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PICCARRETA DAVIS KEENAN FIDEL PC

2 East Congress Street, Suite 1000

Tucson, AZ 85701

(520) 622-6900

Michael L. Piccarreta

State Bar No. 003962

Email: mlp@pd-law.com

Attorney for Defendant Andrew Padilla

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA

United States of America,

 Plaintiff,

vs.

6. Andrew Padilla,

 (Counts 1-51)

7. Joye Vaught,

 (Counts 1-51)

 

 Defendant.

NO. CR-18-00422-06-PHX-SPL (BSB)

EMERGENCY MOTION TO STAY 

SEIZURE OF ATTORNEYS’ FEES AND 

REQUEST FOR IMMEDIATE HEARING

(Oral Argument and Immediate Hearing 

Requested)

It is expected that excludable delay under 18 U.S.C. § 3161(h)(1)(D) will occur 

as a result of this motion or an order based thereon, as explained more fully below.

Defendants Andrew Padilla and Joye Vaught, by and through their undersigned

counsel, hereby request this Court to issue a stay of seizure warrants directed to funds for 

attorneys’ fees for their representation in the above-captioned criminal case and to hold an 

immediate hearing on the validity of seizure of attorneys’ fees.

1 These defendants have the 

duty to promptly bring this matter to this Court’s attention due to the significant impact upon

 1 The government is not seeking seizure of previously earned attorneys’ fees, only the 

fees held in IOLTA trust for future legal work in this criminal case.

Case 2:18-cr-00422-DJH Document 360 Filed 11/08/18 Page 1 of 8
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the pending criminal proceedings before this Court.2

On the afternoon of Wednesday, November 7, 2018, counsel for defendant Andrew 

Padilla was notified by an attorney from the United States Department of Justice’s Money 

Laundering and Asset Recovery Section that a warrant had issued (but not yet served on the 

bank) for the seizure of funds in counsel’s IOLTA bank account containing unearned fees

for the criminal representation of Mr. Padilla in this case. See Seizure Warrants attached 

hereto as Exhibits A and B. Counsel for Mr. Padilla was advised to wire transfer funds in the 

accounts to the United States (in lieu of execution of the warrants) by no later than 4:00 p.m. 

on Tuesday, November 13, 2018. Counsel for Mr. Padilla then received a confirming email 

with the wiring instructions. (See Exhibit C). Counsel for Ms. Vaught received similar 

information and a seizure warrant from the government on the afternoon of November 6, 

2018. (See Exhibit D). The government advised that unless we wire the funds to them by 

4:00 p.m. on November 13, the banks will be served with seizure warrants.

The warrants are signed by Magistrate Judge Rozella Oliver, and have been served 

on counsel here in Arizona and address seizure of funds held in counsels’ bank accounts in 

Arizona.3 Counsel have requested the underlying seizure warrant affidavits but they have not 

 2 See United States v. Kent, 649 F.3d 906, 912 (9th Cir. 2011) (“All federal courts are 

invested with inherent powers enabling them to manage their cases and courtroom 

effectively”).

3 The Padilla seizure warrants address wrong numbered accounts, including an IOLTA 

account that was closed approximately one year ago and names the law firm’s operating 

account, not the IOLTA account. The defendant had advised the government of this 

error and agreed not to disburse funds from the Padilla IOLTA account without 

government or court approval. Defendants Padilla and Vaught nonetheless request 

emergency relief as these matters are being sorted out.

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yet been disclosed. Mr. Padilla and Ms. Vaught now request an emergency stay of the seizure 

of these funds as they are necessary for the continued representation of these defendants in 

these criminal proceedings. These defendants also request the immediate disclosure of the 

affidavits so that the validity of the seizure warrants may be fully addressed and fully briefed 

for a hearing on this matter.

