UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

___________________

United States of America, )

 ) 

 Plaintiff, ) NO. 2:18-cr-00422-DJH

v. ) 

 ) Phoenix, Arizona

Michael Lacey, et al., ) September 20, 2023

 ) 9:12 a.m.

 Defendants. )

_____________________________)

BEFORE: THE HONORABLE DIANE J. HUMETEWA, JUDGE

REPORTER'S TRANSCRIPT OF PROCEEDINGS

EXCERPTED TESTIMONY OF CARL FERRER

JURY TRIAL DAY 9

A.M. SESSION

Official Court Reporter: 

Teri Veres, RMR, CRR

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

401 West Washington Street, Spc. 38

Phoenix, Arizona 85003-2151

(602) 322-7251

Proceedings Reported by Stenographic Court Reporter

Transcript Prepared by Computer-Aided Transcription

UNITED STATES DISTRICT COURT

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 1 of 67
 1 A P P E A R A N C E S

 2 For the Plaintiff:

UNITED STATES ATTORNEY'S OFFICE

 3 By: Kevin M. Rapp, Esq.

 Andrew C. Stone, Esq.

 4 Peter Shawn Kozinets, Esq.

 Margaret Wu Perlmeter, Esq.

 5 40 North Central Avenue, Suite 1800

Phoenix, Arizona 85004-4408

 6

 7 For the Defendant Michael Lacey:

LIPTSUTZ GREEN SCIME CAMBRIA, LLP

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

42 Delaware Avenue, Suite 120

 9 Buffalo, New York 14202

 10 For the Defendant Andrew Padilla:

DAVID EISENBERG, PLC

 11 By: David S. Eisenberg, Esq.

3550 North Central Avenue, Suite 1155

 12 Phoenix, Arizona 85012

 13 For the Defendant Scott Spear:

KESSLER LAW OFFICE

 14 By: Eric Walter Kessler, Esq.

6720 North Scottsdale Road, Suite 210

 15 Scottsdale, Arizona 85253

- and -

 16 FEDER LAW OFFICE, PA

By: Bruce S. Feder, Esq.

 17 2930 East Camelback Road, Suite 160

Phoenix, Arizona 85016

 18

 19 For the Defendant John Brunst:

BIRD MARELLA BOXER WOLPERT NESSIM DROOKS

 20 By: Gary S. Lincenberg, Esq. 

 Gopi K. Panchapakesan, Esq.

 21 1875 Century Park E, Suite 2300

Los Angeles, California 90067

 22

 23 For the Defendant Joye Vaught:

JOY BERTRAND, ESQ, LLC

 24 By: Joy Malby Bertrand, Esq. 

P.O. Box 2734

 25 Scottsdale, Arizona 85252-2734

UNITED STATES DISTRICT COURT

2

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 2 of 67
 1 I N D E X

 2

 3 GOVERNMENT WITNESS: PAGE 

 4 CARL FERRER

Continued Direct Examination by Mr. Rapp....................8

 5

 6 E X H I B I T S

 7 EXHIBITS RECEIVED

 8 NO. DESCRIPTION

 9 156 Mohan email to Vaught, 07/03/2012, 22

 DOJ-BP-0000029933

 10

157 Email from Mohan to Padilla, Vaught 24

 11 (with attachment), 07/09/2012, 

 DOJ-BP-0000000441

 12

157a Attachment. Spreadsheet with list of code 24

 13 words, DOJ-BP-0000000442

 14 1202 Email from Ferrer to Padilla, “Juvenile 29

 Prostitution Ad”, 05/11/2012, DOJ-BP-0001126261

 15

1204 Email from Ferrer to Padilla, “Fwd: Identified 31

 16 Prostitution Ads on Backpage”, 06/28/2012,

 DOJ-BP-0000029078 - DOJ-BP-0000029079

 17

1207 Email from Padilla to Ferrer, “Re: Prostitution 33

 18 Ads Depicting a Child”, 11/14/2012,

 DOJ-BP-0000888474 - DOJ-BP-0000888475

 19

1208 Email from Padilla to Ferrer, “Re: Prostitution 37

 20 Ads Depicting a Child”, 11/15/2012,

 DOJ-BP-0000000174 - DOJ-BP-0000000175

 21

1922 Email to Spear, “Analytics backpage.com 44

 22 20120529”, 05/30/2012, DOJ-BP-0004814366

 23 1922b Version of Exh 1922-a, Pages 1-2 only, 44

 DOJ-BP-0004814367

 24

 25

UNITED STATES DISTRICT COURT

3

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 3 of 67
 1 INDEX OF EXHIBITS CONT'D

 2 EXHIBITS RECEIVED

 3 NO. DESCRIPTION

 4 31 Email from Larkin to Spear, Brunst, and 46

 Ferrer, 07/27/2012, DOJ-BP-0004602746

 5

335 Email from Ferrer to Larkin, attaching 51

 6 page view and revenue reports, 09/18/2012

 DOJ-BP-0004809310 

 7

335b Attachment. Spreadsheet titled Revenue 51

 8 By Category 091012-091612, DOJ-BP-0004809313

 9 342 Email from Ferrer to Brunst, Larkin, 55 

 Attaching revenue report, 08/06/2012

 10 DOJ-BP-0004809504

 11 342a Attachment. PDF titled backpage.com 55

 DOJ-BP-0004809505

 12

1664 Email from Ferrer to Larkin, Spear, Brunst, 59

 13 “Nov stats”, 12/02/2012, DOJ-BP-0002724405

 14 1664a Attachment, “backpage.com_nov” 59

 DOJ-BP-0002724406 - DOJ-BP-0002724409

 15

355 Email from Ferrer to Larkin, Brunst, 64 

 16 attaching revenue report and ad count, 

 12/22/2012 DOJ-BP-0004809751

 17

355b PDF of Exhibit 355-a; Attachment. 64 

 18 Spreadsheet titled Monthly Revenue & Ad 

 Count report by Section and Category, 

 19 DOJ-BP-0004809752 

 20

 21

 22

 23

 24

 25

UNITED STATES DISTRICT COURT

4

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 4 of 67
 1 P R O C E E D I N G S

 2 (Whereupon the proceedings began at 9:12 a.m.)

 3 COURTROOM DEPUTY: All rise, court is now in 

 4 session.

09:12a 5 THE COURT: All right, please be seated. 

 6 Good morning, everyone. Well, it appears that we 

 7 also have a delayed juror. She, essentially, missed her alarm 

 8 this morning. So she's about an hour away. So we will be 

 9 delayed roughly until about 10:15. 

09:12a 10 We'll let you know. Don't go anywhere. We'll let 

 11 you know as soon as she arrives and then we can proceed. I 

 12 should let you know I will once again inquire of the jury if 

 13 they can stay a little bit longer on Friday. As well, I will 

 14 give them a heads up on Thursday that I'm going to inquire if 

09:12a 15 next week we can begin at 8:45 because we will be out on 

 16 Friday due to the necessity to use the ceremonial courtroom; 

 17 and so if we can begin at 8:45 and go until 4:30, that should 

 18 give us a little bit of makeup time. But in any event, don't 

 19 go far. We'll let you know when the juror arrives.

09:13a 20 MS. BERTRAND: Your Honor, how -- how late is the 

 21 Court considering going on Friday?

 22 THE COURT: About -- well, my understanding is one 

 23 of the jurors is still reporting to work and has to leave here 

 24 so that she can --

09:13a 25 MS. BERTRAND: Oh, my gosh.

UNITED STATES DISTRICT COURT

5

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 5 of 67
 1 THE COURT: -- he or she can make it in at 2:00 

 2 o'clock. So we can't go much farther beyond 12:30, 12:45 at 

 3 the latest.

 4 MS. BERTRAND: All right, thank you.

09:13a 5 THE COURT: Yes.

 6 MR. BERRY: Your Honor, bringing up the ceremonial 

 7 courtroom issue for next week, do we need to do something with 

 8 all these boxes in preparation of that? 

 9 THE COURT: My understanding is that you can store 

09:13a 10 your materials in the second floor conference room that you're 

 11 using for the defense team. 

 12 You, obviously, have an office here; and I think we 

 13 just need all of the tables to be cleared because they are 

 14 going to be removed for seating purposes and I think we -- we 

09:14a 15 are going to store the exhibits ourselves.

 16 MR. BERRY: Okay.

 17 THE COURT: These exhibits that are in front of the 

 18 bench here.

 19 MR. BERRY: So we'll just take our stuff, court --

09:14a 20 THE COURT: So just take your items that are on your 

 21 respective desks and tables out of the courtroom.

 22 MR. BERRY: Okay.

 23 THE COURT: Then my understanding is they'll 

 24 re-situate the courtroom on Monday.

09:14a 25 MR. BERRY: Thank you.

UNITED STATES DISTRICT COURT

6

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 6 of 67
 1 THE COURT: All right. So we will stay nearby, and 

 2 we'll let you know as soon as that juror arrives.

 3 MS. BERTRAND: Your Honor, can we go to our work

 4 room and maybe get an e-mail from the Court? 

09:14a 5 THE COURT: Yes, yes.

 6 MS. BERTRAND: Okay, thank you.

 7 COURTROOM DEPUTY: All rise.

 8 (Off the record at 9:14 a.m.) 

 9 (Back on the record at 10:21 a.m.)

10:21a 10 COURTROOM DEPUTY: All rise, court is now in 

 11 session.

 12 THE COURT: All right, please be seated.

 13 It appears that we do have all our jurors present. 

 14 Just so you know, I'm intending to just forge ahead just until 

10:22a 15 the noon hour so we won't have a morning break, and so we'll 

 16 bring in the jurors. 

 17 Would you have the witness back on the stand, 

 18 please. 

 19 (Jury in at 10:22 a.m.)

10:23a 20 THE COURT: All right. Please be seated, and the 

 21 record will reflect the presence of the jury. The witness is 

 22 on the stand, and let me just say to the Members of the Jury, 

 23 obviously, we're getting a late start and so we're going to 

 24 forge ahead close to the noon hour. 

10:23a 25 Of course, I don't want to hold anyone hostage. If

UNITED STATES DISTRICT COURT

7

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 7 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 anyone's feeling uncomfortable, again, as I mentioned before, 

 2 just raise your hand and say, "I need a break," if that's the 

 3 case, but we'll try to maximize the use of our time this 

 4 morning. 

10:24a 5 With that, Mr. Rapp, you may continue.

 6 MR. RAPP: Thank you. 

 7 CONTINUED DIRECT EXAMINATION

 8 BY MR. RAPP:

 9 Q. Good morning, Mr. Ferrer.

10:24a 10 A. Good morning.

