1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Paul J. Cambria, Jr. (Cal. Bar No. 177957)

LIPSITZ GREEN SCIME CAMBRIA LLP

42 Delaware Avenue, Suite #120

Buffalo, New York 14202

Telephone: (716) 849-1333

Facsimile: (716) 855-1580

Email: pcambria@lglaw.com

emccampbell@lglaw.com

Counsel for Defendant Michael Lacey

Thomas H. Bienert, Jr. (Cal. Bar No. 135311)

Kenneth M. Miller (Cal. Bar No. 151874)

Anthony R. Bisconti (Cal. Bar No. 269230)

Whitney Z. Bernstein (Cal. Bar No. 304917)

BIENERT, MILLER & KATZMAN, PLC

903 Calle Amanecer, Suite 350

San Clemente, California 92673

Telephone: (949) 369-3700

Facsimile: (949) 369-3701

Email: tbienert@bmkattorneys.com

kmiller@bmkattorneys.com

tbisconti@bmkattorneys.com

wbernstein@bmkattorneys.com

Counsel for Defendant James Larkin

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

United States of America,

Plaintiff, 

v. 

Michael Lacey, James Larkin, Scott 

Spear, John Brunst, Dan Hyer, Andrew 

Padilla, and Joye Vaught,

Defendants. 

No. CR-18-00422-PHX-SPL (BSB)

SUPPLEMENT OF DEFENDANTS 

LACEY AND LARKIN TO THE

OPPOSITION TO THE UNITED 

STATES’ MOTION TO DISQUALIFY 

COUNSEL

Oral argument scheduled October 5, 2018

Case 2:18-cr-00422-DJH Document 331 Filed 10/04/18 Page 1 of 15
1

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

I. INTRODUCTION

Attempting to bolster its motion to disqualify Defendants’ longtime counsel 

(Doc. 118; “DQ Mot.”), the government provided several “factual supplements,” after 

Defendants responded to the motion.1

 Raising new fact allegations and arguments in 

this fashion is improper. Defendants should at least have an opportunity to respond. 

Defendants thus submit this supplement and ask the Court to consider it in 

connection with the disqualification motion to be heard on October 5, 2018. The Court 

should decide that motion on an accurate record. This is especially important because 

Defendants’ Sixth Amendment rights are at stake, and a wrongful denial of their rights 

to chosen counsel requires automatic reversal. See United States v. Gonzales-Lopez, 548 

U.S. 140, 148 (2006). 

The government’s belated “factual supplements” misstate the facts. At the same 

time, the government has taken many other actions to prejudice Defendants’ rights and 

their ability to defend this action. These are supplemental facts the Court should 

understand, as they bear on the government’s tactics and relief Defendants have sought 

in other pending motions before the Court.

II. BACKGROUND

In support of its Disqualification Motion, as originally filed, the only factual 

support the government offered was: (1) pleadings in other cases showing that DWT 

entered appearances on behalf of Mr. Ferrer (along with numerous other parties), see 

DQ Mot. at 3-5 & Exs. C-U (Docs. 118-03 through 118-19); and (2) two identical letters 

from Ferrer (written a week after his pleas and apparently as part of his agreed 

cooperation with the government) purporting to withdraw his prior informed consent to 

counsel’s joint representation, see id. Exs. A, B (Docs. 118-01, 118-02).

 

1 “Defendants” refers to Michael Lacey and James Larkin, whose counsel the 

government is attempting to disqualify, as well as Scott Spear, John Brunst, Andrew 

Padilla, and Joye Vaught, who joined in the opposition to the government’s motion to 

disqualify (see Doc. 180, “Opp.”; Docs. 160, 161, 163, 181, 184, 191 (joinders)). 

Case 2:18-cr-00422-DJH Document 331 Filed 10/04/18 Page 2 of 15
2

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Defendants’ response showed that, in addition to misunderstanding the law, the 

government disregarded the parties’ actual relationships with counsel and their joint 

representation agreements. Defendants noted, for example, that DWT did not represent 

Ferrer personally, but rather represented Backpage.com entities and parties jointly. See

Opp. at 4-6. This was pursuant to the parties’ joint representation agreements, in which 

Ferrer requested and agreed to joint representation by DWT and other counsel, agreed 

that counsel could continue to represent Messrs. Larkin and Lacey and their companies 

(the “Medalist parties”) if he were to withdraw from joint representation, and agreed not 

to seek disqualification. See Opp. at 6-8; Grant Decl. ¶¶ 9-20 & Exs. A, B (filed in 

camera). 

