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GLENN B. McCORMICK

Acting United States Attorney District of Arizona

KEVIN M. RAPP (Ariz. Bar No. 014249, kevin.rapp@usdoj.gov) MARGARET PERLMETER (Ariz. Bar No. 024805, margaret.perlmeter@usdoj.gov) PETER S. KOZINETS (Ariz. Bar No. 019856, peter.kozinets@usdoj.gov) ANDREW C. STONE (Ariz. Bar No. 026543, andrew.stone@usdoj.gov) Assistant U.S. Attorneys

40 N. Central Avenue, Suite 1800

Phoenix, Arizona 85004-4408

Telephone (602) 514-7500

DAN G. BOYLE (N.Y. Bar No. 5216825, daniel.boyle2@usdoj.gov) Special Assistant U.S. Attorney 312 N. Spring Street, Suite 1400

Los Angeles, CA 90012

Telephone (213) 894-2426

KENNETH POLITE

Assistant Attorney General 

Criminal Division, U.S. Department of Justice

REGINALD E. JONES (D.C. Bar No. 1620183, reginald.jones4@usdoj.gov) Senior Trial Attorney

Criminal Division, U.S. Department of Justice

1400 New York Ave N.W., Suite 1200

Washington, D.C. 20005

Telephone (202) 616-2807 

Attorneys for Plaintiff

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

United States of America,

Plaintiff, 

v. 

Michael Lacey, et al.,

Defendants.

No. CR-18-00422-PHX-DJH

UNITED STATES’ RESPONSE IN 

OPPOSITION TO DEFENDANTS’ MOTION TO PARTIALLY VACATE 

SEIZURE WARRANTS AND 

RELEASE FUNDS (Doc. 1366)

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INTRODUCTION

Federal actions are governed by rules. These rules set forth orderly and predictable 

procedures, and thus ensure equal treatment across all litigants. While courts may craft 

exceptions to these rules where necessary, these exceptions are narrowly construed and 

carefully guarded to ensure fairness and predictability. In a criminal action, these rules

dictate that questions of guilt precede questions of forfeiture—including the forfeitability 

of seized assets—unless and until a defendant establishes that her Sixth Amendment rights 

are actually in peril. Despite this well-settled structure, Defendants Lacey, Larkin, Spear, 

and Brunst have moved to “Partially Vacate Seizure Warrants” without attempting to 

follow these rules or make a showing of their purported need, despite having been told in 

this action and others what showing is required. This is a transparent effort to release 

another party’s money into their hands, purportedly to pay legal fees Defendants have not 

itemized, explained, or even promised to actually pay. The Motion should be denied. 

FACTUAL BACKGROUND

A. The Backpage/Ferrer Actions

On April 5, 2018, Backpage.com, LLC and several related entities (collectively 

“Backpage”) pleaded guilty to an information charging one count of money laundering and

admitted that Backpage, which operated Backpage.com, “derived the great majority of its 

revenue from fees charged in return for publishing advertisements for ‘adult’ and ‘escort’ 

services,” “[t]he great majority of these advertisements [were], in fact, advertisements for 

prostitution services,” and after “banks, credit card companies, and other financial 

institutions refused to do business with Backpage” the company “found ways to fool credit 

card companies into believing that Backpage-associated charges were being incurred on 

different websites, to route Backpage-related payments and proceeds through bank 

accounts held in the name of seemingly unconnected entities.” United States v. Backpage, 

LLC, et al, Case No. CR-18-465, Doc. 8-2 at 11-12. At the same time, Backpage’s CEO, 

Carl Ferrer, pleaded guilty to a money laundering and Travel Act conspiracy, admitted to

a largely similar factual basis, and agreed to cooperate with the government. See United 

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States v. Ferrer, Case No. CR-18-464, Doc. 7-2, at 12-14 (collectively with CR-18-465,

the “Backpage Actions”). 

As part of their plea agreements, Backpage and Ferrer agreed to pay $500 million 

in restitution to victims directly or proximately harmed by Backpage (including, for 

example, victims trafficked on Backpage), and in furtherance of this restitution, agreed to 

forfeit a range of assets traceable to or involved in their crimes. See, e.g., CR-18-465, Doc. 

8-2 at 6-8. As part of two Preliminary Orders of Forfeiture, Backpage agreed to forfeit a 

substantial amount of cryptocurrency, approximately 260 internet domain names, a number

of corporate bank accounts, and certain funds held in Interest on Lawyers Trust Accounts 

funded by Backpage (the “IOLTA Funds”):

• Davis Wright Tremaine LLP IOLTA account x3414 ($6.25 million)

• Perkins Coie LLP IOLTA account x1235 ($2.9 million)

• Rusing Lopez & Lizardi IOLTA account x1363 ($5.25 million)

• Prince Lobel Tye LLP Citibank account x1369 ($100,000)

• Copeland, Franco, Screws & Gill, P.A. IOLTA account x2052 ($100,000) 

• Wayne B. Giampietro LLC IOLTA account x5397 ($100,000)

• Walters Law Group IOLTA account x4381 ($100,000)

• Akin Gump Strauss Haeur & Feld LLP IOLTA account x7941 ($250,000)

• Thompson Coburn LLP IOLTA account x3332 ($100,000)

See CR-18-465, Docs. 22, 42, 44. On June 29, 2018, moving defendants (hereinafter 

“Defendants”) filed petitions seeking the IOLTA Funds. See CR-18-465, Docs. 61-64, 73. 

