UNITED STATES DISTRICT COURT

1

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

_________________

United States of America, )

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

Plaintiff, )

)

vs. ) Phoenix, Arizona

) November 15, 2023

Michael Lacey, et al. ) 11:04 a.m.

)

Defendants. )

_____________________________ )

BEFORE: THE HONORABLE DIANE J. HUMETEWA, JUDGE

REPORTER'S TRANSCRIPT OF PROCEEDINGS

TRIAL - DAY 33 - CONTINUED EVIDENTIARY HEARING AND

JURY QUESTIONS

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.

Mr. Daniel Boyle, 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.- Appeared telephonically

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. 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 11:04 a.m.)

THE COURT: All right. Please be seated. This is the

continuation of the evidentiary hearing from yesterday. Let me

remind those that are in the public seating area, there is a

notation outside of my courtroom that no cell phones are to be

used. And so if you feel compelled that you need to use the

telephone, please step out. That includes texting, including

looking at social media, so on and so forth, and that's to

prevent any recording of this proceeding. And so if you don't

step out, you will see from time to time we have deputy

marshals come in. I have instructed them that if you are on

your cell phone, you will be asked to leave.

All right. Let's proceed.

MR. STONE: Your Honor, quickly, just had a thought.

Given the limited nature of this evidentiary hearing and the

five or six items that Your Honor was hoping to hear from the

evidence, I'm not sure we need to hear from any further

witnesses on this issue. The question that is before the Court

on this is whether this 91-page document was Jencks of

Mr. Thai, and I believe based on his testimony there is

sufficient information for the Court to rule on that.

There's also an issue that's been raised with Jencks

and Mr. Ferrer, but there is clearly no indication that he even

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read this document, much less approved it. If Your Honor is

inclined to hear from further witnesses, and we do have

Inspector Versoza and Carl Ferrer here and available, I'd

really think there is just a couple questions that would need

to be asked of either of them, and Your Honor could do it

yourself.

You know, for Inspector Versoza, I think the questions

are: Did you write this document? And was it intended as a

final version? I think those two questions would help the

Court if there is still some questions on those regards or on

those particular issues.

And for Mr. Ferrer, it would be simply: Did you see

the draft? And if you saw it, did you adopt it? I don't think

there is any other evidence that is needed for the Court to

make this determination. I think we can move forward with some

argument from the parties if the Court is so inclined, but I

think in terms of keeping this limited and making useful time

of the -- making use of the Court's time, proper use, I don't

think we really need to hear from these other witnesses.

THE COURT: Well, I guess I want to just ask you,

Mr. Stone, there's an allegation, or somewhat of an allegation

that there is also exculpatory material in there, and I -- I am

curious about that because I've parsed through the documents.

And in looking at exhibit, I think it's 12, or, sorry,

Exhibit 8, No. 8, it appears to me that those paragraphs that

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are in that draft report were included in publicly-filed

forfeiture proceedings, and counsel were representing clients

in those proceedings.

But I think the position that the defendants have put

forth was that there was potential exculpatory material that

could have been gone into in Mr. Ferrer's testimony, and so I'd

like a little bit more of a record developed on that particular

topic. I asked the defendants to give me pincites to some of

the transcripts in which they thought there could have been

additional examination of Mr. Ferrer; for example, what would

have been the outcome if they would have had this particular

document, and that's what I'm interested in as well.

MR. STONE: Your Honor, I think the papers do a better

job of explaining that issue, and I can explain why. In the

defendants' motion, this is Document 1967, they go through a

number of paragraphs on page 4 and 5 about these examples of

this alleged exculpatory information that would have permitted

them to cross-examine Mr. Ferrer differently, and they cite to

paragraphs in Exhibit A and they cite to those paragraphs.

THE COURT: Well, I think, though, and I will make the

assumption, but I will ask Mr. Lincenberg, I don't take that to

be the totality of what you were going to put forward as

different evidence, is that correct, those bullet points on

page 4?

MR. LINCENBERG: I think page -- pages -- pages 4

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through 7 cover some of that. I think it's page 7 that has

footnotes which go into some of the pincites.

And Your Honor, as a general matter, our position is

not whether there were -- there was information that we had.

It's that Mr. Thai was a witness who the government called. He

was available. Our defense, mine in particular, was focused on

a lack of credibility of Mr. Ferrer and limits on Mr. Thai's

testimony.

And based upon the fact that we now have what we

believe is a prior report from Mr. Thai, and certainly a

document he was well aware of and reviewed and agreed with, we

could have used him as well to impeach Mr. Ferrer.

And so we set out some of those examples -- some of

the examples where there is inconsistencies, for example, with

Mr. Ferrer's testimony. Dealing with -- three of the examples

that come to mind are Posting Solutions, the role of Michael

Gage, and Mr. Ferrer's involvement with foreign entities. This

report lays out, for example, that he was the ultimate business

owner of the foreign entities.

Some of the pincites on his Posting Solutions

testimony are in the footnote. I can grab the brief. I think

it's footnote 2. Footnote 2 and 3 deal with, one of them is

Ferrer's testimony, and one of them are arguments that Mr. Rapp

made in his closing that we dealt with.

Some of the other things that are not exact pincites

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because throughout, you know, part of the debate that the

defense and the government were having about a lot of these

entities was the government trying to suggest that Mr. Brunst

was centrally involved in setting them up and running them and

so forth.

And here we have a witness who is in court with a

report which contains statements of Mr. Ferrer where Mr. Ferrer

is making statements to, let's even just assume it's for

Versoza. We know from the reports we've gotten that Mr. Thai

was involved in the interviews of Mr. Ferrer, but there's

inconsistencies.

In the 302s we received, it did not contain much

detail about the wires and the tracing. There was some

references to the different accounts and businesses that the

government referred to as shell companies. Much more detail

about statements that Ferrer is making to government's agents

show up in Exhibit A. So those are some of the points with

inconsistencies with Ferrer.

