UNITED STATES DISTRICT COURT

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UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

_________________

United States of America, )

) No. 2:18-cr-00422-DJH

Plaintiff, )

)

vs. ) Phoenix, Arizona

) October 26, 2023

Michael Lacey, et al. ) 10:05 a.m.

)

Defendants. )

_____________________________ )

BEFORE: THE HONORABLE DIANE J. HUMETEWA, JUDGE

REPORTER'S TRANSCRIPT OF PROCEEDINGS

TRIAL - DAY 25 - A.M. SESSION

Official Court Reporter:

Hilda Elizabeth Lopez, RMR, FCRR

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

401 West Washington Street, Spc 30

Phoenix, Arizona 85003-2151

(602) 322-7256

Proceedings Reported by Stenographic Court Reporter

Transcript Prepared by Computer-Aided Transcription

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A P P E A R A N C E S

For the Government:

UNITED STATES ATTORNEY'S OFFICE

By: Mr. Kevin M. Rapp, Esq.

Mr. Peter S. Kozinets, Esq.

Mr. Andrew C. Stone, Esq.

Ms. Margaret Wu Perlmeter, Esq.

40 North Central Avenue, Suite 1200

Phoenix, Arizona 85004

kevin.rapp@usdoj.gov

peter.kozinets@usdoj.gov

andrew.stone@usdoj.gov

margaret.perlmeter@usdoj.gov

For the Government:

UNITED STATES DEPARTMENT OF JUSTICE

By: Mr. Austin Berry, Esq.

1301 New York Avenue, NW, 11th Floor

Washington, DC 20005

austin.berry2@usdoj.gov

For the Defendant Michael Lacey:

LIPSITZ GREEN SCIME CAMBRIA, L.L.P.

By: Mr. Paul J. Cambria, Jr., Esq.

42 Delaware Avenue, Suite 120

Buffalo, NY 14202

pcambria@lglaw.com

For the Defendant Scott Spear:

FEDER LAW OFFICE, P.A.

By: Mr. Bruce S. Feder, Esq.

2930 East Camelback Road, Suite 160

Phoenix, AZ 85016

bf@federlawpa.com

- and -

KESSLER LAW OFFICE

By: Mr. Eric Walter Kessler, Esq.

6720 N. Scottsdale Road, Suite 210

Scottsdale, AZ 85253

eric.kesslerlaw@gmail.com

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For the Defendant John Brunst:

BIRD MARELLA BOXER WOLPERT NESSIM DROOKS

LINCENBERG & RHOW, P.C.

By: Mr. Gopi K. Panchapakesan, Esq.

Mr. Gary S. Lincenberg, Esq.

1875 Century Park E, Suite 2300

Los Angeles, CA 90067

gpanchapakesan@birdmarella.com

glincenberg@birdmarella.com

For the Defendant Andrew Padilla:

DAVID EISENBERG, P.L.C.

By: Mr. David S. Eisenberg, Esq.

3550 North Central Avenue, Suite 1155

Phoenix, AZ 85012

david@deisenbergplc.com

For the Defendant Joye Vaught:

JOY BERTRAND, ESQ., L.L.C.

By: Ms. Joy M. Bertrand, Esq.

P.O. Box 2734

Scottsdale, AZ 85252

joy@joybertrandlaw.com

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P R O C E E D I N G S

(Proceedings commence at 10:05 a.m.)

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

Good morning, everyone. I'm going to go through, I hope you'll

be able to follow along, it's essentially what you had been

working off of and your strikes and redlines.

I've revised two instructions, and they will be handed

to you shortly and then hopefully we'll be able to, at the end

of this, provide to you copies, hard copies of the revised

instructions.

I don't think we have to spend a lot of time on the

revised, I'm sorry, the stipulated proposed standard

instructions, but nevertheless, I want to go through them to

make sure that they are in the order that you agreed to.

We're going to start out with the 3.9 instruction,

"Testimony of Witnesses Involving Special Circumstances," and

this is the immunity benefits and accomplice plea, and so this

one will just be the two paragraphs, "You have heard testimony

from Carl Ferrer and Dan Hyer, witnesses who have pled guilty

to a crime arising out of the same events," so on and so forth.

I've put -- I've included both of them, Carl Ferrer and Hyer,

in that. Okay. Thank you. And so there really is nothing, I

don't think, substantive to discuss regarding that 3.9.

MR. STONE: Your Honor, the only -- is it okay if we

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remain seated?

THE COURT: Yes. Yes. Yes.

MR. STONE: The only comment from the United States on

this is in the Model instruction there's a number of different

options.

THE COURT: Yes, I know, and I didn't think those

options really applied.

MR. STONE: And the defense chose, "received benefits"

and "favored treatment." We're okay with "benefits" because it

goes with the cooperation agreement, but "favored treatment,"

I'm not sure really what that means here. It's, you know, two

defendants who pled guilty. The other defendants could have

had the opportunity to plead guilty. I don't really think that

that "favored treatment" clause applies, you know. "Received

benefits," that's fine, and the second paragraph would be fine

too, but that's the only issue from the United States.

THE COURT: And that's precisely why I only included

the two paragraphs. The second being -- well, let me read the

entire instruction, "You've heard testimony from Carl Ferrer

and Dan Hyer, witnesses who pled to a crime arising out of the

same events for which the defendants are on trial. These

guilty pleas are not evidence against the defendants and you

may consider Carl Ferrer and Dan Hyer's pleas only in

determining their believability.

For these reasons, in evaluating the testimony of

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Carl Ferrer and Dan Hyer, you should consider the extent to

which or whether their testimony" have -- "may have been

influenced by their pleas." In addition, you should examine

the testimony of Carl Ferrer and Dan Hyer with greater caution

than that of other witnesses."

MR. LINCENBERG: The Court has, sounds like, gone

further than even with what the government agrees should be in.

So the part you deleted from what we proposed is, "You've heard

testimony from Ferrer and Hyer, witnesses who received favored

treatment and benefits from the government in connection with

this case and pleaded guilty to a crime." And where the parties

are in dispute is not whether that should be included. It's

that we would like both "benefits" and "favored treatment"

language included, because "favored treatment" I see as being

related to, for example, 5K, and "benefits" being, you know,

being able to keep the house.

The government's view is, and I agree with them that

what is "benefits" versus "favored treatment," you know, they

could both apply to the same, but the reason why this language

is in the draft instruction is because it covers the bases. We

did not include "compensation" because we don't see evidence of

compensation, but we think it's important that it be included,

both "received benefits" and "favored treatment."

THE COURT: Well, I suppose a juror could view

"favored treatment" and "benefits" as keeping his home or

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something to that effect. We will re-insert that language.

MR. STONE: Your Honor, I just think we need one or

the other. I'd go with "benefits."

MR. LINCENBERG: That's our dispute. They want one or

the other. We think it should be both because it seems to me

that one covers one thing and the other covers the other thing.

THE COURT: Well, I don't think that that really --

there's a distinction unless you then further define what the

treatment or the benefits are.

MR. LINCENBERG: Well, that part is for argument.

THE COURT: In any event, I would just say, "received

favored treatment" and remove "and benefits." We will word it

that way.

3.14, "Opinion Evidence, Expert Witness." The only

one was this expert Kimberly Mehlman-Orozco. I didn't clarify

in the exhibit what her expert opinion was in terms of a sort

of a summary. I think it's best to leave it to the jury. But

if you propose some characterization of her testimony or what

she was testifying about, then you should share that with me,

but otherwise it simply just says, "You have heard testimony

from Kimberly Mehlman-Orozco, who testified about her opinions

and the reason for those opinions," and then the standard

language.

Any objection?

MS. BERTRAND: No objection, Your Honor.

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MR. LINCENBERG: And Your Honor, just so I'm following

the Court, I'm assuming, maybe I shouldn't assume, when the

Court was dealing with the credibility instructions and the

Court went over 3.9, there is no objection to 3.8. I just

wanted to make sure that that's in the Court's instructions,

the impeachment instruction.

THE COURT: Did you propose that?

MR. LINCENBERG: Yes. That's at page 16 of the

redline that we filed. What we e-mailed to the Court, the

redline of 1896, 3.8, Impeachment Evidence.

THE COURT: I'll come back to that. Is there an

objection to the impeachment?

MR. STONE: No objection.

THE COURT: All right. "Dual Role Testimony." I've

kept in there 3.15. Any objection to that?

MR. STONE: Your Honor, I don't think there was any

dual role testimony.

THE COURT: Well, I guess the question that I -- that

I had when I looked at this proposed instruction was, you had

in some instances law enforcement officers who quasi testified

about their experience and role of law enforcement officers,

and sort of giving a quasi expert opinion, but if you disagree,

then tell me now and I can remove this.

MR. LINCENBERG: And Your Honor, from the defense

point of view --

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THE COURT: Well, let me have government respond

first.

MR. STONE: Your Honor, I don't think we need it

because I think law enforcement testified to specific -- well,

they testified about their experience, all law enforcement

officers do, and then specifically about their investigation of

prostitution and pimping offense, and what certain code words

means, but that's all based on their experience.

It's very different, I think, than the dual role

testimony that you see in some of the cases where there is a

bifurcation for law enforcement who then talks about how drug

deals go down and really gets into the nitty gritty on those

types of drug offenses, so I think this is different than the

dual role testimony you see in some of the Ninth Circuit cases.

THE COURT: All right. Now --

MR. LINCENBERG: Your Honor, this wasn't on any list

that we reviewed. Neither party proposed it. We didn't review

it. I just don't know if any other counsel are going to have

any comments. I think we would just need some time to review

it. We are not proposing it.

THE COURT: Well, if you're not proposing it, then I

would be inclined to remove it. If you have a disagreement

with the government, you can let me know. Any objection to

removing "Dual Role" --

MR. LINCENBERG: May I have a moment to ask counsel?

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THE COURT: I know. I was asking them.

MR. LINCENBERG: I was just going to consult.

THE COURT: Sure.

MR. LINCENBERG: Thank you, Your Honor, no objection

to remove it.

THE COURT: "Charts and Summaries," 3.16, "Not

Admitted into Evidence," were there charts and summaries not

admitted?

MR. LINCENBERG: Your Honor, our understanding -- were

you looking to the government?

THE COURT: Yes, first.

MR. STONE: Yes, I believe there were some

demonstratives that were admitted, or summaries.

THE COURT: Well, I'm asking about the not admitted

charts and summaries, 3.16. There's 3.17 that deals with

admitted charts and summaries.

MR. STONE: I believe we used demonstrative exhibits

that were not admitted, so that -- so this instruction would

apply to those types of exhibits.

THE COURT: Any objection?

MR. PANCHAPAKESAN: No objection. My understanding,

Your Honor, is with Mr. Thai there were those flowcharts that

were admitted only for demonstrative purposes. They weren't

admitted into evidence, so 3.16 would apply to those.

MR. STONE: I can respond to that. That's incorrect.

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They were admitted as demonstrative. They were just admitted

into evidence as exhibits, as summary exhibits are permitted to

be.

THE COURT: So 3.16 will remain.

MR. PANCHAPAKESAN: We have a disagreement about that.

I thought the flowchart, it's 1479, that was for demonstrative

purposes. I think some of these charts like revenue and owner

received, that may be an appropriate summary exhibit that's in

evidence, but I don't remember the flowchart being admitted.

THE COURT: It was admitted.

MR. PANCHAPAKESAN: For demonstrative purposes only.