B. The CDCA Civil Seizure Warrants and Civil Forfeiture Actions

Between March and November of 2018, magistrate judges in the Central District of 

California (“CDCA”) found probable cause to issue warrants to seize a range of assets

involved in or traceable to Backpage’s operations. On June 1, 2018, Defendants filed a

motion to vacate the seizure warrants on First Amendment grounds, see In re Seizure 

Warrants, CDCA Case No. 18-cv-6742, and on June 10, 2018, Lacey filed an additional

motion in the same action seeking to release certain purportedly-untainted funds. CDCA

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Case No. 18-cv-6742, Doc. 22. The motion to vacate was denied on December 20, 2019 

(id., Doc. 130), and Lacey’s motion for return of funds was resolved through stipulation.

On September 28, 2018, in the Central District of California, the United States filed 

verified complaints for forfeiture in rem based on the seizure warrants and, pursuant to 

Supplement Rule G(3) of the Federal Rules of Civil Procedure, obtained arrest warrants in 

rem over the assets at issue there. See, e.g., Ex. 1 (Arrest Warrant in rem authorizing seizure 

of $407,686.14 in Bank Funds Seized from Compass Bank Account ‘4862). Beginning on

or about May 22-24, 2019, Defendants filed claims to the assets at issue in these civil 

forfeiture actions. See, e.g., CDCA Case No. 18-cv-8420 (“Civil Actions” or “Civ. Act.”), 

Docs. 31, 36. The Civil Actions were consolidated on January 14, 2020, and on June 1, 

2020, the United States filed a First Amended Consolidated Master Complaint for 

Forfeiture (“FACMC”). See Civ. Act., Doc. 108. On July 1, 2020, Defendants filed two

motions to dismiss the FACMC, which Judge Klausner denied on December 1, 2020. See

Civ. Act., Doc. 170. On January 13, 2021, the parties stipulated to stay the Civil Actions, 

and a stay was granted on January 20, 2021. See Civ. Act., Docs. 188-189. 

C. This Criminal Case

On March 28, 2018, a grand jury in this District returned an indictment charging 

Defendants (and others) with knowingly facilitating prostitution and engaging in money 

laundering designed to conceal misconduct and evade law enforcement, and in July of 

2018, the grand jury issued a First Superseding Indictment (the “SI”). See United States v. 

Lacey, et al., Case No. CR-18-422 (the “Criminal Action” or “Crim. Act.”), Doc. 230. On 

February 11, 2019, Defendants moved to dismiss the SI based on purported interference 

with certain defendants’ Sixth Amendment rights (Doc. 456), which the Court denied on 

May 2, 2019, although the Court granted certain counsel permission to withdraw for nonpayment, and appointed CJA counsel for nonmoving defendants. See Doc. 559. Trial in the 

Criminal Action began on September 1, 2021, and on September 14, 2021, the Court 

granted a mistrial. See Doc. 1308. Trial is now set for February 9, 2022. See Doc. 1377.

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On October 26, 2021, Defendants moved this Court to “partially vacate the seizure 

warrants that currently restrain [certain] assets and order the release of these limited sets of 

assets.” Mot at 2. The Motion seeks the release of four subsets of assets, defined with 

varying degrees of specificity (the “Seized Assets”):

1. $407,686.14 in Bank Funds Seized from Compass Bank Account 4862, held in the 

name of Voice Media Group (the “VMG Funds”); 

2. “Over $10 Million” in funds seized from a series attorney trust accounts (the IOLTA 

Funds, as defined above); 

3. Undefined seized funds purportedly from non-adult advertising on Backpage (the 

“Non-Adult Advertising Funds”); and 

4. Undefined seized funds purportedly relating to revenues from outside of the United 

States (the “International Funds”).

Only one moving defendant submitted a declaration in support of the Motion (defendant 

Brunst), and that lone declaration (1) does not disclose any defendant’s ability to pay 

counsel, (2) does not disclose how much any defendant purportedly needs to fund their 

defense, and (3) does not commit to actually pay counsel with any funds released.

RELEVANT LAW

Criminal Forfeiture

Forfeiture in a criminal action is governed by Federal Rule of Criminal Procedure 

32.2. Under Rule 32.2(a), the United States must provide notice of its intent to pursue 

forfeiture in the indictment or information, and upon a guilty plea or guilty verdict, the 

Court or Jury must determine what property is subject to forfeiture and “whether the 

government has established the requisite nexus between the property and the offense.” Rule 

32.2(b)(1)(A). Upon a determination that property is subject to forfeiture, a court must 

enter a Preliminary Order of Forfeiture (“POF”) “without regard to any third party’s 

interest in the property,” as the determination of any potential third-party interest in 

property “must be deferred until any third party files a claim in an ancillary proceeding 

under Rule 32.2(c).” Rule 32.2(b)(2); see also United States v. Lazarenko, 476 F.3d 642, 

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649 (9th Cir. 2007) (“A third party claiming an interest in property subject to forfeiture 

may not intervene in a trial or appeal of a criminal case involving the forfeiture.”).