There were other points we were pointing out about

inconsistencies between Mr. Thai's testimony and things in his

report. One example that we highlight is the payroll point.

Mr. Thai in his examination, frankly on cross-examination, was

very much: I didn't look at the purpose behind any of these

wires or anything, so forth and so on. Even if you just accept

what Mr. Thai says in his e-mails, that Exhibit A is a joint

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report, or a Versoza report, even if you accept it at that,

there is all of this discussion about purpose and how it

constitutes money laundering and subject to forfeiture and

alike, and there's an inconsistency with regard to payment of

payroll.

Now the government might have an answer to it, but in

the report it talks about this Prosperity Bank account, I think

it was out of the Prosperity Bank account, where they talk

about how that was used to pay Backpage payroll, and Mr. Thai

had that testimony about the Cereus Properties account being

used to pay Backpage payroll, which we believe was untrue and

was one of the things that Mr. Rapp argued in his closing, and

we have the pincite to that in our brief.

One additional thing that I think Mr. Feder wants to

add is we received more Jencks yesterday. This includes prior

e-mails from Mr. Ferrer with Mr. Versoza and the like.

Mr. Feder and Mr. Cambria are in a better position to address

that, but I think it also expands the issue that we're raising

about discovery that wasn't produced that takes it to a whole

other level, and this would also, I think, be the subject of

the examination that counsel want to do with Mr. Versoza and

Mr. Ferrer, and they can address that if the Court wants to go

into that in greater detail.

THE COURT: Well, I guess the central question in my

mind is as it relates to all of this, is the disclosure. The

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Exhibit A material, which is the focus of the hearing, is it

your position that none of that material, the substance of it,

had been previously produced?

MR. LINCENBERG: No. The government is correct that a

lot of the substance was previously produced.

THE COURT: And so that goes to the next point, how

can it then be a surprise to you, either through Mr. Thai's

testimony or Mr. Ferrer's, as to how they would testify when

you had the material that you could have examined them on?

MR. LINCENBERG: Well, two things. First, the Court

asked me is it your position that none of it was previously

produced, and I said, no, a lot of it was. I don't believe it

was all.

THE COURT: The material, the substance.

MR. LINCENBERG: The substance of it. So for example,

Ferrer's statements in there, the fact that Ferrer is making

certain statements not produced. But what's more important to

us is the source of the document. And if you accept our

position that this is Jencks, or even if the Court doesn't

accept it but accepts that it's relevant material for

cross-examination of Mr. Thai, who is the witness they called

for all of the wire transfers, not Versoza, that we now have a

prior statement of him.

I can't just take in the same manner a prior statement

of Versoza and cross-examine Thai with it. It's not that I

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couldn't try, but my experience, and there were a lot of

objections at times by the government, where I would try to do

an impeachment, or co-counsel would, and the Court ruled, well,

that's not that person's prior statement or something that they

are necessarily familiar with. This is something that clearly,

it's either a prior statement or at least it's part of the work

that, as Mr. Thai says, you know, I produced the summary charts

that went into this if you look at these e-mails and so forth,

and it opens up a whole new area where we now have a witness on

the stand, who is the only witness they are calling in this

case, to go through wires and money, the money laundering

counts and so forth, where we can use that document for

impeaching him and use that document with him to also impeach

Mr. Ferrer.

MR. STONE: Your Honor, if I may, based on

Mr. Lincenberg's argument, it really supports my initial

argument is that it hinges on Mr. Thai. What is important to

the defense through Mr. Lincenberg's argument is that is this

document tied to Mr. Thai? Is it his Jencks? If it's his

Jencks, they can cross-examine him on this information despite

the fact that all this information was previously produced in

other sources, including, I might add, every single statement

attributed to Mr. Ferrer, and that's in Exhibit A, and usually

they are disclosed in more detail in other documents.

But because the defense's whole point here is that

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this was a document that relates to Mr. Thai, meaning it's his

Jencks, there is now evidence in the record for Your Honor to

make that determination, and we don't need to have anymore

witnesses on this issue since it only relates to Mr. Thai.

MR. LINCENBERG: Well, but again, it's Mr. Thai's --

it's a document that it's either Mr. Thai's report or not. In

the 2019 e-mail from Mr. Thai to Mr. Stone, you know, "Lyndon

and I put together flow charts and notes for the seizure

warrants."

For them to say that, well, we have a seizure warrant,

so you already knew this, and it's Versoza who did it, but this

is the guy who we now see in an e-mail putting together all

this stuff, which that part is consistent with his testimony at

trial. It's inconsistent, I think, with the impression he is

leaving in the hearing yet. Mr. Thai writes: I thought those

items would be good to use as a basis for the summary charts.

Then he says, but I wanted to format that material to whatever

you think would flow best. And his testimony yesterday was: I

just did some formatting. He's basically saying: I put

together all these charts with Lyndon and flow and this and

that, and I also wanted to format it. It's not that all I did

was formatting.

He also writes a couple weeks ago, again, calling it

"the document that Lyndon and I put together years ago." And

Mr. Stone, because he's a man of integrity, which is why I

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think there is some inquiries that should be made of Mr. Stone,

and I don't know if Mr. Boyle is relevant or not to this. It

says: We're producing the attached e-mail in -- in our

continued efforts to comply with the Jencks. As we did for

trial, we reviewed our files to determine whether there were

any communications that could be deemed a statement under 3500.

We have determined that the attached e-mail may fit into that

category.

So this is produced to us because of Mr. Stone getting

this in front of them and focusing on it and saying: You know

what, I better produce this. He may say it's potentially

Jencks or maybe Jencks, we think it is Jencks, but that's where

we are left.

