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Seetha Ramachandran (NY Bar No. 3944121, admitted pro hac vice)

PROSKAUER ROSE LLP

Eleven Times Square

New York, New York 10036-8299

Telephone: (212) 969-3455

Facsimile: (212) 969-2900

sramachandran@proskauer.com

Thomas H. Bienert, Jr. (CA Bar No.135311, admitted pro hac vice)

Whitney Z. Bernstein (CA Bar No. 304917, admitted pro hac vice)

BIENERT KATZMAN LITTRELL WILLIAMS LLP

903 Calle Amanecer, Suite 350

San Clemente, California 92673

Telephone: (949) 369-3700

Facsimile: (949) 369-3701

tbienert@bklwlaw.com

wbernstein@bklwlaw.com

Attorneys for James Larkin

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.

Case No. 2:18-cr-00422-PHX-DJH

REPLY IN SUPPORT OF MOTION TO 

PARTIALLY VACATE SEIZURE 

WARRANTS AND RELEASE FUNDS 

TO DEFENDANTS

(Oral argument requested)

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Paul J. Cambria, Jr. (NY Bar No. 1430909, admitted pro hac vice)

Erin McCampbell (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

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

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

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The government’s response asks the Court to ignore the law, which only allows the 

government to seize tainted property pre-trial. The government wrongly argues that Defendants 

should not be permitted to challenge its seizures – even where it has seized untainted property –

short of a Monsanto showing. While the government is completely wrong on the law, the fact is 

Defendants have an urgent need for funds – both to pay mounting defense costs (due in part by a 

mistrial caused entirely by the government’s misconduct), and in some cases, for basic living 

expenses. The government does not even attempt to address the comprehensive evidence that

Defendants have offered proving that certain assets are not traceable to any alleged criminal 

activity. Instead, the government brushes off the Defendants’ motion and argues that it had 

probable cause to seize those funds for reasons that include, incredibly, its own cooperator’s 

“consent” to “forfeit” funds in attorney retainer accounts set aside for these Defendants’ defense, 

while allowing him to keep identical funds designated for his own defense in both criminal and 

civil cases. The government’s actions have grave constitutional implications under the Sixth 

Amendment, and Defendants respectfully ask this Court to release the assets identified in their 

Motion (Dkt. 1366) (“Mot.”). 

I. THE LAW DOES NOT REQUIRE A MONSANTO SHOWING WHERE THE 

GOVERNMENT SEIZES UNTAINTED ASSETS; NEVERTHELESS,

DEFENDANTS CAN DEMONSTRATE THEIR OVERWHELMING NEED

FOR FUNDS TO PAY FOR THEIR DEFENSE.

A. Luis Applies Because the Government Seeks Continued Restraint of 

Defendants’ Untainted Property.

To seize these assets, the government must trace the property at issue to the crimes alleged.

Mot. at 7 (citing Luis v. United States, 578 U.S. 5, 136 S. Ct. 1083, 1090-92 (2016); Honeycutt v. United 

States, 581 U.S. ___, 137 S. Ct. 1626, 1633 (2017); Kaley v. United States, 571 U.S. 320, 323-24 (2014)). 

The restraint of untainted assets, especially those needed to retain counsel, greatly prejudices

criminal defendants and has the potential to violate their Sixth Amendment right to counsel of 

choice. See Kaley, 571 U.S. at 336-37 (right to retain counsel of choice prior to a criminal trial is of 

“vital interest” to defendants and is the “root meaning” of the Sixth Amendment that “matters 

profoundly,” and the wrongful deprivation of this right is a “structural error” that “pervades the 

entire trial”); United States v. Bissell, 866 F.2d 1343, 1354 (11th Cir. 1989).