In reply, the government raised at least six new factual arguments, providing an 

extensive “Factual Supplement,” see Doc. 193 (“Reply”) at 3-6, and a seven-page 

declaration from Ferrer (“Ferrer Decl.”; Doc. 192-6). Then, three weeks later, the 

government provided another “Supplement,” supplying and misstating a ruling by a 

Washington State trial court (Doc. 207, “Supp.”). The government’s new fact 

arguments are discussed below.

III. ARGUMENT

A. The Government Cannot Inject Arguments or Fact Issues for the First 

Time on Reply.

“It is well established that issues cannot be raised for the first time in a reply 

brief.” Gadda v. State Bar of Cal., 511 F.3d 933, 937 n.2 (9th Cir. 2007); accord 

Bazuaye v. INS, 79 F.3d 118, 120 (9th Cir.1996) (“Issues raised for the first time in the 

reply brief are waived.”); see also Sogeti USA LLC v. Scariano, 606 F. Supp. 2d 1080, 

1086 (D. Ariz. 2009) (“It is improper for a moving party to introduce new facts or 

different legal arguments in the reply brief than those presented in the moving papers”

(internal quotations omitted)). As the Ninth Circuit has noted, the prejudice of 

permitting such a tactic is “obvious.” Sophanthavong v. Palmateer, 365 F.3d 726, 737 

(9th Cir. 2004) (allowing litigants to raise arguments for the first time in reply deprives 

Case 2:18-cr-00422-DJH Document 331 Filed 10/04/18 Page 3 of 15
3

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

opposing parties of “the opportunity to point to the record to show that the new theory 

lacks legal or factual support”).

More specifically, it is improper for a party to attempt to assert new facts on 

reply. McCoy v. U.S. Collections W., Inc., 2014 WL 3898088, at *4 (D. Ariz. Aug. 11, 

2014). Accordingly, “the Court will not consider affidavits submitted for the first time 

with [a] reply memorandum.” Rodrigues v. Ryan, 2017 WL 5068468, at *4 (D. Ariz. 

Nov. 3, 2017), aff’d, 718 F. App’x 577 (9th Cir. 2018); see also Delgadillo v. Woodford, 

527 F.3d 919, 930 n. 4 (9th Cir. 2008); Taser Int’l., Inc. v. Stinger Sys, Inc., 705 F. 

Supp. 2d 1115, 1127-28 (D. Ariz. 2010). 

Here, the government’s reply to Defendants’ Opposition to the Disqualification 

Motion was based almost entirely on new fact arguments, and the Court properly could 

(and should) strike the government’s Reply and Supplement as a result. Alternatively, 

Defendants urge the Court to accept and consider this supplement to have an accurate 

record—not just the government’s mischaracterizations—to assess whether the 

government has shown “extreme circumstances” necessary to justify disqualification.

Alexander v. Sup. Ct., 141 Ariz. 157, 161, 685 P.2d 1309 (1984). 

B. The Government’s New Factual Assertions on Reply (and Afterward) 

Are Misstatements. 

Almost without exception, the government’s “Factual Supplements” are 

misstatements or simply wrong. 

1. Washington State Court Ruling. The government points to a ruling of a 

Pierce County (Washington) superior court that “recently disqualified the DWT firm 

from representing Lacey and Larkin in a Backpage-related civil case.” Reply at 2; see 

id. at 3-4. The government failed to note that the trial court’s order was entirely sua 

sponte. No party sought disqualification. There was no motion. The court permitted no 

briefing, hearing, argument, or any opportunity for Defendants to contest the ruling,

except by lodging an objection afterwards. See Reply Ex. A at 71:18-72:11 (Doc. 193-

1); Declaration of James C. Grant (“Second Grant Decl.”) ¶ 2. The court did not 

Case 2:18-cr-00422-DJH Document 331 Filed 10/04/18 Page 4 of 15
4

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

consider the parties’ joint representation agreements or Ferrer’s express waivers of 

conflicts. Also notable, in that case Backpage.com and Ferrer acknowledged that they 

did not—and could not—seek or support disqualification of DWT from further 

representation of Larkin and Lacey and the other Medalist Parties. Id. ¶ 3 & Ex. A at 

72:17-72:20 (transcript of 6/28/18 hearing).

