Exhibit 1

Case 2:18-cr-00422-DJH Document 476-1 Filed 02/25/19 Page 1 of 34
1

Wick, Amanda (CRM)

From: Kucera, John (USACAC) <John.Kucera@usdoj.gov>

Sent: Wednesday, August 8, 2018 11:24 PM

To: Coopersmith, Jeff

Cc: Weinstein, Joe; Wick, Amanda (CRM); Rapp, Kevin (USAAZ)

Subject: Re: Davis Wright Tremaine/Seizure or Freezing of IOLTA Trust Account

Jeff,

Thanks. Without commenting now on everything in your email below, I will confer with my colleagues and get back to

you in the morning.  

Please feel free to contact me should you need anything in the interim.  

‐John

Sent from my iPhone

On Aug 8, 2018, at 8:08 PM, Coopersmith, Jeff <JeffCoopersmith@dwt.com> wrote:

John, thank you again for your time this evening.  My office and cell phone numbers are below, and you

can call me anytime of you want to discuss any questions you may have after reviewing this email.  

Although we disagree with the seizure and reserve all rights on behalf of our clients and our law firm, we

appreciate your willingness to work with us to resolve the immediate issues.  We understand from our

phone conversation today that the government meant to seize the balance of our client trust account

specifically relating to Backpage matters, and not client trust funds relating to unrelated matters or

funds relating to Backpage matters that were earned by our firm.  We recognize that the government

may not always have complete information, so this email provides the accurate data concerning the

client trust account relating to Backpage matters for your review.  We also appreciate your

consideration in telling Bank   to hold off on transmitting funds to the government until we

can get the numbers right, and confirming with the bank that other than the correct amount of funds to

be transmitted by Bank   to the government, no other funds in any Davis Wright Tremaine

accounts should be frozen or are subject to seizure.  As discussed in our call, we heard from Bank   

this afternoon that all funds held in the firm’s IOLTA accounts have been seized or frozen,

which obviously causes very serious problems for the firm and our many clients with rights and

obligations.

We had our accounting department pull the data relating to the particular client trust account that holds

funds relating to Backpage.  The total balance of that account is $6,292,201.67.  This is an interest‐

bearing account at Bank   and the account number is .  The chart below shows

the complete transaction history for this account:

<image002.png>

As shown in the chart, the account was established with the first deposit on May 10, 2017.  Davis Wright

Tremaine did not draw any fees or costs from the account during its entire history.  Please note that on

December 29, 2017, we received a refund from a litigation support vendor in the amount of $3,945.00

Case 2:18-cr-00422-DJH Document 476-1 Filed 02/25/19 Page 2 of 34
2

related to Backpage work.  Those funds were inadvertently deposited in our general client trust account

and should therefore not be at issue.  There are no other Backpage‐related funds held in any client trust

account at Davis Wright Tremaine other than the $6,292,201.67 held in account number .

Again, we appreciate that the government is not seeking forfeiture of fees and costs that were earned

by our firm.  Up to April 6, 2018 (we understand Mr. Ferrer entered into guilty pleas on April 5, 2018),

DWT had earned $1,088,715.63 in fees and costs which were never paid.  We did not withdraw this

earned fee amount from our client trust account, in an abundance of caution to avoid any dispute, but

nevertheless we believe that any seizure should not include these $1,088,715.63 in fees and costs.  This

would reduce the amount to be seized to $5,203,486.04, which would be consistent with the

government’s aim not to seize earned fees.  We would hold the $1,088,715.63 in our trust account

before taking it to cover earned fees and costs until we could be sure that no other parties claim a right

to these funds.  

Further, in lieu of any seizure, we would of course be willing to keep segregated and hold the entire

balance of the Backpage‐related trust account, and allow the funds to continue earning interest, under

an agreement that we would not transfer any funds out of the trust account pending resolution of the

matter with the government and any other interested parties.  Please let us know if the government is

amenable to this option.  Like other law firms, we have entered into similar agreements with

government agencies in the past when funds have been in dispute.  

If holding the funds in lieu of seizure is not an option, the maximum amount of the seizure should be

$6,292,201.67, but as explained above we believe it should be a maximum of $5,203,486.04.  Again, we

must reserve all rights on behalf of our clients and our law firm, but we appreciate your assistance in

resolving the immediate issues associated with the seizure warrant.

Best,

<image003.jpg>

Jeffrey B. Coopersmith | Partner 

1201 Third Avenue, Suite 2200 | Seattle, WA 98101

Tel: (206) 757-8020 | Fax: (206) 757-7020 | Mobile: (206) 708-9396

865 South Figueroa Street, Suite 2400 | Los Angeles, CA 90017 

Tel: (213) 633-8637 | Fax: (213) 633-8699 | Mobile: (206) 708-9396 

Email: jeffcoopersmith@dwt.com| Website: www.dwt.com

Anchorage | Bellevue | Los Angeles | New York | Portland | San Francisco | Seattle | Shanghai | Washington, D.C.