Where a third party asserts an interest in the subject property, the court must hold 

an ancillary proceeding to determine the ownership of the property, as set forth in 21 U.S.C. 

§ 853(n). See Rule 32.2.(c); see also Stefan D. Cassella, Asset Forfeiture Law in the United 

States (2d ed. 2013), § 23-2 (“Cassella”) (“[T]he one and only purpose of the ancillary 

proceeding is to determine the ownership of the property”). A third party has no standing 

to contest forfeiture outside of the confines of the ancillary proceeding, and even in the 

ancillary proceeding, the third party must still establish threshold standing to assert any 

purported ownership interest. See Rule 32.2(c)(1)(A). At the ancillary proceeding, the 

burden is on the third party to establish either that (1) the third party had a preexisting 

interest in the subject property superior to the convicted defendant, or (2) was an innocent 

owner of the property. See 21 U.S.C. § 853(n)(6)(A-B). 

Civil Forfeiture

Following the Civil Asset Forfeiture Reform Act of 2000 (“CAFRA”), civil 

forfeitures are largely governed by 18 U.S.C. §§ 981 and 983, as well as Supplemental 

Rule G of the Federal Rules of Civil Procedure (“Rule G”). A civil forfeiture action 

generally begins with the United States filing a verified complaint against a defendant res,

which is then seized pursuant to an arrest warrant, see Rule G(3)(b), and proceeds much as 

an ordinary civil case would (through motion practice, discovery and trial). 18 U.S.C. § 981 

also includes a statutory stay provision, which permits either the government or a 

claimant/defendant to stay a civil forfeiture action until the conclusion of a parallel criminal 

case. See 18 U.S.C. § 981(g)(1-2).

The “Monsanto Hearing”

Under the statutory structure described above, a criminal determination of guilt will 

almost always precede any adjudication on the forfeitability of seized assets, in order to

“promote[] the goals of res judicata: fairness, finality, and avoidance of duplicate judicial 

proceedings.” United States v. Liquidators of European Fed. Credit Bank, 630 F.3d 1139, 

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1152 (9th Cir. 2011) (describing statutory design that criminal proceedings advance ahead 

of a parallel civil forfeiture actions). This is because forfeiture is “an aspect of punishment 

imposed following conviction of a substantive criminal offense.” Libretti v. United States, 

516 U.S. 29, 39 (1995). 

In 1989, the Supreme Court decided two cases addressing how to balance this 

statutory design against a defendant’s Sixth Amendment right to counsel of their choosing. 

In United States v. Monsanto, 491 U.S. 600, 614 (1989), the Court held that pre-trial asset 

restraints based on probable cause are constitutionally permissible, even when a defendant 

seeks to use those assets to pay for counsel. And in Caplin & Drysdale, Chartered v. United 

States, 491 U.S. 617, 626 (1989), the Court held that “[w]hatever the full extent of the Sixth 

Amendment’s protection of one’s right to retain counsel of his choosing, that protection 

does not go beyond the individual’s right to spend his own money.” (quotation omitted). 

Post-Monsanto, a criminal defendant may seek a limited hearing to challenge the 

probable cause for an asset restraint (a “Monsanto hearing”)—but the defendant is entitled 

to such a hearing only if he first shows that such assets are needed to pay for his counsel 

of choice. Thus, the defendant must make an initial showing of a potential Sixth

Amendment injury. In United States v. Unimex, Inc., 991 F.2d 546, 551 (9th Cir. 1993), 

for example, the Ninth Circuit held that the burden is squarely on the movant to establish 

a “substantial claim” of a Sixth Amendment injury through “sufficiently definite, specific, 

detailed, and nonconjectural” affidavits. In United States v. Bonventre, 720 F.3d 126, 133 

(2d Cir. 2013), the Second Circuit similarly held that, to qualify for Monsanto hearing, a

defendant must disclose his net worth, provide a comprehensive list of his assets, and 

explain how he has been paying his counsel and other living expenses. Accord, United 

States v. Jones, 160 F.3d 641, 647 (10th Cir. 1998) (“[a]s a preliminary matter, a defendant 

must demonstrate . . . she has no assets, other than those restrained, with which to retain 

private counsel”); United States v. Farmer, 274 F.3d 800, 804-05 (4th Cir. 2001); see also

Cassela, § 17-6 (“Under Jones and Farmer, a defendant has a right to a post-restraint, pretrial hearing if he makes two threshold showings: 1) that he has no assets other than those 

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subject to the restraining order with which to exercise his Sixth Amendment right to 

counsel or to pay for living expenses; and 2) that there is a bona fide reason to believe that 

the court (or the grand jury) erred in finding probable cause to believe that the restrained 

property would be subject to forfeiture if the defendant is convicted.”). 