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The government incorrectly insists that the Defendants cannot even challenge the restraint 

of these assets without proving, under Monsanto, that they have a need for funds to pay for their 

defense. See Dkt. 1384 (“Gov’t Opp’n”) at 6. But the government mischaracterizes the controlling 

law and ignores the Supreme Court’s decision in Luis. In Luis, the Supreme Court clarified that 

Monsanto (and its companion case Caplin & Drysdale) “relied critically upon the fact that the 

property at issue was ‘tainted,’ and that title to the property therefore had passed from the 

defendant to the Government before the court issued its order freezing (or otherwise disposing 

of) the assets.” Luis, 136 S. Ct. at 1090. United States v. Chamberlain, 868 F.3d 290, 291 (4th Cir. 

2017) (finding that its reliance on Monsanto in interpreting criminal forfeiture statute to embrace 

both tainted and untainted assets “now appears misplaced” given the “important distinction” 

between tainted and untainted assets articulated in Luis). Despite what the government claims, the 

law does not allow it to seize untainted funds and does not put the onus on Defendants to prove 

that they need the funds for counsel as a precondition to challenging that unlawful seizure. If that 

were true, the government could seize assets pretrial with no justification whatsoever, and criminal 

defendants would have no way to challenge that unlawful seizure without first demonstrating the 

need for funds to pay counsel. That is not the law, and it never has been the law. The government 

is not authorized to seize untainted funds pretrial – period. Honeycutt, 137 S. Ct. at 1632 (finding 

that forfeiture statutes limit forfeiture to tainted property, “that is, property flowing from ... or 

used in ... the crime itself”); Luis, 578 U.S. at 136 S. Ct. 1083, 1090-92 (2016) (finding that a 

criminal defendant’s untainted assets belong to the defendant and are protected from government 

interference pre-trial); United States v. Thompson, 990 F.3d 680, 689-90 (2021) (holding that “[u]nder 

Section 981, forfeiture cannot extend beyond the tainted property and proceeds traceable to it”). 

Here, just like in Luis, the government seeks continued restraint of Defendants’ “untainted

property, without any showing of any equivalent government interest [to that shown by the 

government in Monsanto and Caplin] in that property.” Id. at 1092 (emphasis added). In both Luis

and more recently in Honeycutt, the Supreme Court held that defendants have a right to challenge 

the pretrial restraint of property on the ground that it is not related to the alleged criminal activity,

without having to demonstrate a need for the assets to pay counsel. See Honeycutt, 137 S. Ct. at 

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1633 (“§ 853(e)(1) authorizes pretrial freezes ‘to preserve the availability of property described in 

subsection (a) ... for forfeiture.’ Pretrial restraints on forfeitable property are permitted only when 

the Government proves, at a hearing, that (1) the defendant has committed an offense triggering 

forfeiture, and (2) ‘the property at issue has the requisite connection to that crime.’”) (quoting 

Kaley, 571 U.S. at 323-24); Luis, 136 S. Ct. at 1090.

Furthermore, courts have reviewed probable cause findings even where no Sixth 

Amendment right is implicated. See, e.g., United States v. Bikundi, 125 F. Supp. 3d 178, 190-91 

(D.D.C. 2015) (holding that defendant had a due process right to pretrial judicial review of the 

traceability of assets seized pursuant to probable cause warrants and subject to a grand jury finding 

of probable cause of forfeitability where no Sixth Amendment right was at stake, but defendant 

needed assets for household support). As such, this Court’s decision to review the government’s 

seizure of Defendants’ untainted assets does not hinge on them invoking the Sixth Amendment.

The government offers nothing – beyond an overbroad and conclusory claim that it has 

probable cause to seize assets – to establish that the four limited categories of assets Defendants 

seek to have released are traceable to any alleged criminal activity. The government argues that

Monsanto applies simply because a magistrate judge in the Central District of California found that 

there was probable cause to issue warrants to seize “a range of assets involved in or traceable to 

Backpage’s operations.” Gov’t Opp’n at 2. But the government fails to show that it has probable 

cause to believe the four specific subsets of assets that Defendants seek to have released are 

traceable to the alleged criminal activity. Nor is the government correct to suggest that the “law 

of the case” precludes Defendants’ motion. Gov’t Opp’n at 8-9. This Court has never ruled that 

these specific four categories of assets are tainted or that the government has a basis upon which 

to seize them pre-trial. The Order that the government asserts Defendants are attempting to 

“sidestep” merely held that the Defendants’ claims regarding the government’s seizures “should 

be taken up” in the Central District of California, stating in dicta that “this case, at least at this 

point, is much more like Monsanto and Caplin.” Dkt. 559 at 6-7 (emphasis added). But the case 

now is at a different point and the government has now affirmatively stated that it does “not 

object” to the pre-trial seizure of these assets being taken up in this Court (Dkt. 1366-12 at 4) and 

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refuse to address anything with Defendants given this pending Motion (see, e.g., Mot. at 2, n.6). 

