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

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. (NY Bar No.1430909, admitted pro hac vice) 

Erin McCampbell Paris (NY Bar No. 4480166, admitted pro hac vice) 

LIPSITZ GREEN SCIME CAMBRIA LLP

42 Delaware Avenue, Suite 120

Buffalo, New York 14202

Telephone: (716) 849-1333

Facsimile: (716) 855-1580

pcambria@lglaw.com

emccampbell@lglaw.com

Attorneys for Michael Lacey

Gary S. Lincenberg (CA Bar No. 123058, admitted pro hac vice)

Ariel A. Neuman (CA Bar No. 241594, admitted pro hac vice)

Gopi K. Panchapakesan (CA Bar No. 279856, admitted pro hac vice)

BIRD, MARELLA, BOXER, WOLPERT, NESSIM,

DROOKS, LINCENBERG & RHOW PC

1875 Century Park East, 23rd Floor

Los Angeles, California 90067-2561

Telephone: (310) 201-2100

Facsimile: (310) 201-2110

glincenberg@birdmarella.com

aneuman@birdmarella.com

gpanchapakesan@birdmarella.com

Attorneys for John Brunst

Additional counsel listed on next page

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

United States of America,

 Plaintiff,

vs.

Michael Lacey, et al., 

 

 Defendants.

NO. CR-18-00422-PHX-DJH

DEFENDANTS’ BRIEF IN SUPPORT 

OF DEFENDANTS’ PROPOSED JURY 

VERDICT FORM ON FORFEITURE

 

Case 2:18-cr-00422-DJH Document 1954 Filed 11/08/23 Page 1 of 9
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

Eric Kessler

KESSLER LAW GROUP

6720 N. Scottsdale Rd., Suite 210

Scottsdale, AZ 85253

Telephone: (480) 644-0093

eric@kesslerlawgroup.com

Attorney for Scott Spear

Bruce Feder (AZ Bar No. 004832)

FEDER LAW OFFICE PA

2930 E. Camelback Road, Suite 160

Phoenix, Arizona 85016

Telephone: (602) 257-0135

bf@federlawpa.com

Attorney for Scott Spear

Case 2:18-cr-00422-DJH Document 1954 Filed 11/08/23 Page 2 of 9
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

Defendants file the Defendants’ Brief in Support of Defendants’ Proposed Jury Verdict 

Form on Forfeiture, by and through their undersigned counsel. Several fundamental forfeiture 

principles support the Defendants’ position that their request for the jury to determine the 

requisite nexus between the property and any crime of conviction also necessarily requires the 

jury to determine the amount of forfeiture for any asset the jury finds forfeitable. Indeed, it 

appears that the Government agrees with Defendants, as they have not objected to the 

inclusion of the phrase “and if so, how much of that property should be forfeited” in 

Defendants’ proposed modified jury instruction No. 3. See Dkt. 1943 at 4. 

First, it is well-settled that forfeiture is limited to the proceeds that a defendant obtained 

as a result of the crimes of conviction. In Honeycutt v. United States, 581 U.S. 443 (2021), the 

Supreme Court unanimously held that forfeiture under 18 U.S.C. § 853 “is limited to property 

the defendant himself actually acquired as the result of the crime.” Id. at 454. The Ninth 

Circuit has extended this holding to other forfeiture statutes. See, e.g., United States v. Thompson, 

990 F.3d 680, 691 (9th Cir. 2021) (“To forfeit money from Thompson, the district court was 

required by Section 981 to find that the amount forfeited came to rest with him as a result of his 

crimes.” (emphasis added)). Thus, there must be a determination as to what the defendant 

“actually acquired” as to each asset at issue. Honeycutt, 581 U.S. at 454.

Second, the Ninth Circuit limited forfeiture to the criminal proceeds received by a 

defendant even prior to Honeycutt. For example, in United States v. Rutgard, 116 F.3d 1270 (9th 

Cir. 1997), the Ninth Circuit reversed a judgment of forfeiture entered against an 

ophthalmologist convicted of Medicare and insurance fraud. In that case, the government 

sought and obtained forfeiture of an entire bank account on the basis that proceeds of the 

crimes of conviction were deposited in the account. The Ninth Circuit rejected that type of 

forfeiture, recognizing that the “government, not the defendant, had the burden of showing 

the sources of all the moneys in the account” were the proceeds of crime in order to obtain 

forfeiture of the entire account, which the government had failed to do. Id. at 1293. 