Moreover, courts have imposed strict guardrails to prevent defendants from using 

Monsanto as a general pre-trial discovery device or a fishing expedition into the

government’s case. In Kaley v. United States, 571 U.S. 320, 324 (2014), the Supreme Court 

held that a Monsanto hearing is not a forum to relitigate a grand jury’s probable cause 

finding—but is limited to challenging the alleged nexus between the seized property and 

the charged offense.

In Luis v. United States, the Supreme Court addressed a related issue: “Whether the 

pretrial restraint of a criminal defendant’s legitimate, untainted assets (those not traceable 

to a criminal offense) needed to retain counsel of choice violates the Fifth and Sixth 

Amendments.” 136 S. Ct. 1083, 1088 (2016). The defendant there allegedly dissipated 

alleged fraud proceeds pre-indictment, and the government obtained an order restraining

her admittedly-untainted property. See id. The defendant argued this restraint violated her 

Sixth Amendment rights, and the Supreme Court agreed, holding that the defendant had “a 

Sixth Amendment right to use her own ‘innocent’ property to pay a reasonable fee for the 

assistance of counsel.” Id. at 1096. Luis hinged on the fact that the property was 

indisputably untainted and “belong[ed] to the defendant, pure and simple.” Id. at 1090. 

In sum, Monsanto and Luis each provides a defendant with the opportunity to use 

untainted funds to pay for their defense if needed. As shown below, regardless of whether 

Monsanto or Luis applies, Defendants must first establish—through sworn declarations or 

affidavits—that they cannot pay for their counsel of choice without access to the seized 

assets. Defendants’ Motion must be denied because they have failed to make this necessary

threshold showing, and their remaining assertions are likewise deficient.

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ARGUMENT

I. This Court Has Already Held that Monsanto Applies.

Defendants admit they have not attempted to make a Monsanto/Unimex showing. 

Instead, they argue the Motion is not governed by Monsanto because (they assert) the 

Seized Assets are “legitimate and untainted.” Mot. at 8.1 Yet almost two years ago, this 

Court held that the seizures at issue “were based on the CDCA’s finding of probable cause,” 

and that “[u]nlike in . . . Luis, the Government is not attempting to prevent Defendants 

from using assets it believes are untainted.” Crim. Act., Doc. 559 at 7. 

Nothing has changed since that decision. Defendants’ motion to vacate the seizure 

warrants in the Civil Actions was denied, and the magistrate judges’ findings of probable 

cause have not been overturned. It continues to be true that “given the probable cause 

findings, this case, at least at this point, is much more like Monsanto and Caplin.” Id. at 7. 

As this Court recognized in Doc. 559:

Allowing pretrial restraint of assets is consistent with “the long-recognized and lawful practice of vesting title to any forfeitable assets, in the United

States, at the time of the criminal act giving rise to forfeiture.” Caplin, 491

U.S. at 627. This ensures any “ill-gotten gains” will not dissipate before

conviction and protects the community’s interest in recovery. Monsanto, 491 U.S. at 616. The Supreme Court affirmed these rulings as recently as

2014 when it decided Kaley. 571 U.S. at 371 (“So again: With probable

cause, a freeze is valid.”).

Here, the seizures were based on the CDCA’s finding of probable cause.

Pretrial restraints based on probable cause to believe that the assets will

be ultimately forfeited does not offend the Fifth or Sixth Amendment.

Crim. Act., Doc. 559 at 7.

Despite this law of the case,2 Defendants now simply assert that the Seized Assets 

are untainted, and accordingly, this case is governed by Luis rather than Monsanto. But 

1 Defendants admit that they would have to make a showing of a Sixth Amendment injury 

otherwise. See Mot. at 15 (“These assets are not ‘loot, contraband, or otherwise ‘tainted’’ 

and, therefore, Defendants are not required to make a showing under Monsanto that they 

have been deprived of counsel”).

2 Under the law of the case doctrine, “a court is generally precluded from reconsidering an 

issue that has already been decided by the same court or a higher court in the identical case, 

absent a material change in circumstances.” Ticketmaster L.L.C. v. Prestige Entm't W., Inc., 

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Defendants cannot sidestep this Court’s prior Order (Doc. 559), the CDCA’s probable 

cause findings, and the Monsanto and Unimex cases, simply by ignoring these orders and 

decisions. The weakness of Defendants’ position is particularly obvious in light of the relief 

requested: an order vacating the seizure warrants.3 The Motion implicitly admits that the 

Seized Assets were restrained based on a finding of probable cause by a magistrate judge, 

and yet somehow, the word “magistrate” does not appear a single time in the Motion. In 

short, despite this Court’s prior holding and their own admission that they would need to 

make a showing under Monsanto/Unimex (see note 1, supra), Defendants have simply 

chosen not to do so. On this basis alone, the Motion should be denied. 

The Court should not turn a blind eye to what Defendants are attempting. If granted,

their Motion would nullify Monsanto: No rational defendant would ever follow the 

procedures set by courts post-Monsanto when they could ignore a magistrate’s finding of 

probable cause, and instead just assert that seized funds are untainted and obtain a hearing 

to try to release assets—all without showing that they even intended to use such assets to 

fund their defense. Nothing in the Motion justifies such a radical change in the law.4

315 F. Supp. 3d 1147, 1166 (C.D. Cal. 2018) (citing Thomas v. Bible, 983 F.2d 152, 154–

155 (9th Cir. 1993)). This doctrine “encourages the conservation of limited judicial 

resources and promotes consistency by allowing court decisions to govern the same issues 

in subsequent stages of the same case.” E. Bay Sanctuary Covenant v. Trump, 950 F.3d 

1242, 1261 (9th Cir. 2020).