Moreover, to the extent the government argues that a grand jury’s finding of probable cause 

precludes Defendants’ motion, the Supreme Court has specifically reserved judgment on the

availability of pretrial review of a grand jury’s probable cause finding as to whether the property at 

issue has a requisite connection to the crime. Kaley, 134 S. Ct. at 1095 & n.3. In doing so, the 

Supreme Court noted that the tracing of assets is a “technical matter far removed from the grand 

jury’s core competence and traditional function.” Id. at 1099 n.9. In any event, no grand jury has 

made such a finding in this case. Further, given the constitutional rights at stake and the prejudice 

to Defendants, judicial review of the government’s seizures of Defendants’ untainted assets is 

critical. The need for review is heightened by the fact that the probable cause findings referenced 

in the government’s Opposition were made ex parte, “increas[ing] the risk of an erroneous finding 

of probable cause about forfeitability, when the burden of establishing such probable cause 

indisputably rests with the government.” Bikundi, 125 F. Supp. at 187. 

B. Defendants Require the Release of Funds to Pay for Defense Costs and, in 

Some Cases, Living Expenses.

While Defendants have a right to judicial review of the traceability of their seized untainted 

assets separate from the Sixth Amendment, Defendants show through sworn declarations, 

submitted in camera and under seal, that they have a dire need for these funds to pay for their 

defense, and that they will use these funds for that purpose. These declarations directly address 

the questions that the government raised regarding Defendants’ ability to fund their defense. See 

Gov’t Opp’n at 11. As set forth in the declarations, defense counsel are currently owed substantial 

amounts of earned legal fees for work that has already been done and costs that have already been 

incurred. The declarations also provide an estimate for the cost of a second trial, which is an 

unexpected additional expense Defendants will incur entirely due to the government’s misconduct, 

to the extent the case is not dismissed. 

The government argues that because Defendants have retained a “veritable who’s who of 

the Southern California bar,” there are no Sixth Amendment issues. But the experience and 

reputation of the counsel that Defendants have chosen to represent them is irrelevant to whether 

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the government has violated Defendants’ Sixth Amendment right to counsel of choice. Defense 

counsel were retained well before the government seized the vast majority of Defendants’ assets 

that would have been used to pay their defense costs. And despite not being paid, Defendants’ 

lawyers have continued to defend their clients, and have done so in the face of numerous recusals 

and a mistrial caused by the government’s misconduct, which have made this case even more 

expensive to defend. If funds are not released to pay Defendants’ counsel, they may need to 

withdraw from the representation because they simply cannot afford to continue the 

representation in light of the mounting costs. This is exactly the Sixth Amendment concern that 

that Supreme Court addressed in Luis. See Luis, 136 S. Ct. at 1089 (“the government would 

undermine the value of [defendant’s Sixth Amendment] right by taking from [defendant] the ability 

to use the funds she needs to pay for her chosen attorney”). 

II. THE GOVERNMENT LACKS PROBABLE CAUSE TO SEIZE THE LIMITED 

CATEGORIES OF ASSETS DEFENDANTS SEEK TO HAVE RELEASED.

