Exhibit A 

Case 2:18-cr-00422-DJH Document 516-1 Filed 04/02/19 Page 1 of 9
UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

BACKPAGE.COM, LLC, 

Plaintiff, 

v. 

THOMAS J. DART, 

Sheriff of Cook County, Illinois, 

Defendant. 

Civil No. 1:15-cv-06340 

Judge John J. Tharp, Jr. 

ORDER 

The Sheriff’s motion for sanctions against Backpage.com and its attorneys [226] is 

granted in part and denied in part. Based on its fraudulent representations during the course of 

this litigation, the Court imposes a sanction of $250,000 against Backpage as a partial offset of 

fees and costs incurred by the Sheriff in responding to Backpage’s misrepresentations. The 

motion for sanctions against Backpage’s counsel, however, is denied. See Statement for details. 

STATEMENT

This motion represents the last installment in this case, which concerns the efforts of 

Thomas Dart, the Sheriff of Cook County, to end advertising for prostitution and human 

trafficking in the adult services section of Backpage.com (“Backpage”) by seeking to convince 

credit card companies not to do business with Backpage as long as it accepted such ads. While 

claiming that it engaged in efforts to cooperate with law enforcement and to identify problematic 

ads, Backpage sued Sheriff Dart, alleging that the Sheriff’ was threatening official action against 

the credit card companies and thereby imposing a prior restraint on Backpage’s free speech 

rights. 

Backpage sought and obtained a temporary restraining order from this Court, but after an 

evidentiary hearing, this Court denied a preliminary injunction.

1 Backpage.com, LLC v. Dart,

1

 Backpage’s complaint included a Due Process claim as well as a First Amendment 

claim, but the sole focus of its motion for preliminary injunctive relief was the First Amendment 

claim. In Black Earth Meat Mkt., LLC v. Vill. of Black Earth, 834 F.3d 841 (7th Cir. 2016), the 

Seventh Circuit expressed significant doubt as to whether the conduct alleged in this case would 

give rise to a violation of the Due Process clause. “The First Amendment,” it noted, “forbids a 

public official to attempt to suppress the protected speech of private persons by threatening that 

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2 

legal sanctions will at his urging be imposed unless there is compliance with his 

demands.” [citing Backpage.com LLC v. Dart, 807 F.3d 229, 231 (7th Cir. 2015)]. It is less clear 

that the Due Process Clause does so. The First Amendment is concerned with the chilling effect 

government action may have on speech; procedural due process is not.” 

2

 The Seventh Circuit has since recognized that Backpage’s web site “contained an adult 

section advertising different categories of sex work.” United States v. Jackson, 865 F.3d 946, 

949 (7th Cir. 2017), cert. granted, judgment vacated on other grounds, 138 S. Ct. 1983 (2018). 

127 F. Supp. 3d 919 (N.D. Ill. 2015). This Court found that “Backpage.com’s adult services 

section overwhelmingly contains advertisements for prostitution, including the prostitution of 

minors,” id. at 922; that Backpage had not adequately demonstrated that the Sheriff’s threat to 

cause the credit card companies to be investigated for facilitating Backpage’s conduct actually 

caused the companies’ decision to sever their ties with Backpage, id. at 930-33; and that 

Backpage had not adduced evidence that it would be irreparably harmed by the Sheriff’s 

conduct, because it was speculative as to whether the company would fail if customers could not 

pay for adult services ads with credit cards, id. at 934-35. 

The Seventh Circuit reversed the denial of the requested preliminary injunction. 

Backpage.com, LLC v. Dart, 807 F.3d 229 (7th Cir. 2015). The Court of Appeals, finding instead 

that “it is unclear that Backpage is engaged in illegal activity, id. at 233;”2that the credit card 

companies had capitulated to the Sheriff’s threat, id., that Backpage was merely an intermediary 

between advertisers of adult services and their customers, id. at 234, and that the Sheriff’s 

actions “would be bound to cause irreparable injury” to Backpage, id. at 238. The Court of

Appeals directed the entry of a preliminary injunction that required, inter alia, the Sheriff to 

notify the credit card companies that no action would be taken against them. Despite the 

opportunity to do so, however, none of the credit card companies resumed processing 

transactions for ads on Backpage. 

