2:18-cr-00422- September 12, 2023 - Opening Statement by Bruce Feder

UNITED STATES DISTRICT COURT

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

_________________

United States of America , )

) No. 2:18-cr-00422-DJH

Plaintiff, )

)

vs. ) Phoenix, Arizona

) September 12, 2023

Michael Lacey, et al. )

)

Defendants. )

_________________________ )

BEFORE: THE HONORABLE DIANE J. HUMETEWA, JUDGE

REPORTER'S EXCERPTED TRANSCRIPT OF PROCEEDINGS

TRIAL - DAY 4 - AM SESSION

(OPENING STATEMENT BY BRUCE FEDER)

Official Court Reporter:

Hilda Elizabeth Lopez, RMR, FCRR

Sandra Day O'Connor U.S. Courthouse, Suite 312

401 West Washington Street, Spc 30

Phoenix, Arizona 85003-2151

(602) 322-7256

Proceedings Reported by Stenographic Court Reporter

Transcript Prepared by Computer-Aided Transcription

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A P P E A R A N C E S

For the Government:

UNITED STATES ATTORNEY'S OFFICE

By: Mr. Kevin M. Rapp, Esq.

Mr. Peter S. Kozinets, Esq.

Mr. Andrew C. Stone, Esq.

Ms. Margaret Wu Perlmeter, Esq.

40 North Central Avenue, Suite 1200

Phoenix, Arizona 85004

kevin.rapp@usdoj.gov

peter.kozinets@usdoj.gov

andrew.stone@usdoj.gov

margaret.perlmeter@usdoj.gov

For the Government:

UNITED STATES DEPARTMENT OF JUSTICE

By: Mr. Austin Berry, Esq.

1301 New York Avenue, NW, 11th Floor

Washington, DC 20005

austin.berry2@usdoj.gov

For the Defendant Michael Lacey:

LIPSITZ GREEN SCIME CAMBRIA, L.L.P.

By: Mr. Paul J. Cambria, Jr., Esq.

42 Delaware Avenue, Suite 120

Buffalo, NY 14202

pcambria@lglaw.com

For the Defendant Scott Spear:

FEDER LAW OFFICE, P.A.

By: Mr. Bruce S. Feder, Esq.

2930 East Camelback Road, Suite 160

Phoenix, AZ 85016

bf@federlawpa.com

- and -

KESSLER LAW OFFICE

By: Mr. Eric Walter Kessler, Esq.

6720 N. Scottsdale Road, Suite 210

Scottsdale, AZ 85253

eric.kesslerlaw@gmail.com

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For the Defendant John Brunst:

BIRD MARELLA BOXER WOLPERT NESSIM DROOKS

LINCENBERG & RHOW, P.C.

By: Mr. Gopi K. Panchapakesan, Esq.

1875 Century Park E, Suite 2300

Los Angeles, CA 90067

gpanchapakesan@birdmarella.com

glincenberg@birdmarella.com

For the Defendant Andrew Padilla:

DAVID EISENBERG, P.L.C.

By: Mr. David S. Eisenberg, Esq.

3550 North Central Avenue, Suite 1155

Phoenix, AZ 85012

david@deisenbergplc.com

For the Defendant Joye Vaught:

JOY BERTRAND, ESQ., L.L.C.

By: Ms. Joy M. Bertrand, Esq.

P.O. Box 2734

Scottsdale, AZ 85252

joy@joybertrandlaw.com

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P R O C E E D I N G S

***** EXCERPTED TRANSCRIPT

THE COURT: Please be at the podium at the ready,

Mr. Feder. Please bring in the jury. All rise for the jury.

(Jury is present)

THE COURT: All right. Please be seated. Well,

members of the jury, I welcome you back. We had an unexpected

break. As you can tell, I'm masked because I'm getting over a

little bit of a head cold myself. I guess it's the season.

But with that, we appreciate your patience this morning and we

appreciate your patience with our reschedule and we hope to get

back on track.

And so with that, Mr. Feder, you may begin your

opening argument.

MR. FEDER: Thank you. Good morning. May it please

the Court, counsel, ladies and gentlemen. Welcome back. As

you know, Eric Kessler and I are proud to represent my friend

Scott Spear, who is the gentleman who is also in the mask along

the way.

