Exhibit A

Case 2:18-cr-00422-DJH Document 412-1 Filed 12/11/18 Page 1 of 18
UNITED STATES DISTRICT COURT 

 FOR THE DISTRICT OF ARIZONA 

 _________________ 

United States of America, ) 

 ) 

 Plaintiff, ) CR-18-0422-PHX-SPL 

 ) 

 vs. ) Phoenix, Arizona 

 ) November 16, 2018 

Michael Lacey, ) 9:06 a.m. 

James Larkin, ) 

Scott Spear, ) 

John Brunst, ) 

Andrew Padilla, ) 

Joye Vaught, ) 

 ) 

 Defendants. ) 

 ) 

______________________________) 

 

BEFORE: THE HONORABLE STEVEN P. LOGAN, JUDGE 

REPORTER'S TRANSCRIPT OF PROCEEDINGS

MOTIONS HEARING

Official Court Reporter: 

Elva Cruz-Lauer, RMR, CRR 

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

401 West Washington Street, Spc. 33 

Phoenix, Arizona 85003-2151 

(602) 322-7249 

Proceedings Reported by Stenographic Court Reporter

Transcript Prepared by Computer-Aided Transcription

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UNITED STATES DISTRICT COURT

inquire, Your Honor.

THE COURT: I don't have any questions for the

government on that either.

This is actually a perfect time to take our morning

recess. Court will be in recess until 10:35.

(Recess taken at 10:18 a.m.; resumed at 10:37 a.m.)

THE COURT: This Court will come to order. All

parties present when the court last closed are present again.

The last thing I want to take up is Document Number

376. I know we have the arguments that have already been

presented in the earlier 360; however, I will give the defense

an opportunity.

376 is the Defendants' Emergency Motion to Stay

Seizure of Attorneys' Fees, and that's Defendant Michael Lacey,

James Larkin, John Brunst, Scott Spears. Emergency Motion to

Stay Seizure of Attorneys' Fees and Request for an Immediate

Hearing. The supplemental brief is Document Number 377.

And Mr. Kucera, I am treating the government's

response as Document Number 371, since 371 was filed in the 360

original emergency motion to stay the seizure. Is that what

you would like?

MR. KUCERA: Notwithstanding the fact that these other

documents were filed after the response --

THE COURT: Correct.

MR. KUCERA: -- yes, Your Honor.

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THE COURT: I mean, would your response be pretty much

the same? It's the same issue.

MR. KUCERA: Certainly along those same lines, yes,

Your Honor.

THE COURT: Okay. Well, I will allow you an

opportunity to present on the record any additional information

you would like to as it relates to Docket Number 376, after I

hear from the defense.

MR. KUCERA: Thank you, Your Honor.

THE COURT: You're welcome.

Is there anyone from the defense that wishes to place

anything else on the record as it relates to Document Number

376?

MR. GRANT: Briefly, Your Honor. 376 is the motion as

to Mr. Larkin, Lacey, Brunst, and Spear.

THE COURT: For the record, Mr. Grant. I just wanted

to make sure I had your name.

MR. GRANT: I'm sorry, Your Honor. I forgot.

THE COURT: Go ahead.

MR. GRANT: It raises very similar issues, the same

impropriety of the government's seizure in the first instance.

The basic proposition here that -- we are not here to talk

about Monsanto issues until we first establish whether the

government's seizures in the first instance were permissible.

You don't begin to talk about Monsanto until we find out if

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UNITED STATES DISTRICT COURT

they are legal in the first instance.

And I want to point out one other -- and that is not

the case here because the government couldn't effect the

seizures under the First Amendment. 

I wanted to point out one other thing as well, that

the nature of the request here, of course, is we are asking the

Court to permit us to proceed with the stay and be able to

brief further and argue further about the government's

seizures.

And the issue is not so much looking at the exact

warrants that have been issued by the Central District of

California, it would simply be -- tell the government at this

stage, we are going to maintain the status quo, there will be

no seizures of attorney trust accounts going forward, in order

to be able to address that issue. Without having to, you know,

parse through the warrants in the Central District of

California.

THE COURT: Thank you very much. 

Anyone else?

Mr. Kucera?

MR. KUCERA: Yes, Your Honor, just briefly.