 11 Q. When we were -- 

 12 MR. RAPP: I don't believe this is in evidence, but 

 13 if you could leave it on my screen. Thank you. 

 14 COURTROOM DEPUTY: One second. This thing is 

10:24a 15 frozen, one second. Bear with me. 

 16 MR. RAPP: I'm showing for the witness' eyes only 

 17 United States 156.

 18 MS. BERTRAND: Our screens are not --

 19 THE COURT: Yeah, mine is not. It's coming up.

10:24a 20 MS. BERTRAND: Okay.

 21 COURTROOM DEPUTY: Judge, this is not working. It 

 22 says "off," but when I push it, it turns everything on.

 23 THE COURT: Can you do it one more time? 

 24 COURTROOM DEPUTY: So everything is turning on. 

10:25a 25 Can I turn it off really quick and then restart it? 

UNITED STATES DISTRICT COURT

8

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 8 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 THE COURT: Yes, yes. 

 2 We're going to have to reboot.

 3 MR. RAPP: In the interest of time, Judge, I'm just 

 4 going to go to an area where I'm not talking exhibits, if 

10:25a 5 that's okay? 

 6 THE COURT: That's fine. That would be preferable, 

 7 Mr. Rapp, thank you.

 8 MR. RAPP: So let's skip over the exhibits we were 

 9 going to look at. 

10:26a 10 BY MR. RAPP:

 11 Q. During this time period were you -- in 2012 were you 

 12 having meetings with NCMEC? 

 13 A. Yes, we were.

 14 Q. All right. How long did those meetings go on?

10:26a 15 A. They went on for about at least four or five monthly 

 16 meetings and then they ended.

 17 Q. Do you recall what year the meetings with NCMEC ended?

 18 A. Sometime in 2012.

 19 Q. Sometime in 2012?

10:26a 20 A. Yes.

 21 Q. All right. During those meetings, did NCMEC -- did a 

 22 representative from NCMEC make any recommendations about 

 23 things that Backpage could implement on their site?

 24 MS. BERTRAND: Objection, leading.

10:27a 25 THE COURT: Sustained.

UNITED STATES DISTRICT COURT

9

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 9 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 BY MR. RAPP:

 2 Q. All right. What did -- during those meetings what did -- 

 3 what did NCMEC notice you of? 

 4 MS. BERTRAND: Same objection.

10:27a 5 MR. CAMBRIA: Hearsay.

 6 MS. BERTRAND: And hearsay.

 7 THE COURT: Sustained.

 8 BY MR. RAPP:

 9 Q. During the meetings you had with NCMEC, were there -- 

10:27a 10 after the meetings were there discussions with upper 

 11 management and ownership about anything NCMEC was telling you? 

 12 MS. BERTRAND: Objection, leading.

 13 MR. PANCHAPAKESAN: Vague as to "upper management."

 14 MS. BERTRAND: Vague as to "upper management" and 

10:27a 15 hearsay.

 16 THE COURT: Sustained.

 17 BY MR. RAPP:

 18 Q. Did you have discussions with upper management after you 

 19 had meetings with NCMEC? 

10:27a 20 MS. BERTRAND: Objection. Same objection, vague as

 21 to "upper management."

 22 THE COURT: Sustained.

 23 BY MR. RAPP:

 24 Q. Is there anybody specifically you discussed the meetings 

10:28a 25 with NCMEC with after you had the meetings?

UNITED STATES DISTRICT COURT

10

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 10 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 A. Yes.

 2 Q. Who?

 3 A. Scott Spear, Jim Larkin.

 4 Q. All right. Did you convey to Scott Spear and Jim Larkin 

10:28a 5 any of the recommendations that NCMEC was making regarding 

 6 Backpage?

 7 MS. BERTRAND: Objection, leading. Calls for 

 8 hearsay within hearsay.

 9 THE COURT: Overruled.

10:28a 10 THE WITNESS: Yes.

 11 BY MR. RAPP: 

 12 Q. Can you identify one of the recommendations from NCMEC 

 13 that you discussed with Mr. Larkin and Mr. Spear?

 14 A. That they wanted us to not take prepaid cards anymore.

10:28a 15 Q. All right. And what, if any, reaction or direction did 

 16 Mr. Spear and Mr. Larkin give you in response to that 

 17 recommendation by NCMEC?

 18 MS. BERTRAND: Objection, leading.

 19 THE COURT: Overruled.

10:29a 20 THE WITNESS: We ignored that recommendation and 

 21 then focused on other items.

 22 BY MR. RAPP:

 23 Q. All right. Why did you ignore the recommendation 

 24 regarding prepaid cards?

10:29a 25 A. Because 70 percent of our transactions was coming from 

UNITED STATES DISTRICT COURT

11

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 11 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 prepaid cards.

 2 Q. All right. Do you know why NCMEC -- was there any 

 3 explanation from NCMEC as to why they didn't want you to take 

 4 prepaid cards?

10:29a 5 MS. BERTRAND: Objection, hearsay.

 6 THE COURT: Sustained.

 7 BY MR. RAPP:

 8 Q. Well, let me just ask you. What -- you've testified to 

 9 the revenue, but was there any other reason why you didn't 

10:29a 10 want to not accept prepaid cards? 

 11 MR. FEDER: Relevance, 403.

 12 THE COURT: Overruled.

 13 THE WITNESS: It was apparent our users liked 

 14 prepaid cards. You could pick them up at 7-Elevens and if you 

10:30a 15 -- if at a 7-Eleven you didn't have a bank account, you could 

 16 just buy a gift card. So -- and it offered a level of -- and 

 17 it -- you could be more anonymous.

 18 BY MR. RAPP:

 19 Q. Okay. And why was being anonymous -- why would that be 

10:30a 20 important at all?

 21 MS. BERTRAND: Objection, calls for speculation.

 22 THE COURT: Sustained.

 23 BY MR. RAPP:

 24 Q. Was there any discussion with Mr. Spear or Larkin about 

10:30a 25 the anonymity that prepaid cards gave your customers?

UNITED STATES DISTRICT COURT

12

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 12 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 MS. BERTRAND: Objection. Leading, hearsay.

 2 THE COURT: Sustained.

 3 MR. FEDER: Also compound.

 4 THE COURT: Overruled as to compound, sustained as 

10:30a 5 to leading.

 6 BY MR. RAPP:

 7 A. Was there -- in addition to -- other than just revenue, 

 8 was there any other reason why -- in your discussions with 

 9 Mr. Spear and Larkin why you didn't want to discontinue the 

10:31a 10 use of prepaid cards?

 11 MS. BERTRAND: Objection, leading.

 12 THE COURT: Overruled. I'll overrule that.

 13 THE WITNESS: The discussion was that people used 

 14 prepaid cards because we were successful in reaching users 

10:31a 15 that were unbanked. So these users may not have bank 

 16 accounts, and it's a way that they can participate in 

 17 e-commerce and post ads, pay for ads without having a bank 

 18 account.

 19 MR. RAPP: All right.

10:32a 20 BY MR. RAPP:

 21 Q. Was there another recommendation that NCMEC made to you 

 22 during these meetings that you discussed with Mr. Spear and 

 23 Mr. Larkin?

 24 MS. BERTRAND: Objection, leading and hearsay within 

10:32a 25 hearsay.

UNITED STATES DISTRICT COURT

13

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 13 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 MR. FEDER: Also, if there could be a 

 2 distinguishment between -- unless all of the conversations 

 3 were between Mr. Spear and Mr. Larkin.

 4 THE COURT: Sustained.

10:32a 5 MR. RAPP: All right.

 6 BY MR. RAPP:

 7 Q. Let's just start, was there another recommendation they 

 8 made? 

 9 MS. BERTRAND: Objection, hearsay.

10:32a 10 BY MR. RAPP:

 11 Q. What -- let me ask when you --

 12 THE COURT: Sustained.

 13 BY MR. RAPP:

 14 Q. When they made a recommendation, did you communicate that 

10:32a 15 recommendation to either Mr. Spear or Mr. Larkin? 

 16 MS. BERTRAND: Objection, hearsay.

 17 THE COURT: Overruled.

 18 THE WITNESS: Yes.

 19 BY MR. RAPP:

10:32a 20 Q. What was that other recommendation that you communicated 

 21 to Mr. Spear or Mr. Larkin? 

 22 THE COURT: Well, I think the prior objection was 

 23 with regard to who specifically; and you're asking a somewhat 

 24 compound question about either Mr. Spear or Mr. Larkin. 

10:33a 25 So I think he has to identify one or the other or 

UNITED STATES DISTRICT COURT

14

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 14 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 both, and you have to tailor your question in that way.

 2 MR. RAPP: All right.

 3 BY MR. RAPP:

 4 Q. The recommendations that you received from -- from the 

10:33a 5 NCMEC meetings, did you -- who did you communicate those to?

 6 A. At these NCMEC meetings I had a VP board member with me 

 7 or on the phone with me, Don Moon, and then Liz McDougall; and 

 8 after these meetings I would have conversations with Scott 

 9 Spear and Jim Larkin, but I can't say which one I was talking 

10:34a 10 to at any particular time about any event 'cuz I just gave 

 11 summaries of the meetings with NCMEC whenever I had a chance 

 12 to talk to them.

 13 Q. Why did you give summaries to Mr. Larkin and Mr. Spear?

 14 MR. FEDER: Same objection, compound.

10:34a 15 THE COURT: Overruled.

 16 THE WITNESS: They're my bosses.

 17 MR. RAPP: All right, okay.

 18 BY MR. RAPP:

 19 Q. Do you recall another recommendation that NCMEC made to 

10:34a 20 you? Let's just start with Mr. Spear. Did you communicate 

 21 another recommendation NCMEC made to you to Mr. Spear?

 22 MS. BERTRAND: Objection, hearsay.

 23 THE COURT: Overruled.

 24 THE WITNESS: NCMEC made a lot of recommendations so 

10:34a 25 I'm trying to -- you're asking me to tailor which 

UNITED STATES DISTRICT COURT

15

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 15 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 recommendation I briefed Spear with or Jim Larkin and I'm -- 

 2 I'm kind of challenged with that.

 3 MR. RAPP: Okay, let me see if I can help you.

 4 BY MR. RAPP:

10:35a 5 Q. You've just testified about a recommendation they made 

 6 with regard to prepaid cards. Did they make any

 7 recommendation whatsoever about posting ads?

 8 MR. FEDER: Leading.

 9 THE COURT: Sustained.

10:35a 10 BY MR. RAPP:

 11 Q. What other recommendation did they make -- 

 12 MS. BERTRAND: Hearsay, objection.

 13 MR. RAPP: -- that you communicated to Mr. Spear? 

 14 MS. BERTRAND: Same objection.

10:35a 15 THE COURT: Overruled as to the last question.