MR. STONE: That further supports where there should

be no evidence, no additional evidence for this hearing. That

was just a legal argument. Your Honor has the e-mails from

Mr. Thai, you have his testimony from yesterday, and you can

make the determination based on that evidence. Happy to argue

this more, but I think at this point we are just making

arguments.

MR. LINCENBERG: Well, I think it's relevant for other

counsel to talk about the other e-mails that we also just

received.

THE COURT: Well, I haven't seen them and I am not

going to take up something blindly. You certainly can provide

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it to the Court, give me an argument why you think it's Jencks,

we can be back here again, but I am not going to entertain it

now.

Does anyone have anything further to inquire on

Document 1967, any other counsel? Mr. Kessler.

MR. KESSLER: I do not, but Mr. Feder does.

MR. FEDER: Judge, as to what's already been before

the Court?

THE COURT: Yes.

MR. FEDER: No. We would have asked Mr. Ferrer and

Mr. Versoza follow-up questions about whether or not there are

other reports, whether or not there are other 302s and things

like that, but then the new disclosure that was made last night

by the government, number 51, indicates, number one, that

there's been Bates numbers, the same Bates number on different

documents, which throws into question the entirety of their

disclosure, number one.

And then number two --

THE COURT: How so?

MR. FEDER: I will give you an example, Judge. There

is an e-mail to Mr. Stone this morning, USABP Bates number

0037964, that is on one of these Way Back Machine Backpage that

may have been an exhibit in the trial, and then there is

another with the exact same page that is an e-mail from

Mr. Versoza in 2018 with Ferrer. So that's one issue.

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The second issue is part of the disclosure last night,

disclosure 51, was an e-mail exchange indicating that

Mr. Ferrer is sending Versoza listings of retainers paid of all

the lawyers for Backpage, one of which is Nanci Clarence to the

tune of $4 million.

Maybe the Court remembers my sterling

cross-examination of Mr. Ferrer when I was trying to get him to

talk about how much money he had paid Nanci Clarence, whether

or not it was Backpage money, et cetera, and he feigned not

knowing anything about it, and this e-mail that we are talking

about is a 2018 e-mail. That was what was in the new

disclosure last night. I mean, that's what there would be, and

I think --

THE COURT: It's from 2018?

MR. FEDER: Sorry.

THE COURT: Did you say it was from 2018?

MR. FEDER: Yes. So if the Court doesn't want us to

get into apples and oranges, that's okay, but Ferrer and

Versoza are here. I am happy to give the Court copies of that

and the Court can review it, as can the government, but that's

what was in their disclosure last night. I am not exactly sure

of the time, but around 5:00 o'clock.

THE COURT: Was that a document that was previously

provided, this 2018 e-mail?

MR. RAPP: No, it hasn't been.

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MR. FEDER: This was just a sampling, but at least to

me the most relevant.

MR. STONE: Your Honor.

MR. FEDER: It goes directly to the cross-examination

of Mr. Ferrer when he feigns ignorance. Obviously had we had

that e-mail, that would have been an impeachment; clearly

Giglio.

THE COURT: Or it would have been refreshing

recollection.

MR. FEDER: Either one.

THE COURT: Yes.

MR. STONE: Your Honor, I think that expands what the

evidentiary hearing is for. I am not saying we shouldn't take

it up. I just think Your Honor should be well informed with

what the documents are, and we can provide those to Your Honor.

We can take it up at a later date, but I think right now for

the issue before Your Honor, we should handle that and --

THE COURT: Well, I think, Mr. Stone, the unresolved

question, and the way that I read the defendants' motion is

that this Exhibit A, it's also alleged it was adopted or a

statement of Mr. Ferrer, and certainly I think they are

entitled to ask him to what extent he reviewed the statement,

if in fact he contributed it to it, if he was part of the

drafting process and so on and so forth. I'm not going to make

any assumptions about what his answers would be, and whether or

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not he used it to prepare for his testimony.

I think those are relevant inquiries, but it seems to

me, though, and at bottom with regard to Exhibit A, there

should not have been surprise because from everything that I've

heard, it has not been refuted that the underlying material had

been produced; in other words, you had the capacity to mine the

information, they were in publicly-filed documents in other

cases related to the forfeiture proceedings in California, and

there should not have been any reason that you could not have

pulled these documents or the underlying material to examine

Mr. Thai, to examine Mr. Ferrer. I think that's the issue.

And I have not heard anything to the contrary. And so

I don't find that there was any sort of purposeful hiding of

that material by the government, and I find it difficult to

make a prejudicial finding to the defendants because of that.

I mean, to be sure, there are millions of reams of

documents that you have had to pull through, but certainly when

you have the same counsel that are involved in the asset

forfeiture proceedings in different courts on which document

Exhibit A 1 provides information about, you should have

knowledge of it. You have information about it. And so you

didn't use it, for whatever reason, in your examination.

And at least at this juncture without anything more, I

don't find that the material in Exhibit A 1 is Jencks material.

A witness under oath has testified that he did not write the

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document. He contributed to the formatting, some of the

corrections made in it. It's a document that he obviously left

service prior to his testimony, and it was a document, I think,

that he had from back in November of 2021, which was the

version that he submitted. He didn't adopt the document as his

own.

In fact, when Mr. Lincenberg questioned him about

paragraphs in the document, he seemed confused, unaware of what

the content was, so that tells me even more that he didn't

participate in the drafting of it.

The government produced a, I think what he

characterized as the spreadsheet from which he developed his

testimony and his, which was developed throughout the course of

his investigation. And I also think it's relevant here that

these are -- there seem to be two different responsibilities by

these two different individuals. Mr. Thai was looking at the

claims in the superseding indictment for its development, and

then we have this other part two, where are the assets being

used, which is somewhat related, but also very different.