Defense counsel cites to Monsanto and points out just

essentially generally to several pages of Monsanto, that

Monsanto stands for the proposition that the government must

first establish the legality of its seizure prior to having

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UNITED STATES DISTRICT COURT

Monsanto hearing.

This isn't really found anywhere specifically. There

is certainly no holding to that. But the government takes the

point that there has to be some sort of legal mechanism by

which the government takes hold of this property. The

government submits that that's exactly what it did by going out

and obtaining the seizure warrants based on probable cause from

a federal magistrate. 

This isn't a function of like a PC arrest or a PC

seizure by an agent just at the discretion of the agent and

then having a decision made by a court after the fact.

The government went through the procedure that it

always goes through when it obtains a seizure warrant and does

have lawful possession of the asset pursuant to a seizure

warrant, or would have but for the stay.

THE COURT: Thank you very much.

This is an oral decision. 

After consideration of Defendant Andrew Padilla, Joye

Vaught's Emergency Motion to Stay Seizure of Attorneys' Fees

and Request for Immediate Hearing, which is Document Number

360, the government's response, which is Document Number 371,

the Defendants' Joint Reply, which is Docket Number 382, the

joinders and supplements, which are Docket Numbers 363, 365,

363, and 370, this Court's also taken into consideration the

arguments presented by counsel, and I rule as follows:

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UNITED STATES DISTRICT COURT

As it relates to Docket Number 360, this Court

declines to exercise jurisdiction over the seizure warrants at

issue in the emergency warrant -- I'm sorry, the emergency

motion.

It is well settled that a court should rarely

interfere with the order of another Court as any such

interference usurps the power of the rendering court.

Although courts have held that justice may

occasionally demand this type of interference, the

identification of those rare situations is committed to the

sound discretion of the District Court. 

See Ord versus United States and also Treadway versus

Academy of Motion Picture Arts and Sciences.

Furthermore, the Ninth Circuit Court of Appeals has

held that considerations of comity and orderly administration

of justice demand that the nonrendering court should decline

jurisdiction of an action and remand the parties for their

relief to the rendering court. 

See Delson Group Incorporated versus GSM Association,

which is also a Ninth Circuit case. 

Through the emergency motion, the defendants are

seeking an order from this Court to interfere with two criminal

seizure warrants that were issued upon findings of probable

cause by a magistrate judge in the Central District of

California.

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UNITED STATES DISTRICT COURT

This Court finds that the defendants have not set

forth any persuasive reasons as to why this Court should

interfere with the Central District of California's issuance of

the search warrants, and this Court finds that the defendants

have a sufficient legal remedy for any challenges to the

seizure warrants issued by the Central District of California

in that district.

Accordingly, the relief requested in the Defendants'

Emergency Motion to Stay Seizure of Attorneys' Fees and Request

for Immediate Hearing, which is Document Number 360, is denied.

The temporary stay imposed by this Court's order,

which is Document Number 361, is lifted and the government may

move forward with execution of the seizure warrants at issue if

so ordered.

As it relates to Docket Number 365, again, I have

carefully considered the pleadings, which are the Emergency

Motion to Stay the Seizure of Attorneys' Fees, which is

Document Number 365. The government's response, which is

Document Number 371. Counsel's reply to the response, which is

document -- I'm sorry, Docket Number 379, and the arguments of

counsel.

Again, this Court declines to exercise jurisdiction

over the seizure warrants at issue in this emergency warrant,

as already stated before, but since this is a different order

because there was a different filing under Document Number 365,

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UNITED STATES DISTRICT COURT

it's well settled that a court should rarely interfere with the

order of another court, as any such interference usurps the

power of the rendering court.

Although courts have held that justice may

occasionally demand this type of interference, the

identification of those rare situations is committed to the

sound discretion of the District Court.

See Ord versus United States or Treadway versus the

The Academy of Motion Picture and Arts and Sciences, both Ninth

Circuit cases.

Furthermore, the Ninth Circuit Court of Appeals has

held that considerations of comity and orderly administration

of justice demand that the nonrendering court should decline

jurisdiction of an action and remand the parties for their

relief to the rendering court. 

See Delson Group Incorporated versus GSM, which is a

Ninth Circuit 2014 case.

Through the emergency motion, counsel seeks an order

from this court to interfere with one criminal seizure warrant

that was issued upon a finding of probable cause by a

magistrate judge in the Central District of California.