THE COURT: What was the exhibit number?

MR. PANCHAPAKESAN: I think it was 1479.

MR. STONE: It was admitted for substantive purposes,

and there's a court order that allows it to be admitted before

Your Honor was even on the case back in 2021.

THE COURT: We do have it as admitted. So both 3.16

and 3.17 will be included.

Then we move to 6.1, "Duty of Jury to Find Facts and

Follow Law."

6.2 -- -

MR. STONE: Your Honor, if I may, are we not including

4.8, 4.9 and 4.11? Those are knowingly at --

THE COURT: Let me do it in the order that -- because

I have reviewed some of those intent areas, and I will explain

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to you why.

MR. STONE: Understood.

THE COURT: Let me go through these preliminary

instructions first, and then I'm going to go back to your

contested instructions. I want to get through these first.

MR. STONE: Got it. Okay.

THE COURT: So 6.2, "Charge Against Defendant Not

Evidence."

6.3, "Defendant's Decision Not to Testify."

6.5, "Reasonable Doubt-Defined."

6.6, "What Is Evidence."

6.7, "What Is Not Evidence."

6.8, "Direct and Circumstantial Evidence."

6.9, "Credibility of Witnesses."

6.10, Activities Not Charged."

Is there a necessity for an "Activities Not Charged"

instruction? The instruction reads, "You are here only to

determine whether the defendants are guilty or not guilty of

the charges in the indictment. The defendants are not on trial

for any conduct or offense not charged in the indictment."

Any reason to have that in, Mr. Stone?

MR. STONE: We're talking -- we were just talking

amongst ourselves that it may go to the fact that they are not

charged for sex trafficking, but I know Your Honor is going to

give a limiting instruction, so perhaps we don't need this one.

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THE COURT: Mr. Lincenberg.

MR. LINCENBERG: We think it should be included

because there is lots of evidence of uncharged stuff, including

sex trafficking and other examples.

THE COURT: Well, what are the other examples?

MR. LINCENBERG: Well, the other examples could be

considered bank fraud, could be considered discussion of

whether Mr. Lacey filed his tax returns on that wire. There is

a lot of different references. I think it's more cautious to

give this instruction.

THE COURT: We'll leave the instruction in.

6.13 "Separate Consideration of Multiple CountsMultiple Defendants."

6.18, "On or About-Defined."

6.19, "Duty to Deliberate."

6.20, "Consideration of Evidence" and "Conduct of the

Jury."

6.21, "Use of Notes."

6.22, "Jury Consideration of Punishment."

6.23, "Verdict Form," and I think we do have that

finalized verdict form. If it has not been provided to you, it

will shortly.

6.24, "Communication with Court."

Now, let me turn to then the substantive instructions.

I want to, let's see, first, the proposed "knowingly"

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instruction, I'm going to move that instruction into the

substantive counts of conspiracy and the money laundering so

that it doesn't just sit out on its own and they don't know how

to apply it, and so I'll explain to you how I'm going to go

about that when I cover the conspiracy instruction.

I am going to go to now what is the United States'

Proposed Instruction on Deliberate Ignorance. This is the

proposed 4.9.

MR. LINCENBERG: Your Honor, on the "knowingly,"

should we reserve argument until the Court gets to it?

THE COURT: Yes, please, let me take it in the order

that I have outlined it in my revised instructions. I'm not

going to cover Conspiracy yet, and I will tell you when I'm

going to get there.

So let's look at the Deliberate Ignorance instruction

proposed by the government. I'm not inclined to accept the

proposed instruction because by my view of the government's

theory and evidence, all of the defendants knew that they were

posting sex-for-money ads, and so the evidence and testimony --

the argument I've heard so far is that all of the defendants

knew and scrubbed the ads, and so I don't think the Deliberate

Ignorance instruction applies.

So if you wish to make a record you may, but I've read

the rationale as to why you proposed it, but I'm not inclined

to give it.

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MR. STONE: I think, Your Honor, I understand your

position. I would say a couple things on it. One, it can be

given in specific intent crimes. There's case law on that.

Asefi was the one we cited, 1626-3 at 25. That's the document.

It's an argument that that's an alternative to actual

knowledge, even with specific intent crimes, and so it doesn't

risk the lessening the state of mind that a jury must find.

There is case law on that as well.

And we certainly agree that there is plenty of

evidence for the jury to find that these defendants knew and

had specific intent to promote or facilitate the promotion of

these business enterprises involving prostitution offenses, but

that doesn't foreclose the Court from providing this

instruction as an alternative as well.

So if defendants argue in their close that they

didn't, you know, their clients weren't aware of these ads

despite all the evidence that has come out in during trial,

then the jury could find that they were deliberately ignorant

on that, and there is case law that would support that.

THE COURT: Well, again, by my viewing of the

testimony and the evidence and the arguments, I think it's

fairly clear what the government's theory of the case is.

And so defense wish to be heard on the objection?

MR. PANCHAPAKESAN: Your Honor, we agree with the

Court's view. I am happy to --

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THE COURT: I'm not going to give it. There will be

no Deliberate Ignorance instruction.

Let me turn to the defendants' proposed instruction on

Advice of Counsel, 4.11, we've gone through this almost every

other day, and so for all of the reasons in the record I'm not

going to give it.

Do you wish to be heard, Mr. Lincenberg,

Mr. Panchapakesan?

MR. LINCENBERG: Your Honor, we didn't propose it, and

so unless a different attorney would like to be heard on it we,

submit on that.

THE COURT: Yes, it's a defense proposed instruction,

so I wanted to make the record clear we're not giving it.

MR. LINCENBERG: Right. I was just saying -- right.

I was saying we didn't physically propose it. I was just

turning it over.

THE COURT: Anybody else want to be heard? All right.

The defendants' proposed instruction on Mere Presence. Here

too, the Court finds that this is not necessary because the

jury will be instructed on all of the elements of the alleged

charges, and so I -- the government's objection is well taken.

Do you wish to be further heard?

MR. LINCENBERG: Yes, Your Honor.

THE COURT: Yes.

MR. LINCENBERG: We think it's an appropriate

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instruction. I think it probably is worded better just to say

"Mere knowledge." The instruction that reads, "Mere presence

at the scene of the crime or mere knowledge that a crime is

being committed is not sufficient." I think it should just

read "Mere knowledge." But this case does involve, you know,

and particularly speaking on behalf my client, this question

that the jurors may have, if they believe that a crime was

occurring, and the government is trying to acknowledge because

of budget meetings and so forth.

But if they don't believe that my client was involved

in any promotion or facilitating activity, if they say: Well,

maybe he knew, maybe he didn't know, I think it's important for

the jury to hear that mere knowledge that a crime is being

committed is not sufficient to establish that the defendant

committed it.

MR. STONE: And that's why we have the Specific Intent

instruction, which would protect Mr. Lincenberg's client for

the exact same argument.

THE COURT: And I would agree with that because you

not only have "Specific Intent" in the instructions, and you

also have the "knowingly" in other instructions, and so I think

we're well covered in terms of that. So the "Mere presence"

instruction will not --

MR. FEDER: Note our objection on behalf of Mr. Spear.

We also want the "Mere presence," especially him, because of

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the lack of evidence essentially that after moderation is taken

over by Liz McDougall and others, and the aggregation has ended

as of 2012 and some other assertions by the government,

Mr. Spear is involved very little after that, so in particular

it would apply to him.

THE COURT: Your objection is noted.

MR. CAMBRIA: May we be deemed to join in all the

objections, Your Honor --

THE COURT: Yes.

MR. CAMBRIA: -- so that we don't all have to repeat?

MR. EISENBERG: I agree with that. David Eisenberg.

I agree with that.

THE COURT: Did you hear that, Hilda?

THE REPORTER: Yes.

THE COURT: All right. Let me go to the proposed

Conspiracy instruction. Your instructions are fairly the same

with the exception of the government's continuing argument

regarding whether or not the objects should be modified by

"illegal."

Again, I think we had this argument early on in the

case, and I went back and looked at what was argued and it

appears to me that under the Kaplan case, the additional

guidance there is that a conspiracy is defined as a combination

of two or more persons to accomplish some unlawful purpose or

some lawful purpose by unlawful means. And so because of that,

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I think it is not necessary to include "illegal," and you

certainly -- the defendants can make a record. You've posited

before not only in a prior earlier session, but as well in the

motion for acquittal.

So if you wish to make a record, that's fine.

MR. PANCHAPAKESAN: So for the record, I believe the

U.S. vs. Manarite case, 44 F.3d 1407, states that the object

has to constitute a federal offense.

Our view, of course, is that the indictment, I believe

the object of the conspiracy charge, it's at Docket 230 at

paragraph 190 is -- paragraph 197 is to obtain money, which is

not a federal offense.

The other aspect of this where this sort of pops up is

I think in the U.S.'s revisions to the unanimity requirement on

the conspiracy count, they revised it to say, quote, "Namely,

to make money by promoting or facilitating the promotion of any

business enterprise involving prostitution offenses," and I

think that is problematic because that, as stated, that's not a

federal offense. It's not an object that would form the basis

for a conspiracy, so that's the other part where it pops up.

THE COURT: Mr. Stone, do you wish to be heard?

MR. STONE: We agree with Your Honor. And you've

already given preliminary instructions here where you didn't

read it, and we think any modifications to those are confusing

and shouldn't be done. I think any of the instructions given

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now should conform to what has already being read to the jury.

THE COURT: Well, I am not necessarily making my

ruling based on that. My sense is they never received the

preliminary instructions, and I am sure they have long

forgotten them by now, some of them anyway. By some

instructions. I didn't mean some of the jurors.

In any event, pursuant to Kaplan, I am going to remove

the "illegal object," adopt the United States' Proposed

Instruction 11.1, the Conspiracy Elements.

MR. PANCHAPAKESAN: Only other aspect to that on 11.1

is tying to the 50 ads. I don't know if the Court has made its

determination on that, but if not, I'd like to be heard.

THE COURT: Is this your prior argument in the

preliminary instructions that you provided?

MR. PANCHAPAKESAN: It is, and then on Rule 29, of

course, and the argument ties to Docket 946 at page 13, the

prior court order about the scope of the conspiracy being tide

to the 50 ads because, A, that's what we are on notice of is

it's a conspiracy to violate the Travel Act in 50 instances;

and B --

THE COURT: Let me shortcut you there because I was

reminded when I was going through this, there were two kinds of

proposed modifications. Some of them were, I would say,

grammatical, stylistic, others were more substantive legal

issues. And so to the extent, I was reminded I adopted some of

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the, what I would say stylistic grammatical content. Which --

so for example, in the first paragraph of the defendants'

proposed instruction, it says -- let me go to the second

paragraph which is the better example. "First, beginning in or

around 2004 and ending on or about April 2018, there was an

agreement between two or more persons to commit at least one

Travel Act offense as charged in Counts 2-51."

And then it goes on further to say, "by promoting or

facilitating the promotion of a business enterprise or

enterprises involving prostitution."

So I adopted those types of stylistic changes because

it reminds the jury a little bit more about the focus of this

conspiracy charge, and so those types of grammatical or

stylistic things I adopted from the defendants, but I am going

to remove the reference to "illegal object." Does that make

sense? Do you follow along?

MR. STONE: Yes, Your Honor. What about the unanimity

requirement?

THE COURT: Let me get there. I am just covering

11.1.

MR. STONE: May I be heard on that issue?