When discovery in this case subsequently continued after entry of the preliminary 

injunction, the Sheriff sought, among other things, information relating to Backpage’s finances 

(as relevant to the question of the monetary damages Backpage was seeking). In response, 

Backpage amended its complaint to eliminate any claim for damages and pressed forward 

seeking only permanent injunctive relief. First Amended Complaint, ECF No. 173.

Contemporaneously, Backpage was embroiled in litigation and controversy elsewhere, 

including a Congressional investigation. Two weeks before it filed this suit, Backpage had been 

subpoenaed by the United States Senate Permanent Subcommittee on Investigations for 

information regarding advertising on its adult services section. After the Senate subcommittee 

issued its report, titled “Backpage.com’s Knowing Facilitation of Sex Trafficking,” on January 9, 

2017, Backpage shut down its adult services section the next day. 

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3

 Backpage.com’s lead counsel in this case has been Richard Corn-Revere and James 

Grant of DWT. Charles H.R. Peters of Schiff Hardin LLP has served as local counsel. Other 

lawyers also filed appearances on behalf of Backpage.com, but did not play a substantial role in 

this case. The Court understands that, with respect to Backpage’s counsel, the Sheriff’s motion is 

directed at DWT, and only DWT responded to the motion. 

Subsequently, both Backpage and its CEO, Carl Ferrer, were charged with, and pled 

guilty to, federal conspiracy charges relating to money laundering and the Travel Act, 

respectively. In his plea agreement, Ferrer admitted that he had known that “the great majority” 

of ads placed on Backpage’s adult services section were ads for prostitution, and that he 

conspired with other Backpage principals “to find ways to knowingly facilitate the state-law 

prostitution crimes being committed by Backpage’s customers. Ferrer admitted that one of the 

ways that the conspirators facilitated advertising for prostitution was to create so-called 

“moderation” processes by which Backpage would edit ads submitted to remove terms and 

pictures that were particularly indicative of prostitution. Ferrer also admitted that credit card 

companies stopped doing business with Backpage based on the illegal nature of its business (not, 

then, because of any official action threatened by the Cook County Sheriff or others). In response 

to the actions of the credit card companies, Ferrer admitted that Backpage devised means to 

deceive the credit card companies as to the source of credit card charges submitted in payment 

for Backpage.com services and to continue receiving payments for those ads. 

As part of its plea agreement, Backpage agreed, among other things, to cease operations 

and its web site was shut down. Because Backpage is no longer an extant entity, and given the 

crippling restitution owed by the company and its principals, which effectively eliminates any

possibility that the company could arise from the ashes, the Court dismissed the suit against the 

Sheriff as moot. 

In the wake of Backpage’s demise, Sheriff Dart filed this motion seeking sanctions 

against Backpage and its attorneys. The premise of the Sheriff’s motion is that throughout the 

litigation, Backpage and its attorneys falsely claimed that Backpage “prohibits illegal content 

and activity on its website and takes extensive steps to prevent such misuse” and that the credit 

card companies stopped doing business with Backpage because of the Sheriff’s actions rather 

than the unlawful nature of Backpage’s business. The Sheriff seeks reimbursement of its 

attorneys’ fees and costs incurred in this litigation, including on appeal and in petitioning for 

certiorari. In response to the motion, Backpage’s counsel, Davis Wright Tremaine LLP (“DWT”) 

and Schiff Hardin LLP,3 moved to withdraw from their representation of Backpage.com; that 

motion was granted. Backpage was given additional time to respond to the motion but has not 

done so; DWT, however, has responded. 

Based on the guilty pleas entered by Backpage and Ferrer, its CEO, there is no question 

that Backpage has, from the filing of its complaint, knowingly presented false information to this 

Court in support of its claim against Sheriff Dart. A brief comparison of some of the principal 

claims asserted by Backpage in this litigation and admissions by Backpage and Ferrer in their 

plea agreements suffices to make the point incontrovertible: 

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Backpage’s Original Complaint Backpage/Ferrer Plea Admissions (¶ 10) 

¶ 23: “Backpage.com prohibits illegal 

content and activity on its website 

and takes extensive steps to prevent 

such misuse . . . .” 

