INDEX OF EXHIBITS

Exhibit A November 16, 2018 Letter to Mike Piccarreta from U.S. 

Attorney

Exhibit B Order Dismissing Backpage v. Dart Litigation as Moot

Exhibit C Sheriff’s Motion for Sanctions Against Backpage and Its 

Attorneys in Backpage v. Dart

Exhibit D February 22, 2017 Transcript Excerpts re Grand Jury 16-4 

Motion to Compel and Cross-Motion to Quash Grand Jury 

Subpoena 

Exhibit E National Center of Missing and Exploited Children PowerPoint 

entitled “Backpage Advertisements and The Erotic Review”

Exhibit F January 1, 2008 Invoice from Elms Web Services, Inc. 

Exhibit G February 17, 2009 Phoenix New Times Article 

“TheEroticReview.com” Founder David Elms Arrested in 

Phoenix, Suspected of Trying to Hire Killer

Exhibit H May 11, 2009 Email to Scott Spear from Jim Larkin

Exhibit I February 18, 2011 Email from Andrew Padilla

Exhibit J March 1, 2011 Email from Ernie Allen to Brad Myles

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 1 of 79
Exhibit K November 7, 2018 Email from Amanda Wick to Mike Piccareta

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 2 of 79
Exhibit A

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 3 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 4 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 5 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 6 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 7 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 8 of 79
Exhibit B

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 9 of 79
UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

BACKPAGE.COM, LLC,

Plaintiff,

v.

THOMAS J. DART, Sheriff of Cook County, 

Illinois,

Defendant.

Civil No. 1:15-cv-06340

Judge John J. Tharp, Jr.

ORDER

The defendant’s motions to dismiss the case [222] and to dissolve the preliminary injunction 

entered on December 23, 2015 [223] are granted. Accordingly, the case will be terminated on the 

docket. The defendant’s motion for sanctions [226] remains pending, however, with briefing to 

be completed on the schedule previously entered by the Court.

STATEMENT

In the wake of guilty pleas entered by the plaintiff in this case, Backpage.com LLC, and 

its CEO, Carl Ferrer, to federal charges of money laundering conspiracy and conspiracy, 

respectively, Sheriff Dart has moved to dismiss this case as moot and to dissolve the preliminary 

injunction entered by this Court on December 23, 2015. At a hearing conducted on April 26, 

2018, a briefing schedule was set; Backpage’s response to the Sheriff’s motions was due on May 

17, 2018, with the Sheriff’s reply due on May 31, 2018. Backpage filed neither a response nor a 

motion to extend the time to respond and has therefore forfeited its claim. Boogaard v. National 

Hockey League, --- F.3d ---, 2018 WL 2377803 (7th Cir. May 25, 2018).

In any event, the Court agrees with the Sheriff that this case is moot in light of the guilty 

pleas entered by Backpage and Ferrer, and the plea agreements they entered into with the United 

States.

1 In its guilty plea, Backpage admitted, among other things, that Backpage executives 

conspired to find ways to knowingly facilitate the state-law prostitution crimes being committed 

by Backpage’s customers and to launder the hundreds of millions Backpage earned by 

facilitating the unlawful publishing of ads for prostitution offenses. Backpage Plea Agreement at 

¶ 10.a., ECF No. 8-1, Case. No. 18-cr-465 (D. Ariz.). Ferrer, in his plea agreement, 

acknowledged that he had participated in the Backpage conspiracy. Ferrer Plea Agreement at 

1 “Courts may take judicial notice of court filings and other matters of public record when 

the accuracy of those documents reasonably cannot be questioned.” Parungao v. Cmty. Health 

Sys., Inc., 858 F.3d 452, 457 (7th Cir. 2017).

 

Case: 1:15-cv-06340 Document #: 244 Filed: 05/31/18 Page 1 of 3 PageID #:5460 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 10 of 79
¶ 10.a, ECF No. 7-1, Case. No. 18-cr-465 (D. Ariz.). Ferrer agreed, among other things, “to 

immediately shut down the website www.backpage.com (‘Backpage’) in the United States and 

all other countries in which the website operates” and to the “surrendering to the United States 

the registration account, including login and password information, for the www.backpage.com

domain name necessary to operate the various Backpage websites and providing technical 

assistance to the United States to effectuate the shutdown.” Id. at ¶ 3.a. Backpage, for its part, 

agreed that it would “cease to exist or operate.” Backpage Plea Agreement at ¶ 3.d. Ferrer and 

Backpage each agreed to forfeit any interest in the website (or any of dozens of related websites) 

as well as various bank accounts and other assets of the company. In short, the plea agreements 

effectively ended the operational existence of Backpage.2

Backpage’s shutdown renders this case moot. Backpage’s claim in this case is that Sheriff 

Dart violated Backpage’s First Amendment speech rights by attempting to coerce third parties—

specifically, credit card companies—not to process payments for advertising on the web site.