THE COURT: On the grammatical issue?

MR. STONE: Generally about the conspiracy is that one

of the disagreements between the United States and the

defendants is that they continue to posit that this conspiracy

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was, you know, tide to these 50 counts, and so the time period

was 2013 to 2018, and I think Your Honor has made clear that

that's not the case. This was charged as a 14-year conspiracy

from 2004 to 2018, and conduct that occurred before 2013 is

clearly relevant, and that's how conspiracies work is they can

expand longer than the statute of limitations for substantive

crimes.

So that's just noting what I think is an issue that

has been decided, but within Defendants' Proposed Instructions

it keeps coming up.

THE COURT: I guess I'm a little bit confused because

we have the "on or about" instruction, and then we have the

instruction here, the Conspiracy Elements that says, "First,

beginning in or around 2004."

MR. STONE: I'm okay with this instruction. That was

more of a general comment that I am sure will crop up as we get

to further instructions here.

THE COURT: Okay. Just to be clear, the Court adopted

the stylistic changes of the defendants' Conspiracy 11.1, but

removed the "illegal modifying object." All right.

The unanimity requirement. Because I looked at this

in conjunction with the defendants' proposed 11.3 "Multiple

Conspiracies," I don't think here the defendants have raised

multiple conspiracy defenses, at least I haven't heard them,

and the government, in looking at the indictment, has not

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alleged multiple conspiracies in any way. And so the way that

I read the indictment, it's an ongoing conspiracy. It's one

conspiracy. It's ongoing. And so that for me, I don't think

there's a unanimity requirement instruction that makes sense.

MS. BERTRAND: Your Honor, I'd like to be heard on

that, if I may.

THE COURT: Yes.

MS. BERTRAND: In cases such as this where we have a

conspiracy allegation with Pinkerton liability alleged and then

a series of discrete acts, United States vs. Echeverry,

E-C-H-E-V-E-R-R-Y, 698 F.2d 375, Ninth Circuit, 1983, says it's

plain error to deny a requested unanimity instruction in such

circumstances. It's not that the government has charged

something one way. It's how the jury could perceive it.

And we have a complex set of allegations here with

several moving parts, players coming in and out. Example,

Bill Mercy, the bottom Dollar Bill TER guy, he's in and out of

this case, and there is a potential for the jurors to see this

as not one string of conduct, but several different series of

conduct. And if that's the case, the unanimity instruction is

required.

And I would note that with the site that I made to

Echeverry, this is a little technical, but I just wanted to

make clear about citation, that the Ninth Circuit then came

back with a supplemental opinion that elaborated further on the

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need for this specific type of unanimity instruction, and that

was at 719 F.2d 974, still in 1983.

I think given what the Ninth Circuit has told us about

these specific circumstances with a conspiracy charge then

linked to a series of discrete ads, under which the government

is going to argue with the jury, the other co-conspirators,

alleged co-conspirators, could be found liable under Pinkerton.

The Ninth Circuit requires, and what I would suggest is that at

least, at the least, the jurors should be instructed on the

dates of any conspiracy or conspiracies in which they found

each defendant had participated. But that -- that is my

concern in raising or not giving a unanimity instruction, and

the jury instruction mentioned for this is 7.9 by the Ninth

Circuit standard instructions, but it's just comment. There is

no specific language offered in the comment.

THE COURT: Well, the -- to that end, I guess I am a

little bit confused by the last statement that they should be

instructed as to particular dates. I don't know what you

referred -- what you mean when you refer to that.

MS. BERTRAND: I don't think they should be told what

the dates are. I think they need to agree as to when the

conspiracy started and ended.

THE COURT: Well --

MS. BERTRAND: They have to be unanimous about that.

THE COURT: Well, the indictment charges on or about

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certain year through a certain year, 2018, 2004 to 2018.

MS. BERTRAND: Right.

THE COURT: They are going to get multiple

instructions about the conspiracies, and when they, what time

period they are encompassed. They are also getting, at least

in the form of verdict, a description of the ads and the dates

that they were posted, so I don't know what more they need.

MS. BERTRAND: Well, Your Honor, there is actually

discussion in the case law that says where on or about language

is charge in the indictment regarding the time line of a

conspiracy, that is not sufficient for a jury to adequately

review complex charges such as this.

MR. FEDER: Judge, before you go on, could I add a

little something?

THE COURT: Yes.

MR. FEDER: There was certainly an argument that the

alleged conspiracy from 2004 to roughly 2012 regarding

moderation, TER, et cetera, ended in 2012 when Liz McDougall

took over moderation and aggregation was over with, as Mr. Hyer

discussed, et cetera, and then, and either the conspiracy ended

or it was abandoned by at least Mr. Spear because he was no

longer involved in any of those actions that the government has

made no such a show of. So there's certainly -- the jury could

certainly find that there are two conspiracies, one ending in

roughly 2012 or before, and one going forward after that,

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number one.

Number two, a conspiracy, just because you're getting

payments essentially for the actions of the conspiracy in a

prior time, those are typically not necessarily part of a

conspiracy. So there is a potential statute of limitations

issue here regarding the initial conspiracy -- the initial

alleged conspiracy of 2004, 2012, before the five-year statute

of limitation.

THE COURT: Well, again, and I am happy to hear from

the government, but I also note that Echeverry essentially is

the case that says because you've only alleged one conspiracy.

And I guess to me, I don't know, I don't see evidence of

multiple conspiracies, and that's the problem. I'll let the

government finish.

MR. STONE: And Echeverry is the case we cited for our

point. We just pulled it up, and I think it supports our

position. It's only when there is a genuine possibility of

jury confusion, or that a conviction may occur as a result of

different jurors concluding that the defendant committed

different acts and that there was more than one conspiracy

would be in support of this multiple conspiracies, which we

agree with Your Honor is not necessary, or this unanimity

requirement.

From the opening statement forward, the government has

presented one conspiracy. We broke it down into two phases,

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two stages, of what these defendants are alleged to have done

to make their conspiracy work, and that's a conspiracy to

violate the Travel Act. There was actions done from the

inception to 2010, and there's clearly been a mountain of

evidence about what happened after Craigslist closed down its

adult section, and then they took different actions to maintain

the business and maintain the conspiracy.

So there isn't any confusion for these jurors. It's

been made clear that Dollar Bill and the other super posters

were just one aspect of the first phase of this conspiracy.

So we agree with Your Honor, there isn't any need to

give either the unanimity requirement for 11.1 or the 11.3

Multiple Conspiracy instruction.

MR. FEDER: Can I have a short reply, response,

whatever it would be?

THE COURT: Last -- last word.

MR. FEDER: So there's a case called United States vs.

Dougherty, 867 F.2d. 47, First Circuit, and then kind of a

follow-up, United States v. Wilber, 674 F.3d. 1160, Ninth

Circuit, that talks about multiple conspiracies, and that

essentially is where the conspiracy has been abandoned or has

ended, and there is plenty of evidence.

Notwithstanding what Mr. Stone just said, they are

talking about Craigslist closing the adult section in 2010. By

2012 there has been unequivocal testimony by Ferrer and Hyer

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and others that the alleged actions building up this site, the

aggregation, the moderation practices or lack thereof, Dollar

Bill, TER, et cetera, all had ended by 2012. The five-year

statute from the date of the indictment is March 28th of 2013,

such that whatever conspiracy the government asserts, doesn't

matter what they put in their indictment, whatever they have

asserted has ended by that date.

And I am not sure what they have going forward.

Merely getting payments for what you've created in a conspiracy

that has ended, in my humble opinion, does not -- is not an --

certainly not an ongoing conspiracy and not even a new

conspiracy.

THE COURT: All right. Well, the record has been

made. I am not going to give the unanimity requirements for

the reasons I previously stated.

The -- oh, we got a new instruction. And so for the

same reasons, I am not going to give defendants' proposed 11.3

Multiple Conspiracies instruction. And we've addressed the

issue of whether or not -- let's see, the 11.4, which is the

defendants' proposed Conspiracy, "Knowledge of and Association

With Other Conspirators." They are, again, the same. The

defendants include the insertion of "illegal objects." The

government removes that. And so consistent with my prior

ruling, I'm going to adopt the government's 11.4.

The Pinkerton Charge, again, here the proposed

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instructions were fairly the same, but I think the only change

that I could see were those sort of grammatical types of

changes. So, for example, and certainly let me know if I'm

overlooking something, in the defendants' proposed at the same

element, it says, "First, a member of the conspiracy committed

a Travel Act offense alleged in one of the counts."

The government's reads, "First, a member of the

conspiracy committed the Travel Act offense alleged in that

count."

And so just in terms of that sort of stylistic

revision, what is the government's position?

MR. STONE: We are fine with defendants' proposed

changes.

THE COURT: All right. We will adopt the defendants'

proposed Pinkerton Charge.

Again, same thing with regard to the Pinkerton Charge

as it relates to the money laundering substantive offenses, any

objection to adopting the defendants' with their modified

changes?

MR. STONE: No, Your Honor.

THE COURT: The same thing with the promotional money

laundering charge, the defendants' proposed Pinkerton 11.6,

again, there too it was just simply clarifying what the

particular charge that this conspiracy instruction relates to.

Any objection?

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MR. STONE: No objection.

THE COURT: The Travel Act charges, let me go there

first because there are a couple of questions I have and I will

tell you what I'm inclined to do in terms of changing that.

When I looked at the defendants' charge, I noted that where

there is a description of the state law, you made strikeouts

and modifications to what constitutes the state law violation,

and I am wondering what that was based on because my

recollection is the government proposed the state law

description it was adopting from the particular state's law.

So I don't know if those changes were grammatical or if they

were substantive. And if they were substantive, I want to know

what the statute was that they were drawn from.

For example, you have at, when you're describing

Counts 2, 4, 27 and so on, "concerns prostitution offenses in

violation of the laws of the state of Massachusetts. A

prostitution offense in Massachusetts occurs when, A," and then

you have a person, and you strike out, "engaged, agree." And

then you write, "engages, agrees to engage or offers to

engage." And so you've stricken out some of that language, so

I want to make sure that I know why, and hear from the

government as to whether or not that still tracks the statute,

and you've done that. I want to point out you've done that in

multiple states. Massachusetts -- can't say Massachusetts,

Washington, the same thing. And so --

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MR. PANCHAPAKESAN: My understanding, Your Honor, is

the changes substantively track the underlying statutes, and

that's why the changes were made.

THE COURT: It's a critical issue.

MR. STONE: Your Honor, I confess that I didn't go

back and look at all the statutes after these changes were made

earlier this week, but I remember doing it originally and

looking at all the state statutes. And what I provided, I

thought, was what the language was. A lot of these changes

don't seem to be hugely substantive.

Like the Massachusetts, the first one, it's moving it

from past tense to present tense, I guess. It's eliminating

some of the language in number two, but I don't think it's

changing the meaning.

The Washington statute it eliminated the definition of

"sexual intercourse," and so that seems like an issue, but

if -- if their representation to the Court is that they have

gone back and looked at these statutes and there's a change, I

would be willing to trust them on that.

THE COURT: Well, I guess it's your charge, Mr. Stone.

It's your charge. It's your indictment.

MR. PANCHAPAKESAN: Like for example, Your Honor, in

New York, Section 230.00 is prostitution, "A person is guilty

of prostitution when such person engages or agrees or offers to

engage in sexual conduct with another person in return for a

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fee."

I think that's why we made that change, for example,

just to track the statute.