When the government finally addresses the four specific categories of assets at issue, it gives 

Defendants’ evidence short shrift and reveals just how little it knows about the tens of millions of 

dollars it haphazardly seized from Defendants. Rather than rebut the evidence and sworn 

declarations offered by Defendants, the government responds with innuendo. For example, 

calling a check a “Tainted Check” or an account a “pass-through” account doesn’t make it so. And 

in response to an unrebutted sworn declaration establishing that the over $10 million in attorney 

retainer funds the government seized were in fact earmarked for the defense of cases just like this 

one and were sourced from, among other places, untainted insurance proceeds from one of the 

largest insurers in the country, the government merely claims that Backpage pled guilty and stops 

there. As to the funds the government admits came from non-adult advertisements, the 

government fudges the numbers – it has never claimed, as it now speculates, that “100 percent” 

of Backpage’s revenue came from prostitution ads. Gov’t Opp’n at 16. And yes, contrary to the 

government’s cavalier response, in the face of over $100 million in seizures, 5% or 10% makes a 

difference where the government has seized virtually all of Defendants’ assets. Id. Finally, as to 

the Foreign Loan Payments, again, in the face of sworn declarations and contemporaneous legal 

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and accounting documents establishing that (a) the Backpage business was sold in two sellerfinanced transactions, one relating to Backpage’s domestic operations and the other relating to its 

foreign operations; (b) the foreign entity was engaged only in foreign operations; and (c) 

Defendants received separate streams of loan payments from the domestic and foreign entities, 

the government again deigns not to engage with these fact-based arguments, instead responding

with insults, like calling Defendants’ argument a “fiction” or referring to the foreign loan 

agreement as “so-called international notes.” Gov’t Opp’n at 17. 

It is nothing short of stunning that the federal government would indiscriminately seize funds 

that are demonstrably untethered to any criminal conduct, and then respond so flippantly in the 

face of evidence that it overreached. The only “fiction” here is the government’s purported 

diligence in seizing these assets. 

A. Defendants’ Attorney Retainer Accounts Are Not Traceable to Criminal 

Activity and the Government Has not Shown Otherwise. 

The government does not even attempt to trace the attorney retainer accounts to criminal 

activity, nor did it ever obtain a seizure warrant that endeavored to do so. It also ignores a sworn 

declaration establishing: (a) Defendants directed loan payments from their sale of Backpage to be 

paid to Rusing Lopez & Lizardi (“RLL”) to be kept in trust in anticipation of future litigation—

and more than 60% of the funds directed to RLL were payments on the foreign loan; and (b) about 

75% of the $2.9 million the government seized from Perkins Coie was insurance proceeds from 

Traveler’s insurance company. At a minimum, those retainer funds should be released.

The government’s main response is that Carl Ferrer, Backpage’s CEO, pled guilty on behalf 

of himself and Backpage, and “forfeited” these assets. See Gov’t Opp’n at 2, 14. In other words, 

the government claims that it need not meet its burden to trace attorney retainers designated for 

Defendants’ legal fees because its own cooperating witness – who will testify against Defendants

and receive a reduced sentence – “consented” to their forfeiture. And even worse, the government 

wrongly claims that Defendants have no right to challenge that seizure because they are merely 

third parties asserting an interest in those funds. This claim violates basic principles of due process. 

Criminal forfeitures are in personam, which means a defendant can only forfeit his own 

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interest in property. See United States v. Daugerdas, 892 F.3d 545, 548 (2d Cir. 2018). Where a 

defendant has no interest in an asset, he has no incentive to challenge its forfeiture. In fact, courts 

have recognized that a defendant who “consents” to the forfeiture of someone else’s assets actually

enjoys a windfall because someone else’s assets will be used to reduce his own obligation to satisfy 

a forfeiture judgment. See id. at 557 (“The defendant will not end up with the property either way, 

and he might actually get a windfall if the money he owes is paid off with someone else’s 

property”). That incentive is even stronger for a defendant like Ferrer, who is testifying for the 

government as a cooperating witness, because he must follow the government’s instructions in 

order to receive 5K credit. Under 21 U.S.C. §853(n), third parties can assert an interest in property 

subject to forfeiture in a criminal case and have a right to an ancillary hearing, typically held after 

the defendant’s sentencing. That is because third parties are generally not permitted to intervene 

in a criminal case. But here, the parties who can assert that interest are Ferrer’s co-defendants who 

have been charged as part of the same criminal matter – not third parties.1 Moreover, because 

Ferrer is testifying for 5K credit, the government has sole control over when he will be sentenced,

which will presumably be after Defendants’ criminal trial is over. In fact, the government has 

continued Ferrer’s sentencing seven times. Case 2:18-cr-00464-DJH, Dkt. 111. Preventing 

Defendants from challenging the seizure and forfeiture of their attorneys’ retainer accounts –

money that they need to defend themselves in this criminal case – until after their criminal trial 

raises grave constitutional concerns under the Sixth Amendment and as a matter of due process. 

