will stand in recess.

(Recess at 10:37; resumed at 11:01.)

(Court was called to order by the courtroom deputy.)

THE COURT: All right. Please be seated and we can

go check on the jury.

All rise for the jury.

(Jury enters at 11:03.)

THE COURT: All right. Please be seated. And the

record will reflect the presence of jury. Mr. Lincenberg,

whenever are you ready.

MR. LINCENBERG: Thank you, Your Honor. Is the

microphone okay?

THE COURT: It sounds good.

MR. LINCENBERG: Thank you, Your Honor.

Counsel, friends and family, thank you for coming

today. Members of the jury, you've had a lot of information

hurtled at you. It's lot to digest and you've seen snippets of 11:04:15

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exhibits and not knowing what else is in other parts of the

exhibits and hearing counsel objecting and sometimes the Court

saying disregard it and how do you flush that out of your mind?

It's a tough job. It's a tough job. And we thank you for

taking it seriously and we hope you'll continue to do so.

What I hope to do in my closing is initially overview

some of the points that I mentioned in my opening, give you an

overview of my client's role, go through some of the counts and

then what I hope to do for the bulk of my closing argument is

to take the Court's instructions about how you assess evidence

and apply it to some of the evidence in the hope that that will

help guide you and you'll have something to use as a roadmap

when you come back -- when you go back and deliberate.

You'll recall in my opening statement, the first

thing that I did is I discussed Mr. Brunst's role. He worked

for a media holding company --

You're missing something on your screen?

PANEL MEMBER: Our screen is off. Just this one.

MR. LINCENBERG: Got it? Okay.

So somebody's role is important. When you have a

company, there's a lot of people who do different things in a

company and, by and large, what people do is they stay in their

own swim lane. They do the work that is their function and

they leave it to others to do others' work and they rely on

them that they are doing their work in good faith. 11:06:29

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So I think it's an important place to start. My

client, Mr. Brunst, was the CFO of a media holding company.

That was after working for other companies and accounting firms

and the like. And from 1992 to 2003, as you know by now, the

New Times Media Holding Company only consisted of newspapers.

As Mr. Ferrer told you, in about 2003, as he saw

classified ads going online and he had been working at the

Dallas Observer, he went to Mr. Larkin and the two of them

discussed this idea of Ferrer's that they should have an online

platform for classified ads which they called Backpage.

From 2004 to January of 2013, the company was New

Times and then Village Voice Media Holding Company and they

owned about 18 companies. There are a lot of newspapers during

this time. Initially the revenue of the newspapers was greater

than Backpage but Backpage grew and the revenue of the

newspapers decreased and you heard that by 2010, 2011,

particularly when Craigslist stopped having adult ads, part of

the prosecution theory is that the revenue skyrocketed at

Backpage.

Mr. Brunst was not employed by any of these 18

companies. He was not employed by The Village Voice newspaper,

the Chicago Reader, the San Francisco Weekly or Backpage. He

got no salary from them. He had no operational duties. He had

no email address there and so that's why we put before you as

Exhibit 6243 the corporate structure. And both counsel 11:08:17

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introduced this and noted that this was before the January 2013

sale of the newspapers. And you see that during this time up

until January 2013 on the left side of this you had the

editorial part and Mr. Cambria had pointed out that Mr. Lacey

oversaw the newspaper work.

And in the middle you had Mr. Larkin who was the CEO

of Village Voice Media Holding Company and that is where

Backpage was.

And then on the right side in a completely different

line you had Mr. Brunst who had controllers and CIOs and

business managers of the 17 papers and the sub businesses.

The reason why this exhibit has some importance to

you is, obviously, from what you can see from it, is

Mr. Brunst's role was the CFO of this holding company was 18

different units, newspapers and Backpage and he was not

involved in any of the operations of Backpage, which was one of

the reasons I noted for you that while you would see

documents -- I said this in my opening. You will see documents

noting him as listed as the CFO from Backpage from time in

memoriam because each of these business units, the newspapers

and Backpage, you have to have an ultimate business owner. So

one of the owners of the media holding companies has to sign

documents and they sign on and so you'll see that for the

purposes of certain corporate documents, he's going to be

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But he was never the operational CFO of Backpage.

And what was interesting about this was during the trial when

Mr. Rapp sort took some electronic Post-its and covered up

different names and I think the point was to say that this was

only pre-January 2013. I'm not sure why he was playing with

the exhibit but this was the corporate structure of Village

Voice Media Holding Company through January 2013 and Mr. Brunst

was not part at all of the Backpage operations.

From 2013 to 2018, so this is after the newspapers

are sold and this is the important time period because these

are the 50 counts in the indictment. The conspiracy counts

they allege go back to '04 but they tie into this ads and the

wire transactions are also between 2013 and 2018 and recall

during this time period Backpage was not even operating in

Phoenix. It had its own CFOs because the company had become

large enough that it needed a CFO.