The jury’s determination of the amount subject to forfeiture will be particularly 

important here, since the government’s own exhibits demonstrate that it seeks to forfeit 

Case 2:18-cr-00422-DJH Document 1954 Filed 11/08/23 Page 3 of 9
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

numerous properties where it can trace only a very small portion of the asset to funds 

originating with Backpage. For example, the first page of the government’s proposed 

forfeiture phase summary exhibit shows the government seeks to forfeit Michael Lacey’s 

primary residence, valued at approximately $3,000,000, even though the government can 

establish that, at most, $112,461.58 in unspecified proceeds from Backpage may have been

used to make mortgage payments. 

Third, unless a company is a necessarily illegal enterprise, with no legitimate purpose 

whatsoever (e.g., the Noriega drug cartel), the government must prove that the revenues of the 

company were the proceeds of crime, rather than the proceeds of legal business activities. For 

example, in Rutgard, the Ninth Circuit rejected the government’s claim that an 

ophthalmologist’s entire “practice was a fraud” and, therefore, that all revenue earned by the 

practice could be presumed to be the proceeds of crime during the forfeiture phase of the trial. 

See Rutgard, 116 F.3d at 1293. The Ninth Circuit held that the government failed to establish 

that the ophthalmologist’s practice was an illegal company with no legitimate purpose for three 

reasons: (1) the government did not charge the company as a criminal enterprise under RICO, 

nor did it establish a conspiracy among the various employees of the practice who testified; 

(2) the government’s own proof demonstrated that segments of the ophthalmologist’s practice 

had nothing to do with fraud, such as treatments for glaucoma; and (3) the jury acquitted 

certain counts of the indictment and the Ninth Circuit reversed convictions on certain other 

counts. See id. at 1287-90. The government’s failure to prove that each and every aspect of 

the practice was illegal meant that the government could not ask the jury to presume that all 

of the practice’s revenues were criminal proceeds. Instead, the government was required to 

trace the revenue to the crimes of conviction. 

Here, the government’s proof at trial suffers from even greater infirmities. The 

government not only did not charge the case – or put on any proof at trial – that all content 

on Backpage.com was illegal or that all its revenues were criminal proceeds. Indeed, there is 

no dispute that Backpage had hundreds of millions of ads in non-adult sections. The 

Government’s own exhibit, Exhibit 1480, shows that anywhere from 3% to 7% of revenue 

Case 2:18-cr-00422-DJH Document 1954 Filed 11/08/23 Page 4 of 9
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

earned came from the categories on the website other than adult, including ads for real estate, 

rentals, musicians, automotive, and more. 

Additionally, this Court and the jury must presume that the publication of all content 

on Backpage.com was protected by the First Amendment, unless the government proved 

beyond a reasonable doubt that an ad “propose[d] an illegal transaction.” The government 

introduced evidence about the content of the fifty charged advertisements, as well as some 

additional ads (or ad titles), but the government put on no proof regarding the millions of 

other adult ads posted on the Backpage.com over its 14-year time history or whether any of 

those ads proposed an illegal transaction (much less that all of them did so). Indeed, the 

Government only sought to prove the Travel Act’s “business enterprise” requirement as to 

the 50 ads (eliciting testimony regarding the conduct of a pimp, that he had no other legitimate 

income, etc.). Ferrer’s testimony that all Backpage.com escort ads were “prostitution ads” 

cannot provide a basis for the government to forfeit all revenues earned by Backpage.com. 

Ferrer’s testimony plainly was unreliable for many reasons, including his own admission that 

he had looked at no more than tens of thousands of ads over 14 years on a website that had 

many millions of ads posted each year. Under the Court’s instructions to the jury, 

Backpage.com’s publication of an ad would not lose the protection of the First Amendment 

just because it was an ad associated with prostitution (or, in Ferrer’s words, a “prostitution 

ad”). Rather the ad had to “propose[] an illegal transaction,” which could be determined only 

by examining each ad. Moreover, prostitution is not a federal crime. The government is 

bound by the case it charged under the Travel Act, which requires a showing of specific intent 

to promote a business enterprise involved in prostitution.

