Exhibit K

Case 2:18-cr-00422-DJH Document 1366-13 Filed 10/26/21 Page 1 of 6
October 15, 2021 

By E-Mail 

CACD Acting USA Tracy Wilkison 

CACD Criminal Chief Scott Garringer 

CACD Asset Forfeiture Chief Jon Galatzan 

CACD AUSA Dan Boyle 

AZ Acting USA Glenn McCormick 

AZ Criminal Chief Heather Sechrist 

AZ AUSAs Kevin Rapp, Andy Stone, Peggy Perlmeter, Peter Kozinets 

MLAR Chief Deborah Connor 

DOJ Attorney Reggie Jones 

Re: Government Seizures in United States of America v. $1,546,076.35 In Bank Funds Seized from 

Republic Bank of Arizona Account 1889, et al., 18-CV-8420-RGK, and with Other Warrants 

Dear Government Counsel: 

We are writing at the direction of CACD AUSA Dan Boyle. We have previously 

communicated most of the below to him, and he advised that the government will not release any 

funds and will not afford us a meeting to escalate the issue. He indicated that we could “appeal” his

decision by this letter. 

Given the recent mistrial in the Arizona criminal case United States v. Lacey, et al., 18-CR00422-PHX-SMB, and the multitude of issues the mistrial raises, including the need for additional 

litigation and a potential re-trial, we request that CACD USAO return at least some of the hundreds 

of millions of dollars in assets it has seized so that our clients can continue to be represented by their 

counsel of choice. Retained counsel have exhausted their retainers, and our clients now face the 

prospect of another trial. 

 

To be clear, we believe our clients are legally entitled to the return of all seized assets, but are 

now focusing on four categories for purposes of this conversation. These four categories include (1) 

attorney retainer funds, totaling nearly $16 million, (2) assets owed to Defendants even 

assuming arguendo that CACD USAO’s position in 18cv8420 regarding “adult” ads is accurate, (3) 

print newspaper proceeds entirely disconnected from Backpage.com, and (4) foreign-sourced loan 

payments, reimbursements, and the like made in connection with the sale of the Backpage business 

in 2015, as required under the sale documents. 

 

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October 15, 2021 

As to the first category (attorney retainer funds), we seek return of: 

 

CASE NO. SEIZED FROM AMOUNT FROM SEIZURE WARRANT1

18mj02031 Davis Wright Tremaine 3,713,121.03 

18mj02872 Rusing Lopez & Lizardi PLLC 5,279,173.07 

18mj02874 Perkins Coie LLP 2,167,704.86 

18mj02030 Becker & House PLLC 2,412,785.47 

18mj02875 Piccarreta Davis Keenan Fidel PC 10,000.00 

18mj02876 Piccarreta Davis Keenan Fidel PC 740,000.00 

18mj02883 Mitchell Stein Carey Chapman PC 100,000.00 

18mj02883 Mitchell Stein Carey Chapman PC 100,000.00 

18mj02878 Karp & Weiss PC 250,000.00 

18mj02873 Copeland Franco Screws & Gill 100,000.00 

18mj02880 Prince Lobel Tye LLP 100,000.00 

18mj02874 Thompson Coburn LLP 100,000.00 

18mj02875 Walters Law Group 100,000.00 

18mj02875 Wayne B Giampietro LLC 100,000.00 

 

These seizures are an affront to the Sixth Amendment and have severely handicapped our 

ability to defend the criminal case in the District of Arizona. The government cannot reasonably 

continue to hold all of these seized attorney funds pretrial given the mistrial and prospect of another 

three-month trial. 

 

These seizures are also problematic because, although the government has held or controlled 

these funds for years, the government has not traced most of these attorney funds to demonstrate 

that the government has the right to hold this money, pretrial, as criminal proceeds indefinitely, 

while the various criminal and civil cases brought by the government proceed. 

At best, the government’s execution of these seizures was unseemly. Mitchell Stein Carey 

Chapman PC, for example, wired funds to the government to comply with this subpoena on 

November 13, 2018 at 1:34pm PT. The Court in CACD then issued a stay order nine minutes later 

at 1:43pm PT. When Mitchell Stein Carey Chapman PC then tried to recall the funds at 2:00pm PT 

that day, CACD USAO refused to permit the recall despite the Court’s stay order. 