Scott, would you stand up? Thank you.

Long ago the great fictional Sherlock Holmes said:

The police dog's nose is long and straight, but it points in

only one direction. That's what this case is about. The

government is pointing pretty much away from what the facts

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are.

I've been a lawyer, as you can tell, for quite a long

while. I have sat over here; I've sat over there. Two things

about a criminal case. First, when you are the plaintiff, you

tell the jury the good and the bad, the weak and the strong,

because you have the burden of proof, and in a criminal case it

is the very highest burden we have in our justice system.

Second, this is not a civil case. It's not a personal

injury case. It's not a divorce case. It's a criminal case in

federal court for very serious charges. The importance of

those other cases are down here and the importance of this

case, certainly to my client, is up here. The stakes are very

high.

That's why it is so concerning that this experimental

prosecution has been brought against principals of an Internet

site, and what prosecutors said in their opening is so

inaccurate or incomplete.

First let me introduce who Scott Spear is. He's a

72-year-old Phoenician with an adult daughter who is in

graduate school. He's about my age. In the 1970s he went to

college in California, graduated with honors in anthropology

and sociology, and came back to Phoenix wondering what he was

going to do with that kind of degree. He and some friends

started first one record store that grew into seven record

stores. Everybody remembers what records are? They were

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little disks that had music on them on a turntable. Then they

sold them, and Mr. Spear worked for another friend of his

father in the real estate business.

While he was in the record business, he met a person

named Jim Larkin. Jim Larkin and Mike Lacey started a weekly

newspaper business called New Times. Scott was really

impressed with him. He was impressed by who they were and what

they did; that they weren't afraid to go after the powers that

be in first in this city and then in cities all over the

country, 17, 19 papers at one point in time. He was offered a

job and he jumped at it. It was something that really made him

feel that he could maybe make a difference.

So he became essentially, since he had his

anthropology and sociology degree, a jack of all trades for

what was a very small at that time, the New Times, and that's

what he did. He ran the financial, tried to run the financial

operations, promotional and marketing opportunities, real

estate. New Times, as you may or may not know, renovated an

old elementary school at 12th Street and Jefferson, I think

it's Booker Washington, and that's where New Times was located

initially. He started what's called the 10K, the New Times 10K

running race. He did everything. He was just whatever needed

to be done, he did.

Then in 2004 when Backpage, the idea of a gentleman

named Carl Ferrer, started. Scott was assigned to be his

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immediate supervisor. The Internet was pretty new. Scott then

had to try, on top of his jobs for the newspapers, he had to

try to start learning about Internet service providers, and he

did. He tried to learn how best to run a legal site, have

legal ads, get business legally, because that's what

capitalists in this society do. They try to make money, but

they also try to stay on the right side of the law. That's how

our country works. There's absolutely -- let me make this

perfectly clear, based on Mr. Stone putting up money that they

made eventually after many years of trying -- there is nothing

wrong with making money in this country. We're a capitalist

system, and that's what they did, but they did it legally to

the best of their abilities.

And so how do you do that? Well, Mr. Spear looked at

some of the other sites that were going on to see how they were

doing it, the Googles, the Facebooks, the Craigslist, the

hundreds of other social media sites that started in the early

2000s that were doing all kinds of things. How did most of

these social media sites make money? Advertising, and they

still do. If any of you are on the Internet, you know that.

That's how they make their money by and large, selling space to

a would be stranger who wants to put their advertiser on the

Internet service provider's space. That's what they are paying

for. Nothing more.

Scott and nobody else here helped create these ads,

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come up with the idea for these ads, or anything else. They

rented space for a dollar, $2, $3, sometimes more.

What you will learn about Scott Spear is that he

continually demanded that the ads that were contained on

Backpage were legal, and that when he didn't understand they

went out to get people to help them understand.

MR. STONE: Objection, Your Honor.

THE COURT: Overruled.

MR. FEDER: For contracts, Scott didn't know how to

create contracts. He had people help them create those

contracts. To rent services or buy services, real estate or

what it is, they went out and they got people to help them.