2

 But the court ignored this too in finding on 

its own that there was a “high possibility” of some future conflict. 

The Medalist parties filed motions in the Washington Court of Appeals for 

review and a stay of the trial court’s order, noting, among other things, that disqualifying 

counsel without notice or hearing violates Washington law. See id. ¶ 4; see also In re 

Estate of Barovic, 88 Wash. App. 823, 827, 946 P.2d 1202 (1997). The court of appeals 

immediately entered a preliminary stay of all proceedings in the trial court, Second

Grant Decl. ¶ 4 & Ex. B, then, after considering briefing from plaintiffs, affirmed the 

stay in an order three weeks later, id. & Ex. C.

2. Scope and Timing of DWT’s Joint Representation Under the Parties’ 

Agreements. Although the government’s motion did not address the parties’ joint 

representation agreements at all, on reply the government injected a new argument about 

the “timing” of the agreements. Reply at 4. The government asserted that “the DWT 

firm individually represented Ferrer in several matters [that] predated the execution of 

the first joint representation agreement ... on December 12, 2016.” Reply at 5. First, in 

the cases the government mentions, DWT represented Ferrer only as part of the firm’s

joint representation of numerous Backpage-related parties. See, e.g., DQ Mot. Exs. E-U 

(pleadings submitted by USAO showing that DWT actually entered appearances for and 

represented 12 defendants in the cases). Second, the joint representation agreements 

 

2 With its Supplement, the government provided the Pierce County court’s written order 

(drafted by plaintiffs’ counsel) and claimed the court ordered disqualification “after 

reviewing in camera ‘supporting materials’ submitted by DWT” and concluding there 

was a “high possibility” of future conflict. Supp. at 2-3. This is disingenuous. The 

order on its face states that the court considered the supporting materials DWT presented 

only in connection with DWT’s request to withdraw from representation of Ferrer and 

the Backpage.com parties, which the court granted. Supp. Ex. 1 at 12 (Doc. 207-1). 

Case 2:18-cr-00422-DJH Document 331 Filed 10/04/18 Page 5 of 15
5

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

expressly provide that they memorialized the parties’ understandings and commitments

already in place since April 2015, when Ferrer purchased Backpage.com. See Grant 

Decl. Exs. A, B. The government’s mischaracterized “chronology” cannot override the 

terms of the agreements—or the law. See United States v. Gonzales, 669 F.3d 974, 979 

(9th Cir. 2012) (joint representation and joint defense arrangements “may be implied 

from conduct and situation,” and “it is clear that no written agreement is required”).

3. Government’s Belated Attorney-Witness Argument. In its reply the 

government also argued for the first time that DWT could be a “potential fact witness” 

about Ferrer’s declarations in prior cases. Reply at 5. In six declarations in cases dating 

back to 2012, Ferrer averred that Backpage.com enforced rules and screened ads to 

prevent improper content and regularly worked with law enforcement to identify and 

pursue persons who misused the website. See Second Grant Decl. ¶ 5 & Ex. D (example 

of Ferrer’s declaration from Backpage.com, LLC v. Dart, No. l:15-cv-06340 (N.D. Ill.)). 

In this new argument, the government asserted that DWT had “made clear ... its 

strategy ... to impeach Ferrer by pointing to” his prior statements under oath directly 

contradicting the statements in his guilty pleas. Reply at 5. This, the government says, 

presents the possibility that “defense counsel could become a fact witness midway 

through trial” because DWT worked with Ferrer in preparing and submitting the prior 

declarations. Id. at 6. This argument is also wrong on the facts and the law. 

First, the pleadings from other cases the government cites do not state or suggest 

any “DWT strategy” to testify against Ferrer.3

 They instead state the obvious point that 

 

3 The pleadings the government cites come from two cases in which parties in civil cases 

have brought motions for sanctions against the Medalist parties and DWT on the 

premise that Ferrer’s assertions in his plea agreements should be charged to Larkin, 

Lacey, the other Medalist parties, and DWT. These motions are improper for several 

reasons, not the least of which being that courts have long recognized that guilty pleas 

such as Ferrer’s, in which a party seeks to curry favor or leniency, are “inherently 

unreliable,” United States v. Vera, 893 F.3d 689, 692-93 (9th Cir. 2018), and are not 

even admissible against other parties, United States v. Werme, 939 F.2d 108, 113 (3d 

Cir. 1991). Also, as discussed below (see Section III.C), it appears that the government 

Case 2:18-cr-00422-DJH Document 331 Filed 10/04/18 Page 6 of 15
6

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

“Ferrer’s statements in ... his negotiated plea agreements are inconsistent with his prior 

sworn testimony ... and he will have to answer for the contradictions ....” Reply Ex. D 

at 13. That Ferrer will face challenges and cross-examination about his contradictions 

can hardly be a surprise to the government.