And after April of 2015, Mr. Ferrer owns and is

completely running Backpage. So as we go through the evidence,

keep in mind what Mr. Brunst's role is. That is why you saw,

when the prosecution introduced exhibits, the exhibits dealt

with some of the things that he did as part of his duties for

the corporate media holding company, Village Voice Media

Holding Company. And what a CFO is primarily focused on is

financial statements. The CFO has to gather up together the

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unit or two units or property rentals, whatever revenue comes

in from the different sub units. And that financial statement

is something that may be used if you're looking to sell the

company. More importantly, it's used on an every year basis

with the audit company because the audit company is the

accounting firms are conducting an audit and in preparation of

tax returns which the accounting firms are doing.

And that is what Mr. Brunst spent the bulk of his

time doing, typical of a CFO. And you saw that he was also

involved in corporate transactions. He had a role with regard

to purchase of newspapers, sale of newspapers, sale of Backpage

to Mr. Ferrer in 2015, should not be surprising that he's

involved in that, because he's the accountant there and the

accountant, the CFO is a guy who has a role in dealing with

corporate transactions.

On big transactions it's generally run by law firms

and accounting firms and consultants who do that type of stuff.

But there's an in-house contact and that's where he comes into

play. And he deals with banks and he deals with investors.

You saw one email dealing with communications between Goldman

Sachs, which was one of the -- a big owner of Village Voice

Media Holdings. He has year-end budget meetings with each of

the different sub units, the newspapers and Backpage.

And as Mr. Stone liked to call him in his opening

statement, he was a bill collector after the sale of Backpage, 11:13:37

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which was true. He was a bill collector. Somebody at Village

Voice Media Holding Companies there had been a sale to Ferrer.

There was a loan. Payments had to come in. If they didn't

come in, somebody has to contact them to get the bills paid.

And that's what he did.

Now, Mr. Rapp in his closing instead used the

pejorative term "bag man." And I would suggest to you that it

says something when a prosecutor in a case like this reverts to

the term "bag man" which we associate with some mafia guy who

is running around at liquor stores where they are extorting

them and put cash in a bag or on some drug deal or something.

None of that applies to what we had here which were all

documented transactions with transfers between wires from one

entity to the next and the like. This does not involve bags of

cash.

What I would suggest to you, that when the evidence

that a prosecution has on somebody like Mr. Brunst is woefully

weak, that what they revert to is name-calling.

Let's take a quick overview of the Government's case

as I will break it down into four parts. The first part is

there is no evidence of Mr. Brunst committing any charged

offense. I'll run through that with you in a moment.

The second part that I'm going to emphasize to you

and spend a lot of time is noting that there's only one witness

in this case who says anything inculpatory about Mr. Brunst, 11:15:19

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one person out of 21 who was called. We'll discuss that.

The third part is that that person is a liar and

you're going to have to figure out what you do with that when

that's the only witness who says anything inculpatory against

Mr. Brunst.

And the real focus that I'm going to ask you to think

about throughout your deliberations is to focus on the source

of the story that you've heard and not story. That's difficult

to do. You go back in deliberations. You've heard ten weeks

of this hubbub of information and you've heard a story and it

sort seeped into your brain that this is the story.

But as jurors, your job is to get past just what the

story is and say who is telling this story? What is he saying?

And is it believable? Because that's in a courtroom what we

call evidence or proof and you have to decide whether that

proof is there beyond a reasonable doubt. So let's go through

it. And this is the slide Mr. Stone used in his opening

statement. He had two slides about what the alleged conspiracy

consisted of.

The first is he described 2004 to 2010 as a

prostitution marketing strategy involving aggregation, super

posters and The Erotic Review. And you note very clear, as Mr.

Feder pointed out and Mr. Stone acknowledges essentially in his

opening, is the TER was involved with Carl Ferrer through about

2010. Now, there's some evidence that after Ferrer bought the 11:17:10

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company back, he had some outreach again with -- on his own

with TER. That is after our clients are not even owning the

company.

But when you think about TER, think about it in terms

of the way the prosecution is presenting it to you, that it

runs through 2010.

And the second part is that there was a prostitution

maintaining strategy and this is where they talked about

moderation, response to press and different organizations that

had contacted Ferrer and Backpage in response to credit card

Armageddon.

In my opening statement I pointed out that the part

of the case where you're going to hear some testimony with

regard to Mr. Brunst is dealing with credit card Armageddon.

And much to my surprise, frankly, the prosecution only called

one credit card witness, Mickey Hansen, a guy from AMEX and

Mickey Hansen testified that he never dealt with Jed Brunst.

He only dealt with Carl Ferrer.

So we'll get to that. But keep that in mind as

you're assessing what do I do in my deliberations with regard

to this prosecution of my client, Jed Brunst.