And so I do make the finding that Exhibit A does not

include Jencks material. I'll look at the motion and the parts

of the document and the exhibits a little bit closer again as

to this other issue about exculpatory information, but at

bottom, I think the character of the argument is, for example,

for Mr. Lincenberg that Mr. Brunst wasn't a signatory to many

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of these items, but those points were made. They were made

over and over and over again. They were made in closing

arguments. And so it's -- it would have been cumulative if it

was something of a different statement. That's the question

that I have to look at in terms of any sort of exculpatory or

favorable information.

And so that's my preliminary ruling at least as to the

question about whether it constitutes Jencks material. I'll go

back and examine the exhibits further in terms of whether or

not it's Bradio -- Bradio -- mixing the two together -- Brady

or Giglio, although I learned long ago that it's Giglio, you

know that, Mr. Cambria.

MR. CAMBRIA: I do.

THE COURT: And so I will look at it further and make

that determination. But in that regard, is there any

further -- I will let defendants because it was their motion

make a final argument or if you have final points that you wish

to direct me to in your exhibits, I will take a look at those.

MR. LINCENBERG: Just one further point that

Mr. Cambria has a point. Just in terms of citations, if the

Court is going to go back and look at it, from the Quoc Thai

direct examination, the citation dealing with payroll was

October 13th, which is Day 17, and it's page 136, lines 18

through 20, for example, was one of the citations that I don't

believe was in the brief. At page 138, Mr. Thai talks about

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Posting Solutions at the top of the page. I think those are

the two I was going to bring to the Court's attention.

THE COURT: So page 136 and 138?

MR. LINCENBERG: 136 and 138, and then I'd also bring

to the Court's attention, it's a little more tangential, but on

the cross-examination, which the Court may recall was two days

later, it was Day 19, page 34 through 36, has some testimony

dealing with loan payments, which I think is also inconsistent

with the report.

THE COURT: All right. Mr. Cambria.

MR. CAMBRIA: Thank you. Two things on two subjects.

On the current subject, there clearly were several versions of

this exhibit. And under the Bibbero case, which is Ninth

Circuit case, 749 F.2d 581, we're entitled to all those

versions. In fact, in that case there were several versions of

a DEA report not turned over, and the Court reversed the

conviction.

So we would like to have those versions so that we can

fully examine the statements or potential statements that would

have been available to us for cross.

THE COURT: Let me stop you right there because I -- I

don't want to lose the question to Mr. Stone. Was the -- I'm

operating on the understanding that this financial account

tracing document, was this the version used for the search, the

search warrant applications on the seizure case?

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MR. STONE: Well, this, I think the testimony from

Mr. Thai was this document seemed to grow over time, but what

Your Honor will be able to determine is when comparing the

language from Exhibit A to the search warrant, is that does

change a little bit, and often times it expands in the warrant

affidavit because they are taking this draft document and then

expanding it or modifying it slightly to put it into the

affidavits.

And so, yeah, it's often times verbatim, but there are

modifications, for example, with the Ferrer statements in

looking at, I think there is 23 Ferrer statements cited in

Exhibit A, which are all in the affidavits for the warrants.

There is about half of them more information provided that

supports the Ferrer's statements.

THE COURT: So as to the versions that Mr. Cambria is

referring to, are those prior versions, and would they also

have been included in those affidavits?

MR. STONE: I think Mr. Thai testified that the last

two versions that he had have now been turned over to the

defense, and there was only one change in it and it was like a

date that he put on the first page. The -- in 2018 there are

two affidavits that are attached to our motion. One earlier in

2018 and one, I think, October or November of 2018. So that

includes a lot of the exact information from these documents,

but then you look at the civil seizure, sorry, the civil

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complaint supporting forfeiture in CDCA, which was filed in

June of 2020, which I believe is Exhibit 2 to our motion, and

that would, you know, reflect information that had been

developed between 2018 and 2020.

So between those three, they are going to have all the

information that derives from or comes from Exhibit A.

THE COURT: All right.

MR. CAMBRIA: Our position on that, Your Honor is a

couple of different things. Number one, we don't know any of

that unless we see all the versions. And to the Court's point

about, well, all this information was in another document,

there's a difference between another document not authored by

the person who is on the stand who could simply say: Well, I

don't know, or I haven't seen it, or whatever. And we wouldn't

know that unless we examined them as opposed to: You made this

statement. Here it is.

So without all the versions, and there's several

versions, it's obvious from looking at this, what was sent. In

fact, there was even one referred to as a future version one

that they were supposed to get. So we need to see all the

versions before you can make a determination as to whether all

the information was provided. Even if all the information was

provided, it's a much different situation to impeach someone

with something they said as opposed to referring them to

something someone else said. So that's why that would be

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important.

The other thing is we did make a discovery request for

any communications between Versoza, Thai, Ferrer, relating to

this report, and we haven't had any response on that.

The other issue that I wanted to include is yesterday

we got this Jencks material. We are now specifically including

that in our motion with regard to Jencks, and the reason is --

THE COURT: Mr. Cambria, I just said that I'd like it

in a separate matter.

MR. CAMBRIA: That would be fine, but can I just give

an intro to this?

THE COURT: You can highlight it, yes.

MR. CAMBRIA: We have indicated that it's

Exhibit 6273, which we have given you a copy of. What is

important about this is it is, it is an e-mail from Carl Ferrer

to Versoza and Baum, his attorney, with several attachments.

It's July 13th of 2018. All right. So clearly before he was a

witness.

What's critical about this is that one of the things

that it demonstrates is a subject matter that was attempted to

be covered in cross-examination, which was benefits that he

would have received as a result of his plea bargain, and one of

them would be the utilization of otherwise seized or seizable

money for his legal defense. At the time there were a number

of questions asked of him about trying to pin down how much

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that was, and he indicated repeatedly he couldn't remember,

couldn't remember, couldn't remember.