 16 THE WITNESS: I would communicate their 

 17 recommendations that we provide more data when there was a 

 18 NCMEC report. Like they wanted to know additional ads by 

 19 users -- 

10:35a 20 BY MR. RAPP:

 21 Q. Let me just stop you on the additional ads. 

 22 The additional ads recommendation, did you communicate 

 23 that to Mr. Spear? 

 24 MS. BERTRAND: Objection, leading.

10:36a 25 THE WITNESS: I can't be sure if it's Mr. --

UNITED STATES DISTRICT COURT

16

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 16 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 THE COURT: Wait, wait, wait. Let me rule on the 

 2 objection. 

 3 Overruled, you can answer.

 4 THE WITNESS: I can't be sure if it's Mr. Spear or 

10:36a 5 Mr. Larkin at the time.

 6 MR. RAPP: All right.

 7 THE WITNESS: It's like one of the two or both.

 8 BY MR. RAPP:

 9 Q. All right. But what's the recommendation regarding ads?

10:36a 10 MS. BERTRAND: Objection, hearsay.

 11 THE COURT: Overruled.

 12 THE WITNESS: When we'd send a cyber tip report, we 

 13 would only -- the report -- this is a report to NCMEC that 

 14 someone looks under age. We'd only send the one ad. We would 

10:36a 15 not send every ad by that user, and in this case --

 16 BY MR. RAPP:

 17 Q. Can I just stop you. Can you explain that to the jury, 

 18 what we're talking about here?

 19 A. So if a -- we're making a cyber tip report and we see 

10:37a 20 someone that appears to be under eighteen, we would go ahead 

 21 and send just that ad in the cyber tip report. 

 22 Now, we could have sent all ads by the user. So if the 

 23 user had twelve other ads or they're posted in other cities we 

 24 could have sent all ads by the user, but we only sent the 

10:37a 25 single ad. We waited to get a subpoena, and then when we 

UNITED STATES DISTRICT COURT

17

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 17 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 received the subpoena from law enforcement then we would send 

 2 all ads.

 3 Q. All right. Let me -- let me just ask you: Did you 

 4 implement any of the recommendations NCMEC made to you?

10:37a 5 MS. BERTRAND: Objection. Leading, vague as to 

 6 "recommendations."

 7 THE COURT: Overruled.

 8 THE WITNESS: We implemented the recommendations

 9 that wouldn't impact revenue negatively. It was a slow dance, 

10:38a 10 little things.

 11 BY MR. RAPP:

 12 Q. You've made that comment previously in your testimony. 

 13 What did you mean about "slow dance" with respect to your 

 14 meetings with NCMEC?

10:38a 15 A. We just engage them in a conversation, do those tasks 

 16 that will not impact revenue negatively. So the tasks we 

 17 would do, they had a database of problematic URLs. We could 

 18 scan the site to see if those URLs were on there. 

 19 They had a database of child porn images and hash and we 

10:38a 20 could make sure that those didn't appear on the site, but none 

 21 of those would really impact the revenue in the adult section.

 22 Q. All right. Did there come a point where the meetings 

 23 stopped with NCMEC?

 24 A. Yes.

10:39a 25 Q. Do you recall when that was?

UNITED STATES DISTRICT COURT

18

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 18 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 A. I believe June -- mid -- midsummer 2012. June 2012, I 

 2 believe.

 3 Q. Okay. You discussed a -- you have testified to a meeting 

 4 in March of 2011. Do you recall that testimony?

10:39a 5 A. Yes.

 6 Q. Do you recall just testifying to that?

 7 A. Yes, yes.

 8 Q. Do you recall who the CEO or the president of NCMEC was 

 9 at the time?

10:39a 10 A. Yes.

 11 Q. Who was that?

 12 A. Ernie Allen.

 13 Q. And when the -- the meetings ceased with NCMEC, was 

 14 Mr. Allen still the president of NCMEC?

10:40a 15 MS. BERTRAND: Objection, leading.

 16 THE COURT: Overruled.

 17 THE WITNESS: No, he wasn't.

 18 BY MR. RAPP:

 19 Q. Do -- do you know who was? 

10:40a 20 A. Yes, there was someone new, John Ryan.

 21 Q. All right. At the time that the meetings ceased with 

 22 NCMEC, was Mr. John Ryan, was he the president of NCMEC?

 23 A. Yes, I believe so. I don't know his exact title, but he 

 24 was the new CEO.

10:40a 25 Q. All right. And did -- was it communicated to you by 

UNITED STATES DISTRICT COURT

19

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 19 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 anyone within Backpage that you were no longer going to meet 

 2 with NCMEC?

 3 MS. BERTRAND: Objection. Leading, hearsay.

 4 THE COURT: Overruled, he can answer whether or not 

10:41a 5 someone communicated with him.

 6 MR. RAPP: That is a "yes" or "no."

 7 THE WITNESS: Yes.

 8 BY MR. RAPP:

 9 Q. Who was that person?

10:41a 10 A. Board member Don Moon.

 11 Q. All right. And what did he -- did he give you a reason 

 12 as to why the meetings were no longer going to go on with 

 13 NCMEC?

 14 A. He said we had come to an impasse. They were asking 

10:41a 15 us -- 

 16 MR. FEDER: Objection, hearsay and beyond the scope 

 17 of the question.

 18 THE COURT: Overruled.

 19 BY MR. RAPP:

10:41a 20 Q. What'd he say?

 21 A. He said we had come to an impasse with NCMEC, that we're 

 22 not gonna take down the adult section and we're not -- that 

 23 they're demanding us to do too many things.

 24 Q. All right. Now, at this point when the meetings with 

10:42a 25 NCMEC had ceased, what was the status of the safety and 

UNITED STATES DISTRICT COURT

20

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 20 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 security consultant, Hemu Nigam, with SSP Blue at this point?

 2 A. He's not active. I don't believe he's with the company 

 3 any longer.

 4 Q. All right. When you say "the company," do you mean his 

10:42a 5 company or what company?

 6 A. Oh, I mean he's no longer under contract with Backpage.

 7 Q. All right.

 8 MR. RAPP: Madam clerk, how are we doing on the --

 9 COURTROOM DEPUTY: It's working.

10:42a 10 BY MR. RAPP:

 11 Q. I'm showing you 156 on your screen there. 

 12 Do you see that? 

 13 A. Yes.

 14 Q. What is it?

10:42a 15 A. It's an e-mail from Monita Mohan to Andrew Padilla and 

 16 Joye Vaught.

 17 Q. Do you recognize Monita Mohan's e-mail address?

 18 A. Yes.

 19 Q. And you exchanged e-mails with Ms. Mohan during a certain 

10:43a 20 time period in 2011 and '12?

 21 A. I had, but I was mainly copied on e-mails.

 22 Q. All right. Who would she -- do you know who she would 

 23 e-mail when you were copied?

 24 A. She would communicate with Andrew Padilla or Joye Vaught.

10:43a 25 Q. All right.

UNITED STATES DISTRICT COURT

21

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 21 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 MR. RAPP: Move to admit 156.

 2 MS. BERTRAND: Objection, hearsay. 

 3 THE COURT: Overruled, it may be admitted.

 4 MR. RAPP: And request permission to publish, Your 

10:43a 5 Honor.

 6 THE COURT: Yes, it may be published.

 7 MR. RAPP: Thank you.

 8 (Exhibit No. 156 admitted in to Evidence.)

 9 BY MR. RAPP:

10:43a 10 Q. What does Ms. Mohan tell Mr. Padilla and Ms. Vaught?

 11 A. Please approve these words for removal/editing. 

 12 Do you want me to read the whole e-mail? 

 13 Q. If you would. 

 14 A. "Hi Andrew and Joye 

10:44a 15 Please approve these words for editing/removal. 

 16 1. Lick my kitty: Sucking pussy" --

 17 MR. FEDER: Objection, speaks for itself.

 18 MS. BERTRAND: There's no reason to read these in.

 19 THE COURT: Well, I guess you can display it. I

10:44a 20 think it's before the jury. They can take a moment to read it 

 21 for themselves if they wish to do that.

 22 BY MR. RAPP:

 23 Q. In the interest of time, I'm happy to do that but can you 

 24 tell -- while the -- while the jury's reading the e-mail, can 

10:44a 25 you tell us why it is, based upon your position at Backpage, 

UNITED STATES DISTRICT COURT

22

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 22 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 why Monita Mohan is sending this e-mail to Mr. Padilla and 

 2 Ms. Vaught? 

 3 MS. BERTRAND: Objection, calls for speculation. 

 4 He's not cc'd on this e-mail so he can't say why she's doing 

10:45a 5 something.

 6 THE COURT: Well, he can answer based on his 

 7 position.

 8 BY MR. RAPP:

 9 Q. Well, did Mr. Padilla and Ms. Vaught, do they answer to 

10:45a 10 you? 

 11 A. Yes, they do.

 12 Q. And can you explain why they're the ones that are 

 13 exchanging e-mails with the El Camino, the India-based 

 14 moderation company?

10:45a 15 A. Yes, they are focused on getting rid of terms that are 

 16 indicative of sex for money.

 17 Q. All right. Okay, let's look at 157. 

 18 THE COURT: Well, let me just inquire of the jurors. 

 19 Did everyone have a chance to at least read through 

10:45a 20 the e-mail? 

 21 Okay, I see nodding heads all around. 

 22 Okay, move forward.

 23 MR. RAPP: Thank you, your Honor.

 24 BY MR. RAPP:

10:46a 25 Q. Do you see this e-mail?

UNITED STATES DISTRICT COURT

23

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 23 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 A. Yes.

 2 Q. Is this a similar e-mail to -- a similar e-mail exchange 

 3 like the one contained in United States 156?

 4 MS. BERTRAND: Objection, leading.

10:46a 5 THE COURT: Overruled.

 6 THE WITNESS: Yes, it is.

 7 BY MR. RAPP:

 8 Q. All right. Is this from Monita Mohan to -- who's it to?

 9 A. The e-mail is to Andrew Padilla and Joye Vaught.

10:46a 10 Q. All right. And let's look at 157a, and do you recognize 

 11 the attachment in 157a?

 12 A. Yes.

 13 Q. And can you just -- without saying what the contents are, 

 14 can you describe it?

10:46a 15 A. It's a list of terms that should be banned that are 

 16 indicative of sex for money or prostitution.

 17 MR. RAPP: Move to admit 157 and 157a.

 18 MS. BERTRAND: Objection as to 157a, lack of 

 19 foundation.

10:47a 20 THE COURT: Overruled, it may be admitted and 

 21 published.