“The great majority of these advertisements [for ‘adult’ 

and ‘escort’ services] are, in fact, advertisements for 

prostitution services (which are not protected by the 

First Amendment and which are illegal in 49 states and 

in much of Nevada).” 

¶ 25: “Backpage.com also takes 

extensive measures to police user 

posts.” 

Backpage worked “to find ways to knowingly facilitate 

the state-law prostitution crimes being committed by 

Backpage’s customers.” 

¶¶ 19, 34: “Users provide all the 

content for ads they post on 

Backpage.com”; Sheriff’s actions 

violate Section 230 of the 

Communications Decency Act 

because Backpage is merely a 

publisher of content provided by 

others. 

Backpage “utilized ‘moderation’ processes through 

which [it] would remove terms and pictures that were 

particularly indicative of prostitution and then publish a 

revised version of the ad. Such editing did not, of 

course, change the essential nature of the illegal service 

being offered in the ad—it was merely intended to 

create a veneer of deniability for Backpage.” 

¶ 44: “[B]ecause of Sheriff Dart’s 

actions, Backpage.com is barred from 

credit card services of any of the three 

largest card companies . . . .” 

“Over time, many banks, credit card companies, and 

other financial institutions refused to do business with 

Backpage due to the illegal nature of its business.” 

¶ 45: “Sheriff Dart’s actions . . . have 

cut off nearly all revenue to 

Backpage.com (leaving only Bitcoin 

as a means of payment, which 

accounts for a small percentage of 

purchases on the website).” 

Backpage “found ways to fool credit card companies 

into believing that Backpage-associated charges were 

being incurred on different websites, to route 

Backpage-related payments sand proceeds through 

bank accounts held in the name of seemingly 

unconnected entities” 

These false statements are plainly material to issues implicated by Backpage.com’s 

complaint and motions for preliminary injunctive relief—that is why Backpage made them. Its 

complaint put at issue whether speech on the site was protected, whether Backpage.com policed, 

rather than promoted, unlawful solicitations, and otherwise merely published, rather than 

authored, content in the ads (a claim critical to Backpage’s assertion that the Communications 

Decency Act shielded its actions from liability). The question of whether Dart’s actions caused 

the credit card companies to stop accepting payments from Backpage.com was a central question 

on which the viability of Backpage’s claim against Dart rested; Backpage’s admission that it was 

the unlawful nature of Backpage’s adult advertising that prompted the card companies to stop 

accepting payments (rather than a threat of investigation by Dart) was utterly at odds with its 

contentions in this Court and the Court of Appeals; that even Backpage acknowledged that there 

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5 

The Sheriff has infringed Backpage’s First Amendment rights by 

accurately advising credit card companies (two of them, anyway)

that the great majority of ads on Backpage’s adult services web site 

are for prostitution and that Backpage routinely doctors those ads 

to conceal their unlawful nature. When told about these facts by 

Sheriff Dart, those credit card providers decided that they did not 

want to be publicly linked to a company like Backpage and 

stopped accepting payments for ads placed on Backpage.com. Or 

at least they thought they had stopped accepting such payments. In 

reality, however, Backpage.com devised ways to deceive the card

companies about its continued use of their cards as payment for

access to its adult services advertising. It also devised additional 

means to collect payments for those ads and continued to receive 

substantial revenues from such advertising. 

That complaint would have made the prospect of obtaining injunctive relief substantially more 

difficult. 

To be clear, however, the Court’s ruling does not rest on a determination that Backpage’s 

misrepresentations render its claim frivolous; the point is merely that the misrepresentations 

involved facts that were, or would have been, material to the evaluation of Backpage’s claim for 

preliminary injunctive relief in this Court and in the Court of Appeals. Even if Backpage could 

have prevailed absent its misrepresentations, it nevertheless made false statements that were 

material, even if not dispositive, and in doing so defrauded this Court. Sanctions against 

Backpage are unquestionably warranted. 