Well, this particular e-mail from him attaches a

schedule, and in that schedule is a $4 million payment to his

lawyer, and so that would clearly have been something very

important to cross-examine him on, to confront him with when he

indicated he couldn't recall. Do you recall the questions was

like: Was it 100,000? Was it 200? And this: I don't

remember. I don't remember. It's hard to believe that a jury

would think he wouldn't remember $4 million. And obviously the

jury could weigh that $4 million benefit that he got as a

result of his plea bargain in determining his credibility, a

witness very, very critical to the prosecution's case.

So with regard to this exhibit, which a copy of which

you can review, it clearly is a statement of Mr. Ferrer because

it is sent by Mr. Ferrer, and it includes this financial

information with it and indicates that it includes this

financial information.

So here is a very critical piece that could have been

used for cross-examination on a very major witness. There's no

doubt it's a statement. This is absolute self-authenticating

as a statement. There is no doubt that it relates to his

testimony, which is what you need for Jencks, because he was

asked specifically about monies to his lawyers, and there is no

doubt that it would have an impact, reasonably speaking, on any

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juror that part of his deal was to get $4 million plus.

So we have this to hand up. They just gave it to us

yesterday. We asked them if they claim that it was previously

disclosed. Mr. Rapp indicated today the answer to that is no,

and so here it is.

MR. LINCENBERG: I'm advised by the paralegal that

these documents were provided to the Court this morning, so the

Court has them, and it's a number of e-mails. Some of them

also deal with payroll, which relates to one of the issues I

had raised earlier about Exhibit A where Mr. Versoza is going

back and forth with Ferrer about what company is doing payroll

for Backpage.

THE COURT: Well, I haven't seen them, so I am sure

they are somewhere.

But in any event, yes, Ms. Bertrand.

MS. BERTRAND: Thank you, Your Honor. May I approach?

THE COURT: Yes, please do.

MS. BERTRAND: I have two comments to make sure there

is a clear record here. The first is regarding the Central

District of California matters. I don't believe my client is

party to those. I don't believe I have been recipient of any

discovery as to that. I obviously had discovery in this

matter. I'm not sure if Mr. Padilla is named in that Central

District of California matter. I don't believe he is. But I

think that that -- that is an important distinction here with

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regards to at least two defendants that whatever has gone on in

those matters, we have not been party to.

I acknowledge we are in a JDA, so we share a lot of

different information, but that doesn't mean we share -- there

is no guarantee that Mr. Eisenberg and I have the same universe

of information regarding that seizure and forfeiture litigation

that the other defendants do. I don't -- I don't recall in the

case file I received from Mr. Weiss four-plus years ago that

there was any indication that that would pertain to my client.

So I just want to make that record clear.

And the second --

THE COURT: To be clear, it's because your client was

not charged with any of the forfeiture counts.

MS. BERTRAND: Right. Yes, ma'am.

THE COURT: All right.

MS. BERTRAND: The second, it's more of just a

comment, Your Honor, that the Court might want to entertain or

not, but I'm troubled that there was even the delay in these

new disclosures, and the government hasn't given a reason why.

Why don't just give it to us? Why not give it to us,

especially stuff predating 2019? Why not give it to us with

these initial Jencks deadline?

Related to that, why now resist us talking to these

witnesses again to see what happened and to see what really,

and flesh this out? This issue with Ferrer is very troubling

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because we now have -- we had Mr. Ferrer on the stand saying, I

am going to round numbers here, but I think he said more

than -- he met with the government more than 30 times. When we

pressed him about communication with the government, he would

get mealymouthed and said things like: Well, my lawyer was the

one doing that.

We now know Mr. Ferrer was communicating directly with

these agents. Whether his lawyer was cc'd on those e-mails or

not is irrelevant. We didn't receive those e-mails. There is

nothing about this that could possibly be excused.

And it would have greatly impacted my ability to

cross-examination whether Ferrer. Imagine, Your Honor, if

there is an e-mail where he says: I don't know why Joye Vaught

is in this. Why do you keep bringing her up? Or she was a

minor player. She didn't have any control. Maybe there is,

maybe there isn't, but I don't know because we never received

those e-mails.

So I think that this idea that we can just write this

off as not prejudicial, or that, you know, Joy, you had all the

information anyway; you did a great job with him. If any of my

cross-examination of Mr. Ferrer could have been different

because of these e-mails, it's material, and I should have

received it. That's all I have, Your Honor. Thank you.

THE COURT: Final word.

MR. STONE: Just quickly, and just on the first issue

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that Ms. Bertrand raised.

The only potential issue with Exhibit A that could

apply to Ms. Vaught or Mr. Padilla were the Ferrer statements.

There is 23 statements, as I said before. Each one of those

was contained in more detail in the affidavits. The affidavits

were produced in this case in 2018, and that's Exhibit 6 and 7

to our motion. So that was -- that was in the discovery, and

Ms. Bertrand and Mr. Eisenberg had that. Thank you, Your

Honor.

THE COURT: Well, you know, the -- my observation is

this, just with regard to Exhibit A: Having made my

determination, I don't find it to qualify as Jencks material,

and as such, arguably the government didn't have to disclose

it, but in any event, the material related to it had been

disclosed. I'll look at the other matter with regard to the

Thai testimony in the transcript as well as Mr. Ferrer's when I

examine this late disclosure.

And is there anything further then from the

government?

MR. STONE: No, Your Honor. Thank you.

THE COURT: Anything further from defendants?

MR. CAMBRIA: I'd still like to get the versions if we

could, Your Honor.

THE COURT: I will look at the case you cited and

determine that.

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Mr. Eisenberg, you're standing.

MR. EISENBERG: I am, Your Honor. May I address the

Court?

THE COURT: Yes.

MR. EISENBERG: Your Honor, I think the point has been

well made, and I am not going to rehash it. I would

appreciate, of course, the Court looking at what was disclosed

by us, I think, last night.