So at some point in time in 2004 they begin, and

Mr. Stone put up an ad, actually one of the counts in this

indictment, and tried to -- and told you that it was a

prostitution ad. Let me put it back up. Now, prostitution by

definition, although the laws are different in every state, and

there are 50 ads that are part of this indictment, 50 ads from

different states that have different laws, but by and large it

is sex, a sex act sold for money. What do you think is unusual

about this ad, ladies and gentlemen? You know what's unusual?

There isn't any money in this ad.

Second, let me show you something. See at the top

where it says, "November 14, 2016"? Guess what? In April of

2015 Mr. Spear, Mr. Lacey, Mr. Brunst sold Backpage to

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Carl Ferrer. They were no longer the owners. And you will see

of the 50 ads that they have, the prosecutors have charged

these men, with the vast, not the vast, the majority of them

are after the sale of Backpage to Mr. Ferrer where they had no

further responsibility and no further to do with the ads.

The government who has the burden of proving guilt

beyond a reasonable doubt put 30 or so of these 50 ads in their

indictment claiming that they could prove guilt beyond a

reasonable doubt for ads that were after the sale of Backpage;

after the sale of Backpage.

Here's another part of that ad, T3R. Remember when

Mr. Stone was talking about the The Erotic Review? Well, what

he didn't tell you is as of 2012 or before while these

gentlemen owned Backpage, they got rid of TER well before 2012.

They got rid of aggregation well before 2012. They got rid of

GFE, Girlfriend Experience, that Mr. Stone was talking about

well before 2012. They got rid of the affiliates that

Mr. Stone was talking about well before then. All gone by 2012

or before.

And the only time that TER came back was after

Mr. Ferrer bought it. He changed it. That's the government's

main witness that you're going to start to hear testify

probably this afternoon.

So you saw the ad that the government thinks tells you

it's prostitution. And when you see them, ladies and

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gentlemen, what you're going to see is a bunch of suggestive

terms, scantly clad women or men suggesting we don't know what,

and you're not going to know what.

Let me give you an example or two. Is "one-night

stand a hundred dollars" an ad for prostitution, or is it a

business in Phoenix called My Sister's Closet where they sell

used furniture and clothing? According to these folks, that

would be. It's not sex for money, but "one-night stand" we all

understand can, could mean a one-night stand to have sex, or it

could also mean "one nightstand" next to your bed for a hundred

dollars.

How about this one, "Put it in the hole for a hundred

dollars." That's pretty graphic.

MR. STONE: Your Honor, objection; argument.

MR. FEDER: I will finish up. Or a billiards parlor

that's having a contest and the winner gets a hundred bucks.

Unless the ad says sex for money, a sex act for money, what is

there? I know it may come as a shock for you, but sex

permeates our society and most others, maybe not Iran and

Afghanistan. We have songs that talk about being a whore and

getting paid for it. We have cosmetic ads that show all kinds

of things with scantly clad women. Every single thing that

people buy in our society can have a suggestive tone to it.

Why? Because sex sells. That's just a fact of life. It may

not be your taste, it may not be my taste, but it is to a lot

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of other people's taste, which is what is protected by the

First Amendment.

Another thing Mr. Stone didn't tell you about,

remember when he started talking about the second phase of

Backpage's criminal enterprise, moderation. First of all,

moderation started much earlier; not 2010. There was informal

moderation of Backpage ads throughout its existence. But what

he didn't talk to you about is that there is a law, a federal

law, 41 United States Code Section 230, that was enacted by the

United States Congress --

MR. STONE: Objection, Your Honor.

THE COURT: I will let you finish.

MR. FEDER: -- to incentivize Internet service

providers like Backpage to engage in moderation practices.

THE COURT: Overruled.

MR. FEDER: Let me read that again: To incentivize

Internet service providers like Backpage to engage in

moderation practices.

First of all, why wouldn't the prosecutor tell you

about that law. Second of all, why would he try to demonize

moderation as if it was something wrong and there is a federal

statute to the contrary? These people that have the burden of

proving guilt beyond a reasonable doubt.

Remember this slide from the government? This one is

true. This is a copy of what you would look to if you got on

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that website and you looked at all of the categories that

Backpage offered. You could sell your car, you could sell

anything you want. But remember when Mr. Stone told you that

Backpage only charged for adult ads? Wrong. They had what are

called banner ads. I don't know if you know what they are, but

banner ads are when you have an advertisement in the aisle, you

have a big ad that kind of emphasizes your ad, and if you

wanted a banner ad to try to emphasize that bicycle that you

wanted to sell, you had to pay for it to Backpage.