Admitted in Washington, California, and the District of Columbia

Disclaimer: This message may contain confidential communications protected by the attorney client privilege. If you 

received this message in error, please delete it and notify the sender.

From: Kucera, John (USACAC) [mailto:John.Kucera@usdoj.gov] 

Sent: Wednesday, August 08, 2018 5:37 PM 

To: Coopersmith, Jeff 

Cc: Weinstein, Joe; Grant, James; Wick, Amanda (CRM); Rapp, Kevin (USAAZ) 

Subject: RE: Davis Wright Tremaine/Seizure or Freezing of IOLTA Trust Account

  

FYI

Please find the attached face page of the warrant you requested. 

Case 2:18-cr-00422-DJH Document 476-1 Filed 02/25/19 Page 3 of 34
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Also, my understanding is that the government has not yet received the funds, and 

I’ve requested that hold off on transferring any funds pursuant to the warrant 

until the government gets back to them. I will have further conversations with 

 tomorrow during business hours to discuss further.

Thanks,

John

____________________

John Kucera | AUSA 

(213) 894-3391

From: Coopersmith, Jeff <JeffCoopersmith@dwt.com>  

Sent: Wednesday, August 08, 2018 5:06 PM

To: Kucera, John (USACAC) <jkucera@usa.doj.gov>

Cc: Weinstein, Joe <joeweinstein@dwt.com>; Grant, James <jimgrant@dwt.com>

Subject: RE: Davis Wright Tremaine/Seizure or Freezing of IOLTA Trust Account

  

Please dial 888‐757‐0729 and use passcode     thanks

From: Kucera, John (USACAC) [mailto:John.Kucera@usdoj.gov] 

Sent: Wednesday, August 08, 2018 5:04 PM 

To: Coopersmith, Jeff 

Cc: Weinstein, Joe; Grant, James 

Subject: RE: Davis Wright Tremaine/Seizure or Freezing of IOLTA Trust Account

  

It seems that my colleagues are unavailable, but I’ll call you now. What number 

should I call?

I’ve attached our previous correspondence on this matter. 

____________________

John Kucera | AUSA 

(213) 894-3391

From: Coopersmith, Jeff <JeffCoopersmith@dwt.com>  

Sent: Wednesday, August 08, 2018 4:53 PM

To: Kucera, John (USACAC) <jkucera@usa.doj.gov>

Cc: Weinstein, Joe <joeweinstein@dwt.com>; Grant, James <jimgrant@dwt.com>

Subject: Davis Wright Tremaine/Seizure or Freezing of IOLTA Trust Account

  

John, thank you for taking our call just now.  As stated, I am a partner at Davis Wright Tremaine and a

former AUSA.  Joe Weinstein is the General Counsel of our firm.  We received information from Bank   

this afternoon that the government has frozen or seized (we are not sure which)  all funds held

in our law firm client trust account.  We are a law firm of over 500 lawyers and this will obviously

immediately impact the rights and obligations of countless clients who have nothing whatsoever to do

with the Backpage matters.  Funds in trust relating to Backpage are held in a segregated account, and

Case 2:18-cr-00422-DJH Document 476-1 Filed 02/25/19 Page 4 of 34
4

we are happy to cooperate with the government with respect to those funds by holding them or sending

them to the government as required by any warrant (reserving all rights of our clients).   

  

As we discussed, we need to discuss this with you and your team immediately to lift the seizure or

freeze with respect to unrelated clients.  As discussed, we would like a call today.  My contact

information is below. Thank you.  

  

Best regards,

  

  

<image003.jpg>

Jeffrey B. Coopersmith | Partner 

1201 Third Avenue, Suite 2200 | Seattle, WA 98101

Tel: (206) 757-8020 | Fax: (206) 757-7020 | Mobile: (206) 708-9396

865 South Figueroa Street, Suite 2400 | Los Angeles, CA 90017 

Tel: (213) 633-8637 | Fax: (213) 633-8699 | Mobile: (206) 708-9396 

Email: jeffcoopersmith@dwt.com| Website: www.dwt.com

Anchorage | Bellevue | Los Angeles | New York | Portland | San Francisco | Seattle | Shanghai | Washington, D.C.

Admitted in Washington, California, and the District of Columbia

Disclaimer: This message may contain confidential communications protected by the attorney client privilege. If you 

received this message in error, please delete it and notify the sender.