The movant has not set forth any persuasive reasons as

to why this Court should interfere with the Central District of

California's issuance of the seizure warrant, and this Court

finds that the movant has sufficient legal remedy for any

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challenges to the seizure warrant issued by the Central

District of California in that district.

Accordingly, counsel's Emergency Motion to Stay

Seizure of Attorneys' Fees, which is Docket Number 365, is

denied.

The temporary stay imposed by this Court's order,

Docket Number 369, is lifted and the government may move

forward with executing the seizure warrants at issue if so

ordered.

And last, as it relates to Docket Number 376, this is

the Court's oral decision, after consideration of defendant

Michael Lacey, James Larkin, John Brunst, and Scott Spears'

Emergency Motion to Stay Seizure of Attorneys' Fees and Request

for Immediate Hearing, which is Document Number 376, the

supplemental brief, which is Document Number 377, and the

government's response, which is nearly identical to the

response 371, in the docket filing 360, this Court declines to

exercise jurisdiction over the seizure warrants at issue in the

emergency motion.

It is well settled that the court should rarely

interfere with the order of another court as any such

interference usurps the power of the rendering court. Although

courts have held that justice may occasionally demand this type

of interference, the identification of those rare situations is

committed to the sound discretion of the District Court.

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See Ord versus United States, or Treadway versus The

Academy of Motion Picture, Arts and Sciences, both Ninth

Circuit cases.

Furthermore, the Ninth Circuit Court of Appeals has

held that considerations of comity and orderly administration

of justice demand that the nonrendering court should decline

jurisdiction of an action and remand parties for their relief

to the rendering court. 

See Delson Group Incorporated versus GSM, which is a

Ninth Circuit 2014 case.

Through the emergency motion the defendants are

seeking an order from this Court to interfere with nine

criminal seizure warrants that were issued upon a finding of

probable cause by a magistrate judge in the Central District of

California.

The defendants have not set forth any persuasive

reasons as to why the Court should interfere with the Central

District of California's issuance of the seizure warrants, and

the Court finds that the defendants have sufficient legal

remedy for any challenges to the seizure warrants issued by the

Central District of California in that district.

Accordingly, the Defendants' Emergency Motion to Stay

Seizure of Attorneys' Fees and Request for Immediate Hearing,

which is Document Number 376, is denied. The temporary stay

imposed by this Court's order, which was Document Number 384,

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UNITED STATES DISTRICT COURT

is lifted and the government may move forward with the

execution of the seizure warrants at issue, if so ordered.

The hearing is adjourned.

MR. PICCARRETA: Judge, may I say one thing?

THE COURT: I'm sorry?

MR. PICCARRETA: May I say one thing?

THE COURT: Sure. Go ahead.

MR. PICCARRETA: I would ask the Court to continue

this stay --

THE COURT: Can you speak into the microphone and tell

me who you are?

MR. PICCARRETA: Mike Piccarreta. 

Judge, we would ask the Court to stay these orders for

seven days to allow us time to consider bringing motions in the

Central District.

THE COURT: Your request is denied.

The hearing is adjourned.

MS. BERNSTEIN: Your Honor, may I address 377? I

didn't have an opportunity to do that. That was Mr. Larkin's

supplemental brief.

THE COURT: I specifically asked you if there was any

defense counsel that wished to address that issue.

MS. BERNSTEIN: I understood that to be about 376. I

apologize.

THE COURT: Go ahead.

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UNITED STATES DISTRICT COURT

MS. BERNSTEIN: Thank you, Your Honor. 

Especially in light of the Court's ruling just now,

we -- I do want to just highlight the issues that were raised

by Mr. Larkin in Document Number 377.

He is in an untenable position that the government has

seized nearly all of his assets through Central District of

California seizure warrants, which we did challenge. We raised

and briefed the serious Franks issues that were present there.

The government never responded to that on the merits. Instead

said they could file a civil complaint. Filed a civil

complaint. They sought the stay and obtained a stay. Now, the

government has obtained the seizure of funds, of all other

funds that were earmarked for Mr. Larkin's defense.

And additionally has put Mr. Larkin on notice that

should he spend other money that he has from newspaper print

proceeds, the government views that as somehow criminal,

subjecting him to possible further charges, as well as further

bond revocation.

Mr. Larkin owned a newspaper empire with the Phoenix

New Times, SF Weekly, LA Weekly, Village Voice, Denver

Westword, Dallas Observer, Miami New Times, many print

newspapers. He had a history of running those. He -- they

made millions of dollars.