That Backpage and its principals acted in bad faith, however, does not compel the 

conclusion that its attorneys did so as well. Although his briefs frequently employ the 

formulation that “Backpage and its attorneys” lied to the court, elsewhere the Sheriff stops short 

of definitively claiming that Backpage’s attorneys actually knew that Backpage was lying about 

its conduct and the effects of Dart’s conduct. See, e.g., Motion at 11 (“Backpage’s counsel may 

was no causality between threat and the actions of the card companies may have prompted the 

Court of Appeals to reconsider its view that “[t]he causality is obvious.” 807 F.3d at 233. And, of 

course, Backpage’s claim that its inability to accept credit card payments threatened its very

existence was central to the issue of irreparable harm; that it found ways to work around that 

limitation would have further confirmed this Court’s view that it had not established that 

irreparable harm was likely, and certainly would have challenged the Court of Appeals’ 

conclusion that Backpage “was bound” to suffer irreparable harm.

The Court therefore has no difficulty in concluding that in conducting this litigation, 

Backpage.com knowingly took positions that were factually unsupported and made numerous 

false statements to advance its claim against Sheriff Dart. Indeed, it is difficult to imagine how 

Backpage.com could have advanced its claim if, in lieu of the false allegations identified above,

it had included the admissions it made in its plea agreement. The complaint would then have 

read something like this: 

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well have known all along about their client’s lies”). Whether or not its counsel had actual 

knowledge of the company’s fraud, however, Backpage contends that Backpage’s lawyers 

actively avoided the truth by sticking their heads in the sand.

For its part, DWT maintains that there is no basis to impose sanctions on attorneys who

successfully advanced constitutional claims on behalf of Backpage. The Sheriff, they argue, is 

merely reasserting his discredited “illegality” defense. They further deny that the Sheriff has 

demonstrated that they knew that Carl Ferrer “would change and contradict averments he made 

not just in this case but in a half dozen others.” 

The first argument can be dispatched essentially for the reasons already set forth. If the 

Sheriff’s motion focused only on Backpage’s admission that “the great majority” of ads on its 

adult services site were for prostitution, DWT might have a point, because the Seventh Circuit‘s 

opinion seems to hold that the presence of even a single lawful ad on Backpage’s adult services 

site would have made the site a protected “avenue of expression of ideas and opinions entitled to 

First Amendment protection.” 807 F.3d at 231-32. But the misrepresentations by Backpage go 

not only to the extent to which the Backpage adult services site served as a medium for unlawful 

solicitation of criminal conduct but also to elements such as causation and irreparable harm,

which the court of appeals considered and resolved in Backpage.com’s favor. Knowing that 

Backpage had successfully devised work arounds to compensate for the loss of credit card 

transactions, for example, would plainly be material to the question of irreparable harm. So, too,

Backpage’s admission that Dart’s “threats” had not caused the card companies to disassociate 

themselves from Backpage. Id. at 233. There is, in short, more to Backpage’s misrepresentations 

than the viability of the Sheriff’s “illegality defense.” And even if there weren’t, that would not 

give Backpage, or its counsel, the green light to make false statements in an effort to cast the 

company in a better light generally. 

DWT’s second argument, however, is more substantial. Pointing out that the Sheriff 

relies entirely on the admissions of Backpage and Ferrer in their plea agreements to establish the 

falsity of the positions taken in this litigation, DWT essentially asks why it was not entitled to 

rely on the prior version of the facts that their client supplied to them. They point not only to fact 

that Ferrer supplied a declaration in support of Backpage’s motion for preliminary injunctive 

relief but also to the other, consistent, declarations he made in other cases in which similar issues 

were being litigated. 

In answer, Backpage points to what it calls the “red flags” that also surfaced before and 

during the litigation that should have put DWT on notice that facts alleged in the complaint were 

not accurate. Most of these warning signals relate to the congressional investigation that was 

going forward during the pendency of this case, but the fact that Backpage’s attorneys knew 

about ongoing investigations does not demonstrate that Backpage’s attorneys knew that the 

claims of Backpage’s executives about its practices were false. Plainly, there was a lot of smoke, 

and Backpage’s attorneys should have been looking closely to see if there was a fire, but as the 

most prominent incident on which the Sheriff focuses—the “Red Beauty”—posting—suggests, 

DWT appears to have looked closely at the purportedly revealing information. 