  

  

  

  

Case 2:18-cr-00422-DJH Document 476-1 Filed 02/25/19 Page 5 of 34
Exhibit 2

Case 2:18-cr-00422-DJH Document 476-1 Filed 02/25/19 Page 6 of 34
1

From: "Gary S. Lincenberg" <glincenberg@birdmarella.com>

Date: August 8, 2018 at 8:32:27 PM PDT

To: "Kucera, John (USACAC)" <John.Kucera@usdoj.gov>, "Ariel A. Neuman"

<aneuman@birdmarella.com>

Cc: "Gopi K. Panchapakesan" <gpanchapakesan@birdmarella.com>, "Rapp, Kevin (USAAZ)"

<Kevin.Rapp@usdoj.gov>

Subject: RE: Brunst Real Property

John,

Your proposal is accepted.  Thank you for your professional courtesy in dealing with this issue.

Sincerely,

Gary S. Lincenberg | Principal

O: 310.201.2100, Ext. 224 | E: glincenberg@birdmarella.com

Bird, Marella, Boxer, Wolpert, Nessim,

Drooks, Lincenberg & Rhow, P.C.

1875 Century Park East, 23rd Floor

Los Angeles, California 90067-2561 

BirdMarella.com

From: Kucera, John (USACAC) <John.Kucera@usdoj.gov>  

Sent: Wednesday, August 8, 2018 1:25 PM

To: Ariel A. Neuman <aan@birdmarella.com>; Gary S. Lincenberg <gsl@birdmarella.com>

Cc: Gopi K. Panchapakesan <gkp@birdmarella.com>; Rapp, Kevin (USAAZ) <Kevin.Rapp@usdoj.gov>

Subject: Brunst Real Property

  

Gary and Ariel,

Regarding your client’s real property located at 5830 E. Calle Del Media, Phoenix, 

AZ, the government will agree to recognize the full amount of your recorded lien on 

condition that the government be allowed to approve the sale of the property (which 

approval will not be unreasonably withheld) and any proceeds in excess of your 

recorded lean will then be deposited into a government account to be treated as 

substitute res in the criminal forfeiture proceeding. Please let us know your 

position.

Case 2:18-cr-00422-DJH Document 476-1 Filed 02/25/19 Page 7 of 34
2

Thank you,

John

 

____________________

John Kucera | AUSA 

(213) 894-3391

Case 2:18-cr-00422-DJH Document 476-1 Filed 02/25/19 Page 8 of 34
Exhibit 3

Case 2:18-cr-00422-DJH Document 476-1 Filed 02/25/19 Page 9 of 34
1

Wick, Amanda (CRM)

From: Barbara Polowetz <bpolowetz@pd-law.com>

Sent: Thursday, November 8, 2018 11:36 AM

To: Wick, Amanda (CRM)

Cc: Michael Piccarreta

Subject: Padilla: seizure warrants issued for IOLTA funds to defend Mr. Padilla / request for 

seizure affidavit - response to Amanda from MLP

Attachments: 36A 37 38 40 JPMC.PDF; 36B GrandPoint.pdf

Amanda: 

Thank you for your prompt response to my request for the search warrant affidavits. However, I am a

little perplexed. When I reviewed the seizure warrant and matched them up the PDKF firm accounts,

the $10,000 seizure warrant is from my operating account which contains nothing but earned fees from

all of the law firm’s cases. The second account named for $740,000 from the Grand Point bank account

was closed approximately one year ago. The other named accounts do not belong to our law firm. We

do have an IOLTA trust account which only contains unearned funds relating to Mr. Padilla. That

account was segregated from our other trust account. 

I, too, am not sure who “they” is. However, you may check with Patrick Reid as he is the source of that

information and that information was not only provided to myself and Mr. Keenan who was present, but

also to Steve Weiss who represents Ms. Vaught. However, as long as we receive the affidavit promptly,

it is not important now who recommended it and who did not, only that we receive it. As you indicated,

you anticipate having an answer today that should resolve that portion of the problem. 

I am willing to stipulate to a deadline extension for the execution of the warrants since they have been

served upon me. We do appreciate that you provided the warrants to us rather than serve the banks

as it would cause disruption not only to our law firm but numerous clients. However, in the absence of

a brief extension, we will need to address this issue with the court immediately due to the impact on

Mr. Padilla’s and Ms. Vaught’s First, Fifth and Sixth Amendment rights. 

We understand that the government is not attempting to seize earned fees that have been moved from

the IOLTA prior to the receipt of the warrant. The law firm normally issues billings on the first business

day of the month for work performed the previous month so regardless of the seizure warrant, no funds

would be, nor now will they be, removed from the IOLTA account. In light of this recent development, I

do not intend, without court or government approval, to transfer any funds from the Padilla IOLTA

account until this issue is resolved. 