MR. STONE: Your Honor, let me just revisit my

comments here. In talking to a member of the team who has gone

back very recently and looked at this and confirmed that our

instruction as originally included in, now I am talking

specifically about the Washington statute, "sexual intercourse

means that the sexual organ of the male entered and penetrated

the sexual organ of the female." The defense changes has its

ordinary meaning. So our position would be that it's part of

the Washington state statute for sexual intercourse, and that

should be included.

I guess I don't feel as strongly for what seems to be

sort of line edits from "engaged" and "agree" to "engages" and

"agrees." That's fine. But for the more substantive ones, our

position would be that the government's instructions should

remain.

THE COURT: Well, if they are only modifications in

terms of grammatical or stylistic, I am not going to adopt

those, and so I'll keep with the government's proposed

instructions, at least as to the description of the state law

violation. Because from what I heard Mr. Stone say is that a

member of the team has scrubbed through those statutes, those

state statutes, and then included them in the instruction.

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So I'm hesitant to modify them so just stylistically

for that reason alone. So then I will adopt the proposed

Travel Act instructions.

Now, here are the -- here are the changes that I'm

going to propose, however. I'm going to adopt some of the

defendants' proposed language. Here's where the changes begin.

In the second paragraph which reads, "First, the defendant used

any facility in interstate commerce," I am going to include,

"with the specific intent to promote." I'm going to remove

"manage, establish, carry on" and keep "or facilitate the

promotion." Remove "management, establishment or carrying on."

Continue on with, "of any business enterprise involving

prostitution offenses in violation of the laws of the State in

which they were committed (as specified below)."

And then, "Second, after doing so the defendant

performed," I'm going to take out "or attempted to perform."

Go on to say, "an act that did promote." Remove "manage,

establish carrying on, or facilitate." Remove "the promotion,

management, establishment or carrying on" and say, "of any

business enterprise involving prostitution offenses,

specifically, by publishing on Backpage.com the ads listed in

Counts 2-51 of the indictment."

So here what I am going to do next is insert,

defendants' modified "promote and facilitate" definition. And

let me go to that now. I looked at both of the proposed

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definitions, and I think the government's proposed is really

not -- it's not complete. So with the following modifications,

I will insert this into that -- into a next paragraph after the

paragraph I just read.

So the modification to the defendants' "promote and

facilitate" instruction will read, "In the context of this

Travel Act case, the terms 'to promote' or 'to facilitate the

promotion of' means intentionally helping someone else commit a

prostitution offense in violation of state laws." And I think

that is consistent with Hansen and the other supporting

authorities.

Did you follow along with that?

MR. STONE: I did, Your Honor, and we would object to

one small aspect of it.

THE COURT: And what is the small aspect?

MR. STONE: The aspect is that the Ninth Circuit is

clear that the Travel Act does not require the commission of

the predicate offense. And I believe as Your Honor read that

third paragraph, it suggests, and in fact it's somewhat

explicit, that state law offenses needed to be committed, and

that's just not the law. That's not the law of this case

because the Court has recognized that the Ninth Circuit in

Stafford and Tavelman does not require it. It's only promoting

the unlawful activity with a subsequent overt act in

furtherance of that unlawful activity.

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So there's a separate jury instruction that the United

States proposed, in fact, defense proposed as well, that the

state law offense need not be committed. So I think we need to

be clear in this third paragraph that the underlying state law

offense does not have to have been committed.

MR. PANCHAPAKESAN: Your Honor, our position on that

is that there's a separate instruction on that. And I think,

as the Court observed, to be consistent with the Supreme

Court's decision in Hansen, the Court's language ought to be in

there about what facilitation means.

THE COURT: I will go back and take a look at that, my

modification to "promote and facilitate" before I make that

final decision. I want to be clear that for my own purposes

that it's consistent or there is no inconsistencies with my

modification, and I will let you know. I'll give you a hard

copy of it.

MR. PANCHAPAKESAN: The only other thing I will point

out for the record, Your Honor, on the Travel Act charges, my

understanding based on the Model is that there needs to be a

subsequent overt act as the second element, and I think our

objection, and this is reflected in our modification, is we

don't think that the website just automatically publishing

something is a subsequent act by a given defendant. We think

that ought to be something separate. Maybe it could be an act

in connection with the publishing. It could be another act,

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but the concern is that just because a website publishes

something that's somehow imputed to someone as their act, and

we think the statute requires an actual act on the part of the

defendant separate and apart from something a website might

say.

THE COURT: Let me get through the Travel Act

modifications that I am making and then we can circle back to

that.

So where I left off was after the one, two, third

paragraph, the insertion of the "promote" and "facilitate"

definition will be inserted. We're going to take out that

third substantial step language from the government's proposed

because that's only relevant as to the attempt. I'm going to

strike out, "Jurors do not need to agree unanimously." Well,

that's part of the substantial step.

Then I'm going to insert the "specific intent"

instruction, the "promote or facilitate" instruction, the

"Business enterprise" instruction, and then the "facility in

interstate commerce." Because it all will then just flow

naturally from the Travel Act charge.

MR. LINCENBERG: And Your Honor, when the Court

indicates that you're going to then insert the "specific

intent" instruction, is the Court agreeing with our --

THE COURT: Well, I am going to get there. I'm still

going through the process because there were different

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strikeouts. Let me get to the "specific intent" instruction.

I made modifications to the defendants' proposed

instruction. I can read my writing here. I'm going to begin

with the very last -- oh, okay, thank you -- the last very

portion of the defendants' proposed specific intent defined

instruction. It's going to be modified as follows, "To prove

specific intent, the government must establish that each

defendant in some significant manner associated himself or

herself with the purpose of promoting for facilitating the

promotion of a particular business enterprise involving

prostitution offenses that the defendant knew to be unlawful

under state law."

MR. STONE: Would you mind reading that again, Your

Honor?

THE COURT: Let me point out. There's an error.

Okay. "To prove specific intent, the government must establish

that each defendant in some significant manner associated

himself or herself with the purpose of promoting or

facilitating the promotion of a particular business enterprise

involving prostitution offenses that the defendant knew to be

unlawful under state law."

MR. STONE: May I be heard?

THE COURT: Yes.

MR. STONE: I think that's largely fine. The issue

will be, "a particular business enterprise" as opposed to the

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statutory language of "any business enterprise." That's our

specific intent instruction, which, by the way, was stipulated

to in the first trial. We stipulated to a particular specific

that intent instruction. The Court read that instruction

during the preliminary instructions and we think that that one

really should be given. If there are modifications, it should

still remain the language as the Court read in the preliminary

instructions, which was the last sentence, "specifically

promoting or facilitating the promotion of any business

enterprise involved in prostitution." That's how the Court

read the preliminary.

MR. LINCENBERG: Well, that can't be the case because

these are specific counts.

THE COURT: So the argument you have is replace

"particular" with "any"? I will adopt that.

MS. BERTRAND: Your Honor, the defense objects to the

"any." If I may make a record. I know my colleagues want to

make a record too. I think here "any" is not appropriate

particularly as to the substantive counts of the indictment,

but also conspiracy count, Count 1.

Judge Brnovich made clear, the law of this case has

been that this conspiracy is about these 50 ads and whether or

not these 50 ads were, A, for prostitution at all, B, a

business enterprise.

For the government to be allowed to expand it to be

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any business enterprise, that could be enterprises having

nothing to do with these specific ads, that is overbroad. It

also varies their indictment. But the key here is that the

specific intent is as to the ads listed in the indictment, not

other ads, not other business enterprises, and that expansion

to the word "any" broadens this well beyond what case the

government is, well, the government is supposed to try, and the

case that is now that we have been defending. So I think that,

while it's a small word, is critical to this case, and my

colleagues may want to chime in on this, but I want to make

sure that I make a clear record of that, overbroad, improper

and improperly expands the indictment.

THE COURT: Anybody else?

MR. FEDER: Yes, it is especially prejudicial because

of all the exhibits the government has admitted that have

multiple ads that they have accentuated different language in

that not only confuses jury, but will broaden the 50 ads in the

many, many ads, none of which we have been able to prepare for.

So it will be, on behalf of Mr. Spear, I join in those

comments.

MR. CAMBRIA: My additional comment, Your Honor, is I

specifically remember the language which, as far as I'm

concerned, is the law of the case -- try this. There we go --

from Judge Brnovich that said, "through these 50 ads."

We have only been given notice in an indictment of

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these 50 ads as the vehicle to supposedly promote a

prostitution enterprise. And this now, at this late hour, and

in view of the rulings in the past by Judge Brnovich, is

frankly an amendment to the indictment and inconsistent with

what we have been told since the very beginning that they

supposedly committed this Travel Act offense through these 50

ads.

THE COURT: Anybody else?

MR. LINCENBERG: I think counsel have made the

argument on that sentence of the specific intent instruction.

MR. STONE: May I respond?

THE COURT: The way that I view matters now, and

again, I'll remind counsel that those decisions were made

primarily on the motions to dismiss the indictment for

insufficiency. But here, the way that I thought the evidence

came out was that there were some ads that were related to, I

guess, sex-for-money organizations that were run by, you know,

the individuals that we heard about who were bringing girls in

and out of different states and so on, and there were those

individuals who posted on their own.

So that's how I interpreted the "any" to mean. It

could include the circumstance where one of these women had a

pimp or maybe they were independent of a pimp as the evidence

came out, and that's why I thought it was appropriate. I don't

necessarily think it expands beyond the case. And so anyway,

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in any event, I am going to replace that particular with "any."

MS. BERTRAND: Your Honor, the Ninth Circuit requires

us, even after the Court has entertained argument, to note an

objection. So I am respectfully noting that objection to

preserve this issue on appeal.

THE COURT: Certainly. All right. And then after

that Specific Intent --

MR. LINCENBERG: I'm sorry, Your Honor, when the Court

was talking about the Specific Intent instruction, I think the

Court said, initially I'm going to read the last sentence. Is

the Court moving on from Specific Intent and going to the other

part of the Specific Intent instruction?

THE COURT: Yes, moving on.

MR. LINCENBERG: Well, then I do have additional

comment. Excuse me.

The sentence that we proposed, "A defendant cannot

have intended to promote or facilitate a business enterprise

that the defendant did not know to exist" is critical. That is

from the ruling of Judge Brnovich at Document 946 beginning at

line 26, "To answer defendants' questions posed to the Court,

one cannot intend to promote, facilitate a business enterprise

one does not know exists." That's how we have been defending

the case. That should be included in the Specific Intent

instruction.

MR. CAMBRIA: No, Your Honor, with respect to that,

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the only ones we were noticed of are the ones in the

indictment, and that's the reason -- obviously that's one of

the reasons for an indictment, but those are the ads that were

alleged to be the vehicle to commit this offense, so those are

the only ones we had notice of, and obviously we need -- we

thought we could rely on what was alleged in the indictment and

what we've been told. Even though the decision by Judge

Brnovich was about the sufficiency of allegations alone, she

quite clearly characterized what the charge was, and that's how

we have been proceeding with 50 discrete ads listed in the

indictment.

MR. LINCENBERG: And then the --

THE COURT: Isn't that the confines of what the jurors

are going to be determining? That's the reasons for these

instructions. They are limiting their decisional process to

the allegations as they are set forth. They are not -- I

don't -- I guess I'm just not following. Do you think they are

grasping at other things in the air in terms of what might be

occurring elsewhere? I don't know.

