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ELIZABETH A. STRANGE

First Assistant United States Attorney

District of Arizona

KEVIN M. RAPP (Ariz. Bar No. 14249), 

kevin.rapp@usdoj.gov

MARGARET PERLMETER (Ariz. Bar No. 024805), 

margaret.perlmeter@usdoj.gov

PETER S. KOZINETS (Ariz. Bar No. 019856),

peter.kozinets@usdoj.gov

Andrew C. Stone (Ariz. Bar No. 026543)

Andrew.stone@usdoj.gov

Assistant U.S. Attorneys

40 N. Central Avenue, Suite 1800

Phoenix, Arizona 85004-4408

Telephone (602) 514-7500

JOHN J. KUCERA (Cal. Bar No. 274184), 

john.kucera@usdoj.gov

Special Assistant U.S. Attorney

312 N. Spring Street, Suite 1400

Los Angeles, CA 90012

Telephone (213) 894-3391

BRIAN BENCZKOWSKI

Assistant Attorney General

Criminal Division, U.S. Department of Justice

REGINALD E. JONES (Miss. Bar No. 102806), 

reginald.jones4@usdoj.gov 

Senior Trial Attorney, U.S. Department of Justice

Child Exploitation and Obscenity Section 

950 Pennsylvania Ave N.W., Room 2116

Washington, D.C. 20530

Telephone (202) 616-2807 

Attorneys for Plaintiff

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

United States of America,

Plaintiff,

v.

Michael Lacey, et al.,

Defendant(s).

CR 18-422-PHX-SPL (BSB)

REPLY TO OPPOSITION TO 

GOVERNMENT’S APPLICATION FOR 

ORDER REGARDING CRIMINAL 

FORFEITURE OF PROPERTY IN 

GOVERNMENT CUSTODY

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Plaintiff United States of America (the “government”), by 

and through its counsel of record, the United States Attorney’s 

Office for the District of Arizona and Special Assistant United 

States Attorney John J. Kucera, hereby submits its reply to 

Michael Lacey’s, joined by James Larkin, John Brunst, and Scott 

Spear (collectively “defendants”), Opposition To The 

Government’s Application For An Order Regarding Criminal 

Forfeiture Of Property Already In The Government’s Custody (the 

“Opposition”). In support of its motion, the Government states 

as follows.

I. PROCEDURAL HISTORY

On March 28, April 9, April 26, and June 24, 2018, for the 

purpose of initiating forfeiture proceedings, the government 

executed civil seizure warrants issued by three separate United 

States Magistrate Judges in the Central District of California. 

Pursuant to the arrest warrants, the United States seized all 

right, title, and interest in certain assets (the “seized 

assets”). Thereafter, on March 28, 2018, the government 

included several of these assets in its Indictment (CR 18-422-

PHX-SPL (BSB), Dkt. #3). Subsequently, on July 25, 2018, in its 

Superseding Indictment (CR 18-422-PHX-SPL (BSB), Dkt #230) and,

on August 24, 2018, in the First Bill of Particulars (CR 18-422-

PHX-SPL (BSB), Dkt. 281), the government included for criminal 

forfeiture each of the seized assets.

On August 1, 2018, in the Central District of California,

defendants moved to vacate the government’s civil seizure of 

illicit proceeds arising from alleged illegal activities 

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involving money laundering, prostitution, and obscenity 

violations. 

On August 27, 2018, in the District of Arizona, the 

government filed its Application for an Order Regarding Criminal 

Forfeiture of Property in Government Custody. See Dkt. 282. 

Thereafter, on August 29, 2018, defendants filed their 

Opposition. See Dkt. 285.

In their Opposition, defendants’ primary argument is that 

the government is engaged in forum shopping by applying in the 

District of Arizona for an order allowing the Government to 

maintain custody of property already in the Government’s 

possession pending the resolution of the criminal matter in the 

District of Arizona. Specifically, defendants suggest that the 

government is avoiding the September 24, 2018, hearing in the 

Central District of California before the Honorable R. Gary 

Klausner, by submitting this motion in this District. By doing 

so, defendants incorrectly allege that the government’s motion 

is “an obvious effort to pull the issues from Judge Klausner and 

move them [to this District].” Dkt. 285 at 3. Defendants’ 

accusation is false and fails to account for the fact that two 

different matters, one criminal and one civil, involve the same 

individuals and assets, and the fact that the government is 

entitled simultaneously to proceed against these same assets 

both criminally and civilly, or either one without the other.