Backpage characterized the Sheriff’s actions as a prior restraint on speech, but with its shutdown 

there is nothing left to restrain. Backpage’s shutdown would not necessarily moot its claim if it 

were seeking damages, of course, but in an effort to narrow discovery in the case, Backpage 

previously disavowed any claim for damages and filed an amended complaint seeking only 

injunctive relief. See Backpage Motion for Leave to Amend, ECF No. 167, at ¶ 4; Tr. 8/9/16, 

ECF No. 174, at 4:4-13; Amended Compl., ECF No. 173, at 20-21 (“Prayer for Relief,” seeking 

no damages).3 But the injunction that Backpage seeks can no longer do it any good. Now that it 

is operationally defunct, no one—not credit card companies or anyone else—can do business 

with Backpage and Backpage is of course out of the business of providing advertising for 

prostitution services. An injunction would therefore change nothing. Injunction or no, there will 

be no more advertising—licit or illicit—on Backpage.com.

As the Sheriff correctly notes, because an injunction can no longer provide any benefit to 

Backpage, its claim for injunctive relief is moot. “A court’s power to grant injunctive relief only 

survives if such relief is actually needed.” Nelson v. Miller, 570 F.3d 868, 882 (7th Cir. 2009). 

“In an action seeking only injunctive relief, this requirement ordinarily means that, once the 

threat of the act sought to be enjoined dissipates, the suit must be dismissed as moot.” Brown v. 

Bartholomew Consol. Sch. Corp., 442 F.3d 588, 596 (7th Cir. 2006). Where a company seeking 

injunctive relief has ceased to operate, its claims are ordinarily deemed to be moot. City News & 

Novelty, Inc. v. City of Waukesha, 531 U.S. 278, 285 (2001) (“a live controversy is not 

maintained by speculation that City News might be temporarily disabled from reentering a

business that City News has left and currently asserts no plan to reenter”); Bd. of License 

Comm’rs of Town of Tiverton v. Pastore, 469 U.S. 238, 239-40 (1985). And while the criminal 

prosecutions of Backpage and its executives, and the forfeiture of Backpage’s assets, are not 

final, there is no realistic possibility that Backpage will ever resume operations; it follows as well 

that there is no realistic possibility that the Sheriff will resume his exhortations to (or, in 

2 And, indeed, visitors to backpage.com are greeted with a notice advising that 

backpage.com and affiliated websites have been seized by the government. 

3 Backpage also sought attorney’s fees, but “interest in attorney's fees is, of course, 

insufficient to create an Article III case or controversy where none exists on the merits of the 

underlying claim”). Lewis v. Cont'l Bank Corp., 494 U.S. 472, 480 (1990).

2

 

Case: 1:15-cv-06340 Document #: 244 Filed: 05/31/18 Page 2 of 3 PageID #:5461 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 11 of 79
Backpage’s view, his coercion of) third parties not to facilitate Backpage’s crimes. There is, in 

short, “no reasonable expectation that the [alleged] wrong will be repeated.” City of Erie v. Pap’s 

A.M., 529 U.S. 277, 287 (2000). Accordingly, Backpage’s claim is moot.

Because Backpage’s claim is moot, there is no case or controversy and this Court 

therefore lacks subject matter jurisdiction. Home Care Providers, Inc. v. Hemmelgarn, 861 F.3d 

615, 620 (7th Cir. 2017), cert. denied, 138 S. Ct. 1000, 200 L. Ed. 2d 252 (2018) (“cases that do 

not involve ‘actual, ongoing controversies' are moot and must be dismissed for lack of 

jurisdiction”). And because the case is being dismissed for lack of jurisdiction, the Court has no 

basis to continue in force the preliminary injunction previously entered. Nor could the 

preliminary injunction survive the dismissal of the case in any event. Accordingly, the 

preliminary injunction is dissolved. 