Let's talk about the Travel Act charges first. The

Court instructed you that the Government has to prove that

Mr. Brunst acted with a purpose of promoting a prostitution

business enterprise. 11:18:49

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So the issue is not whether pimps advertised on

Backpage. We know that they did. That evidence is clear.

There were ads put on Backpage by pimps. Of course there's

also no doubt that you could probably go to some Motel 6 or

motel in town here where prostitutes frequently rent a room or

go to a sexy lingerie store where prostitutes frequently buy

sexy lingerie and the question of whether or not that motel

owner or the clerk sitting there or a salesperson at the

lingerie store, they may think, what is this person doing

coming back? I have my strong suspicions.

But there's a difference between somebody renting a

room and that motel owner acting with a purpose of promoting a

business enterprise.

Mr. Brunst generally understood that there were adult

ads on the site. He understood that the adult ads were allowed

if they satisfied the Compliance Department's standards of not

being sex-for-money ads and he understood that the --

MR. RAPP: Objection. Judge. There's no evidence of

that.

MR. LINCENBERG: Well, there is evidence of that.

THE COURT: Well, again, the jury will determine what

the evidence and the testimony is and so the objection is

noted.

MR. LINCENBERG: Thank you, Your Honor.

And that the Moderation Department -- and you've 11:20:25

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heard testimony about what the Moderation Department was doing

is they are separating out what is a sex-for-money ad that it's

illegal versus an ad that they believe complies with what the

law says has to be done there. Now, that's not Mr. Brunst's

job. It's the job of others. He as a CFO knows that there's a

Compliance Department in place and that's the function that

they are performing.

There's no evidence that Mr. Brunst knew of any pimp

business, because the Government has to prove that Mr. Brunst

was acting with the purpose of promoting some pimp business.

There's no evidence he knew of any pimp business, no evidence

that he intended to promote any business, pimp business, and,

frankly, one cannot remote or facilitate the promotion of a

business enterprise that one does not even know exists.

The Court gave you a lengthy conspiracy instruction

and I'm going to focus on a couple of parts of it. One part is

where the Court instructed you that the person does not become

a conspirator merely by associating with one or more persons

who are conspirators, nor merely by knowing that a conspiracy

exists. Why is this instruction important? We know that

Mr. Brunst associated with Carl Ferrer and if Carl Ferrer was

in a conspiracy with David Elms or Dollar Bill or whoever it

might be, it doesn't mean that just because Mr. Brunst worked

for a media holding company that owned Backpage that he is part

of some Ferrer-Elms conspiracy. 11:22:21

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Another part of the conspiracy instruction is one who

has no knowledge of a conspiracy, but happens to act in a way

which furthers some object or purpose of the conspiracy, does

not thereby become a conspirator. Why does this come into

play? Because the prosecution is really stretching on these

short year-end budget meetings that come once a year and which

Mr. Brunst's role is just to deal with expense and revenue and

trying to shove it down the jury's throat of it being evidence

of him being involved in promoting some conspiracy but

approving an overall budget for Backpage. And recall, as Mr.

Feder noted, his client, Mr. Spear, was approving for the

marketing -- was involved with the marketing budget. That does

not have the effect of helping Ferrer in a conspiracy with Elms

or whoever it is. It doesn't make Mr. Brunst a conspirator.

Let's just take a quick look at the time. Some of

these arguments have been covered by other counsel as well and

although I'm here to talk on behalf of Mr. Brunst, and I will,

I think I can run through this part of it fairly quickly.

So recall Mr. Ferrer's testimony is be a -- recall

that Mr. Ferrer, throughout 2004 to 2018, is telling the world

as well as people within Backpage, I don't have prostitution

ads. We're looking to build not-adult ad areas.

Now if that's untrue, what Ferrer is saying, first of

all, what does it say about his credibility? But more

important, if that's untrue, then it's a misrepresentation 11:24:34

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being made to Mr. Brunst because his budget plans are basically

talking about the growth of the business in a legitimate way.

And as we go through the ads, it's very clear,

Mr. Brunst never prepared these ads, no evidence that he ever

saw them, no evidence that he ever knew of any of these 50 ads,

no evidence that he ever knew of any pimp business enterprise,

no evidence that he was ever told by anyone that these ads were

illegal. He's not even in the same or the same city during the

time period of these ads, he's not even an employee of

Backpage. He's not an operational CFO of Backpage, no evidence

of some criminal agreement between Mr. Brunst and Carl Ferrer,

no evidence of any intent to promote any pimp business. And in

fact, the opposite is true, that if you were to believe

Mr. Ferrer's testimony in this trial as opposed to what he told

the world and everybody around him for 14 years, then what it

means is that he's concealing from Mr. Brunst.

Now, I ran through these points quickly because they

are simple. But it doesn't mean that they are not critically

important for you to digest. And when you're reviewing these

counts against Mr. Brunst, none of which he had anything to do

with, there's not a chance that a standard of proof beyond a

reasonable doubt is met.