Also, the government cannot create an attorney-witness issue by asserting that 

Ferrer might try to avoid his sworn testimony by attacking DWT, as Ferrer’s Declaration 

belatedly provided by the government seeks to do. Ferrer Decl. ¶ 18 (asserting Ferrer 

had “a few hours” to review one or more of his prior declarations but not asserting that 

the declarations were in any way inaccurate). The government could not even call DWT 

attorneys to testify on this premise—doing so would violate every provision of RPC 

3.8(e).4 As the Arizona Supreme Court has explained, the advocate-witness rule cannot 

be used to disqualify opposing counsel for “tactical reasons” and efforts such as the 

government’s new argument “will not be tolerated.” Cottonwood Estates, Inc. v. 

Paradise Builders, Inc., 128 Ariz. 99, 105, 624 P.2d 296 (1981).5

 

has coordinated with counsel in these cases to pursue and prejudice Defendants and their 

representation by DWT. 

4 RPC 3.8(e) provides that a prosecutor may not subpoena a lawyer to testify in a 

criminal proceeding unless “(1) the information sought is not protected from disclosure 

by any applicable privilege; (2) the evidence sought is essential to the successful 

completion of [the] prosecution; and (3) there is no other feasible alternative to obtain 

the information.” Ferrer’s dealings with DWT about his many prior declarations are 

privileged communications, which the government has now invaded by obtaining and 

providing the belated Ferrer Declaration. Also, the government can make no showing 

that testimony of DWT is “essential” to the government’s prosecution and unobtainable 

except by calling attorneys to testify. Rather, the government’s tack apparently is that if 

Ferrer were to testify that he felt rushed in executing some prior declaration, that would 

induce DWT attorneys to testify that any such assertion is baseless. This is a far cry 

from showing that counsel would be necessary—much less essential—witnesses.

5 The Arizona Supreme Court similarly held that a disqualification motion based on a 

party’s attempt to call opposing counsel as a witness “must be supported by a showing 

that the attorney will give evidence material to the determination of the issues being 

litigated, that the evidence is unobtainable elsewhere, and that the testimony is or may 

be prejudicial to the testifying attorney’s client.” 128 Ariz. at 105; accord Gen. Life Ins. 

Co. v. Sup. Court, 149 Ariz. 332, 335, 718 P.2d 985, 988 (1986).

Case 2:18-cr-00422-DJH Document 331 Filed 10/04/18 Page 7 of 15
7

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4. Government’s Attempts to Mischaracterize the Joint Representation 

Agreements. As noted, the government all but completely ignored the joint 

representation agreements in its Disqualification Motion. For the first time in its reply, 

the government offered a host of arguments to mischaracterize and try to avoid the joint 

representation agreements. The government quoted Ferrer’s characterization of one 

sentence of one of the agreements to claim that DWT supposedly was required to 

withdraw from representing Messrs. Larkin and Lacey if Ferrer objected. See Reply at 7 

(citing Doc. 118, Ex. A at 1 n.3 (letter from Ferrer). In fact, this flatly contradicts the 

joint representation agreements and their express provisions, by which Ferrer waived 

conflicts and any basis to seek to disqualify DWT from representing Larkin and Lacey if 

he should withdraw from the joint representation. Compare id. with Grant Decl. ¶¶ 12, 

16-20. More generally, throughout his declaration (sponsored and belatedly submitted 

by the government), Ferrer purports to offer his “understandings” about DWT’s joint 

representation under the parties’ agreements, in each case contradicting the actual terms 

of the agreements. See, e.g., Ferrer Decl. ¶¶ 26, 40, 41, 42, 43; see also id. ¶¶ 20, 22, 35 

(offering Ferrer’s beliefs and purported intent, also contrary to the agreements’ terms).