The bottom line for me is whatever cross-examination

there could have been of Mr. Ferrer that was not undertaken

because we didn't have all of the material could very well have

caused this jury, which is only, as far as I can tell, come

back with a guilty -- I am sorry -- a verdict on one count, it

may have had an impact. Obviously the jury has the case now,

but I find this really very important with respect to the

failure to disclose how much money was paid to Mr. Ferrer's

attorney at a time when he was on the stand and he could not

recall.

His credibility is essentially the whole case against

at least my client, Your Honor, and I know the Court is going

to consider this, so I just thought I would echo what my

colleagues have said. Thank you, Your Honor.

THE COURT: All right. Thank you. There being

nothing further, then I will take that other matter under

advisement as it relates to Exhibit A and whether or not it

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includes exculpatory or impeachment material, and then I'll

look at the other late disclosures and we will proceed.

MR. FEDER: Judge, as to the other disclosure, does

the Court want some kind of pleading to point out the various

ways those disclosures are relevant?

THE COURT: That would be helpful, but if you can, do

so soon. Time is of the essence. When can you have that to

me, Mr. Feder?

MR. FEDER: I will do my best.

MR. CAMBRIA: We haven't withdrawn our request to

examine the witnesses, Your Honor.

THE COURT: I'm sorry.

MR. CAMBRIA: I said we have not withdrawn our request

to examine the witnesses. I would like to have the other

versions before that happens.

THE COURT: I will consider that as well.

MR. CAMBRIA: Appreciate that. Thank you.

(Proceedings concluded at 11:52 a.m.)

(Proceedings reconvened at 1:53 p.m.)

THE COURT: Please be seated. And I know my law clerk

has handed out copies of the juror's question, and the juror's

question is, "Page 47 in the instructions covers good faith.

Can good faith be applied to all counts or is good faith tied

to a particular charge?"

It is signed Juror No. 2.

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My review of the instructions are indeed that the

good-faith instruction covers all counts. What is the

government's position?

MR. STONE: We agree, Your Honor.

THE COURT: Who wishes to speak from defense?

MS. BERTRAND: Hi. Good afternoon. We agree as well.

THE COURT: All right. And so the Court will simply

answer the question that the good-faith instruction can be

applied to all counts.

MR. CAMBRIA: Thank you.

THE COURT: All right. We are adjourned.

(Proceedings concluded at 1:54 p.m.)

(Proceedings reconvened at 3:32 p.m.)

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

government had an opportunity to review the question?

MR. STONE: Yes, Your Honor.

THE COURT: Have the defendants' counsel reviewed the

question?

MS. BERTRAND: Yes.

MR. EISENBERG: We have, Your Honor.

THE COURT: The question reads, "If a defendant is

found not guilty in charge one per page 27 lines 14 and 15, can

the same defendant be found guilty of charges 2-51? If they

were not found to be a member of the conspiracy?"

And it's signed by Juror No. 2.

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The reference to page 27, that is the Pinkerton

instruction, line 14 through 15 are the fourth -- is the fourth

element, and that reads: Fourth, a defendant was a member of

the same conspiracy at the time the Travel Act offense was

committed.

And I just want to remind counsel that this is

actually a version of what the jury asked yesterday. In fact,

it's almost, not quite identical, but it's -- the only

difference is that in that question, which was, "If a defendant

is found not guilty in charge #1, but found guilty in charges

#2-51, can the defendant be charged in Counts 2-51?" And then

they go forward to say, "The question was a concern due to

page 27, lines 10-11."

Lines 10 through 11, as you will recall, are the

second element. And my recollection is that the Court answered

that question "Yes" and referred them back to instruction,

separate crime is charged in a separate count and separate

consideration of the individual counts at page 16. It also

referred them back to the substantive Travel Act instruction.

And so because the two are very similar, I'm inclined

to do the same, but only refer them back to the deciding the

case as to each crime charged separately.

MR. STONE: Your Honor, I agree it's a similar

question, but they point to a different part of the Pinkerton

instruction on page 27. I think they point to the fourth

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element, rather than the second element. So I think we -- the

Court could be a little bit more helpful in clarifying this

issue for the jury, and so a response to be something like,

"Yes, pursuant to or in accordance with or under the

instructions starting on page 30."

Because these are alternative theories of liability,

the question is a good one in the sense that if they find that

one of the individual defendants is not a member of the

conspiracy, they can't be found guilty under a Pinkerton

theory, but they certainly can be found guilty under the

substantive Travel Act charge, which is starts on page 30.

So we don't know what the jury, where they are in

their deliberations, but the answer to this question is clearly

"Yes," but it would have to be under the instruction that

starts on page 30. And so I think if we fashion an answer in

that regard, that would be the most helpful.

THE COURT: Who wishes to speak?

MR. EISENBERG: We both, Your Honor. Thank you.

Ms. Bertrand can go first, Your Honor.

MS. BERTRAND: Thanks. Good afternoon. Your Honor, I

would suggest to the Court that we not go beyond the specific

language of the question, which is applying lines 14 and 15 of

page 27: Can a defendant be found guilty if they are not part

of the conspiracy? The answer to that is "No." Per that -- if

that is the line that they have a question about, the answer is

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"No." They have not come back and said: Well, what if we go

to page 30 and apply this and that and the other, they have

those instructions. That has never been a sticking point, and

they were referred to this instruction yesterday. The sticking

point is this Pinkerton instruction. And the literal answer to

that is if this person is not a member of the conspiracy, you

cannot use this instruction to find them guilty.

And as I suggested yesterday, we either do not give a

"Yes" or a "No," or here the answer is "No." Applying those

two lines, nothing else. If they have another question, they

know how to ask it. They've been very clear about that. I

don't think it's appropriate to jump ahead and guess what their

next question would be.

So my suggestion, Your Honor, would be to simply say,

"No" or to simply say, "The instruction on page 27 is your

guide." I don't know if Mr. Eisenberg has more to add, but

that's my portion of this argument.