Finally, I think the government should be aware by now that Mr. Padilla and Ms. Vaught do not have

sufficient assets or income to defend themselves and thus if the government is successful in its seizure,

they will be denied their counsel of choice and forced to undertake indigent representation. That will

undoubtedly have an impact on the pending criminal proceedings.

After you review this email, please get back to me with your thoughts. In the interim, we will continue

preparing our pleadings. Best wishes. 

Mike Piccarreta 

Case 2:18-cr-00422-DJH Document 476-1 Filed 02/25/19 Page 10 of 34
2

From: Wick, Amanda (CRM) <Amanda.Wick@usdoj.gov>  

Sent: Wednesday, November 07, 2018 6:17 PM

To: Michael Piccarreta <mlp@pd‐law.com>

Cc: Reid, Patrick (CRM) <Patrick.Reid@usdoj.gov>

Subject: RE: Andrew Padilla: seizure warrants issued for IOLTA funds to defend Mr. Padilla / request for seizure affidavit

Mike, 

Kevin forwarded me your email so that I could address your concerns. First, it might help for me to clarify a few 

things as some of the information in your email isn’t quite accurate. We actually obtained two seizure warrants 

for funds contained within two different IOLTA accounts, both held in the name of Piccarreta Davis Keenan 

Fidel PC. One (attached hereto as “36A 37 38 40 JPMC”) is for $10,000 from a JP Morgan Chase bank account 

ending in -9285. The second (attached hereto as “36B Grand Point”) is for $740,000 from a Grand Point bank 

account ending in -3985. 

I’m not sure who the “they” is that you reference in your email below, but my supervisor at DOJ has told any 

counsel that inquired that this case is being prosecuted out of the District of Arizona and MLARS is assisting on 

asset recovery issues only. As a result, we would have to consult with the prosecutors in Arizona to confirm 

what the status of the criminal case was, whether discovery had been provided, whether the warrant was under 

seal and, if not, whether we could provide it upon request. Given that the warrant affidavit would likely be 

produced at some point during discovery, we didn’t think the prosecutors in Arizona would object, but we 

needed to check with them before sending out the warrant affidavit. I anticipate having an answer on that 

tomorrow. 

Finally, the warrant needs to be executed within 14 days, the deadline for which is Wednesday, November 14th. 

We give law firms the opportunity to wire funds to the United States, in lieu of serving the warrants on the 

banks, because we are trying to minimize any disruption the warrant could have on your IOLTA accounts. I’m 

sure Patrick told you that, often when we serve a seizure warrant on a bank to seize funds from an IOLTA 

account, the bank freezes the accounts entirely and sometimes more accounts than the ones listed in the 

warrant. Because of the adverse effects that can cause, we work very hard to coordinate with law firms to 

effectuate the turnover of the funds with as little impact on the firms as possible. However, some firms do 

decline to wire funds in lieu, and in that situation, we serve the warrants on the bank, as authorized by the 

court, prior to the 14th day. 

To the extent a law firm has earned fees that have not been moved from the IOLTA to an operating account, we 

request that substantiating bills (redacted for attorney-client privilege) be submitted to us for due diligence 

review, and once reviewed, we subtract that amount from the seizure amount, as we are not seeking to seize 

earned fees. 

Should you wish to make a Monsanto claim, we offer every defendant the opportunity to show that they are 

financially unable to pay for their defense without the funds we are seizing. Because of the timeliness of the 

warrant, we will be seizing the funds before the 14th, but if you can make a showing that your client has no 

other funds with which to pay for his defense, we are happy to review those materials and consider releasing 

some amount back to pay legal fees. 

I hope that answers your questions, but if not, please do not hesitate to call me at my direct line below. Thank 

you for your time and assistance with this matter. 

Sincerely, 

Amanda Schlager Wick 

Trial Attorney, Asset Forfeiture & Money Laundering Unit 

Money Laundering & Asset Recovery Section (MLARS) 

1400 New York Ave. NW, 10th Floor 

Case 2:18-cr-00422-DJH Document 476-1 Filed 02/25/19 Page 11 of 34
3

U.S. Dept. of Justice, Washington, D.C. 20004 

(202) 514-2842 

(202) 597-0435 (cell) 

(202) 514-5522 (fax) 

CONFIDENTIALITY NOTICE:  This communication with its contents and attachments, if any, may contain confidential, law

enforcement sensitive, privileged attorney/client communications or work products, and is not subject to disclosure.  It

is solely for the use of the intended recipient(s).  Unauthorized interception, review, use, or disclosure is prohibited.  If

you believe that you have received this communication in error, please notify the sender immediately and permanently

delete the email, any attachments, and all copies from your computer.