3 As a matter of procedure, vacating the seizure warrants is actually a moot point, as the 

seizure warrants currently do not restrain anything: as detailed above, the VMG Funds are 

subject to an arrest warrant (see Ex. 1) and the IOLTA Funds are subject to the amended 

POF (see CR-18-465, Doc. 44), each of which authorize the government’s retention of 

these assets, so vacating the seizure warrants would be largely academic. Defendants seem 

to miss this point, and confusingly argue that “[t]o date, the government has failed to file 

any legal instrument that would authorize the continued restraint of these [IOLTA Funds]” 

(Mot. at 11), but a POF permits the government to seize and retain forfeitable property. See

Rule 32.2(b)(3)(“The entry of a preliminary order of forfeiture authorizes the Attorney 

General (or a designee) to seize the specific property subject to forfeiture”).

4 For the same reasons, Defendants are also not entitled to fee reimbursement (Mot. at 16-

17), and have not cited a single case holding that the government is responsible for the 

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II. Even Under Luis, Defendants Have Failed to Carry Their Burden.

Even if the Court were to consider the Motion under Luis (and it should not),

Defendants still fail to meet their burden. As the Supreme Court stated in Luis, “the pretrial 

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

Amendment” 136 S. Ct. at 1088 (emphasis added). Post-Luis, courts have held that the 

Supreme Court meant what it said in using the word “needed”: much like with Monsanto, 

a defendant seeking relief under Luis must show that she actually needs restrained funds to 

retain counsel of choice. Defendants are certainly aware of such precedent, because Judge 

Klausner expressly rejected their arguments to the contrary in the CDCA:

Defendants next argue that the pre-trial restraint of their assets is depriving them of their right to counsel of their choice as guaranteed under the Supreme 

Court’s holding in Luis v. United States, 136 S. Ct. 1083, 1088 (2016). As Defendants have made no showing in this motion that they lack other funds to pay counsel, the Court disagrees. . . . 

Claimants have made no attempt at such a showing. Their motion makes no 

reference to their present availability of funds, and the Court cannot find 

anything in the hundreds of pages of exhibits that they have submitted from which it can draw any inference on the subject. As such, the Court finds that 

Defendants have failed to make the necessary prima facie showing to justify 

a hearing on release of funds to pay for counsel.

Civ. Act., Doc. 131 (internal citations omitted). Multiple courts have agreed that there is 

no Sixth Amendment injury under Luis absent a showing that a defendant actually needed

restrained funds to retain counsel. See, e.g., United States v. Lindell, 766 F. App’x 525, 

528–29 (9th Cir. 2019) (“Even assuming there were untainted funds in the IRA during the 

criminal proceedings, Defendants have failed to clearly demonstrate that those funds were 

needed to pay for counsel of choice.”); United States v. Jones, 844 F.3d 636, 641, n.1 (7th 

Cir. 2016) (no Luis error where defendant “has not shown a bona fide need for the 

restrained assets”); United States v. $89,866.18, No. 2:16-CV-42-JEM, 2021 WL 1560813, 

at *2 (N.D. Ind. Apr. 21, 2021) (“Beyond a vague assertion of bona fide need and a 

statement of the amount of fees he currently owes his counsel of choice, Claimants have 

costs of a mistrial they themselves moved for. See Doc. 1308. Defendants cite only a single 

case, Arizona v. Washington, 434 U.S. 497, 503–04 (1978), which says nothing about fees. 

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not established that [defendant] has no other method of obtaining funds to pay his attorneys 

in the criminal case. Until a showing is made, the Court need not address the extent to 

which some of the forfeited funds may be untainted by the alleged fraud.”).

The Motion does not attach any declarations from Defendants explaining how much 

they need to pay counsel or prepare for trial, what their trial budget might be, what expenses 

they intend to pay from any released funds, what would become of any unspent or excess 

funds not ultimately paid to counsel, or even swearing that they will actually use any funds 

released to pay counsel. See Kaley, 571 U.S. 320, 355 (2014) (Roberts, J., dissenting)

(“[W]e are not talking about all of a defendant’s assets that are subject to forfeiture—only 

those that the defendant can show are necessary to secure his counsel of choice.”). On the 

present record, the Court could just as easily conclude that Defendants simply intend to 

spirit any released funds out of the country and beyond this Court’s jurisdiction. 