MR. CAMBRIA: No. What I'm saying is that we have

been noticed that this crime allegedly committed through the 50

ads noticed in the indictment, and so that's what the

government has to prove that it happened through those 50 ads,

not things that they bring up for the first time in trial, and

that's outside the notice and outside the decision that we had

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in the past. They have to prove this knowledge through what

they noticed us about.

THE COURT: Well, I'll remind counsel that that's a

100-page indictment, and the notice also goes to the background

of the conspiracy, and that is the evidence that I think the

government has tried to put forth. So I don't -- I guess I'm

lost in the argument. I don't know. You've made your

objections. Let's move. Let's move on, okay, unless unless

there is something critical under the law that you wish to add.

MR. CAMBRIA: The critical part of is that's the

notice we were given, and that's consistent with the decision

that was made, which I submit is the law of the case, and that

is what we've been defending. And now to say that the jurors

can consider an ad outside of those 50 for that particular

issue, I just think is unfair, and the government had to prove

this case through those 50 ads. That's noticed stuff.

MR. STONE: May I be heard? Defendants constantly

bring up this one sentence that's in 946, but the facts are

that the law of the case is this, which has been found in

multiple orders, including Your Honor's order at Doc 1587, and

Judge Brnovich's order at Doc 793, and the Court has

continually found that the alleged facts in the indictment

taken as true established defendants had specific intent to

promote prostitution, in violation of the Travel Act.

They conspired together to do so. The conspiracy was

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successful and resulted in the 50 ads for prostitution that now

make up 50 counts for violating the Travel Act.

The government is not suggesting that the jury look at

anything beyond the 50 substantive ads when determining guilt

or not guilt from Counts 2 through 51. It's just that

defendants continually attempt to argue that if their clients

didn't know about these particular ads, that they can't be

found guilty, but the Court has found over and over and over

again that that's not the law of the case.

So it's the defendants' policies, procedures and

implementations of those policies and procedures as the

evidence has shown that the jury will consider in determining

whether or not there were actions that they can find guilt for

those 50 ads. The indictment is clear and the orders are clear

on this issue.

MR. LINCENBERG: Your Honor, briefly, I don't want to

distract from the point that I raised. This is a separate

point about the 50 ads; that we really think it's important to

put in the sentence from Judge Brnovich's order where she says,

"To answer defendants' question, one cannot intend to promote,

facilitate a business enterprise one does not know exists."

THE COURT: All right. Point taken three times. In

any event, my ruling stands and that's how the instruction will

read.

We'll go to the "Business enterprise" which I think

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you agreed on, that will come next after "specific intent. And

then followed by "facility in interstate commerce." Those will

be all included in that Travel Act instruction. And then it

will be followed by the description of the counts using the

state law violations that are described in the defendants'

proposed instruction.

Now, moving to the money laundering counts, the

defendants propose 18.4 is adopted with its modifications.

Again, these are primarily, in my view, stylistic changes.

They track very closely to what the government has proposed.

MR. STONE: Your Honor, I have objection to that

because their 18.4 suggests that the money laundering needs to

be tied to Counts 2 through 51. That is not the law.

THE COURT: Well, I asked you before, and I think I

asked you this two or three days ago. Because some of these

money laundering counts stand alone, I asked you to propose to

me some other modifying instruction that says as much. I never

received any.

MR. STONE: Because we didn't believe it was necessary

because they just need to find that there were Travel Act

violations, not that these are tied to Counts 2 through 51. A

jury could find that the defendants are not guilty on 2 through

51 and still find on money laundering. We bring cases that

just involve money laundering counts. It is about finding that

the money involved was from the specific unlawful activity. In

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this case, it is Travel Act offenses, so it need not be tied to

the counts.

MR. PANCHAPAKESAN: Your Honor, may I be heard on

that?

THE COURT: Yes.

MR. PANCHAPAKESAN: Our position is this: In the

indictment, the specified unlawful activity incorporates

essentially what's previously alleged in the indictment. It

can't be the conspiracy because that's not defined as specified

unlawful activities under the relevant statutes. So all we're

left with are the 50 substantive counts. When the government

says it could be other Travel Act violations, they haven't put

on evidence about the Travel Act violations. The only Travel

Act violations they endeavored to prove are tied through the 50

ads from the individuals that testified and the business

enterprise that they have alleged.

So when the government sort of says that there might

be some other Travel Act violations that form the basis for the

specified unlawful activity, we're not sure what that is. We

are not on notice of that. The only proof at trial has been on

the 50 ads. So in fairness, that's what it ought to be.

THE COURT: I guess I am confused then because at the

end of the government's proposed instruction on money

laundering, it basically says, "I instruct you that violating

the Travel Act is a felony," so you're going back to your

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Travel Act violations in any event.

MR. STONE: Right. It would be -- let's say we

charged this case just as money laundering, there will be zero

Travel Act substantive violations, and we would need to prove

that the proceeds that were tied to the specific money

laundering counts derived from Travel Act violations, so we

would need to prove that up that the defendants knew that this

money came from the promotion or the facilitation, or

facilitating the promotion of business enterprise involved in

prostitution offenses, but that would be something that we

would need to demonstrate. It does not need to be tied to any

substantive counts. It --

THE COURT: Let me shortcut you. So your dispute is

basically the reference of, "or violations of travel acts

charged in Counts 2 through 51." That's your dispute.

MR. STONE: Correct. You got to get rid of the 2

through 51.

THE COURT: I would agree with that. So I'm going to

remove after "violations of the Travel Act" in the defendants'

proposed referring to Counts 2 through 51.

MR. PANCHAPAKESAN: For the record, we object to that

for the reasons I noted. I understand Mr. Stone's argument

that in other cases there may not be a Travel Act charge, but

there is one here, and so that's -- that's what the money

laundering ought to relate to.

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THE COURT: Well, whether you agree or not, when the

jury looks at the entirety of the Travel Act instructions, they

are count by count. So I think it's a nonissue really.

All right. So the Court will also adopt the

defendants' proposed 18.5 with that charge.

MR. STONE: You mean eliminating Counts 2 through 51?

THE COURT: Yes.

MR. STONE: We're okay with that, Your Honor.

MR. PANCHAPAKESAN: Your Honor, just for my record,

just note objection on that for these instructions.

THE COURT: Yes, it will. The same with the 18.6, I

will adopt the defendants' version with the removal of the

reference to Counts 2 through 51.

The Court will adopt the defendants' 18.7 "Money

Laundering." I'm going to remove in the first, sorry, in the

second paragraph where it says, "First, the defendant knowingly

engaged in." After that second sentence I'm going to remove the

act is knowingly done, because it's going to be redundant with

what I propose was what I am going to do with your "knowingly"

instruction. It's going to be incorporated elsewhere.

MR. LINCENBERG: The Court is leaving in this language

on attempt?

THE COURT: Well, I'm looking at your proposed

instruction 18.7.

MR. LINCENBERG: It should probably get rid of "or

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attempted to engage."

THE COURT: So your modification to your instructions

should read, "First, the defendant knowingly engaged in a

monetary transaction."

MR. LINCENBERG: Yes.

THE COURT: Is there an objection?

MR. STONE: That's fine.

THE COURT: I will adopt the defendants' 18.7 a, money

laundering conspiracy.

MR. STONE: Your Honor, sorry to interrupt, the fourth

element has Counts 2 through 51 again on 18.7.

THE COURT: Yes, we will remove references to those

counts.

MR. STONE: And then I think when they are defining

the "financial institution," maybe either way they have the

counts through 2 through 51 again listed on page 69.

THE COURT: Okay. Oh, I'm sorry, yes, I got this

backwards. Okay. So I actually added in the "knowingly"

instruction after that second paragraph. So it will read,

"First, the defendant knowingly engaged in a monetary

transaction," period. Then what I inserted was the proffered

"knowingly" instruction that reads, "An act is done knowingly

if the defendant is aware of the act, and does not act or fail

to act through ignorance, mistake, or accident. You may

consider evidence of the defendants' words, acts, or omissions,

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along with all the other evidence, in deciding whether the

defendant act knowingly."

So that is the modification to 18.7, the defendants'

proposed instruction. Did you follow along?

MR. LINCENBERG: Yes, we would note the following

objection.

THE COURT: To adding that "knowingly" modifier in

there or description?

MR. LINCENBERG: Yes. The objection is that in the

comments to the "Money Laundering" provisions it says, "because

it is a specific intent crime, it is reversible error to give a

'knowing' instruction in a money laundering case in a manner

that case the defendant need not know that the money being

laundered was proceeds of criminal transactions."

THE COURT: Mr. Stone, do you have a --

MR. STONE: Well the statute says "knowingly" so I

think that should be defined.

THE COURT: Well, I think that's the reason I included

it. So there has to be some instruction for the jury to figure

out what "knowingly" means and so I have included it because of

that. So in any event, that's how it will be modified.

The proposed defendants' 18.7(a), I have adopted -- I

removed, obviously, Mr. Larkin's name.

MR. STONE: What about the unanimity requirement, Your

Honor?

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THE COURT: I might have missed that.

MR. STONE: That's included in defendants', and we

would object to that.

THE COURT: I might be missing where you're at.

MR. STONE: Page 71 of the defenses' proposed

instructions.

THE COURT: That's not helpful to me, page reference.

I am looking at 18.7(a), Money Laundering Conspiracy, related

to the 1956(h) charge.

MR. STONE: The one I am looking at is from defense

includes a unanimity requirement, but if yours doesn't have one

and you're not inclined to give one, then I don't have anything

more to say.

THE COURT: The proposed instruction says, "Defendant

Lacey, Spear and Brunst are charged in Count 52 of the

indictment with money laundering, conspiracy, in violation of

section 1956(h) of Title 18 of the United States Code." For

defendant -- "For a defendant to be found guilty of that

charge, the United States must prove each of the following

elements beyond a reasonable doubt with respect to that

defendant:

First, there was an agreement;

Second, the defendant knew the objective;

Third, the defendant joined in the agreement with the

intent to further its unlawful purpose."

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That's what I'm going off of that.

MR. STONE: No objection to that.

MR. PANCHAPAKESAN: Your Honor, in our redline, we

prepared after that a unanimity requirement that reads, "For a

defendant to be found guilty of Count 52, conspiracy to commit

money laundering, you must find beyond a reasonable doubt the

defendant joined in a plan to commit at least one of illegal

object of the alleged conspiracy, one of the money laundering

events as charged in Count 53 to 99 upon which you all agree."

The reason we included that is because there is four

different sets of money laundering charges. Many of them my

client is not even on. There's transactional concealment,

promotional, et cetera. It's distinct from the Travel Act in

that sense in that these are four different, very different

types of charges.

And so for there to be a conspiracy, the jury ought to

agree on, you know, which count or counts forms the basis for

the conspiracy.

THE COURT: I think the reason I removed it, now that

I am thinking about it late last night is because of the same

reason I removed it originally from the conspiracy because

there is only one conspiracy, and so I did not include it.

And then so then we already covered the specific

intent, and I think this gets to one of the issues that was

raised previously, the United States' proposed instruction that

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the state law need not be violated for them to be found guilty

under the Travel Act. I am inclined to adopt this instruction.

Now, to the extent that it's inconsistent with an instruction,

can you let me know that?

MR. STONE: Well, I think I raised that before is that

I think your -- the Court's definition of "promote" or

"facilitate" included a reference to a completed state crime,

and I just think that needs to be modified because under

controlling Ninth Circuit law the state crime need not have

been completed or committed for an individual to be found

guilty of the federal Travel Act crime.