And recall Mr. Ferrer's admissions. You go way back

to September 27 and remember the first 15 questions or so of my

cross-examination of Mr. Ferrer. I went through these areas. 11:26:36

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With regard to the founding of Backpage, Mr. Brunst wasn't

involved with that. No. That was me and I got together with

Mr. Larkin. With regard to the marketing, the marketing which

is the heart of this case, was he a part of the marketing

department? No, he was not. TER, was he ever a part of any

conversation that you had with Mr. Elms or any email? No, he

was not.

With regard to ad moderation and the good work that

people like Joye Vaught and Andrew Padilla were doing along

with Mr. Spear, but he's not a part of that in any event.

Nothing to do with that.

Aggregation, do you have any knowledge of Mr. Brunst

ever having communicated with any aggregators? No, I don't

believe he ever communicated directly with them. Advertisers,

I don't believe he did. Ads, review any of the ads that you

testified during your direct examination? 

I don't know.

I mean, this is the only witness that the Government

has against Mr. Brunst and he's basically admitting that

there's no evidence of Mr. Brunst's involvement in any of the

conduct alleged in Count 1 through 51. Super posters, did you

ever include Mr. Brunst on any email that you had with

Mr. Mersey? No.

NCMEC, no. Wasn't involved with that. Senate

related meetings that you heard about. Nope, wasn't in 11:28:08

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Washington as part of that. Subpoenas, recall that they tried

to make this discussion about the subpoenas, whatever happened

with the subpoenas. Whatever you think about the work that

they were doing one way or the other to help law enforcement

was not something that was in Mr. Brunst's swim lane.

Attorneys General, these letters that would be

written by the Attorneys General, either to counsel for

Backpage or Mr. Larkin or I think Mr. Moon was involved with

some of these. Did you ever have any of this back and forth,

did you ever consult with Mr. Brunst about how you should

respond? No.

Press inquiries, did you ever consult with Mr. Brunst

about how to respond to press inquiries? I don't recall any.

Dealings with politicians, there's some testimony

about dealing with like a mayor in Seattle, didn't involve

Mr. Brunst.

And Mr. Brunst, Mr. Ferrer concedes, was not on

Backpage's payroll. Pretty simple straightforward lack of

evidence involving Counts 1 through 51.

Let's talk about the wire transfers. So the wire

transfers are Counts 52 through 100. Really 100 was that one

that Mr. Cambria talked about. Some of these are alleged

against Mr. Brunst. Some are not. But they are all really

basically the same pattern.

So the first thing you should ask yourself as a jury, 11:29:46

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is there any evidence linking these wire transfers to any

particular unlawful ad? You know when you're a prosecutor, you

should be putting forth evidence with specificity. The jury is

entitled to this. There's a lot at stake. The defendants are

entitled to evidence with specificity they can refute and yet

what do we know about these wire transfers?

They are basically loan payments. They are basically

all payments -- most of them are payments that are being made

from Backpage or Website Technologies to the lender, the

holding company, and we know that they are not concealed.

These are open. They are going through the banks. The banks

have their AML policies which are anti-money laundering

policies. They are putting through all of these wires after

they are doing their due diligence. We know they don't promote

anything because it would actually be the opposite of

promoting. The only way you could possibly promote with a wire

is if the money was going to Backpage. This is money coming

out of Backpage. It's the opposite of promote.

And Mr. Thai. Mr. Quoc Thai, the former IRS agent

who ran through some charts -- I'm going to show you a couple

of them -- what did he testify to? That he did no analysis of

the purpose of the wires.

My partner, Mr. Panchapakesan, asked him: You

subpoenaed the banks. Any documents in there about money

laundering violations? Nope. And the Government exhibits and 11:31:47

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the prosecutor even stated, it shows the money going one way

were his words. Well, that's accurate. It's going out of

Backpage. It's the opposite of promoting.

And, you know, if you look at the proof relating to

the ads, and let's just say you find that those 50 ads, you may

find that they were prostitution ads as the Government wants

you to do. Let's assume the worst. It's not what the evidence

showed but let's assume the worst. Recall the testimony of

Mr. Ferrer where he said the revenue that would come in from an

ad was about a dollar to five dollars. Well, if you have 50

ads, that means you're talking about $50 to $250. And even if

some of them are reposted or something and you go a little

higher. We are talking about a couple hundred bucks.

How does that tie in to wire transfers that, as they

show you, are in the hundreds of thousands of dollars, millions

of dollars? There's no link that the prosecution provides to

you between these ads or anything specific and the transfer of

money.

And, you know, the judge instructed you as part of

the First Amendment instruction is that all speech is presumed

protected by the First Amendment. It's the Government's burden

to establish that each of the ads alleged in this case is an ad

for prostitution and not for another purpose. So while they

just want you to say, well, but you heard Ferrer say all of

these adult ads are prostitution ads. That doesn't overcome a 11:33:43

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First Amendment presumption. They can't substitute this guy's

general statement for actual proof.