 22 MR. RAPP: And request permission to publish, Your 

 23 Honor.

 24 THE COURT: Yes.

10:47a 25 (Exhibit Nos. 157 and 157a admitted in to Evidence.)

UNITED STATES DISTRICT COURT

24

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 24 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 BY MR. RAPP:

 2 Q. And what does Ms. Mohan say to Mr. Padilla and

 3 Ms. Vaught? 

 4 A. "Hi Andrew and Joye

10:47a 5 Please confirm if you would like us to delete the ads 

 6 with these words. 

 7 Best Monita."

 8 Q. And then looking at 157a, is this list of words similar 

 9 to other lists of -- of words that we have looked at 

10:47a 10 previously in other exhibits?

 11 A. Yes, it is.

 12 Q. And are all of these words in some fashion indicative of 

 13 some kind of a sexual act?

 14 MS. BERTRAND: Objection, calls for speculation.

10:48a 15 THE COURT: Sustained.

 16 BY MR. RAPP:

 17 Q. Well, how do you know -- don't speculate. 

 18 How do you know that these are words indicative of sexual 

 19 acts?

10:48a 20 A. Because their definition is about a sexual act --

 21 Q. All right.

 22 A. -- for the purpose of sites that have prostitution ads.

 23 Q. Well, let's just -- this goes on for several pages. 

 24 Let's just go back --

10:49a 25 A. And I want to just clarify something. Not all terms are 

UNITED STATES DISTRICT COURT

25

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 25 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 indicative of sexual acts. There are a couple in there that 

 2 are not, like "young."

 3 Q. Okay, fair enough. But these are words that -- are these 

 4 gonna be words that are -- that will be banned from postings?

10:49a 5 A. Yes.

 6 Q. And then what happens when they're banned from the 

 7 posting?

 8 A. Well, there's a variety of actions that could happen. It 

 9 could give them a -- it could be stripped out or it could be 

10:49a 10 banned, and I think at this time the terms are banned so that 

 11 they get a message and then they're able to just post again by 

 12 changing that word.

 13 Q. Okay. Let's go on to another area. You recall in 10 -- 

 14 Exhibit 104, let's see if I can find that quickly for you.

10:50a 15 Do you recall a recommendation from the security officer 

 16 -- the safety and security that you meet with an individual by 

 17 the name of Byron Fassett?

 18 MS. BERTRAND: Objection, leading.

 19 THE COURT: Sustained. And it's a confusing 

10:50a 20 question, Mr. Rapp. You started talking about 104 and then 

 21 you switched to a different topic so. . .

 22 MR. RAPP: All right, let me see if I can clear this 

 23 up.

 24 BY MR. RAPP:

10:50a 25 Q. Do you remember -- did you meet with Byron Fassett?

UNITED STATES DISTRICT COURT

26

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 26 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 A. Yes, I did.

 2 Q. After meeting with -- is it Sergeant Fassett?

 3 A. Yes, it is.

 4 Q. Did you receive things from him?

10:51a 5 A. He began sending me e-mails, yes.

 6 Q. All right. Let's look at Exhibit 1202 for the witness' 

 7 eyes only. Do you see that on your screen?

 8 A. I do.

 9 Q. And is this an e-mail you received from Mr. -- from 

10:51a 10 Sergeant Fassett?

 11 A. Yes, it is.

 12 Q. All right. And what was the purpose of this relationship 

 13 that you had with Sergeant Fassett where he would send you 

 14 certain e-mails? What information was he giving you?

10:51a 15 MS. BERTRAND: Objection, vague as to "information"

 16 and hearsay.

 17 THE COURT: Well, that's a compound question.

 18 MR. RAPP: Let me see if I can clear this up.

 19 BY MR. RAPP:

10:52a 20 Q. Do you -- do you recognize this e-mail?

 21 A. Yes, I do.

 22 Q. How do you recognize it?

 23 A. Because I received e-mails regularly from Byron Fassett.

 24 Q. All right. And -- and did you exchange e-mails with him 

10:52a 25 periodically?

UNITED STATES DISTRICT COURT

27

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 27 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 A. Yes, after we met in person we exchanged e-mails.

 2 Q. And is his e-mail address on here?

 3 A. Yes, it is.

 4 Q. All right.

10:52a 5 MR. RAPP: Move to admit 1202.

 6 MR. CAMBRIA: Objection, foundation.

 7 MS. BERTRAND: Objection, hearsay and relevance 

 8 under 401 and 403.

 9 THE COURT: I think just foundation for the exhibit 

10:52a 10 itself, Mr. Rapp. I don't know what the date is. I mean, I 

 11 don't know what the context is. I mean, I think you just have 

 12 to lay the foundation for the exhibit and ask him about it.

 13 MR. RAPP: All right. 

 14 BY MR. RAPP:

10:53a 15 Q. What's the date you received this -- this e-mail? 

 16 A. May 11th, 2012.

 17 Q. All right. And is this after you had met with him?

 18 A. Yes, it is.

 19 Q. All right.

10:53a 20 MR. RAPP: Move to admit 1202. 

 21 MS. BERTRAND: Objection. Same objections as to

 22 hearsay, 401 and 403.

 23 THE COURT: Overruled as to each.

 24 MR. CAMBRIA: And foundation.

10:53a 25 MR. RAPP: And request permission to publish.

UNITED STATES DISTRICT COURT

28

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 28 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 THE COURT: Yes, it may be published.

 2 (Exhibit No. 1202 admitted in to Evidence.)

 3 BY MR. RAPP: 

 4 Q. And so down at the bottom what is the -- without reading 

10:53a 5 the whole thing in the interest of time, what is the subject 

 6 of the posting that he is sending you?

 7 A. "Juvenile Prostitution Ad."

 8 Q. And then once you receive that, do you send that to 

 9 Mr. Padilla?

10:54a 10 A. Yes.

 11 Q. All right. And why are you sending it to Mr. Padilla?

 12 A. I'm giving him instructions to archive and 404 these ads, 

 13 subpoena's coming.

 14 Q. All right. And then can you remind us what "404" means?

10:54a 15 A. It just means to remove the ad so it doesn't appear 

 16 on-line and the search engines will not index it.

 17 Q. All right. Now, let's look at 1204 for the witness' eyes 

 18 only. Is this a similar ad?

 19 A. Yes, it is.

10:54a 20 Q. And is it an ad that -- 

 21 THE COURT: Mr. Rapp, let me stop you there. I 

 22 don't see an ad. I see an e-mail. I don't know what you're 

 23 referring to.

 24 MR. RAPP: Yeah.

10:55a 25 BY MR. RAPP:

UNITED STATES DISTRICT COURT

29

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 29 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 Q. Is this an e-mail from Mr. Fassett, Sergeant Fassett?

 2 A. Is this an e-mail, yes, it is.

 3 Q. And is he -- is he -- is the e-mail -- does it include an 

 4 ad?

10:55a 5 A. It does.

 6 Q. All right. And is this in June of 2012?

 7 A. June 28th, 2012.

 8 Q. All right. And is this e-mail -- let's look at the 

 9 second page. Oops. 

10:55a 10 So does the second page have information on it that you 

 11 can identify?

 12 A. Yes, posting IDs.

 13 Q. All right. And how is it, sir, that you can identify the 

 14 posting IDs?

10:56a 15 A. Every ad has a unique posting ID. That posting ID's also 

 16 in the URL of the ad. We're able to find ads based on posting 

 17 IDs if we know the city.

 18 Q. All right. And posting IDs on Backpage?

 19 A. Yes.

10:56a 20 Q. All right.

 21 MR. RAPP: Move to admit 1204. 

 22 MS. BERTRAND: Objection. Hearsay, lack of 

 23 foundation, relevance under 401 and 403.

 24 THE COURT: Overruled.

10:56a 25 MR. RAPP: Move to admit and also request permission 

UNITED STATES DISTRICT COURT

30

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 30 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 to publish.

 2 THE COURT: It may be admitted and it may be 

 3 published.

 4 (Exhibit No. 1204 admitted in to Evidence.) 

10:56a 5 BY MR. RAPP:

 6 Q. All right. And without reading the entirety of this, can 

 7 you just sort of summarize what he's giving you? 

 8 A. He's telling us that 22 of the ads listed below resulted 

 9 in an arrest for prostitution.

10:57a 10 Q. All right. And then going on to the second page -- and I 

 11 believe you were referencing this -- can you explain to the 

 12 jury what these numbers indicate?

 13 A. So every ad in the city will have a unique ID, and so 

 14 the posting ID appears in the URL but you'll also see it in 

10:57a 15 the body copy of the ad near the bottom. So we're able to 

 16 find these ads using these posting IDs.

 17 Q. All right. And, similarly, do you give this -- do you 

 18 send this to anybody?

 19 A. Yes, I send it to Andrew Padilla.

10:58a 20 Q. All right. Let's look at 1207. Is this yet another 

 21 e-mail from Mr. -- from Sergeant Fassett?

 22 MS. BERTRAND: Objection, cumulative.

 23 THE COURT: Well, it's actually -- Mr. -- I guess 

 24 that's what confused me about your last exhibit, Mr. Rapp.

10:58a 25 MR. RAPP: Yes, ma'am.

UNITED STATES DISTRICT COURT

31

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 31 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 THE COURT: The e-mail at the header is not from

 2 Sergeant Fassett. It's from Mr. Ferrer.

 3 MR. RAPP: Well -- 

 4 THE COURT: It's forwarding an e-mail.

10:58a 5 MR. RAPP: All right, so let's see if I can address

 6 that.

 7 BY MR. RAPP:

 8 Q. Can you look at the bottom here on 1207?

 9 A. Yes.

10:59a 10 Q. Do you see down here -- down below, does it indicate who 

 11 is on this e-mail string?

 12 A. Yes.

 13 Q. Who is it?

 14 A. Byron Fassett is e-mailing me on November 14th, 2012.

10:59a 15 Q. All right. And this actually is a -- there's actually 

 16 two pages to this e-mail, and does it have his signature line 

 17 on it?

 18 A. It does.

 19 Q. And when you receive this, do you send this to somebody 

10:59a 20 eventually?

 21 A. I do.

 22 Q. Who do you send it to?

 23 A. I sent it to Andrew -- 

 24 Q. All right.

11:00a 25 A. -- Padilla.

UNITED STATES DISTRICT COURT

32

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 32 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 Q. Okay. 

 2 MR. RAPP: Move to admit. 

 3 MS. BERTRAND: Objection, Your Honor. As to the

 4 lower part pertaining to Mr. Fassett, the e-mail address is 

11:00a 5 not on there. It's simply text. There's no links.