The government’s seizure of funds for attorneys’ fees is just the latest maneuver in 

its attempts to interfere with the defendants’ Fifth and Sixth Amendment right to due process 

and right to counsel of choice. These actions include seizure of other attorneys’ trust accounts 

which were to be used in defense of the criminal case, attempt to raise conflict issues with 

key lawyers, and threatening other defendants or their spouses if they spend lawfully earned 

money. Their actions have wreaked havoc with the attorney-client relationship and the ability 

to properly defend this important case. The seizure of these funds will render defendants 

Padilla and Vaught indigent and will seriously impact the present criminal case potentially 

including, among other things, withdrawal of counsel and appointment of indigent services 

counsel, a new scheduling order and trial date, indigent services defense requests, including 

whatever time may be necessary for new counsel to establish a relationship with the clients 

and properly and professionally bring him or herself up to date on the case. It may also impact 

motions practice, ongoing discovery issues, and various other matters related to the criminal 

case. 

The government’s timing also raises additional issues. Counsel for Mr. Padilla has 

been representing him for over 18 months and the government first mentioned its “concerns” 

about funds for Mr. Padilla’s representation many months ago, in May of 2018. (See Exhibit 

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E, correspondence from Assistant United States Attorney Kevin Rapp to Michael Piccarreta, 

May 18, 2018). Counsel for Mr. Padilla then provided a detailed response setting forth the 

grounds for Mr. Padilla and counsel’s beliefs that the funds were not tainted and could not 

be subject to seizure or forfeiture. (See Exhibit F, correspondence from Michael Piccarreta 

to AUSA Rapp, June 13, 2018). This exhibit sets forth some of the issues that will need to 

be resolved and will be more fully briefed in subsequent motions. The government did not 

raise the matter again for months after the parties had been in the midst of vigorous litigation 

of these issues, and after some rulings in the defendants’ favor. This raises the specter of 

improper government conduct in response to vigorous assertion of the defendants’ rights. 

See United States v. Rosales-Aguilar, 818 F.3d 965, 971 (9th Cir. 2016). 

Defendants Padilla and Vaught, and their counsel, based upon abundant legal 

authority in their favor, believe that these funds are derived from lawful, constitutionally 

protected activity, and are not subject to seizure or forfeiture. The pre-trial seizure of these 

funds violates the First Amendment and also violates the Sixth Amendment right to counsel 

of choice under Luis v. United States, __ U.S. __, __, 136 S. Ct. 1083, 1088 (2016) (“the 

pretrial restraint of legitimate, untainted assets needed to retain counsel of choice violates the 

Sixth Amendment”). Under these circumstances, none of Backpage’s assets can properly be 

determined to be tainted and subject to forfeiture until all matters relating to Backpage’s 

activities have been fully litigated in the adversarial process. In fact, Luis makes it clear that 

the fact that funds may at some point be determined to be forfeitable to the government does 

not outweigh a defendant’s present constitutional right to use assets to which he is entitled to 

fund his counsel of choice. __ U.S. at __, 136 S. Ct. at 1093. 

Case 2:18-cr-00422-DJH Document 360 Filed 11/08/18 Page 4 of 8
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It is important to note that the government is proceeding on a novel theory of 

forfeiture of funds that has never before been accepted on the merits by any court, just as it 

is proceeding on a novel theory of underlying criminal liability that has similarly never been 

accepted by any court on the merits.4 The seizure warrants are based upon affidavits by 

Postal Inspector Lyndon Versoza. Mr. Versoza’s affidavits involving other seizures relating 

to the defendants in this case are currently the subject of challenges in the Central District of 

California and the Ninth Circuit Court of Appeals based, in part, on numerous inaccuracies 

in Mr. Vesoza’s sworn statements.5 There is reason to believe that Inspector Versoza’s 

affidavits for these seizure warrants are similarly defective.

Mr. Padilla and Ms. Vaught were salaried employees with no ownership interest in 

Backpage. They did, however, have the right to indemnification and/or advancement of 

funds for legal fees if the government or private entities, despite their string of losses, tried 

to indict or sue them. See United States v. Stein, 541 F.3d 130, 155 (2d Cir. 2008) 

(recognizing the Sixth Amendment right to counsel of choice for “an employee who 

reasonably expects to receive attorneys’ fees as a benefit or perquisite of employment, 

whether or not the expectation arises from a legal entitlement”). Because Mr. Padilla and Ms. 

Vaught earned the right to receive indemnification and/or advancement of funds through 

 4 The government is well aware of the numerous problems with its novel theories of 

criminal liability and forfeiture as these matters are discussed in internal government 

memoranda that the government is now seeking to claw back. A copy of this has been 

provided to the Court by the government under seal.