Let's look at couple of the flowcharts that Mr. Thai

put up on the screen.

So the first one was Count 53. It shows a wire in

2016 from Website Technologies back to Cereus Properties' bank

account. And what was his testimony about this? Ferrer's

testimony I believe this was: If you know, what did Cereus

Properties do -- this was Mr. Thai's testimony -- Ferrer's

testimony. Ferrer testifies: What did Cereus Properties do? 

Answer: Cereus Properties collected the interest and

debt payments from the $600 million loan. It's a loan payment.

Count 64, just to use another example of a loan

payment and, by the way, what did Mr. Thai say about Cereus

Properties? At one point he said Cereus Properties appears to

be an entity used to pay Backpage's payroll expenses. And I

point this out -- not that I would expect anybody to remember

that little piece of testimony, but I point it out because

there's no basis for saying that. It's not true and what did

he testify to? He said I didn't look beneath these wire

transfers. I just took a wire that I found in one bank account

record and matched it up with the other.

So don't accept that. These are wires that are

outgoing. There's no evidence that he did any investigation

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And you see the testimony, what was the purpose to go

from Ad Tech to Cereus Properties? It was to make interest and

principal payments on the note, the smaller note being the note

for the overseas international operations.

Now there's one wire transfer that was a little bit

different and that's why I said almost all of these were

straightforward documented loan payments through normal

channels. But this Count 63 is a little different because this

is a wire transfer from Backpage to a bank in India. And Mr.

Rapp in his closing statement with regard to Count 63 stated to

you, he said: And you remember Carl Ferrer's testimony and did

you pay for that feed -- he's reviewing the testimony of

Ferrer -- these were feeds that -- they were putting on the

site; right? So Ferrer, in fact, at one point testified that

they used somebody in India, some web developer, whoever it

was, to deal with feeds.

But Ferrer testifying that at some point they used a

website in India is not a link that this payment was to some

web developer in India. You know, India is a country of a

billion and a half people. There's a lot of businesses there.

Who knows what the purpose of this wire was for? Certainly

Mr. Thai said I don't know the purpose of it is. Mr. Ferrer

was never asked to look at this wire in Count 63 and tell me

who or what it's for. It's not your job to guess. It's not

their job to tell you to guess. You can't just say, well, the 11:37:34

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guy said they did some business with somebody in India so match

it up with a wire in 2016 that went to India and find beyond a

reasonable doubt that somebody committed money laundering.

That's not proof and you shouldn't go along with it. Treat

this with a healthy dose of skepticism.

We asked Mr. Thai about this. He was asked: Do you

have any information about this transaction other than the

dates, the amount, and where it was sent?

No, I don't. 

Now, the next point to consider with regard to the

wire transfers is that the banks processed these.

Now, you don't hear any testimony in the prosecution

case from any of the banks. No bank came in and said, "I was

defrauded," or, "I didn't know what I was doing," and these are

big banks. You heard a lot of testimony. Mr. Ferrer telling

you. We understand that banks have know-your-customer

requirements. You saw some of that dealing with the loan

processing, the payment processing applications, which I'll

talk about later, all fully disclosed and knowing that these

payments, whether they are coming from Website Technologies or

Backpage, are Backpage-related funds. We'll get back to that

in a little bit.

There were no lies made to the banks and this is

going to be an important part of my closing, because

essentially the Government's case seems to be that Mr. Brunst 11:39:24

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somehow was involved in lies to the bank. So we're going to

take it on straight up.

Let's look first at Exhibit 772. This is one of the

exhibits that the prosecution harped on. So this was involving

this bank in Mauritius where in 2015 some of the banks had

stopped doing business with Backpage because of reputational

concerns and, as Mr. Ferrer said accurately, they were looking

for banks that would process their work. And we heard this

discussion about how banks certainly knew about Backpage's

business, that they were involved with adult ads and like.

You heard all of this death by Google search. What

does death by Google search means? It means that any bank with

a simple Google search is going to know that you're dealing

with Backpage. They operate in the adult world and we, as a

bank, are going to have to decide whether that's a reputational

concern that we're willing to live with.

They all know. And here's Mr. Brunst writing in a

2015 email about Mauritius. He's saying: Didn't we go down

the Mauritius path once and the banks had the same issue with

our content?

Now, the Government introduces this because it shows

that Mr. Brunst had issues with their content. Well, I will

tell you there's no denial that banks had issues with their

content and Mr. Brunst fully knew that banks had issues with

their content. That is what the testimony was. Mickey Hansen 11:41:09

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wasn't a bank but even with AMEX, they processed credit cards

for years and years and years and at some point they said, you

know what, the heat is there. There's all sorts of stuff in

the press.