II. ARGUMENT

A. The Government May Apply for an Order Regarding 

Criminal Forfeiture of Property In Government Custody 

Because Venue Is Proper In This District

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Title 18 U.S.C. § 1355(b)(1) permits the government to

initiate a civil forfeiture action in the Central District of 

California because such actions may be brought in “the district 

court for the district in which any of the acts of omissions 

giving rise to the forfeiture occurred.” 18 U.S.C. § 

1355(b)(1)(A) (emphasis added). Section 1355 has a broad 

application, establishing venue so long as “at least one of the 

acts or omissions giving rise to the [forfeiture] action 

occurred” in the district where the action is brought. United 

States v. One Oil Painting, 362 F. Supp. 2d 1175, 1186 (C.D. 

Cal. 2005); see also United States v. Hartog, 513 F.3d 991, 998 

(9th Cir. 2008) (“Where an act or omission giving rise to the 

forfeiture occurs in a district, the corresponding district 

possesses jurisdiction over the forfeiture action regardless of 

its control over the res.”). In using the term “any,” Congress 

chose language that is deliberately “broad” and “expansive” in 

its scope. See generally Ali v. BOP, 552 U.S. 214, 219 (2008) 

(finding that when Congress uses the word “any” to modify a noun 

in a statute, it intends the language to have a “broad” and 

“expansive” scope).

The facts alleged in the indictment outline multiple 

allegations, including forfeiture based on money laundering 

statutes and facilitation of prostitution, which statutes 

provide for the forfeiture of assets involved in or traceable to 

the proceeds of these enumerated criminal acts. Numerous acts 

in connection with the illegal proceeds are alleged to have 

occurred in the District of Arizona, including conspiracy in 

violation of the Travel Act (18 U.S.C. § 1952(a)(3)(A)) (Dkt. 

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#230 at ¶¶195-96.), facilitating prostitution (Dkt. #230 at 

¶¶200-01.), conspiracy to commit money laundering (Dkt. #230 at 

¶¶202-03.), money laundering concealment (Dkt. #230 at ¶¶204-

05.), promoting international money laundering (Dkt. #230 at 

¶¶206-07.), transactional money laundering (Dkt. #230 at ¶¶208-

09.), and concealing international money laundering (Dkt. #230 

at ¶¶210-11.). Likewise, these illegal activities have a direct 

nexus to the Central District of California. 

Defendants’ argument that the government is engaged in 

“forum shopping” completely ignores the extensive and detailed 

allegations set forth in the indictment. As explained above, 

the indictment very specifically and in detail alleges multiple

acts in this District in furtherance of the conspiracy, which is 

the underlying basis for the forfeiture of the defendant assets.

Defendants also ignore the fact that where there is an 

indictment, the government need not pursue a forfeiture 

complaint civilly, but, instead, may proceed by criminal 

forfeiture alone if it elects.1 As such, this Court has full 

 

1 The government may elect to pursue civil forfeiture, 

criminal forfeiture, or both mechanisms to forfeit the same 

property traceable to the same criminal act(s). See 18 U.S.C. 

§§ 981(a)(1)(A), 982(a)(1); United States v. One 1978 Piper 

Cherokee Aircraft, 91 F.3d 1204, 1209-10 (9th Cir. 1996); United 

States v. Candelaria-Silva, 166 F.3d 19, 43 (1st Cir. 1999); 

United States v. Cunan, 156 F.3d 110, 117 (1st Cir. 1998) (“The 

United States Code specifically contemplates the possibility of 

duplicative forfeiture proceedings ... .”). Cf. United States v. 

One 1985 Mercedes-Benz, 300 SD, VIN WDBCB20C6FA177831, 14 F.3d 

465, 467 (9th Cir. 1994) (“Congress allowed for both the civil

forfeiture, under 18 U.S.C. § 981 . . ., and the criminal

forfeiture, under 18 U.S.C. § 982, of ‘property involved’ in 

violations of reporting requirements included in other sections 

of Title 31.”). This is so because, as the Ninth Circuit 

pointed out above, “criminal and civil forfeiture actions are . 