MR. EISENBERG: Your Honor, if it may please the

Court, the other thing I would add is that, I remember the

question from the other day centered on lines 10 and 11. The

difference between the question yesterday and the one today is

on line 10 it talks about a person was a member of the

conspiracy, and that could have included Mr. Ferrer. Doesn't

require that a defendant be a member in the second element.

But the fourth element clearly says, "A defendant was a member

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of the same conspiracy."

I think in addition to, direct them to another charge

in the indictment by the Court does -- it would champion, if

you will, Your Honor, a different approach because it comes

from the Court, and I think that is not really what, A, it

isn't what they've asked for; and B, I think it overbears what

the jury is entitled to do, which is decide the matter

themselves.

They have the instructions with the Travel Act and I

am sure that they have considered them. So I agree with my

colleague. The answer to this question is "Yes." The

defendant had to have been --

MS. BERTRAND: The answer would be "No."

MR. EISENBERG: No. The way they worded it. Okay.

No.

MS. BERTRAND: The answer would be "No."

MR. EISENBERG: I get my no's and yeses mixed up.

THE COURT: Mr. Stone.

MR. STONE: Well, look, we can't just say "No" and not

say "Yes" under instruction 30 'cause that's misleading. I

have no issue doing both. Under the theory on page 27, if the

defendant was found not to be a member of the conspiracy, he or

she could not be found guilty of the charges 2 through 51, but

the same defendant could be found guilty under the theory

that's articulated starting on page 30.

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MS. BERTRAND: Your Honor, I think if they want to ask

questions about an alternative theory of liability, they have

more question forms and pens in the back.

MR. STONE: It's just a misleading answer, Your Honor.

MR. EISENBERG: Well --

THE COURT: It's not helpful. I mean, you've made

that point, and it's not helpful. It's just a response to what

Mr. Stone said. It is an interesting choice of words now that

I look at it, why is -- can somebody opine on why the

distinction between reference to the person versus a defendant

in the second and third lines that says, "that person." The

fourth line then says, "a defendant"?

MR. STONE: Of course. I would be happy to. The

Pinkerton theory, let me just make sure I am tracking what your

question was, see, first, a member of the conspiracy, this is

the first element, committed the Travel Act offense. It just

needs to be a member of the conspiracy. Doesn't need to be a

named defendant in this action. We've litigated this issue

numerous times in this matter.

And the second element tracks the first. That person

was a member of the conspiracy charged in Count 1 of the

indictment.

Third, that person committed the Travel Act offense in

furtherance of the conspiracy.

And then fourth goes to the individual defendant who

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they would be finding guilty through this theory.

Fourth, a defendant was a member of the same

conspiracy as the person who committed the actual Travel Act

offense.

So that's why the language is a little bit different.

THE COURT: Thank you for reminding me of that.

MS. BERTRAND: And Your Honor, I think that's why it

is important to stick with the question that they asked and not

expound on other theories. The jury has for two days struggled

with Pinkerton --

THE COURT: Let me stop you there. The question does

refer to charges 2 through 51.

MS. BERTRAND: Yes.

THE COURT: And so I don't know how you're saying that

they are not considering that.

MS. BERTRAND: Your Honor, what I'm saying is the

hang-up is with this Pinkerton instruction at lines 14 and 15.

And the answer is, if applying lines 14 and 15, if they are not

part of the conspiracy, they cannot be found guilty applying

lines 14 and 15.

MR. STONE: Your Honor, we agree with that. It just

needs to be complete that they could find him under the

substantive count.

MS. BERTRAND: That's where the defense objects. It

is not appropriate when answering jury questions to go beyond

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the question. And while, yes, it is addressing charges 2

through 51, but so is the Pinkerton instruction, and that is --

that is where their process is. I don't think it's appropriate

for us to jump ahead in the process for them. It is

appropriate to stick with the question and the instruction

about which they have a question.

MR. STONE: Your Honor, our job is to clarify, not to

hide the ball by not giving the full answer here.

MR. FEDER: Do not advocate.

MS. BERTRAND: There is nothing about hiding the ball

about answering their question directly. What we also cannot

do is suggest to them that there's a different way to convict

on this case when we don't know if they already addressed that.

The question is this specific instruction, and that only.

MR. STONE: Well, if they have addressed it then it

will be an easy deliberation for them. They can just disregard

that part of the --

MS. BERTRAND: We cannot assume that.

THE COURT: Well, I do think answering the question

reference to the Travel Act instruction is appropriate because

they are asking the question whether or not someone can be

convicted of a Travel Act offense. It clearly says that. Can

the same defendant be found guilty of charges 2 through 51,

which are the Travel Act offenses.

MS. BERTRAND: However --

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THE COURT: That's the end of the question.

MS. BERTRAND: But the beginning of the question, the

first phrase of that question is, "Per page 27 lines 14 and

15." So the call of the question, which also --

THE COURT: Which also refers to the Travel Act, lines

14 and 15.

MS. BERTRAND: They certainly do. The call of the

question from the jury is, how do we apply lines 14 and 15?

Nothing further.

THE COURT: I do think the response, at a minimum,

should refer them back to separate consideration of the

individual counts. That's what we've asked them to do in the

instruction.

MS. BERTRAND: The struggle is, Your Honor, that they

received that yesterday and they have the same question. So

they've gotten that answer before. That doesn't seem to be

where the struggle for this jury lies. And I think going

beyond and trying to guess is overbroad. They were told

yesterday to consider these counts separately, to consider the

defendants separately. They referred back to the Travel Act

specific elements. That did not answer their question, and now

they are simply asking, can we under these two lines on

page 27, find someone guilty? The answer is "No" if the person

is not a member of the conspiracy.

MR. STONE: Your Honor, we answered this very similar

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question yesterday. To answer it "No" today will be extremely

confusing for this jury. If we're going to add "No," then we

need to just make it clear that there is a "Yes" here and it is

the substantive instruction on page 30.