From: Barbara Polowetz <bpolowetz@pd‐law.com>  

Sent: Wednesday, November 7, 2018 3:51 PM

To: Rapp, Kevin (USAAZ) <KRapp@usa.doj.gov>

Cc: Michael Piccarreta <mlp@pd‐law.com>

Subject: Andrew Padilla: seizure warrants issued for IOLTA funds to defend Mr. Padilla / request for seizure affidavit

Kevin: 

I just was advised by Patrick Reed of DOJ that they’ve issued a seizure warrant for the 

IOLTA funds that can be used to defend Mr. Padilla in this criminal case. They are 

forwarding me the warrant. They indicated that at DOJ, the supervisors have strongly 

urged the Arizona prosecutors to disclose the seizure affidavit as soon as possible. I 

am requesting that the seizure affidavit be provided immediately so that I may review it 

in conjunction with the seizure warrant to determine what legal remedies in the 

forfeiture and/or the criminal case are appropriate. 

Mike Piccarreta 

Barbara Polowetz, Legal Assistant 

PICCARRETA DAVIS KEENAN FIDEL PC 

2 East Congress Street, Ste 1000, Tucson, AZ 85701 

t 520.622.6900, ext. 137 | f 520-622-0521 | www.pd-law.com

Case 2:18-cr-00422-DJH Document 476-1 Filed 02/25/19 Page 12 of 34
Exhibit 4

Case 2:18-cr-00422-DJH Document 476-1 Filed 02/25/19 Page 13 of 34
 1

UNITED STATES DISTRICT COURT

UNITED STATES DISTRICT COURT 

 FOR THE DISTRICT OF ARIZONA 

 _________________ 

United States of America, ) 

 ) 

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

 ) 

 vs. ) Phoenix, Arizona 

 ) January 25, 2019 

Michael Lacey, ) 9:35 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

STATUS CONFERENCE

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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Case 2:18-cr-00422-DJH Document 476-1 Filed 02/25/19 Page 14 of 34
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UNITED STATES DISTRICT COURT

A P P E A R A N C E S 

For the Government: 

 U.S. Attorney's Office 

 By: KEVIN M. RAPP, ESQ. 

 ANDREW C. STONE, ESQ. 

 MARGARET WU PERLMETER, ESQ. 

 40 North Central Avenue, Suite 1200 

 Phoenix, AZ 85004 

 U.S. Attorney's Office 

 By: JOHN JACOB KUCERA, ESQ. 

 312 North Spring Street, Suite 1200 

 Los Angeles, CA 90012 

 U.S. Attorney's Office 

 By: REGINALD E. JONES, ESQ. 

 1400 New York Ave. NW, Ste. 600 

 Washington, DC 20530 

For the Defendant Lacey: 

 Lipsitz Green Scime Cambria 

 By: PAUL JOHN CAMBRIA, JR., ESQ. 

 42 Delaware Avenue, Suite 120 

 Buffalo, NY 14202 

For the Defendants Lacey and Larkin: 

 Davis Wright Tremaine LLP 

 By: ROBERT CORN-REVERE, ESQ. 

 1919 Pennsylvania Ave. NW, Ste. 800 

 Washington, DC 20006 

For the Defendant Larkin: 

 Bienert Miller & Katzman 

 By: THOMAS HENRY BIENERT, JR., ESQ. 

 903 Calle Amanecer, Suite 350 

 San Clemente, CA 92673 

For the Defendant Spear: 

 Feder Law Office 

 By: BRUCE S. FEDER, ESQ. 

 2930 East Camelback Road, Suite 205 

 Phoenix, AZ 85016 

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Case 2:18-cr-00422-DJH Document 476-1 Filed 02/25/19 Page 15 of 34
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UNITED STATES DISTRICT COURT

For the Defendant Brunst: 

 Kimerer & Derrick 

 By: MICHAEL D. KIMERER, ESQ. 

 1313 East Osborn Road, Suite 100 

 Phoenix, AZ 85014 

 Bird Marella Boxer Wolpert Nessim 

 Drooks Lincenberg & Rhow 

 By: GOPI K. PANCHAPAKESAN, ESQ. 

 1875 Century Park E, Suite 2300 

 Los Angeles, CA 90067 

For the Defendant Padilla: 

 Piccarreta Davis Keenan Fidel 

 By: MICHAEL L. PICCARRETA, ESQ. 

 2 East Congress Street, Suite 1000 

 Tucson, AZ 85701 

For the Defendant Vaught: 

 Karp & Weiss 

 By: STEPHEN M. WEISS, ESQ. 