Later on we had Sheriff Dart come out threatening

credit card companies, threatening VISAs and so forth. He said

I didn't find anything illegal here but we didn't want to deal

with them. It's kind of in a different context what Mr. Becker

said -- remember Mr. Becker was the lawyer that Mr. Cambria

called who was dealing with Mr. Lacey's trust plan.

And at one point he said I think in response to

cross-examination, he said: Look, all of this is illegal.

Would I do it again? No way. Who needs the hassle? Who needs

the hassle? And that's what these big, big, banks and credit

card companies, why would they need to be dealing with negative

press of something they are dealing with? And these different

organizations, lobbying them, stop doing business with these

guys and so forth. Get out of it. It's not going to make a

penny difference to the bottom line of AMEX or VISA or Wells

Fargo Bank or Bank of Montreal.

And you recall, by the way, what Mr. Hansen, the AMEX

guy, testified to, was when my partner, Mr. Panchapakesan, went

through and he looked at some of the AMEX documents and he

said, yeah, we don't really deal with lottery ticket things.

We don't want to deal with something like, you know -- I don't 11:42:48

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remember what it was, Hustler magazine or porn sites or

something like that. Online gambling, whatever it is. They

don't want to deal with it. They have the right to not deal

with it. That's fine.

They dealt with it for years understanding the

reputational concerns and they changed their minds. Frankly,

not surprising that in 2011, later in 2015 the owners of

Village Voice Media Holding Company wanted to sell Backpage.

They were getting tired of dealing with the reputational

concerns as well. It's not surprising.

There's other examples of full disclosures to the

bank. I'm not going to put all of these on the board for you

but two of the exhibits dealing with Bank of Montreal, 616 and

886; dealing with Frick Bank, 1230. Similar types of

discussions about the reputational concerns and the back and

forth, the Bank of Montreal emails that came into evidence. I

believe one was from 2010. One was from 2015. Back and forth

with Bank of Montreal saying, hey, can you give us the latest

stuff on what you're dealing with on compliance on the adult ad

section, things like that. Open discussion. Open discussion,

full disclosure.

And for the Government to suggest that some bank or

payment processor was defrauded when they won't even bring in a

bank representative or a payment processor to testify shows the

weakness of their case. 11:44:35

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So is there a concealment? The opposite is true.

You will see the exhibits all show that the banks knew, the big

thing that they're claiming was hidden from them, which is that

Backpage is affiliated with Website Technologies or that the

banking is going through Backpage. Promotion, the opposite is

the trace.

And the third type of money laundering count

involving transactional money laundering is also not proven

because they don't link it up with any ads. And in fact,

there's no evidence that my client believed that there was any

underlying unlawful activity relating to this.

Remember there's a difference between believing that

there's unlawful activity based upon whether an ad is being

moderated appropriately or not versus whether or not there was

a pimp that ever advertised on the sites. My client was told

the ads were legal. And a second element of the transactional

money laundering is that it has to involve more than $10,000.

And you've been presented with no proof of prostitution ads of

more than $10,000 that are linked in with any of these wire

transfers.

MR. RAPP: Objection. Misstates the law.

THE COURT: Well, again, the Court has instructed the

jury on the law and it is the jury instructions on the law that

the jury will follow so the objection is noted.

MR. LINCENBERG: And I would ask you to look at the 11:46:28

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jury instructions in this regard because it does not misstate

the law. They can't just have some generalized thing unlinked.

Let's talk a little bit about Carl Ferrer.

First of all, who is this guy who is coming in here?

Is it the person who is programmed for his testimony in court

or the guy who is running a business for all of these years?

And let me say that with regard to the 2015 purchase of

Backpage by Ferrer, the only reasonable inference that you can

draw from the evidence is that this guy eagerly bought

Backpage. Why not? He founded it. He's been building it. He

sees big profits going to the owners of the media holding

company. He's making seven figures a year, some of it in what

he's being paid by Backpage. As we heard, a lot more that he's

getting with his little scheme where he's stealing money on the

side with his brother and now he can own it.

And this is a time when Backpage's revenue is growing

by leaps and bounds. And in connection with this purchase of

the company, he's assisted by counsel. You heard evidence

about this lawyer Larry Shosid who testified he was shoved down

my throat. This is his lawyer. You really think he doesn't

have the opportunity to pick his own lawyer? He's getting a

company and a seller-financed deal. He doesn't have to put any

money down.

I mean, take yourself back. Try to picture in 2015,

not in this courtroom, which is a microcosm, of where the 11:48:18

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prosecution is trying to pull together what they want to

present you.

Picture Carl Ferrer 2014 his roll in over $120

million in revenue from Backpage. He's running the show and he

has the opportunity to buy this company and he's been running

it for 11 years. Do you really think that a guy who can buy it

no money down, seller financed, no personal collateral that he

has to put on it, that he's under duress? The prosecution

theory here, Ferrer's testimony is crazy and it's not supported

by any reasonable interpretation.