The government next tried to suggest it is somehow significant that DWT was not 

a signatory to the Common Interest/Litigation Management Agreement (“CI/LM 

Agreement”) that Ferrer executed. Reply at 7. But that is irrelevant, because the 

agreement was between (and bound) Ferrer, Larkin, Lacey and all their respective 

companies, specifically with regard to retaining and managing counsel, waiving 

conflicts, and precluding any effort to seek disqualification of joint counsel. See Ferrer 

Decl. ¶ 33 (Ferrer’s admission that the CI/LM Agreement provided that the Medalist 

parties would manage counsel and litigation). 

5. Ferrer’s Dissembling About Accepting the Joint Representation Agreements. 

The government further contended in its new reply arguments that there are “serious 

questions whether Ferrer’s decision[s] to agree” to the joint representation agreements 

“can be characterized as “‘informed consent.’” Reply at 8. In this regard, the 

Case 2:18-cr-00422-DJH Document 331 Filed 10/04/18 Page 8 of 15
8

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

government offered Mr. Ferrer’s declaration in which he admitted that he executed the 

CI/LM Agreement but says that this was in connection with other agreements (to 

restructure and ease debt obligations for his purchase of the website), and this was 

“stressful” and he felt “rushed.”6

 Ferrer Decl. ¶¶ 28-32. Inasmuch as Ferrer has 

acknowledged that he does not seek to disqualify DWT—and admits he cannot do so—

the government cannot make some hinted allusion of duress regarding the agreements he 

does not deny or contest, so the government can pursue disqualification instead. 

In a similar vein, the government also asserted for the first time on reply that 

Ferrer says he did not consult other counsel in entering into the joint representation 

agreements and he was not advised to do so. Reply at 8; see Ferrer Decl. ¶¶ 26, 36-37. 

However, the agreements expressly stated that Ferrer and all parties were separately 

represented and had full opportunity to consult with their own counsel about entering into 

the agreements. See Grant Decl. ¶¶ 10, 20, 22, 23 & Exs. A, B, C. Ferrer had his own 

personal counsel, including Ms. Clarence, who represented him from September 2016 

onward and signed the JDA. Id. ¶¶ 21-23 & Ex. C; see also Welch v. Paicos, 26 F. Supp. 

2d 244, 248-49 (D. Mass. 1998) (“With one distinguishable exception, we find no cases 

where consent of a former client, represented at the time by independent counsel, was 

held insufficient [to waive conflicts] under Rule 1.9.”). 

6. Ferrer’s Privilege Waivers. The government’s Disqualification Motion made 

no mention of the fact that, in the proffer agreements Ferrer previously executed, he 

purported to waive all privileges for himself and Backpage.com (to the extent he could 

waive such privileges). See Opp. at 9-10; Grant Decl. ¶¶ 34-36 & Exs. J, K. Defendants 

pointed to this as showing there was no basis for Ferrer to claim that his confidences 

would be improperly disclosed if DWT continued to represent Larkin and Lacey. Opp.

at 18-20. The government acknowledged that Ferrer’s second proffer agreement—in 

which he “waive[d] all claims of attorney-client privilege, whether in his personal or 

 

6 DWT did not draft the CI/LM Agreement and had no role in the negotiation or 

execution of the agreement among the parties. 

Case 2:18-cr-00422-DJH Document 331 Filed 10/04/18 Page 9 of 15
9

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

official capacity as the [CEO] of Backpage.com, LLC”—was not “a model of clarity.” 

Doc. 192, at 8. But the government insisted that, although the proffer’s terms indicated 

Ferrer waived all privilege claims in his “personal capacity,” it was “not meant to apply 

to attorneys and law firms that represented Ferrer in a personal capacity.” Id. Implicitly 

recognizing this oxymoron, the government added another new fact argument on reply, 

asserting that Ferrer agreed to disclose his communications with personal counsel only 

“if asked to do so,” and, the government says, “[t]his topic ... has never been broached 

during Ferrer’s proffer sessions.” Id. (emphasis in original). Defendants asked for 

disclosure of what Ferrer actually said and the information he has provided, but the 

government has refused to respond. Defendants have further requested this information 

in two motions pending before the Court. See Docs. 202, 235, 324.

C. The Government Has Taken Numerous Other Actions to Prejudice 

Defendants and Their Ability to Defend this Case.

In the months since the government brought charges against Defendants, it has 

pursued a number of other actions, here and elsewhere, aimed at inhibiting or precluding 

Defendants’ ability to defend. The following summary is provided to give the Court an 

understanding of the context for motions pending before the Court and how the 

government’s actions pertain to the motions.