THE COURT: All right. I will modify that because I

agree with the government, and I think what I'll do is I'm

going to put this instruction after the Travel Act instruction.

So that's the order it will be placed.

We already discussed your knowledge or intent.

Now, let me tell you that I did go through the

defendants' good faith proposed instruction. I have given you

what I propose as the good-faith instruction. I think your

instruction incorporates confusing language. It's in some ways

redundant. But in any event, the instruction that I gave to

you to look at is pursuant to some of the cases that I looked

at because there is no, of course, there is no Model

instruction.

MR. LINCENBERG: And Your Honor, we're okay with that

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language. We would propose adding the following sentence,

which essentially combines a theory of defense with the

good-faith instruction. It would simply be, "Each defendant

contends that he or she performed his or her duties in good

faith." Then that could be combined with this instruction as

part of the theory of defense instruction.

THE COURT: But I, you know, I don't know, is there

evidence of each defendant putting forth a contention of good

faith?

MR. LINCENBERG: Yeah, throughout their

cross-examination.

MR. STONE: That's an argument, Your Honor. Certainly

all defense counsel can argue during their closings, but that

should not be included in the instruction.

MR. LINCENBERG: Well, I mean, the law favors giving

the defense a theory of defense instruction. It's really one

sentence that leads into the good-faith instruction.

MR. STONE: And I don't believe there is evidence of

it, but certainly they can argue it.

THE COURT: Well, I agree. I am going to give the

instruction as I've provided it to you.

So then let's go to the First Amendment instruction.

I looked at what Mr. Cambria resubmitted, and so I did make a

couple modifications to what I originally intended to give, and

so have you had an opportunity to look at the Court's newly

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revised First Amendment instruction?

MR. CAMBRIA: I've been trying to look at it as we've

been talking about these other situations. It -- it still

appears to me, Your Honor, that the Court's instruction doesn't

distinguish between first-party speech and third-party speech,

and will allow a publisher to be prosecuted, for example, for

publishing an ad proposing something facially lawful with no

actual knowledge that the person posting the ad intends to

engage in something unlawful.

I think that the instruction on circumstantial

evidence would allow the jury to convict based on this

so-called extensive not-for-the-truth evidence claiming that

all adult advertising on Backpage was connected to unlawful

activity are based on the testimony of Ferrar or Hyer that all

the millions of ads on Backpage were prostitution ads,

something they obviously could not know.

It must be illegal on its face. All the Ninth Circuit

cases and other cases say that, and it must necessarily be

illegal on its face.

THE COURT: And that's what I modified the

instruction.

MR. CAMBRIA: I saw the part of it, and you removed

the "related to," which is good. That's consistent with Ninth

Circuit.

But what I'm concerned about is the testimony here

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that's going to make it say, you know, it looks like it's

unprotected, is a problem, and that's why I think the

instruction that we've proposed, which, for example, it's

page 78 of what we had proposed, that, you know, that it's

necessarily -- it necessarily would constitute an illegal act,

if concluded, that's unprotected. That's unprotected. But the

language, "if there are plausible ways to complete a proposed

transaction lawfully, the speech proposing that transaction

concerns lawful activity," then it's protected." I'm concerned

about the reference to circumstantial evidence, especially when

you're talking about third-party speech because it, you know,

not being the speaker you don't know -- you can't say what the

intent is as the speaker. You're just the publisher.

So it has to be illegal on its face, and I think the

jury needs to be told the language that we included, that if

there are plausible ways to complete it as written, it's

protected. That's the only way to give any life to the

presumption of protection. There is a vast difference between

first-party and third-party speech, and that's why publishers

have, you know, special rules, and so I think that as we

proposed it and we laid out all the authorities, especially

from the Ninth Circuit, that support exactly what we've asked

for, I think that I would ask the Court to reconsider what

we've suggested.

As you read through these Ninth Circuit cases, they

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really do not conflict with one another that, you know, a

publisher can only be liable if its unlawful on its face. And

it's, again, not one of these situations where looks like it

might not be unprotected. It has to on its face necessarily be

unprotected. And that's, that's critical, I think to the

jurors, because I don't think that they should be confused and

feel that if somebody used a facially lawful ad and then the

individuals who are part of the ad committed the crime in some

way that that's a crime for the publisher, 'cause it's not.

Third-party speech is so delicate, and you know, like

I say, I think the jury needs to have the right tools and the

tools are necessarily constituting illegal act, and then they

need to be told that there is plausible ways to perfect the act

that's advertised that it's protected. That's the only way to

give life to the presumption.

It's interesting because when you read some of these

cases, you know, it's almost like you need graph paper to line

them all up. But in the end, there is no doubt the Ninth

Circuit makes it as clear as clear can be that there must be a

necessarily illegal proposition. And you know, this testimony

from Hyer and the others, those are all prostitution ads,

that's the pit we can't fall into under the law because they

necessarily wouldn't know unless they had, you know, patronized

every single one of them.

And the testimony we have in the case from the police

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officers and so on saying they couldn't tell on the face of an

ad. Again --

THE COURT: Well, can't you argue that to them?

MR. CAMBRIA: We need to argue it with the right

tools, and the jury needs to be told that it must necessarily

be illegal on its face, otherwise --

THE COURT: And that's what the instruction says.

MR. CAMBRIA: But what we've asked is that they also

be told that if there are other plausible ways to complete the

proposed transaction lawfully, the speech proposing the

transaction is then protected.

THE COURT: Well, again, I think that's an argument,

Mr. Cambria, but I disagree with you that you they shouldn't be

told that they can consider direct or circumstantial evidence.

That's the -- that's how criminal trials work. That's the

evidence that any jury considers; they are allowed to consider.

And you're entitled to say: Look, you can also consider there

are other ways. You had an expert tell you on the stand that

not all prostitution ads equal prostitution ads. And so that's

the argument that you're entitled to make, but I don't

necessarily think that -- it's confusing to put that sort of

instruction or that sort of language in a jury instruction.

MR. CAMBRIA: All I'm asking --

THE COURT: Because frankly there's not really been a

lot of examination that draws that out.

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MR. CAMBRIA: All I'm asking is that the Ninth Circuit

language that says "must necessarily be illegal on its face" be

followed.

The circumstantial evidence rule clashes with that

because what that does is consider things other than facially

what's in the statement. That takes you outside of the

statement itself on its face. The First Amendment has always

had very unique rules, and that's one of them. It has to be

illegal on its face. Forget circumstantial evidence. You have

to go back to the face in the language, otherwise the

presumption has not been removed.

And here the circumstantial evidence language that you

use allows them to go away from the face of the ad itself and

make a consideration, and that's just not what the law says.

THE COURT: I'll hear from the government unless any

defendants' counsel wants to chime in, and then we'll leave it

at that.

MR. KOZINETS: Thank you, Your Honor. May I use the

podium?

THE COURT: Yes.

MR. KOZINETS: Thank you. Thank you, Your Honor. The

United States respectfully objects to the proposed revised

instruction. In particular, the sentence, "However, the First

Amendment does not protect speech that proposes an illegal

transactions on its face," the "on its face" wording,

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respectfully, we submit, should be removed, for several

reasons.

Just as a general proposition, as Your Honor knows, a

substantial amount of the evidence in this case involves the

use of coded language, words like, "Greek" or "anal," codes

like "GFE" and "outcall" and so forth. I think the jury may be

confused that in light of that trial evidence, they may be

confused about how that relates to this instruction here.

Also, as Your Honor pointed out, a large part of the

government's theory involves the defendants' use of scrubbed

ads, and I think that scrubbed, sanitized, moderated ads where

explicit sex-for-money terms were removed, but coded words

remained or other indicia of prostitution remains still would

not be protected under the First Amendment because as a factual

matter the ad still will communicate an unlawful message, an

unlawful proposition to engage in unlawful conduct. It just

wouldn't do so in the very explicit, overt way that the current

wording of the instruction seems to suggest.

And I want to take you back --

THE COURT: Let me ask you this because what I have in

my head is, so what your argument really is is that, you know,

let's have someone who is not involved in the business of

either law enforcement or in the sex work industry, when they

look at this ad, they may not see sex for money.

MR. KOZINETS: Precisely, Your Honor.

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THE COURT: Okay.

MR. KOZINETS: We are dealing with this sort of niche

industry. Well, as Carl Ferrer referred to it in one of the

e-mails involving The Erotic Review, trying to appeal to the

niche industry of johns, people buying commercial sex and

prostitutes and pimps, people selling commercial sex. So there

are three things that support omitting three words here. One

is law of the case, one is trial evidence, and one is the

actual case law as it exists.

Just real briefly Your Honor, this concept has been

with us from the beginning of the case. So in Doc 793, for

example, pages 9 through 12, the Court found that the

superseding indictment's allegations, if proven as true, would

show that the ads are protected by the First Amendment, and

specifically it discussed the use of coded language, so PR, PRs

ads, those are about ten of the charged Travel Act charges.

Roses as code for money. She also used nude images, which some

of which the moderators removed, that coded language and images

don't necessarily reflect speech that on its face proposes an

illegal transaction. So it kind of doesn't really jive well

with this new revised instruction.

And then as the Court went through and analyzed the

other charged ads, there was similar discussion of the use of

other coded language like "GFE, "New In Town," "in-call" and

"outcall," the use of disclaimers. So you might have an ad

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that seems innocuous through its language, but in the female

escort section it has these images we have been seeing. And

then it says, "By the way, by responding to this ad, you agree

that you are not associated with law enforcement. You agree

that any money that might exchange hands is just a donation."

And you know, we submit that the trial evidence shows that

under no stretch could that kind of language be associated with

really what is a legal transaction proposed on its face.

So we have that from Doc 793. We have more recently,

Doc 1643, the Motion in Limine order that addressed several

motions in limine before trial. If you may recall on pages 8

to 9 of that order, the Court, after reviewing briefing

addressing these issues wrote, this is the bottom page 8,

"Accordingly, to the extent that defendants seek to invoke

their First Amendment right as a defense to the allegations

that they conspired to promote or facilitate prostitution,

through veiled ads for prostitution, they are prohibited from

doing so." They are prohibited from making that claim here.

So what we're talking about are veiled ads for prostitution,

which are not ads that on their face proposed an illegal

transaction.

We've got that -- we've litigated the underlying case

law that Mr. Cambria included with his redlined instructions

the other day, that was included in Doc 1657 which we argued to

the Court on August 18th this year. And as you may recall,

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Your Honor, you overruled the objection set forth in that

document, that's at Doc 1710, the minute entry from that

hearing. Mr. Cambria reurged the same set of authorities,

literally handed you the same brief just this past Friday in

connection with the Rule 29 motion, and Your Honor held that

this had already been litigated and decided.

And of course, when your court drafted prior versions

of the First Amendment instruction, you didn't include this on

your face type language even though the defense had requested

it. So first prong is law of the case.

Second prong is the trial evidence itself. And for

that I would just briefly summarize, we heard testimony from

multiple victims, people who posted these ads, that they

essentially copied these code words from other ads. Breahannah

Leary talked about copying the lingo that appeared on other

Backpage escort ads. Again, ads that didn't contain on their

face, offers to engage in illegal transactions, but used coded

language, images, other indicia to show that they were for an

illegal purpose.

Anya Beck testified that she copied and pasted her

language from other ads in the female escort section.