 3060 North Swan Road 

 Tucson, AZ 85712 

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Case 2:18-cr-00422-DJH Document 476-1 Filed 02/25/19 Page 16 of 34
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UNITED STATES DISTRICT COURT

argue they are not getting money from Backpage. They are

getting money, clean money from Backpage. Clean money.

They got 100,000 in August. We are not taking that.

That's clean money. So Spear, Brunst, Lacey, and Larkin, have

separate money from the sale of the alternative weeklies. They

are getting money that we view as clean, legitimate money, and

they are funneling it through another lawyer's account and

disbursing it out.

THE COURT: Why do you use the funneling through

analogy? Because that just sounds unseemly.

MR. RAPP: Well, it's a con move, however you want

to -- look, here's the point. They are getting money, and

under Monsanto, come to us, show us your financials, we will

look at your financials, and if you have no legitimate money,

then maybe we can have a discussion. But they won't do that.

They won't do that.

So you have to know the history of the case. These --

many of the attorneys on this case who came to us shortly after

arrest, they knew that the tracing of illegitimate and

legitimate money was a problem. And some of them said, look,

we have an account, we think this is legitimate money. This

doesn't -- should not come as a surprise to them.

If by analogy, if this was a drug trafficking case,

and the kingpin of the cartel gave drug revenue out to various

attorneys before being arrested and indicted, and that same

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Case 2:18-cr-00422-DJH Document 476-1 Filed 02/25/19 Page 17 of 34
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UNITED STATES DISTRICT COURT

kingpin was arrested and indicted and pled guilty and agreed

that he was running a criminal enterprise and that the revenue

from the criminal enterprise was dirty, and then he pled

guilty, the entire cartel, anybody looking at this would know

that there's a good chance that the money is all tainted.

That's the same case here. It is no different.

Backpage was a criminal enterprise from its inception.

Now, they don't want to address the First Amendment

arguments that we responded to in 446, but if you look at the

business practices they were engaging in, and they have never

ever responded to those, in any of the letters I have sent

them, in any of the pleadings, they won't stand up here and try

to defend the financial relationship with the Erotic Review,

with the aggregation of ads from other prostitution websites,

because they can't.

Because they are running a criminal enterprise, and

every dollar that they make is dirty or it's commingled with

the very de minimis amount of money that is legitimate -- that

they say is legitimate, I guess, from selling bicycles and

couches, which was such an incredibly small fraction of

Backpage's business model that it is not even worth talking

about.

So they have a remedy, Monsanto. Come to us, show us

your financials. Maybe you can trigger a Monsanto hearing, and

we can look at your financials, or don't. And then find money

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Case 2:18-cr-00422-DJH Document 476-1 Filed 02/25/19 Page 18 of 34
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UNITED STATES DISTRICT COURT

from your legitimate source to fund your defense.

THE COURT: Mr. Rapp, I appreciate that.

Mr. Piccarreta, since you are the one that basically

filed 443, I will give you the last word. I will give you

three minutes.

MR. PICCARRETA: Judge, we haven't had a factual

hearing yet to defend the allegations of the government, so for

them to assume we haven't defended yet, we haven't gotten to

that stage. We have plenty of defenses.

Two, they know under United States versus Vera, the

Ninth Circuit is very clear that a guilty plea cannot -- facts

contained in it cannot be used against other defendants because

it's inherently unreliable. I can give you the cite on Vera.

THE COURT: I am familiar with it.

MR. PICCARRETA: And finally, Judge, there's been a

lot of slander of Davis Wright Tremaine. They seem to be the

target of these guys, but they are a very reputable --

THE COURT: Another fire bomb legal term when you

start throwing away slander and -- bring out slander and

prosecutorial misconduct and threats and all of this. You all

are senior enough that when you start launching these different

types of allegations and accusations, you should be prepared to

have an affidavit signed by you and notarized to a state bar

that this person is engaging in this conduct.

If you are not prepared to do that, in this case -- I

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don't know if it is your practice some other place -- but save

that for when you leave the courtroom. Because when you place

it on the record like this, it's very difficult to unring that

bell. 

And I'm pretty confident that all of you are very

proud about what you have accomplished as lawyers, prosecutors,

defenders, whatever you have taken on as a lawyer. And you

don't want to have your reputation sullied that way, so if you

could take this outside of the courtroom. 

But if you are seeking a remedy from me for some form

of misconduct, please bring it up in this courtroom. If you

are not, leave the name calling out of this litigation.

Go ahead.

MR. PICCARRETA: I wasn't trying to call names, I was

just responding to what was --

THE COURT: When you talk about slander, that's

exactly what you are doing. Go ahead.

MR. PICCARRETA: All right. I did not believe it was

fair to make those accusations. But put that all aside, we are

all here today as a result of the government's seizure of IOLTA

accounts in November of this year.