. . based on different legal principles . . . . [C]riminal

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statutory authority to consider this motion and issue an order 

allowing the government to maintain custody of property already 

in the government’s possession pending the resolution of this 

criminal matter.2 Moreover, the government is not interfering 

with the authority and jurisdiction of another district court 

given that statutory authority contemplated such concurrent 

proceedings and authorizes the government to pursue both matters 

concurrently.

As such, defendants’ “forum shopping” argument is 

unavailing and lacks merit, and defendants remain free to seek 

any relief they deem appropriate in this District.

B. The Government Is Justified In Maintaining The Assets

Notwithstanding that the Department of Justice’s Policy 

Manual creates no substantive rights, defendants site to the 

Manuel for the proposition that the government may only seek a 

 

forfeiture actions are in personam proceedings against the 

defendant . . . . By contrast, civil forfeiture actions are in 

rem proceedings against specific pieces of property.” United 

States v. $20,193.39 U.S. Currency, 16 F.3d 344, 347 (9th Cir. 

1994).

 2 Title 21 U.S.C. § 853(a)(1) subjects property “constituting, 

or derived from, any proceeds the [defendants] obtained, directly 

or indirectly” to criminal forfeiture provided that said 

defendants are “convicted of a violation of this subchapter.” 

Section 853(a)(1) also allows this District to “enter a 

restraining order or injunction” pursuant to 21 U.S.C. § 853(e). 

Likewise, the Supreme Court has recognized that 21 U.S.C. § 

853(c) “reflects the application of the long-recognized and 

lawful practice of vesting title to any forfeitable assets, in 

the United States, at the time of the criminal act giving rise to 

forfeiture.” Caplin & Drysdale, Chartered v. United States, 491 

U.S. 617, 627 (1989); see also United States v. Monsanto, 491 

U.S. 600, 613 (1989) (“We cannot believe that Congress intended 

to permit the effectiveness of the powerful ‘relation-back’ 

provision of § 853(c) ... to be nullified by any other 

construction of the statute.”). Here, this standard is satisfied 

by the indictment’s specification of multiple acts in furtherance 

of the conspiracy that occurred in this District. 

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protective order pursuant to Section 853(e)(1) when the 

government has already obtained lawful custody. Opposition, p. 

4. Not only do defendants’ arguments on this point appeal to no 

binding authority upon either the government or this Court, 

their arguments are internally inconsistent in that they ignore 

that portion of the Manual that contradicts their argument. In 

pertinent part, the Manual states, “[I]t is perfectly 

appropriate for the Government to maintain possession of such 

property prior to the entry of a preliminary order of forfeiture 

as long as [the Government] has a valid basis for holding the 

property.” Department of Justice, Policy Manual: Asset 

Forfeiture Policy Manual (2016) (available at

https://www.justice.gov/criminal-afmls/file/839521/download), 

Chap. 1, Sec.III.C (at page 34) (the “Manual”). 

The government is well within its rights to seek custody 

and control of the property pursuant to a court order, whether 

it be through an injunction or similar remedy. Where “the 

property with respect to which the order is sought would, in the 

event of conviction, be subject to forfeiture under this 

section.” 21 U.S.C. § 853(e)(1); see also 21 U.S.C. § 853(f). 

This statute also allows this Court to “take any other action to 

preserve the availability of the property ... for forfeiture ... 

.” Id. Moreover, as evidenced by the allegations set forth in 

the indictment, the government has shown a clear basis for 

maintaining possession and control of the property pending the 

resolution of this criminal matter.

///

///

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WHEREFORE, pursuant to section 853(e)(1), the United States 

respectfully moves this Court to issue an Order directing the 

United States to maintain custody of the seized assets described 

above through the conclusion of the pending criminal case, and 

stating that such Order satisfies the requirements of 18 U.S.C. 

§ 983(a)(3)(B)(ii)(II).

DATED: September 12, 2018 ELIZABETH A. STRANGE

First Assistant United States 

Attorney

District of Arizona

BRIAN BENCZKOWSKI

Assistant Attorney General

Criminal Division, U.S. Department 

of Justice

/s/John J. Kucera

KEVIN RAPP

MARGARET PERLMETER

PETER S. KOZINETS

ANDREW C. STONE

JOHN J. KUCERA

Assistant U.S. Attorneys

REGINALD JONES

Senior Trial Attorney

Case 2:18-cr-00422-DJH Document 326 Filed 09/27/18 Page 8 of 8