5 Defendants have appealed the California District Court’s stay of those forfeiture 

proceedings.

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their employment, and because they do not believe that any of the conduct was unlawful or 

any of the assets tainted, they are, in essence, bona fide purchases for value of the funds for 

these services. See Luis, __ U.S. at __, 136 S. Ct. at 1091.

As in Stein, the government has embarked on a course of conduct designed to 

interfere with the defendants’ Fifth Amendment right to due process and Sixth Amendment 

right to counsel of choice. In Stein, as in the present case, the government interfered with 

funds earmarked for employees’ criminal defense fees. The Second Circuit held that the 

employees who were unable to retain their counsel of choice as a result of the government’s 

actions were deprived of their Sixth Amendment right to counsel of choice. 541 F.3d at 157. 

That Sixth Amendment violation was structural error, not subject to harmless error review, 

that could only be remedied by dismissal of the indictment. Id. (citing United States 

Gonzalez-Lopez, 548 U.S. 1540, 144, 148-52 (2006).6

It is well settled that federal district courts have the “inherent authority to remedy 

constitutional violations within their jurisdiction.” Ruiz v. Scott, 1996 WL 9320104, *8 (S.D. 

Tex. 1996); see also United States v. Barrera-Moreno, 951 F.2d 1089, 1091 (9th Cir. 1991); 

Board of Education of Shelby County Hughes v. Jude, 2013 WL 1821077, *8 (M.D. Fla. 

2013). Defendants Padilla and Vaught therefore respectfully request this Court to stay the 

 6 The Second Circuit affirmed the district court’s ruling dismissing the indictment on Sixth 

Amendment grounds and did not address the district court’s separate finding that the 

government’s interference with assets to fund attorneys’ fees for counsel of choice also 

violated the defendant’s substantive due process rights. United States v. Stein, 495 F.Supp.2d 

390, 412 (S.D. N.Y. 2006); see also United States v. Stein, 435 F.Supp.2d 330, 365 (S.D. 

N.Y. 2006).

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seizure of funds for their attorneys’ fees, to order the immediate disclosure of the affidavits 

underlying the seizure warrants, and to conduct an immediate hearing to fully address the 

validity of the seizure warrants.

Granting defendants’ requested relief will cause no harm to the government because 

counsel have agreed to maintain the IOLTA funds the government is attempting to seize and 

not attempt to disburse any of the funds without the government’s prior knowledge and 

approval or this Court’s approval. Defendants are simply requesting a stay of the seizure of 

funds until the validity of the warrants may be fully briefed and addressed at a hearing on 

this matter.

RESPECTFULLY SUBMITTED this 8th day of November, 2018.

PICCARRETA DAVIS KEENAN FIDEL PC

By: /s/ Michael L. Piccarreta

Michael L. Piccarreta

Attorney for Andrew Padilla

KARP & WEISS

By: /s/ Stephen M. Weiss

Stephen M. Weiss

Attorney for Joye Vaught

Case 2:18-cr-00422-DJH Document 360 Filed 11/08/18 Page 7 of 8
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On November 18, 2018, a PDF version

of this document was filed with the

Clerk of Court using the CM/ECF

System for filing and for Transmittal

of a Notice of Electronic Filing to the

following CM/ECF registrants:

Reginald Jones, reginald.jones4@usdoj.gov

Peter Kozinets, peter.kozinets@usdoj.gov

John Kucera, john.kucera@usdoj.gov

Margaret Perlmeter, margaret.perlmeter@usdoj.gov

Kevin Rapp, kevin.rapp@usdoj.gov

Patrick Reid, Patrick.Reid@usdoj.gov>

Andrew Stone, andrew.stone@usdoj.gov

Amanda Wick, Amanda.Wick@usdoj.gov

Paul Cambria, pcambria@lglaw.com

Tom Bienert, tbienert@bmkattorneys.com

Bruce Feder, bf@federlawpa.com

Michael Kimerer, mdk@kimerer.com

Stephen Weiss, sweiss@karpweiss.com

Case 2:18-cr-00422-DJH Document 360 Filed 11/08/18 Page 8 of 8