Courts have found that, in some cases, postponing the ability of claimants to challenge a pretrial 

restraint until after forfeiture has been ordered (at sentencing) violates due process. See United

States v. Crozier, 777 F.2d 1376, 1382-84 (9th Cir. 1985) (finding that section 853(e)’s provision for 

restraining orders on the filing of an indictment violates due process by not allowing a criminal 

defendant or a third party to challenge a restraining order unless and until after forfeiture has been 

1 Defendants filed third-party petitions shortly after the government included them in 

Ferrer’s Preliminary Order of Forfeiture because they had to preserve their ability to challenge the 

forfeiture if they were forced to litigate their interest through an ancillary hearing. The statutory 

deadline for filing a petition is 30 days after a claimant receives notice of the Preliminary Order of 

Forfeiture. See 21 U.S.C. § 853(n)(2).

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ordered); United States v. Siegal, 974 F. Supp. 55, 58 (D. Mass. 1997) (finding that the due process 

clause required the court to afford third parties “a timely pretrial opportunity to challenge the 

restraining order as ‘clearly improper’ on the ground the property was not available for forfeiture” 

because otherwise they would be unable to challenge the restraint for another six months).

The government’s actions are especially troubling because Ferrer quite obviously had no 

interest in funds that were specifically set aside for Defendants’ legal expenses. In fact, the 

government allowed Ferrer to access and use $2,310,000.00 of similar funds that were set 

aside for his defense and the defense of his companies – not only in the criminal case but also 

in numerous civil cases (where there is no Sixth Amendment right to counsel) – even though 

the funds had exactly the same source and purpose as the funds in Defendants’ attorney retainer 

accounts. Case 2:18-cr-00464-DJH, Dkt. 23. The government also agreed not to forfeit Ferrer’s 

Frisco, Texas home, on the grounds that it was not purchased with funds deriving from Backpage

(Case 2:18-cr-00464-DJH, Dkt. 7), but restrained real estate owned by Defendants – acquired long 

before they earned money from Backpage – on the theory that their payment of incidental expenses

(such as taxes) related to those properties with funds derived from Backpage rendered them tainted 

assets subject to forfeiture. The government’s hypocrisy is astounding – the Court should not 

condone such disparate treatment, merely because Ferrer is a cooperating witness.

B. The Government Fails to Trace the Funds in the VMG Account to Alleged

Criminal Activity.

The unrebutted facts establish that the VMG depository account is not traceable to any 

alleged criminal activity, and the government has never made a showing to the contrary. 

Defendants have demonstrated that the only deposits into the VMG depository account came 

from the sale of Defendants’ print newspaper businesses and were VMG’s payments on the 

corresponding note or rent to sublease an office building, both of which are completely unrelated 

to Backpage. Brunst Decl., Exh. D. (Dkt. 1366-6). 

Calling the seizure of these funds a “closer question” appears to be the government’s way 

of admitting that it was wrong to seize these funds. Gov’t Opp’n at 16. And calling something a 

money laundering transaction or a “pass-through account” does not make it so. The government 

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feigns ignorance, calling Defendants’ evidence “newly-disclosed.” Id. at 16. Again, just because 

the government ignored evidence to the contrary in seizing funds it should not have seized in the 

first place is not an actual response to Defendants’ unrebutted evidence. And no, these are not 

matters for “civil discovery” or “trial” -- the government has already agreed to litigate the seizure 

of these assets now, before this Court (Dkt. 1366 at 2 n.6). 