And that has wreaked havoc on my client, my defense,

and my ability to get funds. And that's why we are here today

asking you to stay the proceeding, at least for the defense

obligations until the next status conference so we can

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determine whether we have adequate funds to defend or whether

we have to file pleadings and go from there. That's all we are

asking.

I am not involved in the other cases or whatever they

are referring to. We are here with a legitimate gripe. We

didn't serve the warrant on ourselves. That wasn't discussed

with us. It was dropped on our lap on November 7th, and that's

why we are here today, Judge.

THE COURT: I really appreciate that.

First of all, I want to thank all of you for your well

thought out arguments that you've presented to the Court. It

is all very, very helpful.

This Court is in receipt of Document Number 443, which

is the defendants' joint status report. This Court, after

reading the 15-page document several times, I will consider it

as a motion requesting a continuance or as was described

earlier by Mr. Piccarreta, a request to stay the defendants'

obligations.

This Court is also in receipt of Document Number 444,

which is the United States Government's memorandum, and I also

have Document Number 446 that I have also considered, which is

the United States' response to defendants' joint status report.

After careful consideration of all of the arguments of

counsel, and I certainly understand the issues concerning both

sides and the litigation generally and some of the hardships

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that the defense counsels may be going through to adequately

make sure that their clients are prepared for trial. 

After carefully considering all of the issues, the

motion, which is Document Number 443, will be denied.

The current deadlines in the scheduling order that are

spelled out in Document Number 131, the government and defense,

I am ordering you both to continue to meet those deadlines.

In the event that the Ninth Circuit Court of Appeals

comes out with a decision, and that decision is one in which

this District Court needs to act on it based on if funds are

freed or whatever way that they decide the case and send it

back to the District Court, I look forward to weighing in on

those issues.

Mr. Feder, I appreciate you providing me with a copy

of this document that is currently under seal. I don't want

it. It's a sealed document.

Lisa, if you can return that to Mr. Feder.

And the hearing is adjourned.

(Proceedings conclude at 11:28 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 6th day of February,

2019.

 s/Elva Cruz-Lauer 

 Elva Cruz-Lauer, RMR, CRR 

 

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Case 2:18-cr-00422-DJH Document 476-1 Filed 02/25/19 Page 23 of 34
Exhibit 5

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Exhibit 6

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DECLARATION OF LYNDON VERSOZA

A. Background of Postal Inspector Lyndon Versoza

1. I am a United States Postal Inspector employed by the United States Postal 

Inspection Service (“USPIS”). I have been so employed since June 2005. Currently, I am 

responsible for investigating criminal violations of money laundering and structuring, such 

as when United States Postal Service (“USPS”) Money Orders or the United States Mail 

are used as a means to launder or structure criminal proceeds or instrumentalities. During 

my career as a Postal Inspector, I have conducted (or otherwise participated in) a variety 

of investigations, including financial crimes (such as money laundering, cash structuring 

and bank fraud), fraud (including wire and mail fraud, mail theft, identity theft), drug 

trafficking, child exploitation, homicides, rapes, assaults, and armed robberies. In addition, 

I have received both formal and informal training from the USPIS and other agencies 

regarding money laundering and financial crimes. From 2002 to 2005, prior to my 

appointment as a Postal Inspector, I was employed as a law enforcement officer with the 

U.S. Immigration and Naturalization Service, which later became U.S. Customs and

Border Protection where I was tasked with various details and assignments to assist in 

detecting, interdicting or mitigating terrorism, drug trafficking and human trafficking.

2. I am one of the case agents conducting the Backpage.com investigation. The 

information contained in this declaration is based on my personal knowledge, information 

I received from other law enforcement officials assisting in the investigation, and 

information I have gathered from other sources. 

B. Background of Voice Media Group and Village Voice Media Holdings

3. Village Voice Media Holdings (“VVMH”) was a company founded by James 

Larkin (“Larkin”) and Michael Lacey (“Lacey”). VVMH controlled alternative press 

newspapers such as the Phoenix New Times, LA Weekly and the Village Voice and 

eventually founded Backpage.com to compete with the predominant online classifieds 

website, Craigslist.com. On or about January 17, 2013, VVMH divested its ownership of 

the alternative print newspapers and sold these assets to Voice Media Group (“VMG”) for 

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about $29,935,771. Backpage.com assets were not included in this sale. The sale of the 

alternative press assets to VMG was financed by the owners of VVMH, which include 

Larkin, Lacey, John Brunst (“Brunst”), and Scott Spear (“Spear”, collectively, the 

“Criminal Defendants”) under the name Camarillo Holdings, with payments made to 

Cereus Properties. To date, VMG has an outstanding principal balance of over 

$22,850,000 still owed to Camarillo Holdings.