They were sold and he continues to generate income

from the sale of the newspaper. That is not Backpage money.

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The government has -- and has not seized that money, but the

government has told Mr. Larkin that it will move to indict if

he does spend that money. So he is in an untenable position

that he can't use money that was earmarked for his defense as

it was just restrained and seized, and he can't spend newspaper

print proceeds without any repercussions. 

And so we are seeking clarity as to what money

Mr. Larkin, if he is able to use those newspaper print proceeds

to fund his legal defense and his life.

THE COURT: Mr. Kucera, do you wish to respond to

that -- or Mr. Rapp?

MR. RAPP: Well, first, this motion came in quite

late, and our response to the previous dockets doesn't really

address this. We haven't had a chance to respond. But in a

word, I don't know what she is talking about.

THE COURT: I just asked co-counsel minutes ago if

there was some additional information that the government

wanted to place on the record and he had that opportunity. I

don't know why -- what's your name again, ma'am?

MS. BERNSTEIN: Whitney Bernstein.

THE COURT: I don't know how you didn't understand

when I asked the question about the emergency motion, Document

Number 376, when I pointed to defense counsel if anyone had

anything to place on the record. I don't know how you didn't

understand my question.

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UNITED STATES DISTRICT COURT

But Mr. Rapp, your co-counsel indicated that 371,

the -- when I asked the question, should it serve as the

response, he did say they had some additional information -- I

don't recall what you said exactly, Mr. Kucera, but I provided

the government with an opportunity to flush out the issue.

So go ahead.

MR. RAPP: Well, I think there's some confusion. You

were talking about 371. This is 377. This came in --

THE COURT: No, there's no confusion. My question

was, the issues raised in Docket Number 376 were similar to the

issues raised in 360. I asked your co-counsel if he wanted to

use 371 to serve as a response.

Is that what I asked you, Mr. Kucera?

MR. KUCERA: Yes, Your Honor.

THE COURT: So where's the confusion?

MR. RAPP: This is 377, not 376. Maybe I could just

cut to the chase.

THE COURT: Did you hear what I just told you?

MR. RAPP: I --

THE COURT: We are here to address document number --

Docket Number 376. I understand 377 -- is her supplemental

brief, which is 377. That's why I asked Mr. Kucera that exact

question, because I didn't receive a response from the

government.

MR. KUCERA: Can we have a moment, Your Honor?

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UNITED STATES DISTRICT COURT

THE COURT: Of course. 

 (Discussion between government counsel held off the 

record.) 

MR. RAPP: Judge, if the Court has any questions about

this motion, we are happy to respond to them.

THE COURT: Go ahead. Is there anything from you?

MS. BERNSTEIN: We are seeking the government's

position that if Mr. Larkin accesses, utilizes money that is

newspaper print proceeds for his legal defense or his life, we

have been put on notice from the government that they would

find that to be criminal.

THE COURT: Okay. Is this relief that you are

requesting outside of what we were here for today?

MS. BERNSTEIN: No, Your Honor. I think it implicates

many of the same issues, it's just now, especially in light of

the fact that the money earmarked for the defense has been

restrained, Mr. Larkin -- we need some clarity as to whether he

can spend money that is not restrained and not related to

Backpage without incurring additional criminal charges.

THE COURT: Is the government prepared to respond to

that?

MR. KUCERA: The government is not prepared to respond

to it and I cannot imagine any situation where the government

ever would respond to the possibility of prospective action and

take a position on whether or not that action is subject to

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indictment.

THE COURT: Is there anything else you would like to

place on the record?

MS. BERNSTEIN: Would the Court entertain an

evidentiary hearing upon further briefing at a later date as to

this issue?

THE COURT: No. This Court has ruled on the matters

that were pending, which is Docket Number 360, Docket Number

365, and Docket Number 376. My ruling is on the record and the

hearing is adjourned.

MS. BERNSTEIN: Thank you, Your Honor.

(Proceedings conclude at 10:58 a.m.)

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UNITED STATES DISTRICT COURT

C E R T I F I C A T E

I, ELVA CRUZ-LAUER, 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 17th day of November,

2018.

 s/Elva Cruz-Lauer 

 Elva Cruz-Lauer, RMR, CRR 

 

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