Then Mr. Stone brought up this. And this, again, is a

close-up of the escort adult part of the website. The facts

are, one, escorts are legal. As a matter of fact, in Phoenix

you will hear evidence that you can get a license to be an

escort from the Phoenix municipal government. Same with

Scottsdale, same with Tempe, same with all the other

municipalities. It's legitimate. It's legal.

Body rubs, same thing, legal.

Strippers, may not be your taste, may not be my taste,

but strippers are legal.

All adult jobs. They have pornography where people

have sex on a movie. Legal.

The government claims that you can tell a prostitution

ad just by looking at it, but they don't -- but they tell you

that the ads that they put up that don't say sex for -- sex act

for money, but you could just tell or maybe they could just

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tell. Wrong.

Now, Backpage decided to use moderation. As you know,

if you are on the Internet at all, there are some websites as

we sit here today that do not moderate at all. Their

advertisements put whatever they want on that site as is.

MR. STONE: Objection, Your Honor.

THE COURT: Overruled.

MR. FEDER: There's a certain most wealthy person in

the world that's doing just that. But Backpage, their owners,

decided, like a lot of other websites, that they wanted to

moderate. Why? Because they wanted to make sure that they are

not getting abused by people that want to abuse that site and

put illegal things on there. They also have taste, taste,

T-A-S-T-E, standards, just so it didn't get out of hand.

Now, in 2004, those are the days of the wild and

woolly Internet. As the years went by Backpage, like many

other Internet service providers, became more and more rigid

and strict about what they would allow on their site. So their

moderation practices became more and more strict.

What does that mean? It means that they had what were

called terms of use and posting rules. Again, if you've been

on the Internet, you've probably been on a site that says

before you can submit your ad, you have to promise certain

things. On Backpage, important, at least most important to

this case, there were a couple. You had to be older -- over

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18. Otherwise, you're not allowed. You had to confirm that

you were not going to use the site with your ad to do illegal

things. You had to confirm, promise that you were not

trafficking anybody against their will; that you were doing

essentially legal things on this site.

Now, could people abuse that, check it off and lie,

lie lie, lie, lie? Sure. That is the problem with social

media sites. They have to try to control sometimes the

uncontrollable because Backpage, like many others, at some

point the ads weren't coming in in dribs and drabs. They were

coming in by the thousands, hundreds of thousands, millions,

fast, and in order to accommodate the legal users, you wanted

to get that ad out published as soon as you could. But in

order to stop the illegal users, you had to have some way of

trying to do it. That's where moderation came in.

In the case of Backpage, like the case of many, many

others, how do you do that? Well, first, Backpage, a few at

the beginning and then increasingly more and more and more

people, you hire people to sit in front of the screen and look

at the ads and make sure that, one, it doesn't say: Let's have

sex for a hundred dollars. Out that goes. They deleted those.

Then as time went on they got other terms that were

suggestive of sex and they used those also to either delete or

to modify so that even a suggestive ad would not go on their

site.

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These are some of the terms: "Content," of course, is

what is contained on the website. "Strip-out" meant what I was

just talking about. There was certain -- there were certain

words that were suggestive of sex, some kind of sex act, some

kind of money, like a dollar sign or a rose or something like

that, that to the best of these guys and gal's ability they

tried to get off of their site, and they had, and you will see

them, lists that were increasingly long, hundreds of terms that

were not allowed on those sites.

How would they do that? The moderators, the people

hired by Backpage, would go through an ad and get rid of them.

It's what is called "strip it out." If it was a sex for money

ad directly, out the door it went. If it was not a sex for

money ad, then they wanted to have only ads that were not

suggestive of sex.

They also didn't want to have distasteful ads on their

website at some point. Again, some of you, if I say the words

Hustler magazine and Playboy you're going to look at me with a

blank stare, but years ago, I don't think they are still

around, but years ago there was a magazine called Hustler,

which was pretty graphic, and then there was a magazine called

Playboy, which was much less graphic, but it did have a

centerfold with a nude woman on it every month, every week when

it came in. Sold on newsstands, sold in drug stores, sold

everywhere. Backpage imposed a Playboy standard for their ads

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to get rid of distasteful things, at least in their opinion,

and their opinion is they own the site; they are allowed to

moderate or not to their expectations.