What did he finally say on cross-examination? Well,

I was handcuffed by my own greed. He bought it because he was

greedy because he saw an opportunity to make a lot of money and

have ownership of a large company.

This is the guy who found, built, and operated and

then bought Backpage. For 14 years, you never saw any exhibit

or testimony that during that time period, he said to anybody:

These ads are illegal. We're running an illegal shop. He

regularly fervently defended Backpage's legal right to operate.

Now, you know, none of us were there from '04 to 2018

day in and day out. We just heard what the puppet said on the

witness stand for your consumption. Your job is to try to cut

through that. Try to pick what is this guy all about? How the

story completely changes and to do that, the Judge has given

you a jury instruction. It's a jury instruction that guides 11:50:35

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you in how to assess the credibility of witnesses.

And the first thing is you can look at the

opportunity and ability that he had to see or hear or know

things. Second thing is looking at what his memory or claimed

memory was. The third is his manner while testifying, I'm

running through these quickly. I'm going to go back through

each of them.

The fourth is his interest in the outcome of the

case. The fifth is did this guy have any bias? The sixth is

what other evidence contradicted his testimony? Was his

testimony reasonable and anything else that you find that bears

on believability.

So the next part of my closing argument to you is

going to be to go through these factors one by one as I hope

you will do when you are deliberating.

Okay. The judge gave us this instruction. Let's

look at how the evidence matches up and what do I do with this.

So the first thing is as a general matter, to note

that the Government called 21 witnesses, these 20 plus Ferrer.

When you look at this list and you go down it, the first

question you should ask yourself is, who on this list accused

Jed Brunst of wrongdoing? The answer is no one on that list.

The only person who did so was Carl Ferrer. Not one of their

20 witnesses corroborated Carl Ferrer's statements to you about

his conversations with Jed Brunst. 11:52:30

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And I would go a little further, frankly, and each

say that Carl Ferrer sort of -- it was only sort of an

indictment of Mr. Brunst. The reason I say sort of is because

when we review the evidence you're going to see that if the

case is that there were lies to the banks, Mr. Ferrer actually

says, "We never lied to the banks."

So let's go through these in a moment. No witnesses

called by the Government to corroborate Ferrer.

Now, remember there's a lot of various names that you

saw on emails, for example, that my client was on. Susan

Boswell, one of the lawyers involved in the sale. Michael

Gage, who we've seen testimony, was a CFO of Backpage. Nathan

Kopecky. Mary Latta from Bank of Montreal. Lot of people they

could have called to say, "Yeah, let me tell you what that

email was about. I can corroborate what Mr. Ferrer said."

None of them were called and there's a reason why they weren't

called, is because Ferrer's testimony to you not is

corroborated. It makes no sense.

The list goes on. Scott Lebovitz. Jeff Mars, you

may recall from a moment ago, he was a guy that was right below

Mr. Brunst on the org chart. Seems like a pretty logical guy

to call if you're going to put on a case claiming that

Mr. Brunst did something wrong. Haven't seen him.

Kate Obermiller was on some emails, Mr. Brunst's

assistant who was also dealing with some of the banks. Don 11:54:25

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Moon. We're going to get to Don Moon. Ilona Nicholls from the

bank. Steve Suskin, Scott Tobias, president of New Times.

Patricia Weber, this person who was the payment processing

consultant showing up on an email with Ferrer. And Irina from

Bank of Montreal.

And all sorts of other people, Craig Capital who was

at the recipient end of these partnerships to sell in 2011.

Trent Voight from one of the payment processors. The

accountants and the like. Pause and ask yourself, if you're

going to come back with a verdict that my client is guilty

based on the testimony of Carl Ferrer, the Government had an

opportunity to call 35 different people -- these are just

people who showed up on different emails or transactions. Why

aren't they called? It's a lack of proof and you shouldn't

just accept what they choose to present to you as if it's

corroborated because they didn't do so.

So let's go back to this first of those eight factors

in the jury instruction.

Opportunity to hear and know. Now, here as a

starting point, certainly Mr. Ferrer did have the opportunity

to hear and know certain things. So as to some evidence, this

factor would cut in favor of the prosecution.

As to other things, he did not have the opportunity

to hear and know and yet he testified as if he did hear and

know. So let's go through some examples. First of all, you 11:56:19

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saw repeatedly through eight days of direct examination,

documents would be shown to Mr. Ferrer, emails, that he's not

on, right, presumably never saw, but he testifies, yeah, I know

what they are talking about. When the defense asks him about

the same thing, the opposite is the cases, I don't know what

this is about. We'll go through one or two examples of that

but it was constant throughout his testimony.

For the Government he would concoct stories about

innocuous emails. Let's look at an example of that.

Exhibit 177. So I'll blow some of this up in a

moment but just follow along with me before we do so. This was

an email where the prosecution has Mr. Ferrer point to one

thing at the top of the email string where it says something

about we need to keep -- or something about need to keep

Website Technologies and Backpage separate. That's what they

pop on the screen. That's all you see during direct

examination.