 

 Further, as to most of the attorney funds, the seizures are also impermissible as CACD 

USAO has never filed a sworn, verified complaint supporting its belief that it can seize these funds 

in the nearly three years and counting that the government has held these attorney funds. In fact, a 

large part of the retainers came from overseas operations or overseas loan payments, or were 

insurance proceeds, and the government cannot proffer a valid basis for their pretrial seizure or 

restraint. Accordingly, we seek the return of all attorney funds. 

1

 This table only identifies the amounts sought in the seizure warrants. The amounts actually 

seized or restrained varied from the amounts in the warrants, and we seek the return of whatever 

was seized or is being formally or informally restrained by the government. 

Case 2:18-cr-00422-DJH Document 1366-13 Filed 10/26/21 Page 3 of 6
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October 15, 2021 

 

As to the second category (assets owed to Defendants even assuming arguendo that CACD 

USAO’s position in 18cv8420 regarding “adult” ads is accurate), we seek the return of at least 

$13,633,946.20. CACD USAO has argued that “more than 90 percent of Backpage’s revenue” 

“[b]etween 2004 and April 2018” came from Backpage.com’s “adult category,” which CACD USAO 

contends generated criminal proceeds subject to forfeiture. See 18cv8420 at Dkt. 108, First Amended 

Consolidated Master Verified Complaint (“FAC”), at paragraph 107. As an initial matter, we do not 

believe the government has a basis to seize any of these funds. It appears that the government’s 

position is that all “adult” ads on Backpage.com were for prostitution. But the government has 

never proven (and cannot prove) that this was the case (or that these funds are otherwise subject to 

forfeiture). Indeed, California DOJ Agent Brian Fichtner, the government’s one witness at trial who 

testified about the website, admitted: (a) he knows of no arrests based solely on a Backpage ad; (b) 

he himself could not tell if any of the ads he reviewed were for prostitution, because none of the ads

contained sex for money language; and (c) the “sting ad” he posted (which, on its face, did not 

propose a transaction that would constitute prostitution) was taken down immediately after his 

request that Backpage do so. Indeed, of the 50 ads charged in the indictment, only one was a sex for 

money ad on its face (and the fact that the government could find just one sex for money ad among 

the many millions of adult ads posted to Backpage.com speaks volumes).2 

All that said, for purposes of this discussion, we are seeking that to which the government 

has no right to seize even under its own theory. The government has seized at least $136,339,462.65 

in liquid assets, and the true value of the total assets seized is likely much higher.3 Accordingly, we 

2

 It is clear that the government itself recognizes these significant issues. In the aftermath of 

the mistrial, there has been widespread reporting about government legal memos generated in 

connection with a prior investigation of Backpage, memos that the government produced and then 

clawed back in the Arizona case. As you know, that investigation covered the same time period that 

much of the indictment here covers, and resulted in a decision not to prosecute Backpage. One 

news outlet reported that, “[i]n memos published by Reason, two assistant U.S. attorneys for the 

Western District of Washington wrote that Backpage was ‘remarkably responsive to law 

enforcement requests and often takes proactive steps to assist in investigations,’ and FBI Agent 

Steve Vienneau called the company ‘very cooperative at removing these advertisements at law 

enforcement's request.’” See https://www.vice.com/en/article/5dbvdb/mistrial-backpage-case-lacey-larkin. 

Another news outlet reported that, in connection with the W.D.W.A. investigation, the government 

“reviewed more than 100,000 documents and interviewed more than a dozen witnesses . . . but 

failed to find a smoking gun,” noting that the memos stated, “‘[i]t was also anticipated that we would 

find numerous instances where Backpage learned that a site user was a juvenile prostitute and 

Backpage callously continued to post advertisements for her. To date, the investigation has revealed 

neither.’” See https://www.thedailybeast.com/backpagecom-founders-michael-lacey-and-james-larkin-go-on-trialover-sex-worker-ads. 

3

 That is because (a) this amount does not include the numerous real properties the 

government has seized, (b) most assets have appreciated since the seizures, and (c) we lack the exact 

amount seized, as the government has not identified the amount seized in certain instances, alleging 

only that it has seized “any and all funds in the account;” these seizures are thus unaccounted for in

this total. 