Even if Defendants had attempted to make such a showing of need, it is difficult to 

see how they could have succeeded, as post-Luis, courts have generally held that a 

defendant suffers no Sixth Amendment injury under Luis where he or she was competently

represented by counsel of choice. See Marshall, 754 F. App’x at 160 (“Because Marshall 

was represented by the counsel of his choice, there was no need for the seized funds and, 

thus, no Luis error.”); United States v. Gordon, 657 F. App’x 773, 778 (10th Cir. 2016) 

(“Luis needed the funds to obtain counsel of her choice. Here, Gordon did not need the 

assets to retain counsel as he, in fact, had retained counsel of his choice and that counsel 

thoroughly and vigorously represented him at trial”) (citations and alterations omitted). For

nearly three years, Defendants have been vigorously represented by a veritable who’s who 

of the Southern California bar, including counsel from three leading trial boutiques, noted 

First Amendment attorneys, and multiple former federal prosecutors and federal defenders.

There is no indication in the Motion that any defense counsel intend to withdraw, nor have 

Defendants or counsel explained how any purported lack of funds would functionally 

impair their defense. While Defendants vaguely assert they “lack funds to pay the hard 

costs necessitated by a second trial, are unable to mount a constitutionally effective 

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defense, and may lose their choice of counsel in violation of the Sixth Amendment” (Mot. 

at 15), they do not cite any declaration or indicate that a motion to withdraw is forthcoming.

On this record, the Sixth Amendment is not implicated and Luis is not applicable. 

III. Defendants Have No Right to Fund Their Defense with Backpage’s Money.

A defendant has “no Sixth Amendment right to spend another person’s money for 

services rendered by an attorney, even if those funds are the only way that that defendant 

will be able to retain the attorney of his choice.” Doc. 559 at 5 (quoting Caplin & Drysdale,

491 U.S. at 626). Here, Defendants seek to release IOLTA Fundsthat Backpage has already 

agreed to forfeit—yet Defendants have made no effort to establish that they (as opposed to

Backpage) own these funds, and the proper venue for them to do so is in the ancillary 

proceeding.

The IOLTA Funds were included in a signed POF (see CR-18-465, Doc. 44), and

Defendants filed petitions to the IOLTA Funds in the ancillary proceedings. See CR-18-

465, Docs. 61-64, 73.

5 Under Rule 32.2 and 21 U.S.C. § 853(n), a third party’s sole avenue 

for challenging a POF is to establish in the ancillary proceeding that they have a superior 

ownership interest in these assets. “[S]ection 853(n) is the exclusive proceeding in which 

third parties may claim interests in property subject to criminal forfeiture.” United States 

v. Nava, 404 F.3d 1119, 1125 (9th Cir. 2005) (emphasis added); Lazarenko, 476 F.3d at

648 (9th Cir. 2007) (“Section 853(n) provides the process for vindicating a third party’s 

interest in forfeited property. The law appears settled that an ancillary proceeding 

constitutes the only avenue for a third party claiming an interest in seized property.”).

Even if probable cause were lacking (it is not), Defendants have made no effort to 

establish that they have a superior ownership interest to Backpage in the IOLTA Funds, 

and the exclusive venue for them to make such a showing is in the ancillary proceeding. In 

fact, the only mention of any POF in the Motion is an argument that “most assets the 

5 Defendants previously sought “reconsideration” of the amended POF (see CR-18-465, 

Doc. 45), but as described above, a third-party has no standing to object to inclusion of 

assets in a POF, and Defendants have since filed petitions to the IOLTA Funds. 

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government seized from Defendants, their families, or their companies are not subject to a 

criminal restraining order or preliminary order of forfeiture.” Mot. at 7, n.16.

6 But the 

primary assets Defendants are seeking to release (the IOLTA Funds) are identified in

Backpage’s amended POF, and Defendants have already filed petitions seeking the return 

of those assets in the ancillary proceeding. Having chosen not to make a showing of a 

superior interest in the IOLTA Funds under §853(n), Defendants are not entitled to have 

and spend assets that Backpage has already agreed to forfeit.7

IV. The United States Established Probable Cause to Restrain the Seized Assets

Finally, even if the Court were inclined to disregard the showings required under 

Monsanto and Luis, and to permit Defendants to challenge the forfeiture of assets they have 

6 It is technically correct that many assets seized from Defendants (as opposed to those 

forfeited by Backpage) are not subject to a POF or restraining order, but that is because (as 

described above) these assets are restrained pursuant to arrest warrants in the Civil Actions. 

See, e.g., Ex. 1. The relatively small amount of forfeitable property seized from Defendants 

but not named in the Civil Actions was returned pursuant to a stipulation between the 

parties, and consisted of an estimated $1,170,000 in luxury vehicles, jewelry, art, and 

personal effects. See Docs.1036-1037. Defendants do not explain in the Motion why they 

are not seeking to use this returned property to fund their defense, and they have never 

requested permission to liquidate this property pursuant to the stipulation in order to pay 

their counsel. Defendants appear to be seeking to spend Backpage’s forfeited money on 

their defense instead of liquidating their own luxury assets. 

7 The POF over the IOLTA Funds in this District is the primary reason the government 

agreed that defendants could bring a Monsanto motion in this Court, as opposed to CDCA,

which has in rem jurisdiction over many of the non-IOLTA assets pursuant to the arrest 

warrants there, such as the VMG Funds. See Ex. 1. As to these non-IOLTA assets, the 

government acknowledges that the Court may have jurisdictional concerns with the Motion

being heard in this District as opposed to the CDCA, because the in rem nature of a civil 

forfeiture case will generally mean that the assertion of jurisdiction by one court over an 

asset forecloses jurisdiction in another court until the jurisdiction of the first court is 

released. See Penn General Casualty Co. v. Commonwealth of Pennsylvania ex rel. 