As to the purported “Tainted Check,” the government’s argument is a non-starter. That 

check merely was reimbursed to VMG for legal fees that VMG incurred in connection with civil 

suits related to Backpage.com. Declaration of John Brunst in Support of Reply, Exh. A. As part 

of the November 8, 2012 sale agreement between Village Voice Media Holdings (“VVMH”) and 

VMG, VVMH (which held Backpage and was owned by Defendants) agreed to indemnify VMG

against any claims relating to Backpage (VVMH did not sell Backpage to VMG; it only sold the 

newspapers). See Dkt. 1366-3 (purchase agreement) at Article VII. And as the government admits, 

the reimbursement check was not even paid from the seized account in question. In short, 

there is zero evidence that the reimbursement somehow rendered the VMG’s bank account a 

“pass-through” account. The government’s argument is baffling – it points to a $83,063.12 check 

paid to indemnify VMG for legal expenses, a check that did not touch the seized account, and 

$944,729.25 in separate, admitted loan and rent payments from VMG regarding Defendants’ sellerfinanced sale of newspaper businesses, and asks the Court to rule that these two sets of distinct, 

unrelated transactions, neither of which was illegal to begin with, somehow equate to money 

laundering and taint the entire seized account. Indeed, for the government’s specious argument to 

be true, Voice Media Group, a media company that owns papers like the Phoenix New Times, would 

have to be a money launderer. That obviously is not the case, and there is not, nor can there be,

any allegation that Defendants “controlled” VMG. 

C. The Government Fails to Show That Foreign Loan Payments Are Traceable 

to Alleged Criminal Activity. 

Defendants have shown, through detailed documentation and contemporaneous 

accounting records, that Backpage’s post-sale foreign operations generated a separate stream of 

loan payments totaling tens of millions of dollars. See Brunst Decl., Exh. I (Dkt. 1366-11). That 

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is not a “fiction” – it is what the unrebutted evidence shows. Gov’t Opp’n at 17. The government 

acknowledges that, with respect to the assets seized relating to revenues from Backpage.com’s 

operations outside of the United States, “what matters is where the payments [on international 

notes] were sourced from.” Id. at 17. But the government ignores that principle and fails to offer 

any evidence establishing that such note payments were sourced from or traceable to alleged illegal 

activity in the United States. It is not Defendants that ask the Court to rely on an unproven 

“assumption,” (id.), but rather the government that asks the Court, without a shred of evidence, to 

assume that every single dollar generated by Backpage’s post-sale foreign operations was generated

from unlawful activity in the United States. It does not matter that Carl Ferrer had Backpage enter

a guilty plea stating that the “majority” of Backpage’s ads were ads for prostitution. Id. at 17. The 

Travel Act is not an extraterritorial statute: it does not proscribe business enterprises involved in 

alleged prostitution in foreign countries. And in any event, the government offers nothing to show 

that loan payments tied to the sale of Backpage’s foreign operations came from a domestic source. 

The government’s only response is a reference to the vague allegations that Backpage was 

“fool[ing]” credit card companies, “mischaracterizing” the source of its revenue, and that the 

Defendants still controlled Backpage after its sale (if that were true, then how could Ferrer 

unilaterally plead Backpage guilty, while Defendants continue to vigorously contest the charges 

against them?). These allegations say nothing about Backpage’s post-sale foreign operations or the 

specific loan payments at issue. The government’s response is emblematic of its broad-brush, 

“seize everything first, and come up with a generic justification later” approach here. 

To the extent the government relies on a commingling theory, that too is insufficient to 

support a finding of probable cause for the reasons explained in Defendant’s Motion and above 

in Part II.B. See Brunst Decl., Exh. M (Dkt. 1366-15) (showing that Ferrer’s payments on the 

domestic and foreign loans were made and accounted for separately). Nor does that argument 

address the foreign loan payments that were paid directly to law firms to hold in trust. The mere 

inclusion of a money laundering count in the indictment does not show probable cause that would 

justify the pretrial restraint of these assets – not under Kaley (as the government claims, without 

explanation) or any other case law. 