THE COURT: And really that is the -- that is the

concern is the consistency, and that's why I pulled out the

last question because it's extraordinarily similar, and I think

that the appropriate response should be at least similar to the

manner which the Court answered the latter question.

MS. BERTRAND: Any of my colleagues want to comment?

I just want to make sure none of my colleagues are being frozen

out here.

Your Honor, we tried that approach yesterday. The

jury is indicating that's not the answer they need help with.

THE COURT: Well, that wasn't the question. It's a

similar question. It's not the same.

MS. BERTRAND: Similar question regarding the same set

of instructions on page 27, but as we've noted discrete. As

the Court noted, there is a discrete difference in the

language. And I would also note defense objected yesterday to

the answering of the question "Yes." I think here what is

critical is that the jury be told applying page 27 lines 14 and

15, the answer is "No."

THE COURT: Well, it may be more concise to answer the

question that a defendant who you find not guilty in what they

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refer to as charge 1, can be found guilty of charges in Count 2

through 51 even if not a member of the conspiracy.

MS. BERTRAND: Your Honor, I think that that goes

beyond the question, and I also think it directs them basically

to find the defendant guilty, and that's far more direction

than is proper.

Here, if the Court were going to point out an

alternative theory, it should be something to the effect of:

Applying lines 14 and 15 at page 27 --

THE COURT: Well, I can't single -- well, no, you

can't parse out the instruction that way. You have to read it

in total.

MS. BERTRAND: But they did.

THE COURT: I understand that.

MS. BERTRAND: And so the answer is "No" applying

that. There are alternatives that are possible, but applying

the strict language of this, the answer is "No." The jury has

also been directed to look at page, I believe it's 30 that has

the Travel Act instructions, but the answer to this question is

"No."

THE COURT: Well, I actually think an explanation that

relates back to the Travel Act is, again, important or at least

the way they referred to it as charges 2 through 51, and it

really is related to the instruction that reads, "You must

decide the case of each defendant on each crime charged against

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that defendant separately. Your verdict on one count as to any

defendant should not control your verdict on any other count."

And therefore, answering the question in the way that you

suggest would be misleading and it would not be in harmony with

the prior instructions.

MS. BERTRAND: Your Honor, the question pertains to

Pinkerton liability.

THE COURT: I understand that, Ms. Bertrand. Give me

a moment.

The Court proposes this: If a defendant is found not

guilty in Count 1, you are to consider the remaining charges as

to each defendant separately.

MS. BERTRAND: That's fine.

THE COURT: Mr. Stone.

MR. STONE: I think we can provide more clarification

and drop the reference to the substantive instruction or the

Travel Act on page 30, because there's a chance that they are

confused, as maybe they think that the United States had to

prove up both.

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

the remaining charges separately is because it doesn't single

out the Travel Act charges, which obviously they are concerned

about, but it directs them that they are to separately consider

each individual count as to each defendant, and I think it's a

broader way of getting to answer their question.

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MR. STONE: I understand that, Your Honor. My concern

is if they think that the United States still needs to prove up

the Pinkerton theory in conjunction or in addition to the

substantive Travel Act. There isn't really a part of the

instruction that says these are separate theories of liability.

You can go under one theory, you can go under the other, and

clearly they are struggling with this Pinkerton instruction,

and so I was -- we think that to clarify and point them to

instruction 30 or the instruction that begins on page 30 would

be helpful.

MS. BERTRAND: Your Honor --

THE COURT: Well, I am going to have the final word.

I'm going to answer the question in the way that I propose, so

the answer will be: If a defendant is found not guilty in

Count 1, you are to consider the remaining charges as to each

defendant separately.

It incorporates and encompasses all of the counts,

including the Travel Act, and that's how I will resolve it.

MR. STONE: Your Honor, I'm sorry, I just missed it,

is it to each of the remaining charges?

THE COURT: As to each. I'm sorry. It reads: You

are to consider the remaining charges as to each defendant

separately.

MR. STONE: Would it be okay, we offer that it would

be each of the remaining charges as to each of the defendants

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separately?

THE COURT: Yes.

MS. BERTRAND: Sorry, what did Mr. Stone just say?

THE COURT: It will read: If a defendant is found not

guilty in Count 1, you are to consider each of the remaining

charges as to each defendant separately.

MR. LINCENBERG: Your Honor, may I make just a record

of our objection?

THE COURT: Yes.

MR. LINCENBERG: We object. We don't think that that

answers the question. This question is dealing with element

four of the conspiracy count. It's not dealing with each

defendant or anything. It's asking specifically about if a

defendant that they may have in mind is found not guilty in

Count 1, and they are asking about element four and nothing

further. And the answer should only be -- it should be "No"

and it should be restricted to -- the answer should be

restricted to element four.

MS. BERTRAND: I concur with my colleague, Your Honor.

I think the danger of the government's interpretation is that

we don't know that they haven't already gone through page 30

and decided that that doesn't apply here. It is --

THE COURT: I am not putting any reference into

page 30.

MS. BERTRAND: Then my suggestion would be, Your

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Honor, that in addition to the language the Court has included,

the answer still "No."

MR. CAMBRIA: Still "No."

MS. BERTRAND: The exact answer to: Can we convict if

they weren't a member of the conspiracy? Not applying that

rule they can't.

THE COURT: All right. I will answer the question in

the way that I outlined, and please return the question to my

law clerk.

MR. CAMBRIA: We join in that too, Your Honor.

THE COURT: Sorry, what was that?

MR. CAMBRIA: We all join in that, in our objections.

(Proceedings concluded at 4:04 p.m.)

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UNITED STATES DISTRICT COURT

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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 16th day of November,

2023.

s/Hilda E. Lopez_______

HILDA E. LOPEZ, RMR, FCRR

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