 6 THE COURT: Overruled. He's testified previously 

 7 that he received other e-mails from that same individual, so 

 8 overruled. What exhibit was that again, Mr. Rapp? 

 9 MR. RAPP: 1207 for the record.

11:00a 10 THE COURT: It may be admitted and published.

 11 MR. RAPP: Thank you.

 12 (Exhibit No. 1207 admitted in to Evidence.)

 13 BY MR. RAPP:

 14 Q. And so is this -- this is what we've been discussing. Is 

11:00a 15 this this two-page e-mail from -- from Sergeant Fassett and 

 16 what is he alerting you here to?

 17 A. "The below listed Backpage ad has been identified as ad 

 18 for prostitution and/or Child Sex Trafficking. The young girl 

 19 depicted" -- I can't quite -- "young girl depicted in the 

11:01a 20 listed ad has been identified as a child" who's been 

 21 "compelled to engage in prostitution."

 22 Q. And that was sent to you to have that ad removed -- 

 23 A. It is.

 24 Q. -- and Mr. Padilla?

11:01a 25 A. I'm having Andrew Padilla remove the ad.

UNITED STATES DISTRICT COURT

33

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 33 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 Q. And does Mr. Padilla respond to you?

 2 A. He does. He confirms, "This is done."

 3 Q. All right. And last, let's look at 1208.

 4 Is this yet another e-mail from Sergeant Fassett to you 

11:02a 5 that you forward to Andrew Padilla?

 6 A. Yes, it is.

 7 MR. RAPP: Move to admit 1208.

 8 MS. BERTRAND: Objection, Your Honor. Foundation as 

 9 to where it was forwarded. We only have the Carl Ferrer 

11:02a 10 e-mail address going to some random place and 401, 403, 404(b) 

 11 and cumulative.

 12 THE COURT: Well, sustained as to foundation with 

 13 regard to this exhibit. It's a different -- different e-mail, 

 14 different addresses.

11:02a 15 MR. RAPP: All right, let's have a look here. 

 16 BY MR. RAPP:

 17 Q. Is your e-mail on there?

 18 A. Yes, it is.

 19 Q. Is Mr. Padilla's e-mail on there?

11:02a 20 A. Yes, it is.

 21 Q. Is this in November of 2012?

 22 A. It's November 15th, 2012.

 23 Q. And does it have a subject?

 24 A. Yes, "Prostitution Ads on Backpage.com."

11:03a 25 MR. RAPP: Move to admit 1208.

UNITED STATES DISTRICT COURT

34

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 34 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 MS. BERTRAND: Your Honor, same objection. There's 

 2 no indication in this document how Mr. Padilla, if at all, 

 3 received this; and at this point it looks cobbled together. 

 4 There's no continuity between Mr. Fassett, 

11:03a 5 Mr. Ferrer, and the top half of the first page and then 

 6 Mr. Padilla.

 7 THE COURT: It's a fair point with regard to 

 8 foundation and this particular exhibit. 

 9 Mr. Rapp, why don't you ask -- just ask him is he 

11:03a 10 familiar with it? What is it? What did he do with it?

 11 MR. RAPP: Well, certainly.

 12 BY MR. RAPP:

 13 Q. What did you do with this -- this e-mail when you 

 14 received it from Sergeant Fassett?

11:04a 15 A. Well, I received it. It was sent to me at 11:18 a.m. I 

 16 then responded at 12:30 p.m. on the same day and then I then 

 17 forwarded -- I then sent it -- we need these ads removed at 

 18 12:31 p.m. At 2:50 p.m. I also say we should also ban the 

 19 user because we really don't want this user to post any more 

11:04a 20 ever again, not just remove the ads; and then at 4:53 p.m. 

 21 November 15th Andrew Padilla tells me, "this is done by the 

 22 way."

 23 Q. All right. Just to respond to the concern about this 

 24 being cobbled together, do you know who -- where this e-mail 

11:05a 25 came from?

UNITED STATES DISTRICT COURT

35

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 35 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 A. It came from the Arizona Grand Jury and the PSI.

 2 Q. And I believe you testified yesterday that was the United 

 3 States Senate?

 4 A. Yes.

11:05a 5 Q. You -- are you aware of whether or not both of those 

 6 investigative bodies asked for e-mails from Backpage?

 7 MR. FEDER: Leading.

 8 THE COURT: Sustained.

 9 BY MR. RAPP:

11:05a 10 Q. Do you know if they asked for e-mails from Backpage?

 11 MR. FEDER: Leading and also relevance, 403, 

 12 hearsay.

 13 THE COURT: I think there's a valid 401 objection, 

 14 but I also think it's, again, one of these compound questions. 

11:05a 15 You're asking about two separate, different bodies and 

 16 cobbling the request together. So I think the foundation 

 17 needs to be laid, Mr. Rapp.

 18 BY MR. RAPP:

 19 Q. Were you required to give e-mails to two investigative 

11:06a 20 bodies? 

 21 A. Yes, I was.

 22 Q. Is one of them the Arizona --

 23 THE COURT: I can't hear you.

 24 BY MR. RAPP:

11:06a 25 Q. Is one of them the Arizona Grand Jury? 

UNITED STATES DISTRICT COURT

36

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 36 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 A. Yes.

 2 Q. Is one of them United States Senate?

 3 A. Yes.

 4 Q. And, sir, how do you know that?

11:06a 5 A. Because I was subpoenaed for those documents and involved 

 6 in delivering those documents.

 7 Q. All right. And is this one of those documents?

 8 A. Yes.

 9 MR. RAPP: Move to admit 1208.

11:06a 10 MS. BERTRAND: Objection, Your Honor. The existence 

 11 of Bates stamps at the bottom of a document doesn't create the 

 12 foundation to authenticate a document where we don't have the 

 13 actual where the e-mail is going from Mr. Ferrer.

 14 THE COURT: Overruled.

11:06a 15 MR. RAPP: Goes to the weight.

 16 THE COURT: Overruled.

 17 MR. RAPP: Move to admit, request permission to 

 18 publish.

 19 THE COURT: Admitted and permission to publish.

11:07a 20 (Exhibit No. 1208 admitted in to Evidence.) 

 21 BY MR. RAPP:

 22 Q. All right. Is this the -- below is -- down here, is this 

 23 the e-mail sent by Sergeant Fassett?

 24 A. Yes, it is.

11:07a 25 Q. Is this the same type of an e-mail that he -- that we've 

UNITED STATES DISTRICT COURT

37

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 37 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 looked at in Exhibits 1202, 1204 and 1207?

 2 MS. BERTRAND: Objection, leading. The document

 3 speaks for itself.

 4 THE COURT: Sustained.

11:07a 5 BY MR. RAPP:

 6 Q. Have you seen an e-mail like this before?

 7 A. Yes, he sent the -- a couple now.

 8 Q. All right. And do you -- what do you do with this 

 9 e-mail?

11:07a 10 MS. BERTRAND: Objection, asked and answered.

 11 THE COURT: Sustained.

 12 BY MR. RAPP:

 13 Q. Do you give this e-mail to anybody? 

 14 MS. BERTRAND: Same objection.

11:08a 15 THE COURT: Well, we're talking about 1208, right? 

 16 Is that -- 

 17 MR. RAPP: Yes.

 18 THE COURT: Overruled.

 19 THE WITNESS: I -- I forward Sergeant Fassett's 

11:08a 20 e-mail to Andrew Padilla, and he knows because of the history 

 21 of this relationship with Sergeant Fassett that we're just 

 22 gonna remove these ads.

 23 MR. RAPP: All right. 

 24 All right, let's move on to -- to another exhibit. 

11:08a 25 Let's look at 1922. 

UNITED STATES DISTRICT COURT

38

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 38 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 MS. BERTRAND: I'm sorry, what was the exhibit 

 2 number?

 3 MR. RAPP: 1922.

 4 MS. BERTRAND: Thank you.

11:09a 5 BY MR. RAPP:

 6 Q. So how is -- we are now in May of 2012. How is the 

 7 revenue for Backpage during this time period?

 8 A. It's hitting all-time high records.

 9 Q. And how are the alternative newspapers that Mr. Lacey, 

11:09a 10 Mr. Spear and Mr. Brunst own? How are they doing?

 11 A. They're not doing well. They continue to decline. It's 

 12 a national -- it's an industry-wide phenomenon, like it's 

 13 happening to all newspapers.

 14 Q. During this year time period do they do anything with 

11:09a 15 those newspapers?

 16 A. Yes, they do.

 17 Q. What do they do with them?

 18 A. They sell them to a employee-led management group. That 

 19 means employees who are working for the company are taking it 

11:10a 20 over.

 21 Q. And if you know, do they have any further involvement in 

 22 the newspapers?

 23 A. They appear to separate themselves from the papers. I 

 24 recall seeing press releases where they talked about how they 

11:10a 25 were -- they were done with the papers and there was new blood 

UNITED STATES DISTRICT COURT

39

Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 39 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 taking over.

 2 Q. All right. So do you know if Backpage is the only 

 3 company that they own?

 4 MS. BERTRAND: Objection, vague as to "they."

11:10a 5 THE COURT: Sustained.

 6 MR. RAPP: Well, let's take them individually. 

 7 BY MR. RAPP:

 8 Q. What does the chief financial officer for Village Voice 

 9 Media and Backpage, what is his position now after they sell 

11:11a 10 the newspapers? 

 11 MR. PANCHAPAKESAN: Objection. Foundation, 

 12 speculation.

 13 THE COURT: Sustained.

 14 BY MR. RAPP:

11:11a 15 Q. Do you know? Do you know what his position is?

 16 A. He's the CFO of Backpage now and only Backpage.

 17 Q. How do you know that?

 18 A. Because the newspapers are gone. They're under a new 

 19 management group because they needed to separate themselves 

11:11a 20 from Backpage. Backpage was too toxic. It was leading to the 

 21 papers getting boycotts so -- 

 22 MR. FEDER: Objection, goes beyond the scope.

 23 THE COURT: Sustained.

 24 BY MR. RAPP:

11:11a 25 Q. Why did they have to separate themselves from the

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 newspaper?

 2 A. They had to separate themselves from the newspaper 

 3 because --

 4 MR. FEDER: 401, 403.

11:11a 5 THE COURT: Overruled.

 6 MR. PANCHAPAKESAN: It also lacks foundation.

 7 THE WITNESS: -- because they wanted to keep 

 8 Backpage.

 9 THE COURT: Let me late rule on that objection. 

11:11a 10 It's overruled.

 11 THE WITNESS: They wanted to keep Backpage.com. You 

 12 couldn't have both. It was hurting the newspapers.

 13 BY MR. RAPP:

 14 Q. All right. When you say "it was hurting the newspapers," 

11:12a 15 what do you mean? What do you mean it was hurting the 

 16 newspapers?