Case 2:18-cr-00422-DJH Document 1390 Filed 11/16/21 Page 12 of 15
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REPLY IN SUPPORT OF MOTION TO PARTIALLY VACATE SEIZURE WARRANTS 

AND RELEASE FUNDS TO DEFENDANTS

D. A Conspiracy Charge Does Not Support the Blanket Seizure of Defendants’ 

Assets, Including Legitimate, Untainted Assets. 

The government argues that because the Indictment includes a conspiracy count against 

Defendants, there is probable cause to believe that “every dollar of Backpage’s revenue” was 

involved in the criminal activity, simply because a large percentage of Backpage’s revenue may be

traceable to alleged criminal activity. See Gov’t Opp’n at 16. That is a gross misrepresentation of

the traceability requirement under forfeiture law. The government is “required to trace the seized 

property directly to the offense giving rise to the forfeiture.” $8,221,877.16 in United States Currency, 

330 F.3d 141, 158 (3d Cir. 2003). The government cannot simply cite to its own conspiracy charge

as a way to circumvent the traceability requirement and seize all of Defendants’ assets. In fact, the 

Supreme Court has recently limited the extent to which the government can use conspiracy charges 

as a basis for forfeiture. See Honeycutt, 137 S. Ct. at 1635 (limiting forfeiture to “property the

defendant himself actually acquired as a result of the crime” and holding that members of a 

conspiracy are not jointly and severally liable for property that one conspirator, but not the other, 

acquired from the crime); United States v. Thompson, 990 F.3d 680, 689-90 (9th Cir. 2021) (applying

Honeycutt to Section 981 and holding that forfeited property of a conspiracy has to be “traceable” 

to the proceeds “derived” from the alleged crime, which “does not, and cannot under Honeycutt, 

extend to all the criminal’s property, ‘traceable’ or not” because [s]uch an application would be 

inconsistent with the common law conception of forfeiture”). Thus, proceeds derived from 

legitimate business activity are not subject to forfeiture simply because they are associated with a 

business charged with other criminal activity. 

III. CONCLUSION.

For the foregoing reasons, Defendants respectfully request this Court (1) partially vacate 

the seizure warrants to the extent they restrain funds tied to the VMG Account and the attorney 

retainer funds and (2) order the government to release any seized funds traceable to the foreign 

loan payments or non-adult advertising proceeds.

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REPLY IN SUPPORT OF MOTION TO PARTIALLY VACATE SEIZURE WARRANTS 

AND RELEASE FUNDS TO DEFENDANTS

RESPECTFULLY SUBMITTED this 16th day of November 2021,

PROSKAUER ROSE LLP

s/ Seetha Ramachandran

Seetha Ramachandran

Asset Forfeiture Attorney for James Larkin

BIENERT KATZMAN LITTRELL 

WILLIAMS LLP

s/ Whitney Z. Bernstein

Thomas H. Bienert, Jr.

Whitney Z. Bernstein

Attorneys for James Larkin

Pursuant to the District’s Electronic Case Filing Administrative Policies and Procedures Manual (Oct. 2020) § 

II(C)(3), Whitney Z. Bernstein 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.

LIPSITZ GREEN SCIME CAMBRIA LLP

s/ Paul J. Cambria, Jr.

Paul J. Cambria, Jr.

Erin McCampbell Paris

Attorneys for Michael Lacey

FEDER LAW OFFICE PA

s/ Bruce Feder

Bruce Feder

Attorney for Scott Spear

BIRD MARELLA BOXER WOLPERT 

NESSIM DROOKS LINCENBERG AND 

RHOW PC

s/ Gary S. Lincenberg

Gary S. Lincenberg

Ariel A. Neuman

Gopi K. Panchapakesan

Attorneys for John Brunst

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CERTIFICATE OF SERVICE

CERTIFICATE OF SERVICE 

I hereby certify that on November 16, 2021, I electronically transmitted the attached 

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

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

record. 

/s/ Toni Thomas 

Toni Thomas

Case 2:18-cr-00422-DJH Document 1390 Filed 11/16/21 Page 15 of 15