Jessika Svengard used the word "specials" in her ad.

Megan Lundstrom talked about using GFE, PSE, FS for

full service, BBBJ, New In Town. Again, all things, code words

that to the customers and sellers of commercial sex made clear

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what the purpose of the ads were.

We also had testimony from one of the detectives,

Detective Eric Murray from Phoenix, who said what is, you know,

one of the leading indicia of whether an ad is for prostitution

is whether it even appeared in the female escort section of

Backpage because the trial evidence shows that due to the

defendants' efforts, Backpage had created this market position

of being very well-known to buyers and sellers of commercial

sex that the female escort section was the place to go to shop

for prostitution.

So the fact that the mere -- and then we get to one

other point, which sort of underscores this, and I will move

on. We had the CNN broadcast, the Amber Lyon story, not

offered for the truth, but to show notice to the defendants.

She posts an ad that doesn't contain really any coded words.

It's just a picture of her in a skimpy bathing suit with some

sort of suggestive propositional language, but no specific code

word, puts it up in the female escort section, and almost

immediately the phone starts bringing with johns seeking

commercial sex, so that's the second reason.

The third reason, Your Honor, is established law

itself. If Your Honor would like me to go on, we've talked

about the Pittsburgh Press case repeatedly, Supreme Court case

from --

THE COURT: I think it's been fully briefed.

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MR. KOZINETS: That's been fully briefed. We also

think the Ninth Circuit case law that Mr. Cambria keeps

returning to doesn't support the propositions for which he's

put forth. Valle Del Sol is a good example, page, so 709 F.3d

and 821, it talks about the sort of related two illegal

activity exception to First Amendment protection, and it sets

forth the standard in a couple different ways. It sites to

another Supreme Court case, Virginia State Board of Pharmacy,

425 U.S., 72, and quotes it and says, "No First Amendment

protection for commercial speech if," quote, "if the proposed

transactions are themselves illegal in any way," end quote.

And then the Ninth Circuit also addresses the Central Hudson

formulation of the standard. This is the Supreme Court case

447 U.S. 564. Central Hudson talks more generally about

speech, quote, "related to unlawful activity as being excluded

from First Amendment protection."

So the IMBd case, not a commercial speech case,

contains no analysis of the use of code words.

The Metro Lights case, whether or not the speech was

protected, wasn't even litigated as shown in footnote 7,

parties agree the speech was protected.

So there is no Ninth Circuit case that I'm aware of

that would compel using this "on its face" language.

Real briefly, Your Honor, as to Mr. Cambria's other

points about wanting to add additional language to the

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instruction, we think Your Honor is absolutely correct that

it's just practice in --

THE COURT: Someone's alarm is going off. Sorry. I

keep hearing a buzzing or beeping. Oh, it's your 12:00 o'clock

notice.

MR. KOZINETS: Sorry, I will go fast. Circumstantial

evidence and direct evidence, that's just a fundamental tenet

of how criminal cases are decided. Of course, the jury should

be allowed to consider direct and circumstantial evidence.

This distinction between first-party and third-party

speech I don't think this really applies here. I think the

CDA, you know, was enacted to overcome kind of the common law

approach where publishers were held liable to the same extent

as speakers and kind of created a sort of distinction here, but

the CDA doesn't apply to what we're talking about in this case,

and so I don't think we need any additional language there. I

think --

THE COURT: Well, let me ask you this: What if I,

in -- Mr. Cambria is concerned about the last part of this.

You're concerned about the "on its face" language. In

listening to the arguments and reflecting on the testimony and

evidence here, because of the coded language it was heavy in

the case, I tend to agree with the government, but in terms of

removing this "You may consider any direct or circumstantial

evidence" sentence, I would propose removing that sentence and

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ending with, "If you find that an ad proposes an illegal

transaction, it is not protected by the First Amendment." I'll

read that again, "If you find that an ad proposes an illegal

transaction, it is not protected by the First Amendment."

MR. KOZINETS: I think that's fine as long as "on its

face" is taken out, and as long as the -- I think the

instruction elsewhere will refer to direct and circumstantial

evidence.

THE COURT: Yes.

MR. KOZINETS: It's part of the standard instructions.

THE COURT: Yes, it's part of the standard

instructions.

MR. KOZINETS: Okay.

THE COURT: In its total it will read, "All speech is

presumptively protected by the First Amendment to the United

States constitution, however, the First Amendment does not

protect speech that proposes an illegal transaction.

Prostitution is illegal in 49 states, and most of Nevada. It

is 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 such as an ad for an escort, dating or massage

service. If you find that an ad proposes an illegal

transaction, it is not protected by the First Amendment."

MR. KOZINETS: Okay.

MR. CAMBRIA: Can I be heard, please?

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THE COURT: Yes.

MR. KOZINETS: Thank you.

MR. CAMBRIA: Here's the problem. When we look at

what you've said here, the first part talks about it must be

illegal on its face, and that's important because we're

publishers. We're not the speaker. All right. So now,

however, the second sentence says, it is, yeah third sentence,

"It is the government's burden to establish that each of the

ads alleged in this case is an ad for prostitution." That

means aside from what facially is in the ad. That would be

okay for a first party, for the person who posted the ad. The

person who actually created the ad, the government could show

that they actually were committing a crime. We're talking

about a publisher.

And so you can't go away from the face of the ad, and

this language that you have here, "It is the government's

burden to establish that each of the ads," you're talking about

establishing it aside from the ad or not on the ad itself.

You're talking about away from the ad establishing it.

And what I'm saying is for publishers, the rule has to

be "on its face." For the speaker, the person who creates the

ad, the government could show what they really intended, but

not from a publisher's standpoint.

So that sentence that says, "It's the government's

burden to establish that each of the ads in the case is an ad

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for prostitution" is something that you're saying can happen

aside from the ad or divorced from the ad itself. That's the

problem. If it was first-party, that would be okay.

Third-party publisher, it's got to be on its face, and the jury

has to be told that it has to be on its face, because there is

no way publishers can operate except for the facial words, and

here what you're saying, well, if the government can show that,

forget what the facial words are, but the facts are this,

that's what they are asking to do here, and that's what this

sentence is allowing them to do. When you do that, you cancel

out the "on its face" because now you've gone away from the

face and you're talking about another situation other than what

the publisher sees.

The publisher can only under the First Amendment deal

with what they are faced with, and not with what might happen.

So that takes us back --

THE COURT: I guess I am curious because I thought

that's what the case was about that the publishers knew,

despite the scrubbing and the removing of modification of terms

and so on and so forth, that they knew that the ads were for

prostitution. I thought that's what the case was about.

MR. CAMBRIA: No, but the presumption here of

constitutionality; that in other words, coded language takes

you right out of that because the ad on its face appears to be,

you know, doesn't -- let's put it this way, isn't necessarily

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only illegal, the ad on its face. Here they are saying, well,

we can go outside the ad and talk about, here's what we think

this language means and all the rest of it. That would be okay

for the first-party person who created the ad. That would be

all right. It's not for the publisher. It still has to be on

its face.

And this second sentence takes the analysis beyond the

face of the ad, and that's where the problem is. That cancels

out the presumption for publishers.

THE COURT: I suspect, and I appreciate the argument,

Mr. Cambria, you've been very diligent about making this

argument throughout the course of the trial, prior to it, now

with your additional briefing and reiterating it, and I think I

read somewhere where there's a very flattering photograph of

you and described as the First Amendment Defender, and I will

say that I appreciate the argument. At the end of the day,

though, I think it's necessary to lay out before the jury that

there is a First Amendment protection, but also that the First

Amendment doesn't apply to illegal purposes, to statements of

illegal purposes, and that's, I think, critical to point out.

But it is also the government's burden to show that

each of these ads are as purported as they've alleged to be

illegal.

MR. CAMBRIA: But that takes away the necessarily

illegal language that's required. They can -- if it's

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necessarily illegal, then it's not protected. If there is

another interpretation, it is protected. And here what you're

saying is they can go outside the face of the ad to prove this

other interpretation.

THE COURT: No. I think they are actually arguing,

this is the ad, this is what it says.

MR. CAMBRIA: But they didn't create the ad. They are

just the publishers, so they don't lose the presumption unless

on its face it necessarily and only can be illegal. It has to

only be on its face.

THE COURT: And again, I appreciate the argument. I'm

going to modify the instruction the way I've indicated. I

suspect some day down the line, maybe I'll be retired by then,

three heads are better than one and they will let you know the

answer, Mr. Cambria, and me too.

MR. CAMBRIA: We'd like to avoid that.

THE COURT: Well, let me --

MR. FEDER: Judge, can I make a record?

THE COURT: Yes.

MR. FEDER: We --

THE COURT: We have our jury coming in at 1:00.

MR. FEDER: If the Court would look at Docket 449.

That was when the government's memos about what their factual

findings were that was suppressed by Judge Logan talked about

everything that Mr. Kozinets just said, and they indicated that

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the government's own investigation showed --

MR. KOZINETS: I think we object to this. He may be

referring to matters that Judge Logan addressed as being wholly

unrelated to this case.

MR. FEDER: It was an order. It was Judge Logan's

order that talks about what was suppressed, and I think talks

about the very things that Mr. Kozinets was just saying are

things that the government found were not the case that we have

been deprived of using. But in relation to this Court's change

to this First Amendment instruction, I would ask the Court to

consider what's been suppressed.

THE COURT: Consider what was that last statement?

MR. FEDER: What has been suppressed and what the

government's assertions were that were in those documents that

were suppressed.

MR. CAMBRIA: The memos.

THE COURT: You want me to go back and reopen the file

and look at some suppressed memos?

MR. FEDER: If the Court is going to allow this kind

of instruction on the First Amendment to go forward, the Court

should consider the consequences of what the government found

and then they are going to basically argue to the contrary.

It's a Brady violation and I think it goes to what the Court is

going to put in.

THE COURT: Well, it's a little late now to bring an

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allegation of a Brady violation. Let me say this one thing,

and I told you you'd have the final word. Again, we have our

jury coming in at 1:00 o'clock, and we are going to proceed to

instructing the jury. I need to have this done by that time.

I don't want them waiting around.

Now, my decision on this jury instruction is based on

the totality of the case that was presented in court to this

jury, not anything hidden in the docket. And so that is why

I'm proposing this modified First Amendment instruction, and it

will be given in the way that I've indicated.

All right. Now, the last matter I wanted to raise --

MR. LINCENBERG: Is the Court done with jury

instructions?

THE COURT: No, I am not. The last matter, well, one

of the last matters, I guess, is the government proposed a

"Knowingly Proof of Knowledge or Intent" instruction. I lifted

that second sentence, which begins with, "In determining the

issue of what a person knew or what a person intended at a

particular time," and I inserted it into the 11.1 Conspiracy

Elements instruction after the paragraph that begins, "One

becomes a member of a conspiracy," because the second element

there is, "Second, the defendant became a member of the

conspiracy knowing of at least one of the objects." And so do

you follow that? So it comes before the final paragraph which

reads, "An overt act does not itself have to be unlawful."

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So just before that there will be a paragraph that

begins, "In determining the issue of what a person knew or what

a person intended," that full statement or full statement.

Does that make sense?

MR. LINCENBERG: Yes.

THE COURT: With that, we covered your Good Faith.

Was there any other matter that I failed to address?

MR. LINCENBERG: Yes.