 17 A. There was bad press. There was calls for boycotting 

 18 Village Voice Media newspapers because of Backpage.

 19 Q. All right. And how do you know that? How do you know 

11:12a 20 that there were boycotts? What's your basis?

 21 MR. FEDER: 401, 403, hearsay.

 22 THE COURT: Overruled.

 23 THE WITNESS: Well, it was in the media, but there 

 24 was even a press release from the new owners of the papers 

11:12a 25 expressing how Backpage had been a problem for them with the 

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Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 41 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 papers so. . .

 2 BY MR. RAPP:

 3 Q. After that happens, does Backpage stay here in Phoenix?

 4 A. No, we are soon to be evicted.

11:12a 5 Q. What do you mean by that, you are soon to be evicted?

 6 A. We needed to separate Backpage from the company. So the 

 7 Backpage office could no longer be at the building at 1201 

 8 East Jefferson Street.

 9 Q. Just down the street, down Jefferson here, right?

11:13a 10 A. Correct, correct.

 11 Q. So where did you go in Phoenix? Did you find another 

 12 building in Phoenix?

 13 A. Scott Spear was tasked with trying to find us another 

 14 location, but it was going poorly. We seemed to be too toxic 

11:13a 15 to even get a lease.

 16 Q. All right. And did you have discussions with Mr. Spear 

 17 about that fact?

 18 A. Yes.

 19 Q. Okay. So what happened?

11:13a 20 A. We came up -- we, Scott Spear and I, decided that we just 

 21 didn't need an office in Phoenix.

 22 Q. Okay.

 23 A. We just would have people work from home and then 

 24 transfer key employees to Dallas and operate out of Dallas 

11:14a 25 because Dallas -- we're working out of that newspaper office 

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 and we had lots of space, and that newspaper office didn't 

 2 want to work with us so they moved to a different floor in the 

 3 building and we kept -- took over their whole lease.

 4 Q. All right. And did you stay in that building from 2012 

11:14a 5 to 2018?

 6 A. No, we only stayed in that building until the landlord 

 7 locked us out in 2016 due to a search warrant on the property.

 8 MR. FEDER: Objection, hearsay, 401, 403, move to 

 9 strike.

11:14a 10 THE COURT: Well --

 11 MR. FEDER: Beyond the scope, also.

 12 THE COURT: I will partially sustain the objection 

 13 just in terms of responsiveness. The Court -- I'm sorry, the 

 14 jury will disregard everything after "the landlord locked us 

11:15a 15 out in 2016." 

 16 BY MR. RAPP:

 17 Q. All right. Let's look at 1922. What is 1922? 

 18 A. It's a analytics report -- daily report, I believe, to 

 19 Scott Spear.

11:15a 20 Q. All right. Is this similar to the Google Analytics 

 21 reports that we've looked at previously?

 22 MS. BERTRAND: Objection, leading.

 23 THE COURT: Sustained.

 24 BY MR. RAPP:

11:15a 25 Q. Have you seen reports like this? 

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Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 43 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 A. Yes.

 2 Q. All right. And let's look at 1922b. Is this -- what is 

 3 1922b?

 4 A. It's a Google Analytics report showing the referrals and 

11:15a 5 the traffic to the site.

 6 Q. All right. 

 7 MR. RAPP: Move to admit 1922 and 1922b. 

 8 MS. BERTRAND: Objection. Lack of foundation, 

 9 hearsay.

11:16a 10 THE COURT: Overruled.

 11 MR. RAPP: And request permission to publish it.

 12 THE COURT: It may be admitted and published.

 13 MR. RAPP: Thank you.

 14 (Exhibit Nos. 1922 and 1922b admitted in to 

11:16a 15 Evidence.)

 16 BY MR. RAPP:

 17 Q. And so can you just explain some of the information on 

 18 this transmission e-mail? 

 19 A. So the report is coming from backpage.analytics@gmail. 

11:16a 20 It's an automatic report that Google Analytics is kicking out. 

 21 It's being sent to Scott Spear, and it's a daily report so 

 22 it's sent to him each day. You can tell the day because of 

 23 the number, 2012, May 29th.

 24 Q. All right. And then looking at b, what does this report 

11:17a 25 tell you?

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 A. This report shows that the top three referring sites 

 2 are -- to Backpage.com are prostitution review sites.

 3 Q. All right. And for what time period is it?

 4 A. May 29th, 2012.

11:17a 5 Q. Is that -- that's one day?

 6 A. Yes.

 7 Q. And how many visits for the site are there?

 8 A. It's kinda hard to tell from that because it's on a 

 9 graph. Can you shrink that -- there we go. It's better to 

11:17a 10 look at the site usage.

 11 Q. All right.

 12 A. So the visits 2,066,031 in a single day.

 13 Q. All right. Let's look at Exhibit 31 for your eyes only. 

 14 Do you recognize this exhibit?

11:18a 15 A. Yes, I do.

 16 Q. Do you recognize who this exhibit is from?

 17 A. It's from Jim Larkin.

 18 Q. And who is he sending it to?

 19 A. He's sending it to Carl Ferrer, Scott Spear and Jed 

11:18a 20 Brunst.

 21 Q. And when was this e-mail -- when was it sent?

 22 A. It was sent Wednesday, August 1st at 10:00 a.m.

 23 Q. All right. And what is the context of this e-mail?

 24 A. So this e-mail's an agenda of items that we're gonna 

11:18a 25 discuss regarding Backpage.

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 MR. RAPP: Move to admit Exhibit 31 and request 

 2 permission to publish. 

 3 THE COURT: Yes, it may be admitted and published.

 4 (Exhibit No. 31 admitted in to Evidence.)

11:19a 5 BY MR. RAPP:

 6 Q. All right. What does Mr. Larkin tell you and Mr. Brunst 

 7 and Mr. Spear?

 8 A. "Carl, Jed and Scott: These are the topics I would like 

 9 to begin to cover in our discussion 10:00 am Wednesday in 

11:19a 10 Phoenix. 

 11 Carl, will you please add any items you, Jed or Scott 

 12 Spear might have to discuss and fix an agenda? 

 13 I'm willing to address this in any way necessary and 

 14 would like to begin a regular monthly meeting schedule." 

11:19a 15 Jim Larkin.

 16 Q. In No. 1 what is the first agenda topic that Mr. Larkin 

 17 wants to discuss?

 18 A. "management information metrics/analytics-what are we 

 19 measuring, what are we comparing it against? and review 

11:20a 20 current management reports."

 21 Q. And what did you take that to mean?

 22 A. This is the -- gonna be the ad count, the page views, the 

 23 revenue and the traffic and how we're gonna compare it and so 

 24 he wants to get these reports -- he wants to know how to use 

11:20a 25 them and what other detail would be important for managing the 

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 business.

 2 Q. All right. And then No. 2, what is -- what is the second 

 3 agenda item?

 4 A. The second agenda item is, "fallback business plan 

11:20a 5 scenarios in 2013 if business interrupted."

 6 Q. What did you take that to mean?

 7 A. We're under a lot of pressure from different groups and 

 8 the media. We're under investigation, that we're wondering 

 9 what is our business plan in the event that we have to turn 

11:21a 10 off the adult section.

 11 Q. All right. And then No. 3?

 12 A. "personnel and office leases and space consolidation."

 13 Q. What'd you take that to mean?

 14 A. This is where Backpage in Dallas is gonna take over the 

11:21a 15 office lease for the newspaper and take over a large space -- 

 16 a really large office.

 17 Q. All right. And then jumping to six, what does he -- what 

 18 is this agenda item?

 19 A. "further security/safety/user experience technology 

11:22a 20 enhancements."

 21 Q. What did you take that to mean in terms of what you were 

 22 going to discuss?

 23 A. So I'm gonna provide a list of things that we can do to 

 24 grow revenue, make it easier to do NCMEC reports or reply to 

11:22a 25 subpoenas, and really focus on also growing revenue.

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 Q. All right. And the reference to "user experience," what 

 2 did you take that to mean?

 3 A. The world's changing at this time in 2012. People are no 

 4 longer using desktop computers as often. They're using their 

11:22a 5 mobile phones. So we're changing the site so that it's more 

 6 mobile friendly so you can look at content much easier on a 

 7 mobile phone.

 8 Q. Does that include the female escort section?

 9 A. It's almost entirely engineered to benefit the female 

11:23a 10 escort section because the emphasis is on images.

 11 Q. All right. And then looking at No. 7, what is that 

 12 agenda item?

 13 A. Despite that we've been told to block -- well, it's 

 14 "prepaid credit cards" and we're told not to take them anymore 

11:23a 15 by different NGOs, but we're having a problem with them 

 16 working and we want to make sure that we can continue to make 

 17 them work.

 18 Q. Okay. And why would -- why was that an important item to 

 19 discuss?

11:23a 20 A. Well, we only have one processor, Litle, that's able to 

 21 handle prepaid credit cards. So we have all our eggs in one 

 22 basket called Litle.

 23 Q. All right. And Litle -- what does Litle do for you 

 24 again?

11:24a 25 A. Litle is the credit card processor.

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 Q. All right. And then let's jump to ten. What is ten? 

 2 What agenda item is that?

 3 A. It's "age verification tools update."

 4 Q. All right. And what is the subject matter of that 

11:24a 5 discussion?

 6 A. We're looking for any tools that wouldn't disrupt the 

 7 user experience that might work for age, and we've done some 

 8 beta testing with Aristotle but it's just not -- it's clunky. 

 9 It's not working well, and there's a decision to not pursue 

11:25a 10 Aristotle anymore.

 11 Q. Who was that decision made by?

 12 A. Well, it was communicated to me by Village Voice Media 

 13 Director Don Moon.

 14 Q. All right.

11:25a 15 A. Or I should say board member, board member.

 16 Q. All right. And just so the jury understands, Aristotle 

 17 is what?

 18 A. Aristotle was an age verification company that we had 

 19 contracted with.

11:25a 20 Q. All right. Let's look at 335. Do you see that on your 

 21 screen?

 22 A. Yes.

 23 Q. And what is it?

 24 A. It's an e-mail from me to Jim Larkin on Tuesday, 

11:26a 25 September 18th, 2012.

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 Q. All right. And what is the subject of this e-mail?

 2 A. It's a report on the revenue.

 3 Q. All right. And is there some attachments to this?

 4 A. There is. There's a large number of attachments with 

11:26a 5 different reports.

 6 Q. All right. So let's look at 335b. Do you see that 

 7 there?

 8 A. Yes.

 9 Q. Do you recognize it?

11:26a 10 A. I do.

 11 Q. What is it?

 12 A. This is a breakdown of the revenue by category for -- for 

 13 a week.