So where some of the ads that these folks are going to

probably try to show you have nudity, over the years the nudity

disappeared. It could only be here; not here. That's just the

way they did it. Did they have to do that? Absolutely not.

Is there any law, any rules, regulations that said they can't

do that? No. These are the new rule makers here. They are

trying to impose rules.

MR. STONE: Objection, Your Honor.

THE COURT: Sustained. And the jury will disregard

that last statement about government counsel being the rule

makers.

MR. FEDER: So here was the moderation process. They

had initially an increasing number of moderators, humans, all

over the country that could come into the office or offices at

some point because Backpage, while it started in Phoenix, it

eventually moved to Dallas, and they would review ads, and then

those human moderator ads would be reviewed again by

supervisors, by Mr. Padilla and Ms. Vaught, to make sure that

nothing got through. But at some point in time the amount of

ads became so overwhelming that they made a contract with a

company in Tucson, an IT company named Desert Net, who created

Internet screenings, Internet filters for the ads such that the

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ad could go through and they would input all of these terms

that I am talking about, and it would strip them out so that

hopefully nothing escaped.

Now, humans being humans, any human system is not

mistake-free, and some ads got through. There is no question

about it. Was there an intention for the ad to get through?

Absolutely not. That's how they did it. And their intention

was to keep illegal ads off of their website and even

suggestive ads off of their website. Now, beauty is in the eye

of the beholder. The ads that the government charged them

with, 50 ads, the ones before the sale of Backpage, they are

suggestive. Of course they are. So are perfume ads, so is

that. That's not illegal.

Let's move on from moderation to some of the other

things that Mr. Stone talked to you about. Aggregation. In

this world they even have people that are called aggregators.

Aggregators, aggregation, is merely the collection, in the case

of Backpage, of ads. If their business is to sell ads, you

have to figure out ways to get ads. How do you do that? Well,

you advertise yourself on other Internet sites or you go

looking for other ads that fit into your categories and you

reach out to those advertisers and you ask them: Hey, how

about a free ad on Backpage to see if you like it? And then if

they do, if it's a paid ad, you hope that they will continue to

pay to have their ad, and Backpage did that. Kind of like the

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New York Times has a big advertising section and they reach out

to Washington Post advertisers to get them to come on. That's

aggregation; or Walmart looks at advertisers that are at

Target, and they say: Hey, how about a Walmart ad?

MR. STONE: Objection, Your Honor.

THE COURT: Overruled. Move on.

MR. FEDER: Aggregation is common and legal, and

nothing these people say is going to make it otherwise.

Super posters. Yes, terrible, illegal. No. A super

poster is where if you give me a lot of your business, what am

I going to do in appreciation of that? Give you a discount, or

give you money back. Some of you have a Discover card in your

wallet. That's what that is. They reward people that give

them a lot of ads. It doesn't change in any way whether or not

they are legal ads because every -- every ad that came into

Backpage, no matter what its source, went through what?

Moderation.

And where did they get their ads? Something Mr. Stone

didn't happen to mention. Well, they got them from their main

competitor Craigslist, they got it from Google, the vacuum

cleaner of information in our world, they got it from other

sites. What is the significance of that?

First of all, all of these ads, if they agreed to put

their ad in Backpage, they have to go through that same process

I showed you. They had to check off the box, they have to go

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through moderation to get on the site. But what is more

important about that? If the ads from Craigslist and Google

and everywhere else that came on to Backpage's site were

illegal, how come they are not sitting here?

MR. STONE: Objection, Your Honor.

THE COURT: Sustained.

MR. FEDER: They got their ads from Craigslist. And

the fact that they got them and they didn't see any problems

with those people gave them confidence that what they were

doing was right.

MR. STONE: Same objection.

THE COURT: Sustained.

MR. FEDER: Reciprocal program. Mr. Stone made a big

deal out of that. The Erotic Review. Remember that ad, Count

31 that I showed you, the one that came out November 14, 2016?