In any event, on cross-examination Ferrer admitted that he was only making what he 

called an “educated guess” about whether adult ads on Backpage.com were associated with 

prostitution. Ferrer’s guesses about ads he never saw, posted by people about whom he knew 

nothing, about is evidence of nothing—not proof beyond a reasonable doubt that every adult

ad on Backpage.com over a 14-year time period in “proposed an illegal transaction.” Law 

enforcement officers paid for sting ads on the website. Non-profit organizations paid for their 

Case 2:18-cr-00422-DJH Document 1954 Filed 11/08/23 Page 5 of 9
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

own sting ads on the website. Law enforcement officers testified that there was no probable 

cause to make an arrest based on the face of an ad alone (noting that the ad is the “first step”), 

even when considering one of the charged ads that contained “sex for money” language. In 

other words, the law enforcement officers testified that from the face of an ad they could not 

even determine that there was a “fair probability” that an ad was a solicitation of prostitution. 

Kaley v. United States, 571 U.S. 320, 338 (2014) (“Probable cause, we have often told litigants, is 

not a high bar: It requires only the ‘kind of ‘fair probability’ on which ‘reasonable and prudent 

[people,] not legal technicians, act.’’”). The defense’s expert also testified that there are many 

lawful commercial sex activities and that it is impossible to know whether an ad was an ad for 

prostitution without meeting with the person who published the ad, even if an ad was 

suggestive of prostitution. For all these reasons, to forfeit property the government must 

prove, and the jury must determine, both that the Backpage.com revenues on which its 

proposed forfeitures are based were generated by ads whose publication was not protected by 

the First Amendment and that the property sought to be forfeited is traceable to Travel Act 

violations or a money laundering offense (and that the specified unlawful activity underlying 

such money laundering offenses was a Travel Act violation). 

Fourth, the forfeiture of an entire asset (here, a residence or bank account) on the basis 

that some small amount of tainted funds was used to purchase or maintain a home or was 

deposited into a bank account would be a disproportionate penalty in violation of the 

Excessive Fines Clause of the Eighth Amendment as articulated by the Supreme Court. See 

United States v. Bajakajian, 524 U.S. 321, 337 (1998) (“If the amount of the forfeiture is grossly 

disproportional to the gravity of the defendant’s offense, it is unconstitutional.”). The Ninth 

Circuit has recognized that the Supreme Court’s Excessive Fines Clause analysis applies to any 

forfeiture that is “tied to the commission of a crime.” See, e.g., United States v. $100,348.00 in 

U.S. Currency, 354 F.3d 1110, 1119 (9th Cir. 2004) (recognizing that any forfeiture, even a civil 

forfeiture, that is, among other things, “tied to the commission of a crime,” is punitive and 

subject to excessive fines analysis); United States v. Real Property 874 Gartel Dr., 79 F.3d 918, 924-

25 (9th Cir. 1998).

Case 2:18-cr-00422-DJH Document 1954 Filed 11/08/23 Page 6 of 9
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

Fifth, as a practical matter, only this jury can know and determine the appropriate 

amount of forfeiture the Defendants obtained as a result of any crimes of conviction. This 

jury heard evidence during the guilt-innocence phase of this trial. This same jury then will 

hear evidence concerning the nexus of any particular asset to the crimes of conviction. After 

hearing that evidence, and making the determination that a nexus exists between any particular 

asset and crime of conviction, only this jury would know what it had in mind in terms of the 

amount of the asset(s) at issue as proceeds of crime. For example, the jury could convict any 

Defendant on the Travel Act conspiracy having found that the government established an 

agreement to commit only one of the substantive Travel Act violations. Under that scenario, 

the government only would be entitled to forfeit the proceeds (if any) that a Defendant gained 

from Backpage.com’s sale of ad space for that particular ad. Alternatively, the jury could 

convict any Defendant on the Travel Act conspiracy having found that the government 

established an agreement to commit all 50 substantive Travel Act violations. Under that 

scenario, the government would be entitled to forfeit the proceeds (if any) that a Defendant

gained from Backpage.com’s sale of ad space for all 50 of those ads. The Government 

continues to impermissibly seek to expand the charged Travel Act conspiracy beyond the 50 

ads, contending that these ads are just “examples.” But the law of the case is clear on this 

(Dkt. 946 at 13; Final Jury Instructions [Travel Act Conspiracy Charge]). And the 

Government’s response – that evidence of alleged marketing practices from 2004 to 2018 is 

relevant – is a non-sequitur. There is a clear distinction between relevant evidence and the scope 

of the charged offenses. 