1. The Government’s Seizures of Defendants’ Assets. The government has 

obtained scores of civil seizure warrants in the Central District of California for bank 

and financial accounts of Defendants and their families, instituted overlapping 

administrative forfeiture proceedings, and encumbered Defendants’ homes and other 

real property by filing lis pendens. Second Grant Decl. ¶ 6. Defendants have filed a 

motion in the U.S. District Court for the Central District of California challenging the 

seizures and seeking to vacate them on the grounds that they violate the First, Fourth, 

and Fifth Amendments. In re Seizure of Funds Held in Republic Bank of Arizona 

Account(s) xxxx1889, etc., No. CV18-6742-RGK. That motion is fully briefed, and 

Defendants anticipate a decision from the court shortly. Second Grant Decl. ¶ 6.

Case 2:18-cr-00422-DJH Document 331 Filed 10/04/18 Page 10 of 15
10

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2. The Government’s Seizure of Retainer Funds. Although contrary to DOJ 

policy, the government also seized a retainer held by DWT, thus depriving Messrs. 

Larkin and Lacey and the other Medalist parties of funds expressly intended to cover 

defense costs in this action and for more than a dozen pending civil cases. Id. ¶ 7. The 

government has also threatened to seize retainer funds held by other Defendants’ 

counsel. Id.

At the same time, the government has allowed counsel for Ferrer, Backpage.com 

and his other companies to continue to hold retainers they have and to use the funds for 

representation in this case and the civil cases. See Preliminary Order of Forfeiture, 

United States v. Ferrer, No. CR-18-00464-001-PHX-DJH, ¶ D, at 12-13; ¶ A.(1) at 13 

(Doc. 23); Preliminary Order of Forfeiture, United States v. Backpage.com LLC, et al., 

No. CR-18-00465-PHX-DJH, ¶ D.10-D.13, at 17; ¶ A.(1) at 23 (Doc. 22).7

 In short, the 

government is allowing Ferrer and Backpage.com funds to pay their attorneys for 

asserting challenges to Defendants here and in the civil cases, while taking steps to 

foreclose Defendants from funding their defenses. 

3. The Government’s Apparent Coordination with Backpage.com and Ferrer. 

By all appearances, the government has been coordinating with Ferrer (and 

Backpage.com) to attack Defendants and their counsel not only here but in the pending 

civil cases. For example, shortly after DWT indicated it would withdraw from 

representing Backpage.com and related parties in the civil cases, Ferrer’s counsel (Ms. 

Clarence) sent unsolicited letters to fifteen courts handling the cases, vaguely objecting 

to DWT’s continued representation of the Medalist parties. Second Grant Decl. ¶ 8. 

However, Backpage.com and Ferrer did not object to DWT’s withdrawal in these cases 

 

7 The preliminary forfeiture orders state: “With respect to the accounts listed in Section 

D [the retainers], the accounts shall not be seized at this time. Rather, the funds 

currently on deposit in the listed accounts shall remain under the control of counsel and 

may be withdrawn by counsel in such amounts as may be necessary to defray the cost of 

any legal services provided in connection with the instant case or any related civil or 

criminal proceeding.” Ferrer Order at 13 (Doc. 23).

Case 2:18-cr-00422-DJH Document 331 Filed 10/04/18 Page 11 of 15
11

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

and did not move to disqualify DWT. The courts largely ignored the unsolicited letters, 

permitting DWT’s withdrawal from representation of the Backpage.com parties. Id.

One exception was the Washington State trial court that sua sponte disqualified DWT 

and whose order was stayed by the court of appeals (as discussed above). In another 

case in the U.S. District Court for the District of Massachusetts, the court considered the 

putative conflict issues and, after reviewing the joint representation agreements, 

permitted DWT’s continued representation of the Medalist parties. Jane Doe No. 1v. 

Backpage.com, LLC, No. 17-11069-LTS (Doc. 80). See Second Grant Decl. ¶ 9 & 

Ex. E.

Additionally, before the government’s seizure of DWT’s retainer account, the 

Backpage.com parties pressed DWT to return all retainer funds (notwithstanding that the 

funds were meant for the use of all parties to the joint representation agreements). Id.

¶ 10. Backpage.com’s counsel also raised this issue in the civil cases, but courts 

recognized it had no place in the cases involving individual plaintiffs’ claims against 

Backpage.com. Id. More important for present purposes, the Backpage.com parties 

acknowledged they were pursuing DWT for the retainer in coordination with the 

government. See id. & Ex. F (Backpage.com parties’ pleading in the R.O. case in 

Washington, asserting that they sought return of the DWT retainer funds “[a]s part of 

their agreement to cooperate in the federal and state criminal cases”). 