They are still around. Now, Mr. Stone showed you some things

that made it look like there were reviews of escorts on

Backpage. Not true. What was on Backpage was an ad like any

other ad and they could put a TER number on it. And in order

for the reader to know that they could go to the The Erotic

Review to read something more about that advertiser, A, they

have to know about the The Erotic Review; B, they have to go

from Backpage's site to TER, or there was a link that you

could, if you -- I think if you could hit that link it would

transport you to The Erotic Review site.

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The government seems to think that they could impose a

responsibility on Internet service providers to go check out

every other site that advertises on their site.

MR. STONE: Objection, Your Honor.

THE COURT: Sustained.

MR. FEDER: Now, I talked to you about what

Mr. Spear's roles were. Come 2012, or early or later 2011,

Mr. Spear, Mr. Larkin, Mr. Lacey, Mr. Brunst sold the New Times

paper. All of a sudden Mr. Spear's duties were much reduced.

But maybe more important, another thing the government didn't

tell you in their opening is February of 2012 a lawyer named

Elizabeth McDougall was hired by Backpage to take over the

moderation business of Backpage.

MR. STONE: Objection, Your Honor.

THE COURT: Overruled. Let's move forward, Mr. Feder.

MR. FEDER: Mr. Spear was no longer involved in

moderation in 2012. And since by 2012 aggregation, super

posters, TER, GFE and all the other things that the government

is complaining about were gone. His role was much reduced and

he wasn't responsible for moderating the ads which constitute

the 50 ads that they claim Mr. Spear is guilty of. The ads

start in 2013 and go to 2018.

Ms. McDougall worked at Backpage not only for the

people that are here, but they continued to work for

Mr. Ferrer -- she continued to work for Mr. Ferrer after he

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bought Backpage until 2018 when the government seized the site.

MR. STONE: Objection, Your Honor.

THE COURT: Sustained.

MR. FEDER: Super affiliates, TER, some of the GFE,

some of the abbreviations, they disappeared from Backpage for

one reason. Because Backpage, in cooperation with the state

Attorney General organizations, with religious organizations

that didn't like the ads on Backpage, with what's called NCMEC,

they suggested that they take them off, so they did. Not

because they had to, but because they wanted to cooperate with

the people that would help keep bad ads off of Backpage, and

for Backpage to stop abusers of their site.

Similarly, I think Mr. Cambria showed you a couple,

but Backpage was viewed in the law enforcement community, at

least a lot of the people in the law enforcement community, as

the most cooperative website in helping them catch people that

were not only abusing the Backpage site, but that contained

runaways and other people of interest to the police. And so

when the police would contact Backpage: You want information

on that advertisement, here you go. Same day. You want us to

come out and testify in your criminal case under oath? Boom,

it happened at Backpage's expense. Why? A, they thought they

were doing good and that feels good for people to feel like

they are making a difference. B, they wanted to get abusers

off their site and help the police do that. So they went out

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of their way to get rid of people that were abusing the site.

Let me read you a couple. In 2012, Agent Marshall

from the FBI: Thank you very much for forwarding this. It's

great to know you guys are behind us catching up with these

pimps.

From Rich Petrie of the Toronto police: Thank you

very much for your assistance. By the way, as a detective with

the Toronto police, I deal with numerous hospitals, banks, cell

phone companies, et cetera. You guys have been by far the best

and easiest to deal with.

Your law enforcement guide was a tremendous service.

They even created a law enforcement guide and sent it out to

law enforcement people to help them not only with ads on

Backpage, but other websites to catch criminals.

Another example. This is Shawn Gullickson from

Hennepin, Minnesota: Your response has been outstanding

compared to most other companies.

Then there is a response back from the Backpage

worker: Hello, Detective Gullickson, we found some ads on

other websites with the same phone numbers in your earlier

subpoena. These ads may also be related to your investigation.

Not only did they help the police and the FBI and

Homeland Security, but they went out of their way and spent

their time looking at other websites who are not here, other

websites to help them find other leads for their investigation.

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What does that tell you about Backpage? They are so confident

in the legality of their site that they are working hand in

glove with law enforcement agents and officers. How many

people that are committing crimes go out and cooperate with the

police, go out and testify for them, talk to them, get prepared

to be a witness, et cetera, et cetera, et cetera? Is that

somebody who has an intent to commit a crime or thinks they are

committing a crime? Common sense and experience would tell you

no.