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October 15, 2021 

request the return of the 10% the government admits it has no right to restrain (funds tied to nonadult ads, i.e., classified ads for cars, rentals, jobs, etc.), which conservatively is at least 

$13,633,946.20. 

 

As to the third category, the $407,686.14 seized in 18mj1863 (see FAC at ¶ 99) from Cereus 

Properties LLC’s VMG (Voice Media Group) Depository account at Compass Bank (Account No. 

‘4862) are proceeds of the 2013 seller-financed sale of print newspaper businesses to VMG and have 

no relation whatsoever to Backpage.com. The proceeds of that sale are in a depository account, 

proceeds that were maintained separate and apart from any Backpage-related proceeds. We seek the 

return of this account because these assets are exclusively print newspaper proceeds. CACD USAO 

previously recognized this fact, when it returned funds from to James Larkin from his Republic 

Bank of Arizona Account ‘1938. CACD USAO returned these funds because Mr. Larkin’s account 

contained only disbursements from the Compass Bank Account ‘4682, and the government 

acknowledged that the Compass Bank Account ‘4682 contained exclusively print newspaper 

proceeds. Under this same theory, we seek the return of at least $407,686.14 seized from Account 

‘4862. The government is incorrect to assert that this account was a “pass-through” account used as 

part of an alleged money laundering scheme – all of the transactions identified by the government 

(amounting to $944,729.25) were loan payments made by VMG to our clients in connection with the 

seller-financed sale of the newspapers, rent for an office building sublease, and related items.4

 

Finally, as the government is aware, in connection with the 2015 seller-financed sale of the 

Backpage business by our clients to Carl Ferrer, (a) the business was sold to two separate entities, 

which respectively held Backpage’s domestic and foreign operations; (b) there were two separate 

loans made to these entities, and the corresponding note payments to our clients were made 

separately by each entity; (c) Backpage’s foreign operations concerned foreign advertising; and (d) 

these facts are documented in contemporaneous accounting documents and sale and loan contracts. 

The loan payments on the note tied to foreign operations and foreign advertisements, representing 

over 40% of the overall loan payments, are presumptively legal. Neither the seizure affidavits nor 

the forfeiture complaints acknowledge these key facts. At a minimum, these funds, which can 

readily be traced and cannot reasonably be characterized as money laundering proceeds, should be 

released. 

We appreciate your prompt consideration of this critical issue, and we would like to meet to 

discuss a reasonable resolution either in person or via Zoom no later than October 21, 2021. 

4

 Also under the same theory that print newspaper proceeds disconnected from 

Backpage.com should be returned, Michael Lacey seeks the release of the rest of the funds at issue in 

his Motion for Release (In re Any and All Funds Held in Republic Bank of Arizona Accts. x1889, 18-cv6742 Docs. 22-24). The funds in this account are also solely newspaper proceeds and should be 

released in their entirety. Indeed, as CACD USAO has recognized, assets procured with newspaper 

money should not be subject to pretrial seizure. 

Case 2:18-cr-00422-DJH Document 1366-13 Filed 10/26/21 Page 5 of 6
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October 15, 2021 

 Very truly yours, 

 

BIENERT KATZMAN LITTRELL 

WILLIAMS LLP 

Thomas H. Bienert, Jr. 

Whitney Z. Bernstein 

Counsel for James Larkin 

cc: BIRD, MARELLA, BOXER, WOLPERT, NESSIM, 

DROOKS, LINCENBERG & RHOW PC 

 Gary S. Lincenberg 

 Ariel A. Neuman 

 Gopi K. Panchapakesan 

Counsel for John Brunst 

PROSKAUER ROSE LLP 

 Seetha Ramachandran 

 Asset Forfeiture Counsel for James Larkin 

LIPSITZ GREEN SCIME CAMBRIA LLP 

Paul J. Cambria, Jr. 

Erin McCampbell Paris 

 Counsel for Michael Lacey 

 FEDER LAW OFFICE PA 

 Bruce Feder 

 Counsel for Scott Spear 

 DANIEL J. QUIGLEY, PLC 

 Daniel J. Quigley 

Counsel for Medalist Holdings, Inc., Leeward Holdings, LLC, Camarillo Holdings, LLC, 

Vermillion Holdings, LLC, Cereus Properties, LLC, Shearwater Investments, LLC, and 

Broadway Capital Corp., LLC 

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