This raises serious concerns about the government’s misuse of separate ancillary 

proceedings to prejudice Defendants’ ability to defend the criminal charges. See United 

States v. Stein, 541 F.3d 130 (2d Cir. 2008) (affirming dismissal of indictment where 

government interfered with attorneys’ fee advancement to corporate employees, 

effectively empowering prosecutors to determine which employees would be entitled to 

paid counsel and which would be cut off). 

4. The Government’s Apparent Coordination with Plaintiffs’ Counsel. 

Defendants also have strong reason to believe the government has been working with 

counsel representing plaintiffs in civil cases to assert challenges against the Medalist 

Case 2:18-cr-00422-DJH Document 331 Filed 10/04/18 Page 12 of 15
12

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

parties. Plaintiffs’ counsel have met with government counsel, they have obviously 

supplied information to the government about the R.O. case and rulings, and they 

previously worked with the government to provide confidential documents from a prior 

civil case. Second Grant Decl. ¶ 11.

The government’s apparent use of the civil cases to affect the criminal case in this 

Court would violate 18 U.S.C. 3509(k). Section 3509(k) provides that any civil action 

for child exploitation or injury arising out of the same occurrences as a pending criminal 

action “shall be stayed until the end of all phases of the criminal action and any mention 

of the civil action during the criminal proceeding is prohibited.” Id. (emphasis added).8

 

Here, it appears the government has worked with Backpage.com and plaintiffs’ counsel 

in the civil cases to manufacture rulings prejudicial to Defendants, and then has not 

merely mentioned the civil proceedings, but has used them to attempt to influence 

rulings in this court. See Reply at 2-3 (referencing R.O. court’s sua sponte 

disqualification ruling). 

This is a central reason for Defendants’ request that the Court compel disclosures 

from the government about its communications and dealings with Ferrer, Backpage.com, 

their counsel, and plaintiffs’ counsel. See Doc. 235, 324. Such communications 

obviously are not privileged. If the government has directly or indirectly used the civil 

cases as a platform to attack or prejudice Defendants, that is relevant and important 

information for this case. 

5. The Government’s Effort to Eliminate All Privilege Protections. The 

government filed a motion to “resolve privilege issues,” asserting it should be entitled to

review any and all seized documents and talk with Ferrer about any and all attorneyclient communications. Defendants showed in response that this directly contradicted 

 

8 Notably, Backpage.com recently invoked section 3509(k) to seek stays in civil cases in 

Florida and Texas, in motions rather obviously written by the government. Second 

Grant Decl. ¶ 11.

Case 2:18-cr-00422-DJH Document 331 Filed 10/04/18 Page 13 of 15
13

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the privilege protections held and retained by the parties, which Ferrer could not waive. 

See Doc. 235. 

6. The Government’s Production of Voluminous Documents with No 

Identification of Brady/Giglio Materials. The government has produced some 10 

million pages of documents to Defendants (vast portions of which have no apparent 

relevance to this case) with no meaningful indexing and without identifying any 

exculpatory materials. Defendants have moved the Court to require the government to 

specify Brady/Giglio materials, rather than forcing Defendants to search through the 

enormous haystack. The government’s seizures of defendants’ assets undermines their 

ability to host, access, search, and catalogue this massive database of documents. See 

Doc. 273, 310. 

IV. CONCLUSION

Defendants respectfully request that the Court consider this Supplement in 

Connection with the Government’s Disqualification Motion and other motions pending 

before the Court. 

DATED this 3d day of October, 2018.

s/___

Counsel for Michael Lacey and James Larkin

Case 2:18-cr-00422-DJH Document 331 Filed 10/04/18 Page 14 of 15
14

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

CERTIFICATE OF SERVICE

Kevin Rapp

United States Attorney’s Office

District of Arizona

Two Renaissance Square

40 N. Central Ave., Suite 1200

Phoenix, AZ 85004-4408

Reginald E. Jones

Trial Attorney

United States Department of Justice

Child Exploitation and Obscenity Section

1400 New York Avenue, NW

Washington, DC 20530

By: /

Case 2:18-cr-00422-DJH Document 331 Filed 10/04/18 Page 15 of 15