You will also hear some testimony from law enforcement

officers hand picked by the government to come in here and try

to blast Backpage. What you're going to hear from them is

this: They couldn't find one ad in Backpage that would allow

them to arrest, based on that ad, a person for a prostitution,

much less Backpage.

And let me show you something. In order to make an

arrest, you only need a little bit of evidence. It's called

probable cause. Sorry about the writing. The police, FBI

agents, et cetera, are looking at a particular ad could not

even arrest somebody because they had to have probable cause,

and they don't have it. It's not enough. Unless it's sex for

money, B.J. for a hundred dollars, they can't do it.

MR. STONE: Objection, Your Honor.

MR. FEDER: That's what the evidence will show and

that's what the testimony will be.

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THE REPORTER: Sorry, Judge, I did not hear.

MR. FEDER: In a civil case --

THE COURT: Overruled. Overruled.

MR. FEDER: -- red car hits green car, you go to

Mr. Stone if he's a civil lawyer and say: I want to sue the

other car. I am injured. In order to win to get money from

the other driver for being negligent, you got to show

preponderance of the evidence, usually defined as greater than

50 percent. That's a higher standard than probable cause.

I'm trying to write fast. Sorry about the writing.

The next ratchet up for the more serious civil cases,

civil, not criminal, civil, it's what is called clear and

convincing evidence. That's what you have to prove to win in

that case if you're a plaintiff. And then there is the highest

standard in our justice system called guilt beyond a reasonable

doubt. People are presumed innocent unless the government

brings forward so much evidence that they have guilt beyond a

reasonable doubt. It's the only reasonable explanation is

theirs; not anybody else.

Now, if you can't arrest somebody, a cop, for an ad

with probable cause, how in the world can you ever with a

straight face argue that you have reasonable doubt for that

same ad?

Last but not least -- I know you're going, thank

God -- last but not least, Carl Ferrer. Carl Ferrer was the

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founder of Backpage. He pretty much ran it, operated it.

Mr. Spear tried to supervise him, among his other duties, as

did the others. For 14 years, from 2004 to 2018, Mr. Ferrer

responded to the police, testified for them, talked about the

legality of Backpage, signed affidavits to the legality of

Backpage, did everything in the world saying this is a

legitimate site, we are doing our best, until he became a

witness for these guys, I guess.

He took the same oath he's going to take here when he

testified on behalf of prosecutors around the country, and

various other affidavits that he signed under oath, and he is

going to plead guilty in exchange for leniency, he hopes. And

in order to be able to keep the money that he made at Backpage,

to keep his mansion, his cars, his Mercedes, his boats, the

same money that these folks say are criminal proceeds that they

have taken away from these people and are the subject of the

money laundering --

MR. STONE: Objection.

THE COURT: Sustained. The jurors will disregard the

last statement regarding proceeds received.

Please move forward.

MR. FEDER: His incentive, in addition to keeping his

assets, are five-year maximum imprisonment, conspiracy --

MR. STONE: Objection, Your Honor.

MR. FEDER: It's just a five, five, ten, 20, Judge.

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THE COURT: What is the prior statement?

(Record read back.)

THE COURT: Overruled.

MR. FEDER: Conspiracy, conspiracy, one type of money

laundering, another type of money laundering, the mandatory,

not mandatory, a maximum amount of prison that Mr. Ferrer hopes

to avoid any of.

Quite an incentive to lie to try to incriminate people

that you've been telling you're doing everything right for

18 years -- sorry -- 14 years.

In short, Mr. Spear since 2012 has not been involved

in the moderation of the ads that are the 50 counts in the

indictment that are the bases for the entirety of the

indictment, and yet here he is.

At the end of this case, ladies and gentlemen, I will

ask you for what I think is the only verdict that is

appropriate that is based on the evidence, and that is not

guilty. Thank you.

****** END OF EXCERPTED TRANSCRIPT

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C E R T I F I C A T E

I, HILDA E. LOPEZ, 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 23rd day of October,

2023.

s/Hilda E. Lopez_______

HILDA E. LOPEZ, RMR, FCRR

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