Schnader, 294 U.S. 386, 389 (1935). The United States notes this issue only because courts 

have an independent obligation to determine whether subject-matter jurisdiction exists. See

Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999). The United States stands by 

its agreement to have this Court hear the Motion in the first instance, and as noted herein, 

the Motion is deficient for multiple reasons and can and should be denied on nonjurisdictional grounds, so the Court need not reach this issue.

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not established an ownership interest in, and to ignore both the grand jury and the 

magistrate judges’ findings of probable cause, the United States has nonetheless still stated

sufficient probable cause to restrain the Seized Assets. 

Probable cause to restrain assets subject to forfeiture “is not a high bar,” Kaley, 571 

U.S. at 338, and is “less than prima facie proof but more than mere suspicion.” United 

States v. $493,850.00 in U.S. Currency, 518 F.3d 1159, 1169 (9th Cir. 2008). The United 

States must merely establish reason “to believe that the property is involved in the activity 

subject to the specific forfeiture statute it invokes.” Id. It is equally important to recognize 

what the probable cause standard is not: a Monsanto hearing is not a full adjudication of 

the merits of the government’s case. Unlike a full adjudication, a probable cause hearing

“serve[s] only a gateway function” and demands only “the kind of fair probability on which 

reasonable and prudent people, not legal technicians, act.” Kaley, 571 U.S. at 338

(quotation marks omitted). 

1. The IOLTA Funds

The government has far exceeded the low bar of probable cause regarding the 

IOLTA Funds: Backpage has already pleaded guilty (thus establishing the commission of 

an offense) and admitted in a stipulated POF that the IOLTA Funds are proceeds of that 

offense. See CR-18-465, Doc. 44. It is difficult to imagine what more could be asked for 

than a court-accepted plea agreement and a POF establishing the forfeitability of an asset.

See Florida v. Nixon, 543 U.S. 175, 187 (2004) (“[T]he plea is...itself a conviction.”). As 

described above, third-parties such as Defendants simply have no right to try and unwind 

a criminal forfeiture under Rule 32.2. Their remedy is to try to establish a superior 

ownership interest in an ancillary proceeding. See section III, supra.

2. The VMG Funds

The United States has identified $83,063.12 in tainted funds paid by check (the 

“Tainted Check”) through an alleged pass-through account and into the VMG account, and 

has provided Defendants with the check number, date, and amount—all of which 

Defendants attached to the Motion. See Doc. 1366-12, at 2 (describing flow of VMG 

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Funds). The funds from the Tainted Check were commingled with other the funds in that 

pass-through account, rendering the total amounts transferred from the pass-through into 

the VMG account subject to forfeiture. See id. at 2 (describing transfer of $944,729.25 from 

alleged pass-through account into the VMG account); see also Cassella, § 27-9(d) (“[I]f 

the money laundering transaction is the simple movement of commingled money from one 

place to another, all of the money involved in the transaction is subject to forfeiture.”).

While Defendants do not appear to dispute that the Tainted Check was deposited into the 

alleged pass-through account, they dispute whether the proceeds of the Tainted Check 

reached the VMG account and have attached records purporting to support this position. 

See Doc. 1366-6. This newly-disclosed evidence does not negate probable cause, however, 

and is exactly the kind of competing evidence ordinarily produced in civil discovery and 

then adjudicated at trial. The government acknowledges that forfeiture of the VMG Funds 

is a closer question than the IOLTA Funds, as it rests on a commingling theory which the 

government must prove at trial (while the IOLTA Funds have already been forfeited and 

await an ancillary proceeding). Nonetheless, the government has met the low bar of

probable cause.8

3. Non-Adult Advertising Funds

Defendants’ requested return of purported Non-Adult Advertising Funds simply 

ignores that they are charged with conspiracies in Counts 1 and 52, pretending instead that 

this case concerns only the 50 ads charged in Counts 2-51. See Mot. at 6 (“[T]he 

government’s seizures are completely untethered to the de minimis proceeds Backpage 

received from the 50 charged ads.”). This position is fundamentally at odds with the 

Superseding Indictment, which alleges a continuous criminal conspiracy dating from 2004-

2018. See SI ¶¶ 195-99 and 202-03; see also Doc. 946, at 13 (May 4, 2020 Order) (the fifty 

ads represent specific instances of “a continuous course of conduct where Defendants 

8 The United States has informed Defendants that it will consider returning this asset if 

Defendants can provide support for their claim that the proceeds of the Tainted Check did 

not actually result in the VMG Funds. As of this date, these discussions remain ongoing. 