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The “Red Beauty” incident involved an undercover posting to Backpage’s adult services 

site. An investigator in the Sheriff’s office reported that he had created an online post advertising 

the services of a girl between 14 and 18 years old who had just graduated from grade school. 

According to the investigator’s report, he paid for and submitted the ad but when it posted, the 

references to grade school and the age range of 14-18 had been deleted. The Sheriff cites this 

incident as a smoking gun that revealed the “moderation” practices Backpage employed to 

conceal the fact that ads were for child prostitution. When the incident was revealed in

discovery, however, DWT pointed out that the dates on the documents appeared to suggest that 

the version that had purportedly been edited was dated a day before the version that had

purportedly been the original posting. DWT also pointed out that the investigator’s report further 

muddied the waters because it documented that the investigator had gone back online and was, in 

fact, able to post the ad with the original language. Given the ambiguities, if this incident 

demonstrates anything, it is that the Sheriff has not come up with the smoking gun showing that 

DWT knew, or was deliberately avoiding, the truth about Backpage’s practices. 

The premise of the Sheriff’s motion for sanctions against Backpage’s counsel is 

essentially that counsel failed to discover the transgressions that Backpage and Ferrer admitted to 

when they pled guilty. Even accepting arguendo that there was reason to doubt representations 

that Ferrer and other Backpage officials made to them, the Sheriff’s motion falls short in 

documenting any instance in which counsel (as distinguished from Backpage) made or facilitated 

a specific representation of fact that was known to be untrue when it was made. And when 

Backpage and Ferrer acknowledged under oath that their prior representations about Backpage’s 

operation and content of its “adult” classified section were false, DWT promptly moved to 

withdraw as counsel. Based on the record presented, the Court does not find a sufficient basis to 

conclude that DWT’s conduct warrants the imposition of sanctions or the conduct of an

evidentiary hearing. 

* * * * *

For the reasons set forth above, the Court concludes that during this litigation, Backpage 

knowingly and repeatedly made false representations of fact concerning relevant aspects of its 

operations. This fraudulent conduct has been pervasive throughout this law suit. Federal courts 

have the inherent power “to punish by an award of reasonable attorneys’ fees or other monetary 

sanction” misconduct by parties and attorneys appearing before it. Carr v. Tillery, 591 F.3d 909, 

919 (7th Cir. 2010) (citing Chambers v. NASCO, Inc., 501 U.S. 32, 46 (1991)). In Chambers the 

Supreme Court recognized that where a party’s “entire course of conduct throughout the lawsuit 

evidenced bad faith and an attempt to perpetrate a fraud on the court, and the conduct 

sanctionable under the Rules was intertwined within conduct that only the inherent power could 

address,” it is appropriate to rely principally on the court’s inherent power to address the conduct 

in its entirety rather than first applying Rules and statutes containing sanctioning provisions to 

discrete occurrences. Chambers, 501 U.S. at 50-51. 

The Court recognizes, however, that the efficacy of a sanctions award at this juncture is

compromised by the termination of Backpage’s operations and the criminal sanctions that will 

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Date: March 25, 2018 John J. Tharp, Jr. 

United States District Judge 

4

 Sentencing is presently scheduled for July 9, 2019. 

likely be imposed as a result of its conviction for money laundering conspiracy.4 Backpage faces 

significant fines and, pursuant to its plea agreement, potential restitution payments up to $500 

million. It appears, in short, unlikely that a payment of sanctions will ever be collectible from 

Backpage. There is little reason, therefore, to engage in protracted proceedings to determine the 

appropriate monetary sanction to impose. Given the centrality of Backpage’s fraudulent conduct 

in this litigation, the Court has no difficulty concluding that Backpage’s conduct has resulted in 

substantial attorneys’ fees and litigation costs to the Sheriff measured in the hundreds of

thousands of dollars that would not have been required absent Backpage’s fraudulent 

representations. The Court therefore orders Backpage to pay to the Sheriff of Cook County a 

sanction in the amount of $250,000. This award is, however, subordinate to all criminal fines and 

restitution awards imposed as part of Backpage’s sentence. Accordingly, the Sheriff may not 

attempt to collect the award until Backpage’s sentence is final.

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