MR. STONE: Yes, Your Honor. Mr. Feder proposed a

character --

THE COURT: Yeah, I saw that this morning, and I have

already given you -- oh, maybe I didn't. I didn't cover it. I

gave you the -- no, I thought we did. Good Faith, and then you

gave me a new instruction. I don't know when this was filed,

but did you have an opportunity to look at it?

MR. STONE: Yes, Your Honor, and we would object.

This is an instruction that, as you can see from the supporting

authorities, comes from the Fifth Circuit. If you look up the

Ninth Circuit Model Instructions, this is 3.4 of the Ninth

Circuit, Character of Defendant. The comment by the committee

is that the committee believes that the trial judge need not

give an instruction on the character of the defendant when such

evidence is admitted under Federal Rule of Evidence 404(a)(1)

because it adds nothing to the general instructions regarding

the consideration and waiving of evidence, so we would ask the

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Court to follow the Ninth Circuit here and not give this

separate Character Evidence instruction.

MR. FEDER: May I be heard?

THE COURT: Sure.

MR. FEDER: "Need not." Doesn't say "don't." The

disparity between circuits indicates that at least some

circuits believe this ought to be sketched out of the regular

credibility instruction. There are four or five different

Federal Rules of Evidence that talk about character evidence,

and the comment in the Ninth Circuit doesn't mean that the

Court cannot. In this particular case, why it is necessary is

the Court has not allowed the defense to put on a variety of

defenses that it would have ordinarily such that character

evidence in this case is accentuated -- of accentuated

importance to Mr. Spear given the orders of the Court and,

again, it's allowed in one circuit, there shouldn't be a

disparity between the circuits.

THE COURT: All right. I am not going to adopt it. I

am going to go along with the guidance of the Ninth Circuit,

and I also think the instructions fairly cover the area.

Mr. Lincenberg.

MR. LINCENBERG: Yes, Your Honor, I think we need a

2.12 instruction, Evidence for Limited Purpose.

THE COURT: What was the limited purpose evidence?

MR. LINCENBERG: There were many instances where there

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were hearsay objections. The government was introducing them

as not for the truth. I think that if the instruction simply

says, "You are about to" -- well, this says, "You are about to

hear evidence." It would be, "You have heard evidence that was

offered for a limited purpose and not for the truth. I

instruct you that this evidence is admitted only for the

limited purpose and, therefore, you must consider it only for

that limited purpose."

We submitted it. It's at page 15 of what we

submitted.

THE COURT: How would you describe the evidence?

MR. LINCENBERG: How would I -- that it was offered

not for the truth. So "Throughout this case, you have heard

evidence that was received for the limited purpose of showing

that defendants or other persons were aware of certain claims

by third parties." We had in the proposed instruction: The

evidence includes exhibits, blank, to be filled in. I propose

at this stage the Court is not going to want to go through all

of the exhibits.

If the Court simply says, "That evidence includes

exhibits and testimony that consisted of reading the content of

those exhibits or characterizing the witness' view of those

contents, I instruct you that the evidence was admitted only

for the limited purpose of showing notice of those claims and,

therefore, you must consider it only for that limited purpose

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and not for any other purpose. In particular, you must not

consider that evidence for the truth of the claims asserted in

the evidence as those claims may not be true."

THE COURT: That's extraordinarily confusing just

listening to it.

Mr. Stone.

MR. STONE: I agree that it's confusing. It's also

the last part "as those claims may not be true" should

certainly be stricken. That's not part of any Model

instruction.

On the whole, because it doesn't reference individual

exhibits now, I don't see what the -- what the jury is going to

get out of this, but if the Court is inclined to give it, I

would suggest just giving the Model instruction language,

nothing else.

MR. LINCENBERG: Your Honor, we could flag the

particular exhibits. It's replete throughout the trial now.

THE COURT: No. It's just too cumbersome. I am not

going to do that.

MR. LINCENBERG: I agree.

THE COURT: Give me your proposed language. I don't

think I am going to give it, though.

MR. LINCENBERG: The Court has our proposed language.

It was sent to the Court, and we think it's appropriate. If

the Court just wants to give the Model instruction, the Court

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can give a Model instruction, but I think our language is more

complete.

THE COURT: If you just give the Model instruction the

way that it's worded, it's confusing as well. It doesn't tell

the jury anything.

MR. LINCENBERG: Well, that's why we explained it

further. The jury throughout this case heard -- the Court

admitted a lot of exhibits that were not for the truth of the

matter but to put our clients on notice, and that's important

to instruct the jurors that they should not be considering

those exhibits for the truth, and I think it's important

because I think that the government is going to be arguing from

the various exhibits that they -- that they -- as if it's the

truth.

Think about, for example --

THE COURT: Let me find it. I will have my law clerks

find it and I will look at it, but --

MR. STONE: Your Honor, may I add just a little bit?

MS. BERTRAND: May my client step out to use the

ladies' room and come right back?

THE COURT: Yes.

MR. STONE: I think under the --

THE COURT: No, I think actually, this is a limiting

instruction and so I'm not going to give it. All right.

MR. LINCENBERG: All right.

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THE COURT: We will refine those instructions as we've

discussed and I will submit them as copies to you so you can go

along with them, take a close look at them, and we will

reconvene at 1:00 o'clock.

MR. LINCENBERG: Your Honor, is the Court going -- the

Court is going to give a set of instructions to the jurors, I

assume without the title of the sections of the instruction?

THE COURT: Yes.

MR. LINCENBERG: Last point, there was some Rule 29

things to address. Technically the parties haven't closed. We

want to address them. I know the Court wants to -- it's 12:20

and the Court wants to keep to a timetable, but there are some

important matters. We can quickly add our point if the

government is deemed closed in their case.

THE COURT: I don't know what the question is. What

is your question?

MR. LINCENBERG: If the Court will treat it -- the

parties have indicated there is no more witnesses. It's not on

the record before the jury that the cases are closed. The time

for reasserting Rule 29 is after it's closed. There is one

additional argument that we would make. We just want to make

sure that the record was closed.

MR. BERRY: I think what he is trying to do is

provisionally close, and United States has no objection to

putting on the record right now outside the presence of the

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jury that we could deem this moment where the defense has

rested, the United States has closed, they can make their

renewed Rule 29, and we would stand on our previous argument

and then we can move forward.

MR. LINCENBERG: And there is one argument then that

we need to make.

THE COURT: Well, it's pro forma because yesterday, if

you were listening to me yesterday, we will bring the jury in,

I will ask you to call your next witness. Somebody from the

defense has to stand up and say, there are no other witnesses,

we close our case, or whatever you're going to say. I am going

to turn to the government, ask them for the rebuttal case.

They are going to tell me, "I have no rebuttal case." Then I

will close up. So that's pro forma. And then I intend to then

move towards the jury instructions.

MR. PANCHAPAKESAN: Your Honor.

THE COURT: So if you wish to make an argument now,

make it.

MR. PANCHAPAKESAN: We renew the Rule 29 argument that

was made last week.

Two, in the verdict form we discovered an issue, I

think Ms. Perlmeter raised with chambers, on two of the counts,

Count 69 and 70 of the money laundering counts, on Count 69 the

bank number I guess in the indictment was wrong, and then on

Count 70 the bank account was wrong. It should have been BMO

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Harris, but it says Bank of America, so our position is that

those ought to be dismissed given the faulty indictment.

THE COURT: I don't have -- I have the Count 70

change. What was the other one?

MR. PANCHAPAKESAN: Count 69, Bank of America Account

9463 is what is alleged in the indictment, but it should be

1793.

MR. STONE: Your Honor --

THE COURT: So that count, actually, the correct

account is transposed I guess at Count 70, so Count 69 should

be the count 1793?

MR. PANCHAPAKESAN: Right. So as to Count 69, the

indictment alleges Bank of America Account 9463, it in fact is

1793. Count 70, it's not Bank of America; it's BMO Harris.

Our view is that because of that the government hasn't proven

their indictment as to those two counts.

MR. STONE: Your Honor, I think we are confused a

little bit here. Count 69 had the wrong account number on the

indictment.

THE COURT: I recall that testimony.

MR. STONE: Mr. Thai's testimony was pretty clear

there was four other digits rather than the one in the

indictment. Everything else was the same. It was still a

Michael Lacey, money moved on the same date. This happens

often. The verdict form can conform to the evidence at trial.

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As I understand, Count 70, and by the way, 9463 is the

correct account number. I think on the indictment somebody has

Doc 230 in front of them. I think it was 1793, so the correct

one should be 9463.

Count 70 in the indictment I think is correct. We

just had it wrong on the verdict form, so we'll just need to

modify the verdict form to conform to the indictment.

MR. PANCHAPAKESAN: The other one is Count 73, which

is -- it's not TD Ameritrade; it's UBS, but it's the same

argument.

MR. STONE: Again, we screwed up the verdict form and

we need to change it on the verdict form to conform to the

indictment.

THE COURT: I'm at a loss for words as why we are

doing this at this hour with these verdict forms that have been

gone through since last week. I will take that under

advisement as well. Correct the verdict form.

Liliana, we're have to tell that jury to come in at

1:15. We're not going to be able to start at 1:00 o'clock.

MR. CAMBRIA: Your Honor, may I ask a question? The

schedule today, are we going to get revised instructions to

review? Are you planning on starting with the government's

summation or?

THE COURT: Yes. As I said yesterday, we are going to

go through the process. Everybody is going to close their case

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and rest. I'm going to immediately start instructing the jury.

Depending on how long that takes, I might take a small break,

let the government start its close. According to Mr. Rapp,

that's going to be roughly an hour and a half. Then depending

again if we're close to the 4:00 o'clock hour, 3:30, I'm going

to expect someone from the defense counsel to start their

closing.

MR. CAMBRIA: That's what I wanted to ask because I

don't think that -- let's put it this way, I am asking that we

not be in a position where we only start our summation and then

we have to stop and wait until Tuesday.

THE COURT: We have tomorrow.

MR. CAMBRIA: Wait until tomorrow to finish it. If it

turns out -- I just don't think it should be stopped and then

restarted tomorrow and let it all happen at once, and that's

the reason why I'm asking because it will probably be me.

THE COURT: Well, I guess, Mr. Lacey, it really

depends how long we go. We are already on a delayed start.

MR. CAMBRIA: That's why I am saying, it looks

unlikely that it would be something I could finish. I would be

starting it, breaking it up. I would rather --

THE COURT: You might want to be refreshed, don't you

think?

MR. CAMBRIA: What I ask, Your Honor, most

respectfully --

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THE COURT: You want to start tomorrow.

MR. CAMBRIA: Start tomorrow, sure, so I can do it all

at one time.

THE COURT: Spit it out there, Mr. Cambria.

MR. CAMBRIA: Trying.

THE COURT: Any objection?

MR. STONE: No, Your Honor.

THE COURT: All right. There we have it.

MR. CAMBRIA: Thank you.

THE COURT: Ask the question and you'll get the

answer.

MS. BERTRAND: What time would the Court like the

lawyers back here?

THE COURT: Assuming you're going to wait around for

the delivery of the hard copy of the instructions, if I am

asking the jury to come in at 1:15, be here before that,

please.

(Proceedings concluded at 12:28 p.m.)

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C E R T I F I C A T E

I, HILDA E. LOPEZ, 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.

DATED at Phoenix, Arizona, this 27th day of October,

2023.

s/Hilda E. Lopez_______

HILDA E. LOPEZ, RMR, FCRR

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