C. Untainted Funds from Voice Media Group Pays for Legal Defense and Other 

Expenses.

4. I have reviewed financial records related to the financing and sale of the 

alternative newspaper assets to VMG. Based on my review to date, the Government’s 

evidence suggests that the funds Cereus Properties receives from VMG are not criminal 

proceeds and therefore are not subject to forfeiture. 

5. Since the April 6, 2018 takedown of Backpage.com, VMG has continued to 

pay its debt to the previous owners of the VMG assets at Cereus Properties, as well as 

provide additional funds to pay for fees of rental properties. These payments were 

deposited into accounts held by Cereus Properties, and later, directly to accounts of 

attorneys:

a. Approximate Rental Property Payments Since April 2018: $202,000

b. Approximate Principal and Interest Payments Since April 2018: 

$2,697,513.57

6. Upon information and belief, in August 2018, VMG was instructed to divert 

payments from Cereus Properties and instead make them to an Interest Only Lawyers Trust 

Account (“IOLTA”) held by Daniel J Quigley PLC at BBVA Compass Bank in Tucson, 

AZ (the “Quigley IOLTA”). I have reviewed records from the Quigley IOLTA and 

determined that these VMG payments are directly funding law firms representing 

defendants in this case. For example:

a. On August 3, 2018 a wire from VMG for $50,000 was received by the 

Quigley IOLTA.

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b. On August 10, 2018 a wire from VMG for $342,338.59 was received by the 

Quigley IOLTA.

7. These funds were then disbursed to firms representing the Criminal 

Defendants. On August 17, 2018, the following wires were sent from the Quigley IOLTA:

a. $56,273.73 to Copeland Franco

b. $50,000.00 to Lipsitz Green Scime Cambria

c. $41,058.68 to Akin Gump Strauss

d. $13,174.65 to Lawrence G Walters

e. $6,700.00 to Smith Katzenstein

f. $2,040.00 to Booth Sweet LLP

g. $16,447.50 to Taylor Maurer PLC

h. $100,000.00 to Davis Wright Tremaine

i. $15,000.00 to Henze Cook Murphy

j. $7,232.50 to Wayne B Giampietro

k. $50,000.00 to Lipsitz Green Scim

8. A similar pattern was repeated in September 2018. On September 10, 2018 

the Quigley IOLTA received a $390,561.97 wire from VMG. The following funds were 

then disbursed to other law firms:

a. September 10, 2018, $100,000 wire to Davis Wright Tremaine

b. September 14, 2018, $12,500 wire to Henze Cook Murphy

c. September 14, 2018, $45,000.00 wire to Lipsitz Green Scime Cambria

d. September 14, 2018, $6,372.70 wire to Wayne B Giampietro

e. September 14, 2018, $5,000.00 wire to Taylor Maurer PLC

f. September 14, 2018, $4,106.20 wire to Lawrence G Walters

g. September 19, 2018, $8,601.85 wire to Smith Katzenstein

9. Records show that Quigley received $259,463.06 in October; $200,000 in 

November; $250,000 in December, and then $68,000 on or about, January 4, 2019. 

Account records also showed similar outgoing payments for October through January as 

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demonstrated above. In early January, Quigley shifted his banking activities to another 

bank and VMG was directed to wire funds to the new account at the different bank. 

10. In total, between August 2018 and early January 2019, the Quigley IOLTA 

received about $1,560,449.92 in allegedly untainted funds from VMG via wire transfers. 

The same account paid out about $1,242,783 to Quigley and other law firms via wire 

transfers and checks. The account also paid out about $392,666.62 to Lacey, Larkin’s 

spouse, Brunst, and Spear’s spouse. The funds were also used to pay for other expenses.

D. Assets and Income for Andrew Padilla

11. On February 22, 2019, I conducted record searches for assets and income for 

Andrew Padilla (“Padilla”) and his spouse. Based on my review, I learned that in or about 

July, 2017, Padilla and his spouse purchased a home in Plano, Texas for $222,687, of which 

they financed about $178,150. In 2018 the tax assessor calculated the total value of this 

property to be $243,788. Based on the mortgage price and the assessed value, and without 

calculations to the principal payments to the mortgage, I believe the property has at least 

$65,000 in equity.

12. I also reviewed payroll records for Padilla and his spouse. Padilla earned 

$60,470.92 in the first quarter of 2018 and has not had any reported income since the 

seizure of Backpage.com. Padilla’s spouse earned about $87,000 in 2018. 

I declare under penalty of perjury that the foregoing is true to the best of my 

knowledge and belief. Respectfully submitted this 25th day of February, 2019.

___________________________________

Lyndon Versoza

Postal Inspector

United States Postal Inspection Service

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