In sum, only this jury will know the bases for a conviction and, as a result, only this 

jury is able to determine the amount of proceeds that a Defendant obtained “as a result of his 

crimes.” See, e.g., Thompson, 990 F.3d at 691. The same holds true for the money laundering 

conspiracy count. Simply put, this Court will not know what the jury found to be the crime 

of conviction for a conviction under either conspiracy charge and, thus, it will be impossible 

for this Court to determine the amount that could be forfeited by any particular Defendant. 

Finally, it is not appropriate to fold the determination of the amount a Defendant must 

Case 2:18-cr-00422-DJH Document 1954 Filed 11/08/23 Page 7 of 9
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

forfeit as to any particular asset into ancillary proceedings. Ancillary proceedings are the 

proceedings by which courts resolve third-party claims to assets that are subject to forfeiture 

after the entry of a preliminary order of forfeiture. Rule 32.2(c) of the Federal Rules of Criminal 

Procedure (“Rule 32.2”) sets forth the procedures for the assertion and resolution of thirdparty claims. See United States v. Lazarenko, 476 F.3d 642, 648 (9th Cir. 2007) (citing Rule 32.2 

and explaining that “a court adjudicates a third party’s interest in the forfeited property in an 

ancillary proceeding after concluding the criminal case and entering a preliminary order of 

forfeiture”). Indeed, “the purpose of the ancillary hearing is to resolve third party claims.” 

United States v. Arce-Padilla, 981 F. Supp. 2d 852, 854-55 (D. Ariz. 2013) (citing United States v. 

Cox, 575 F.3d 352, 358 (4th Cir. 2009)). Thus, it would be improper under Rule 32.2 and 

controlling Ninth Circuit authority either to require a third party to litigate his or her interest

in an asset before the Court determines that the asset will be forfeited or to inject the 

determination of the amount of any particular asset subject to forfeiture as a result of a 

defendant’s crimes of conviction into the separate and distinct inquiry the court must 

undertake to resolve third-party claims. 

 For all these reasons, Defendants respectfully request that, in the event of a 

conviction, the jury make the determination of nexus for each asset, including the amount 

subject to forfeiture. 

RESPECTFULLY SUBMITTED this 8th day of November, 2023, 

Paul J. Cambria, Jr.

Erin McCampbell Paris

LIPSITZ GREEN SCIME CAMBRIA LLP

 By: /s/ Paul J. Cambria, Jr. 

Paul J. Cambria, Jr.

Attorneys for Michael Lacey

Pursuant to the District’s Electronic Case Filing Administrative Policies and Procedures Manual (Jan. 

2020) § II (C) (3), Paul J. Cambria hereby attests that all other signatories listed, and on whose behalf this 

filing is submitted, concur in the filing’s content, and have authorized its filing.

Case 2:18-cr-00422-DJH Document 1954 Filed 11/08/23 Page 8 of 9
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

Gary S. Lincenberg

Gopi K. Panchapakesan

BIRD, MARELLA, BOXER, WOLPERT, NESSIM,

DROOKS, LINCENBERG & RHOW, P.C.

By: /s/ Gary Lincenberg 

Gary Lincenberg

Attorneys for John Brunst

Eric W. Kessler

KESSLER LAW OFFICE

By: /s/ Eric W. Kessler 

Eric W. Kessler

Attorneys for Scott Spear

Bruce Feder

FEDER LAW OFFICE, P.A.

By: /s/ Bruce Feder 

Bruce Feder

Attorneys for Scott Spear

On November 8, 2023, a PDF version of this document was 

filed with Clerk of the Court using the CM/ECF System 

for filing and for Transmittal of a Notice of Electronic 

Filing to the to the CM/ECF registrants who have 

entered their appearance as counsel of record

Case 2:18-cr-00422-DJH Document 1954 Filed 11/08/23 Page 9 of 9