Well, the reason they do that because aha, here's

some wording that we can have Carl get up on the stand and say,

see, here's Mr. Brunst trying to hide, the connection between

Backpage and Website Technologies. But the proof is in the

pudding. The proof is in looking at the documents and saying

what is this email about? And so you may recall I said isn't

this an email from the Chief Technology Officer, Joe Kaiping,

he was joe@backpage.com, talking about something called payment 11:58:12

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card industry security standards? 

And you may recall -- it's a lot to ask of you to

recall something like this because it was a long time ago,

these are these standards that every business deals with in

terms of trying to protect consumers against the misuse of

their personal information. Every business wants to go through

this. They want to be PCI certified.

So Joe writes: If we keep the PCI audit company as

Backpage.com, then the assessments and PCI audit would just

apply to Backpage and its immediate holdings. Any PCI audits

required for other parent company holdings would then be

performed separately.

You're dealing with Website Technologies, this new

company that Ferrer creates, and there's a discussion by the

technology guy, the techie, who is basically saying, hey, guys,

you need to keep these entities separate because if you have

Backpage and Website Technologies together, then you're going

to lose your PCI certification. It's one of the many reasons

why companies form all sorts of different companies for

different purposes. I think the AMEX guy said they have

thousands of different companies.

And that's what Jed writes in response.

He says: All right -- and he's writing to the

techie. Well, we need to think this through or all the work to

separate it from Backpage will be lost. 12:00:00

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What's he responding to? Separated for PCI audit

purposes.

And on direct examination, when the prosecutor asks

Mr. Brunst -- and remember just showing you, the jury, the top

part of the email. He's, oh, I can sum this up without reading

it. Brunst set up Website Technologies to ensure that its

reputation is protected, that it's not affiliated with

Backpage.

What happens on cross-examination? When I start

asking him, I start going through the bottom of the email

chain. And he says: You lost me. I don't really understand

what PCI audits are. I don't understand what this mail is

about. Now, had it not been for cross, you would have been

left with the misimpression that Ferrer and the Government

tried to create on direct when this is this innocuous email

dealing with an issue with the CTO, the tech guy.

Let's look at a second example.

What's the Court's thinking.

THE COURT: How much time do you need?

MR. LINCENBERG: I have a long ways to go. I can

break at any time.

THE COURT: Are you anticipating 30 more minutes?

MR. LINCENBERG: No, much more than that.

THE COURT: More than that?

MR. LINCENBERG: Yes. 12:01:27

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THE COURT: All right. Well, members of the jury, we

are at the noon or just about the noon lunch hour and as Mr.

Lincenberg has indicated, he has further to go, much further to

go. I think it is an appropriate time to at least take the

lunch break. You've been here since before 9 o'clock. I'm

reminded of that as well.

And so we will stand in our usual one-hour lunch

recess. Again, we are continuing through with the summation

arguments of counsel so it's vitally important that you not

come to any conclusions but to continue to keep that open mind

and not to discuss the matter further amongst yourselves or

with anyone else, just simply to try to relax and have a good

lunch hour.

And so with that, please all rise for the jury.

(Jury departs at 12:02.)

THE COURT: All right. Please be seated.

Counsel, let me just raise one sort of scheduling

issue with you. You may, you may not be aware that we also

have a World Series game tonight that starts at 5:03. We have

apparently a concert right adjacent to that World Series game.

We also have a Phoenix Suns game. I think we're going to have

heavy a traffic situation. 

And not only that, but we have jurors who are parents

and want to get their children engaged in the Halloween

festivities. So at a minimum, I'm going to ask them to stay at 12:03:24

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least until 4 o'clock. And so you can gauge one way or the

other this afternoon as to how long the remaining summation

arguments are going to be, discuss that amongst yourselves and

then it might very well be, depending on how long you go, if

you end roughly around 3:30, 3:45, I'm not going to let the

Government have their rebuttal close until in the morning, so

that may be the schedule that we're on. We'll continue to keep

monitoring that situation.

And so with that, we will stand at recess for an

hour.

COURTROOM DEPUTY: All rise.

(Whereupon, these proceedings recessed at 12:04 p.m.)

* * * * * 

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C E R T I F I C A T E 

I, ELAINE M. CROPPER, do hereby certify that I am

duly appointed and qualified to act as Official Court Reporter

for the United States District Court for the District of

Arizona.

I FURTHER CERTIFY that the foregoing pages constitute

a full, true, and accurate transcript of all of that portion of

the proceedings contained herein, had in the above-entitled

cause on the date specified therein, and that said transcript

was prepared under my direction and control, and to the best of

my ability.

DATED at Phoenix, Arizona, this 1st day of November,

2023.

s/Elaine M. Cropper 

_________________________________ 

 Elaine M. Cropper, RDR, CRR, CCP 

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