 14 Q. All right. And is this a multiple-page document, 

11:27a 15 attachment, with a breakdown of revenue?

 16 A. Yes, by -- by all categories and then subtotaled by 

 17 section.

 18 Q. Okay. And the above exchange, I think you had testified 

 19 is between you and Mr. Larkin, but who else receives these 

11:27a 20 attachments?

 21 A. So those attachments are going to Dan Hyer, Andrew 

 22 Padilla, Beth Cook at Village Voice Media, myself, Jed Brunst 

 23 at Village Voice Media, Scott Spear at Village Voice Media, 

 24 Tamara Nikel and Jim Larkin.

11:27a 25 Q. All right. 

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 MR. RAPP: Move to admit 335 and 335b. 

 2 THE COURT: Yes, 335 and 335b may be admitted and 

 3 published.

 4 MR. RAPP: Thank you, your Honor.

11:28a 5 (Exhibit Nos. 335 and 335b admitted in to Evidence.)

 6 BY MR. RAPP:

 7 Q. And so just starting up here, what do you tell

 8 Mr. Larkin?

 9 A. I write to Mr. Larkin, "Well, I must be the biggest sand 

11:28a 10 bagger ever. I thought the week was soft but it was pretty 

 11 good. 

 12 Best news is the number of transactions increasing. 

 13 That shows revenue growth is independent of rate."

 14 Q. Can you explain to the jury in the context of this -- 

11:28a 15 this e-mail with the attachments what are you talking about 

 16 when you say sandbagging? 

 17 A. Sandbagging is -- Scott Spear would accuse me of 

 18 sandbagging because he would want aggressive budgets and then 

 19 I would try to say, "No, how about three percent, five 

11:28a 20 percent?" He would say "25 percent." 

 21 So I'd be accused of sandbagging, which means projecting 

 22 a lower -- trying to get a lower number in the budget and then 

 23 exceeding it.

 24 Q. All right. So just does the -- the attachments, does it 

11:29a 25 sort of explain what you're talking about with Mr. Larkin?

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 A. It does.

 2 Q. So looking at 335b and just starting up here, can you 

 3 explain these rows and columns for the jury?

 4 A. Yes. I think the easiest is to say this is all adult, 

11:29a 5 and for that week the site generated $1,862,264 in net revenue 

 6 after refunds; and what's interesting is that in the number 

 7 one category is this second circle, which is female escorts 

 8 and that's 1,381,820. In this -- in this single week there's 

 9 172,985 paid ads posted.

11:30a 10 Q. All right. But you had -- Backpage had other categories, 

 11 right?

 12 A. Yes.

 13 Q. So let's look at the other categories. Like, for 

 14 example, automotive. How did automotive do?

11:30a 15 A. Automotive generated $591.40.

 16 Q. Okay. Well, how about all these other categories?

 17 A. So the buy/sell/trade category was 6,955.07.

 18 Q. So just going back to 335, did the owners, Mr. Spear and 

 19 Mr. Brunst, did they receive these reports?

11:31a 20 A. Yes, they did.

 21 Q. All right, let's look at another one. 

 22 And, also, did Mr. Padilla receive these reports?

 23 A. Yes, he did.

 24 Q. Let's look at 342. What is this?

11:32a 25 A. This is an e-mail from Carl Ferrer to Jed Brunst and Jim 

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Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 52 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 Larkin. Subject line, "Over 50% of our revenue is 'move to 

 2 the top' buys," and it's sent on August 6th, 2012.

 3 MR. RAPP: Move to admit and request permission to 

 4 publish.

11:32a 5 MS. BERTRAND: Objection. Foundation, hearsay, and

 6 the concern is what's going on with the top of this? It's 

 7 confusing as to who this was received from and sent to if you 

 8 look at the very top of the document.

 9 THE COURT: Overruled as to that and I -- it might 

11:33a 10 be confusing. So maybe Mr. Rapp can lay some foundation for 

 11 the appearance of the exhibit.

 12 MR. RAPP: Okay. Let me -- let me just look at the 

 13 attachment first. Maybe we can do this all together. 

 14 BY MR. RAPP:

11:33a 15 Q. Let's look at 342a. Do you see that on your screen, sir?

 16 A. I do.

 17 Q. Can you tell what this is?

 18 A. This is another report for a week in 2012 that breaks 

 19 down the revenue by category, by section.

11:33a 20 Q. Okay. And so going back to 342 -- 

 21 MR. RAPP: I don't -- I'm not sure I understand the 

 22 objection. Is this --

 23 THE COURT: When you blew it up, it doesn't show

 24 that very top header.

11:34a 25 MR. RAPP: Let me see. Oh, you mean -- 

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 MS. BERTRAND: Uh-huh, that is what I mean.

 2 MR. RAPP: -- up here. Let me ask Mr. Ferrer. 

 3 BY MR. RAPP:

 4 Q. Do you have any idea what that -- the name up there at 

11:34a 5 the top is? 

 6 A. I -- I don't. I speculate, but not certain.

 7 Q. All right. We don't want you to speculate, but do you 

 8 remember sending this e-mail?

 9 A. I do remember sending this e-mail and the content of the 

11:34a 10 e-mail 'cuz it really captures what's going on with the 

 11 business. Like I said, it's insightful.

 12 Q. All right. 

 13 MR. RAPP: Move to admit 342 and 342a. 

 14 MS. BERTRAND: Same objection given that header on 

11:35a 15 this document.

 16 THE COURT: I think he's laid sufficient foundation 

 17 for the e-mail that he drafted, overruled; but perhaps 

 18 Mr. Rapp can make sure that he reviews those exhibits so that 

 19 there's not confusing information on it.

11:35a 20 MR. RAPP: We're on it.

 21 All right, request permission to publish. 

 22 THE COURT: Yes, it may be published. 

 23 MR. RAPP: Thank you.

 24 THE COURT: They are admitted and can be published.

11:35a 25 COURTROOM DEPUTY: Both 342 and 342a?

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 THE COURT: Yes.

 2 (Exhibit Nos. 342 and 342a admitted in to Evidence.) 

 3 BY MR. RAPP:

 4 Q. All right. What do you tell Mr. Brunst in this e-mail?

11:35a 5 A. "Over 50% of our revenue is 'move to the top' buys." 

 6 "Move to the top is over 50%of our revenue. Optimization 

 7 in this area seems key. I attached a pdf of the past" week's 

 8 -- "past week (gross revenue.) Our annual run rate on 

 9 postings is now 43.8 million when you include the work we are 

11:36a 10 doing in feeds.

 11 Badoo uses a 'move to the top' strategy similar to 

 12 backpage."

 13 Q. Can you explain that?

 14 A. Badoo is a competitor coming out of Europe.

11:36a 15 Q. All right.

 16 A. "You could pay a dollar or a euro to 'rise up' the search 

 17 results, and so attract greater attention. You could pay 

 18 again to have your profile photo more widely visible across 

 19 the site. He introduced virtual gifts to buy for your 

11:36a 20 prospective date." No one is pushing you to spend money, but 

 21 if you want to attract more users, you have to pay, he 

 22 explains. You can pay to advertise yourself. "If you want 

 23 something to go faster, you pay. And some people pay tens of 

 24 times every day to rise up."

11:37a 25 Q. Okay.

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 A. And I pulled that from the -- an article that ran in the 

 2 Wired UK magazine.

 3 Q. What -- what are you -- what point are you trying to 

 4 communicate to Mr. Brunst here?

11:37a 5 A. That we have a feature that's very similar called "move 

 6 to the top," and that it's the majority of our revenue in 

 7 "move to the top." 

 8 And "move to the top" means if your ad isn't getting any 

 9 phone calls, you don't have to post a new ad. You go to your 

11:37a 10 same ad and then you just pay again, and it goes right to the 

 11 top of the listings.

 12 Q. All right. I'm now showing you on the screen 342a. 

 13 You see that?

 14 A. I do.

11:38a 15 Q. And then you've been talking about move to the top here. 

 16 Can you interpret this for the jury?

 17 A. So out of the $1,871,987 in ads for this particular week 

 18 in the adult section in revenue, 1.2 million -- $1,263,484 is 

 19 in move to the top.

11:38a 20 Q. All right. And then let's just look at the other

 21 categories. Let's, for example, look at automotive. 

 22 Can you -- can you explain the comparison between 

 23 automotive, for example, and adult?

 24 A. Yes. If you look at automotive it's 1,323; and if you 

11:39a 25 look at move to the top, it's zero. It's zero because people, 

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Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 56 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 even if they were legitimately selling cars, you know, they 

 2 don't need to move their ad up to the top like three times a 

 3 day or four times a day, like in the adult section.

 4 Q. Okay. And then looking at other categories, all these 

11:39a 5 other categories, how do they compare to adult?

 6 A. Well, there's not much revenue. This is in the 

 7 buy/sell/trade section. It's $18,953. In comparison to the 

 8 1.8 million in adult, it's insignificant.

 9 Q. All right. Let's look --

11:40a 10 A. There's one other thing I should point.

 11 Q. All right.

 12 A. 'Cuz I mentioned feeds in the e-mail and imported -- 

 13 these are imported ads.

 14 Q. Can you explain to the jury what "imported ads" are?

11:40a 15 A. Oops, I made a mistake. That, actually, in 

 16 buy/sell/trade wouldn't work. That's under -- these are new 

 17 ads in buy/sell/trade.

 18 Q. Let me go to Page 2. Is there anything there that --

 19 A. Yes, there's two things interesting. In the job section 

11:40a 20 we generate $3,000 in revenue that week, and we imported 

 21 262,000 ads as feeds from other websites. So there's no human 

 22 being actually making that posting.

 23 Q. Okay. Can you explain that to the jury?

 24 A. So you take the feed from another website. They export 

11:41a 25 the data and they put it into a file, and then we had hired 

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 somebody to manage feeds; and the purpose of the feeds is to 

 2 get some content into these other categories that have little 

 3 or no content.

 4 Q. Does it cost you to get these feeds?

11:41a 5 A. The feeds are free. We have to make a -- we have to pay 

 6 a developer to normalize the feeds so that they could be 

 7 imported.

 8 Q. So when you're looking at the revenue that's generated, 

 9 is there some cost that needs to be backed out of that to get 

11:42a 10 the feeds?

 11 A. Well, there's no revenue generated from the feeds, and 

 12 it's actually costing us five grand a month to normalize the 

 13 feeds to import them correctly.

 14 Q. I see, all right. Let's look at 1664, speaking of feeds. 

11:42a 15 What is this?

 16 A. It's an e-mail from me to Jim Larkin, Scott Spear, Jed 

 17 Brunst.

 18 Q. All right. Is there -- let's look at the attachment 

 19 1664a. Do you see that?