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facilitated ‘unlawful activity,’”); Doc. 793, at 19-20 (October 14, 2019 Order) (discussing

United States v. Pinkerton, 328 U.S. 640, 646–47 (1946), and holding that “[t]he alleged 

facts in the SI, taken as true, establish defendants had the specific intent to promote 

prostitution in violation of the Travel Act. They conspired together to do so. The 

conspiracy was successful and resulted in the fifty ads for prostitution that now make up 

fifty counts of violating the Travel Act.”); see also Doc. 1355-7, 9/8/21 Trial Tr. at 7:13-

17 (ruling that uncharged acts—i.e., those not contained within the 50 substantive Travel 

Act counts—were “all in furtherance of the charge[d] conspiracy” and therefore not subject 

to Fed. R. Evid. 404(b)’s notice requirement). The United States is entitled to forfeit both

the proceeds of a substantive offense, such as those alleged in Counts 2-51, “or a conspiracy 

to commit such offense.” 18 U.S.C. § 981(a)(1)(C); see also Cassella, §15-3(b) (“[I]f the 

defendant is convicted of a conspiracy, all of the property involved in the entire conspiracy 

is subject to forfeiture, including property involved in uncharged substantive acts, and 

substantive acts on which the defendant was acquitted.”).

Defendants’ arguments otherwise are based on a false premise that Backpage had 

some substantial “non-adult and admittedly untainted revenue” (Mot. at 6), but as alleged 

in the SI (and entitled to deference under Kaley, 571 U.S. at 324), “virtually every dollar 

flowing into Backpage's coffers represented the proceeds of illegal activity.” SI ¶ 15; see 

also SI ¶ 112 (“the non-adult sections of the Backpage website were simply intended to 

‘allow[ ] plausible deniability,’ to make the website more palatable to ‘regulatory and law 

enforcement’ officials, and to otherwise make Backpage’s adult section more 

‘defensible.’”). Ultimately, whether Backpage was generating 90, 95, or 100 percent of its 

revenue from prostitution ads, considering the scope of the conspiracy alleged in the SI and 

admitted by Backpage, there is probable cause to believe that every dollar of Backpage’s 

revenue was “involved in the activity subject to the specific forfeiture statute it invokes,” 

$493,850.00, 518 F.3d at 1169, namely, conspiracies to violate the Travel Act and launder 

the proceeds of the same. See United States v. Huber, 404 F.3d 1047, 1058 (8th Cir. 2005) 

(where defendant commingled fraud proceeds and legitimate crop sale proceeds, then 

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transferred commingled funds, government was entitled to total amount involved in the 

money laundering transactions with no deduction for the amount of legitimate sales).

4. The International Funds

Defendants’ claim to what they describe as international revenue is simply a fiction,

arising from the same money laundering scheme alleged in the SI. This argument is 

premised on an assumption that payments on so-called international notes must have been 

sourced from international revenue (as opposed to domestic prostitution ads), but this 

assumption is not supported by anything in the Motion or the record before the Court. 

Regardless of how any note payments were characterized, what matters is where the 

payments were sourced from, and the vast majority of Backpage’s revenue was from 

domestic prostitution advertising. See CR-18-465, Doc. 8-2 at 11-12 (Backpage plea 

admission that the “great majority of [Backpage’s] advertisements [were], in fact, 

advertisements for prostitution services.”).

As alleged in the SI and admitted by Backpage in its plea agreement, Backpage was 

actively mischaracterizing the sources of its revenue due to negative publicity around 

Backpage. See CR-18-465, Doc. 8-2 at 11-12 (Backpage plea admission that the company 

“found ways to fool credit card companies into believing that Backpage-associated charges 

were being incurred on different websites, to route Backpage-related payments and 

proceeds through bank accounts held in the name of seemingly unconnected entities.”). 

Indeed, the entire purported sale of Backpage to Ferrer is alleged in the SI as part of the 

money-laundering scheme alleged (see SI ¶¶ 29-32, 177-194, 204-205) and entitled to 

deference under Kaley, so even if Backpage’s so-called international operations actually 

generated the revenue Defendants now claim, the government has nonetheless stated 

probable cause to believe that any note payments under the sale transaction flowed from

the money laundering conspiracy alleged. To the extent that some modest portion of these 

payments was actually made with foreign-generated ad revenue, for the reasons stated 

above (see section IV.3 supra) these commingled funds are subject to forfeiture.

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CONCLUSION

Defendants’ Motion to Partially Vacate Seizure Warrants and Release Funds (Doc. 

1366) should be denied.

Respectfully submitted this 9th day of November, 2021.

GLENN B. McCORMICK

Acting United States Attorney District of Arizona

s/Dan G. Boyle DAN G. BOYLE

Special Assistant U.S. Attorney

KEVIN M. RAPP

MARGARET PERLMETER

PETER S. KOZINETS

ANDREW C. STONE

Assistant U.S. Attorneys

KENNETH POLITE

Assistant Attorney General 

U.S. Department of Justice 

Criminal Division, U.S. Department of Justice

REGINALD E. JONES

Senior Trial Attorney

U.S. Department of Justice, Criminal Division

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CERTIFICATE OF SERVICE

I hereby certify that on November 9, 2021, I electronically transmitted the attached 

document to the Clerk’s Office using the CM/ECF System for filing and transmittal of a 

Notice of Electronic Filing to the CM/ECF registrants who have entered their appearance 

as counsel of record.

s/Marjorie Dieckman

U.S. Attorney’s Office

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