11:42a 20 A. It's a -- it's another what we called statistics report 

 21 breaking down the revenue by category and section.

 22 Q. All right. And so fair to say this is a multiple-page 

 23 report?

 24 A. Yes.

11:43a 25 Q. All right. 

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 MR. RAPP: Move to admit 1664 and 1664a. 

 2 THE COURT: Yes, they may be admitted and published.

 3 (Exhibit Nos. 1664 and 1664a admitted in to 

 4 Evidence.)

11:43a 5 BY MR. RAPP:

 6 Q. Now, why are you sending this to Scott Spear and Jed 

 7 Brunst?

 8 A. I was asked in our management meetings to send reports 

 9 that would show different metrics in comparison and understand 

11:43a 10 where the revenue's coming from.

 11 Q. All right. And what message are you conveying here? 

 12 What do you tell them here in this e-mail with the attachment?

 13 A. You'll -- I'm sending them the Backpage November report. 

 14 "You'll see in this report that feeds are way up

11:44a 15 (imported free ads 1,007,778.) 

 16 We better understand how to secure and utilize this 

 17 content." 

 18 Q. What do you mean by that?

 19 A. Well, we're able to find the feeds. We're able to import 

11:44a 20 the feeds, and we're able to get our numbers up in our other 

 21 categories so that the site has this veneer of a general 

 22 classified site. The ad count number is always -- it's near 

 23 the category on the home page of Backpage.com. So we can't 

 24 show low numbers there. We got to artificially inflate with 

11:44a 25 feeds.

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Case 2:18-cr-00422-DJH Document 1811 Filed 09/20/23 Page 59 of 67
CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 Q. All right. Let's look at the attachments. So what do 

 2 the -- what do the attachments show?

 3 A. Well, this is the entire month and it shows that adult 

 4 generated 7,754,492 of which moved to the top was $5,439,166; 

11:45a 5 and what's really interesting here is that move to the top was 

 6 done 555,327 times in the month of November. So you can see 

 7 it's a frequently-used tool.

 8 Q. All right. And then what does this attachment tell 

 9 Mr. Spear and Mr. Brunst about the female escort category 

11:46a 10 within the adult category?

 11 A. Tells them that female escorts generated 5,759,378 of 

 12 which the majority of that is moved to the top and it was -- 

 13 moved to the top was done 401,817 times in the female escort 

 14 section in the month of November.

11:46a 15 Q. Okay. And then just looking -- let's just take, oh, I 

 16 don't know, automotive. How does automotive compare?

 17 A. Automotive generated $4,342.72. We did get one moved to 

 18 the top -- or we got seven moved to the top sales for $27.00, 

 19 and the imported feeds are 242,739.

11:47a 20 Q. And then these other buy/sell/trade categories, how did 

 21 they compare to the adult category in particular, the female 

 22 escorts?

 23 A. The revenue's insignificant by comparison.

 24 Q. All right. Let's look at 355. 

11:48a 25 What is this?

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 A. This is an e-mail from myself to Jim Larkin, Jed Brunst, 

 2 Scott Spear. It's sent Saturday, December 22nd, 2012.

 3 Q. All right. And why are you sending this to Mr. Brunst 

 4 and Mr. Spear?

11:48a 5 A. The subject line is, "Fwd: revenue & ad count charts," 

 6 and there's some attachments that I'm sending him.

 7 Q. All right. And let's look at 355b, and what does this 

 8 show?

 9 A. Well, this is showing the revenue by month, by section 

11:49a 10 and -- that's it. It also shows the paid ads.

 11 Q. All right. 

 12 MR. RAPP: Move to admit 355 and 355b. 

 13 MR. PANCHAPAKESAN: Objection, cumulative.

 14 MS. BERTRAND: Objection to foundation. Even if the 

11:49a 15 Government attempts to redact it, it still creates a 

 16 foundation issue.

 17 THE COURT: I guess lay some more foundation and

 18 perhaps include the distinction between this and the prior 

 19 e-mails.

11:49a 20 MR. RAPP: Oh, all right.

 21 BY MR. RAPP:

 22 Q. Let's look at -- well, let's just look at the chart and 

 23 I'll -- so the previous charts cover what type of a time 

 24 period, if you recall?

11:50a 25 A. Like a month or a week in the previous charts.

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 Q. All right. And is this chart different in any respect?

 2 A. This chart is different. It's complicated. I was asked 

 3 to make this chart.

 4 Q. Who were you asked by?

11:50a 5 A. I was asked by -- it's either Jim Larkin or Jed Brunst, I 

 6 believe.

 7 Q. All right. And does it provide a comparison of 

 8 categories over a longer time period?

 9 MS. BERTRAND: Objection, leading.

11:50a 10 THE COURT: Sustained.

 11 BY MR. RAPP:

 12 Q. What's the time period that this covers with -- with 

 13 respect to the revenue for the individual categories?

 14 A. The revenue's by sections and it goes from October 10th 

11:51a 15 through November 12th -- I mean -- let me say that again. 

 16 October 2010 through November 2012.

 17 Q. And the previous -- just so we're clear, the previous 

 18 charts that we looked at, did they cover a number of years?

 19 A. No.

11:51a 20 MS. BERTRAND: Objection, leading.

 21 THE COURT: Well, he can explain what the difference 

 22 between the two exhibits are; and without Mr. Rapp leading 

 23 him, Mr. Rapp can ask him to do so.

 24 BY MR. RAPP:

11:51a 25 Q. What's the difference between the previous charts

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 attached to the e-mails and this chart?

 2 A. The previous reports that we looked at were monthly or by 

 3 week. This report gives you the full view from October 2010 

 4 through November 2012.

11:52a 5 MR. RAPP: Move to admit 355 and 355b. 

 6 MS. BERTRAND: Objection, foundation as to the data 

 7 underlying the creation of this chart.

 8 THE COURT: Sustained.

 9 BY MR. RAPP:

11:52a 10 Q. How did you -- how did you create this chart? Where did 

 11 you get the data?

 12 A. So we had Andrea Sennet run all those same monthly 

 13 reports that you saw. She ran them and then took that data 

 14 from those reports and created a spreadsheet so that we could 

11:52a 15 see a month-to-month layout annually and make the report just 

 16 easier to understand.

 17 So Andrea Sennet made it. I'm familiar with Andrea 

 18 Sennet. She works -- she worked in the Dallas office. She 

 19 was tasked with running those reports.

11:52a 20 Q. And the actual underlying data, how is -- where was it 

 21 located? How was it obtained?

 22 A. It's stored on the Backpage servers. It's -- there was 

 23 an administrative feature for running reports that would pull 

 24 the data directly from the Backpage servers.

11:53a 25 MR. RAPP: Move to admit 355, 355b.

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 MS. BERTRAND: Same objection, 901 and not disclosed 

 2 under Rule 16 as to the data.

 3 THE COURT: Overruled as to all the objections. 

 4 It may be admitted and published.

11:53a 5 MR. RAPP: Thank you, your Honor.

 6 (Exhibit Nos. 355 and 355b admitted in to Evidence.)

 7 THE COURT: Are you going to take some time with

 8 this exhibit, Mr. Rapp? 

 9 MR. RAPP: I believe I could do this quickly.

11:53a 10 BY MR. RAPP:

 11 Q. So just so we understand who this went to, this is from 

 12 you?

 13 A. Yes.

 14 Q. And do you send it to Mr. Brunst and Mr. Spear?

11:54a 15 A. I do.

 16 Q. And why do you send it to them?

 17 A. One or all three of them asked for these reports.

 18 Q. All right. And all three of these individuals, are they 

 19 owners of Backpage?

11:54a 20 A. Yes.

 21 Q. And then looking at 355b, I promise to do this quickly. 

 22 So I'll put that on one side and then can you interpret 

 23 the yearly revenue in the adult and compare it to these other 

 24 categories?

11:55a 25 A. I can compare the monthly revenue over a period of time. 

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 So, for example, in October -- I'm up in here. Under 

 2 adult entertainment in 2010 we're running 1,172,000 in 

 3 October, and if you just follow down each it grows by month. 

 4 You can see that it goes from three million to four million to 

11:55a 5 five million to six million to seven million to approximately 

 6 eight million in 2012. So that's -- that's adult revenue per 

 7 month.

 8 Now, the other categories, they -- they don't have that 

 9 kind of growth. I'll use jobs, and in "jobs" we've got 

11:56a 10 24,000, 19,000, 21,000. It actually goes the other way. It's 

 11 going down. So "jobs" revenue by month just continues to go 

 12 down.

 13 Q. All right. One last question: What do you attribute -- 

 14 THE COURT: I can't hear you.

11:56a 15 BY MR. RAPP:

 16 Q. What do you attribute in your capacity at Backpage during 

 17 this time period to the growth in the adult section compared 

 18 to the other sections? 

 19 A. Two things. We're not a job site and, second of all, 

11:56a 20 moderation is not having an impact on revenue growth.

 21 Q. What do you mean it's "not having an impact on revenue 

 22 growth"?

 23 A. Users are able to self-censor their content and they're 

 24 continuing to post. Despite all the blocks or images being 

11:57a 25 removed, they adapt and they continue to post, especially in 

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CARL FERRER - CONT'D DIRECT EXAMINATION BY MR. RAPP

 1 the female escort section.

 2 Q. All right. 

 3 MR. RAPP: That's all I have before lunch. 

 4 THE COURT: All right. Members of the Jury, we are 

 5 at the noon hour so let's take our lunch break. 

 6 Do be ready in the jury room to -- I'd say five 

 7 minutes 'til the hour so that we can begin promptly at 1:00. 

 8 And so just remember the admonition, but have an enjoyable 

 9 lunch. Please all rise for the jury.

 10 (11:57 jury out.)

 11 THE COURT: All right, we will stand in recess.

 12 (Lunch recess taken at 11:58 a.m.)

 13 (Whereupon the proceedings adjourned at 11:58 a.m.)

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 1 REPORTER'S CERTIFICATION

 2

 3 I, TERI VERES, do hereby certify that I am duly 

 4 appointed and qualified to act as Official Court Reporter for 

 5 the United States District Court for the District of Arizona.

 6 I FURTHER CERTIFY that the foregoing pages 

 7 constitute a full, true, and accurate transcript of all of 

 8 that portion of the proceedings contained herein, had in the 

 9 above-entitled cause on the date specified therein, and that 

 10 said transcript was prepared under my direction and control.

 11 DATED at Phoenix, Arizona, this 20th of 

 12 September, 2023.

 13

s/Teri Veres

 14 TERI VERES, RMR, CRR 

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