Date: May 31, 2018 John J. Tharp, Jr.

United States District Judge

3

Case: 1:15-cv-06340 Document #: 244 Filed: 05/31/18 Page 3 of 3 PageID #:5462 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 12 of 79
Exhibit C

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 13 of 79
IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

BACKPAGE.COM, LLC,

 Plaintiff,

 v.

THOMAS J. DART, Sheriff of Cook 

County, Illinois,

 Defendant.

)

)

)

)

)

)

)

)

)

)

Case No. 15-cv-06340

Judge John J. Tharp, Jr.

Magistrate Judge Young B. Kim

SHERIFF’S MOTION FOR SANCTIONS

AGAINST BACKPAGE AND ITS ATTORNEYS

Thomas J. Dart, Sheriff of Cook County, Illinois, by his undersigned Special 

Assistant State’s Attorneys, requests that this Court enter an order based on its inherent authority

and pursuant to Federal Rule of Civil Procedure 26(g)(3) and 28 U.S.C. § 1927 requiring 

Backpage and its attorneys, jointly and severally, to pay Cook County, Illinois all of its 

attorneys’ fees and costs incurred in this litigation, including on appeal and in petitioning for 

certiorari, on the grounds that Backpage admitted on April 5, 2018 that its entire first 

amendment civil rights case was based on untrue facts from the beginning, and thus a hoax, a 

fraud on this Court, a fraud on the Seventh Circuit Court of Appeals and a fraud on the United 

States Supreme Court. Backpage and its attorneys also have squandered resources of the Cook 

County State’s Attorney Office, the Office of the Sheriff of Cook County and the taxpayers of 

Cook County under the guise of a civil rights plaintiff in its phony lawsuit, simultaneously 

fighting off the advances of law enforcement so that it could continue to make hundreds of 

millions of dollars from its enterprise that admittedly facilitated and promoted prostitution and 

child trafficking. In support of his motion, the Sheriff states:

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 1 of 22 PageID #:5177 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 14 of 79
2

I. THE SIGNED PLEA AGREEMENT OF CARL FERRER, 

CEO AND OWNER OF BACKPAGE, PROVES FALSITY

On April 5, 2018 Carl Ferrer, CEO and owner of Backpage, entered into a plea 

agreement with the United States on behalf of himself and Backpage. See Exhibits A and B. In 

those plea agreements, Ferrer attested to facts demonstrating that the entirety of Backpage’s 

complaint against the Sheriff was a fraud from the beginning—something the Sheriff has been 

arguing since the inception of this case. 

In the signed plea agreements, Ferrer admits the following facts regarding 

Backpage being a content provider for illegal prostitution advertisements on its website:

I have long been aware that the great majority of these advertisements [on 

Backpage] are, in fact, advertisements for prostitution services (which are 

not protected by the First Amendment and which are illegal in 49 states 

and much of Nevada). (Ex. B, ⁋ 10(a).) 

Acting with this knowledge, I conspired with other Backpage principals 

(including but not limited to M.L., J.L., S.S., D.H., A.P., and J.V.) to find 

ways to knowingly facilitate the state-law prostitution crimes being 

committed by Backpage’s customers. Id. 

For example, I worked with my co-conspirators to create “moderation” 

processes through which Backpage would remove terms and pictures that 

were particularly indicative of prostitution and publish a revised version 

of the ad. Id.

These editing practices were only one component of an overall, 

company-wide culture and policy of concealing and refusing to officially 

acknowledge the true nature of the services being offered in Backpage’s 

“escort” and “adult” ads.” Id.

In addition to acknowledging that Backpage was a content provider for illegal advertisements for 

prostitution, Ferrer admitted that the reason credit cards companies stopped doing business with 

Backpage was due to the illegal nature of Backpage’s business, and not the Sheriff’s letters to the 

credit card companies:

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 2 of 22 PageID #:5178 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 15 of 79
3

Since 2004, Backpage has earned hundreds of millions of dollars 

in revenue from publishing “escort” and “adult” ads. Over time, 

many banks, credit card companies, and other financial institutions 

refused to do business with Backpage due to the illegal nature of 

its business. Id. 

And on top of Backpage wrongfully accusing the Sheriff of first amendment violations, 

Backpage and its attorneys lied to this Court when stating that due to the Sheriff’s actions, 

Backpage had not been able to accept credit card payments for advertisements and was being 

crippled by the loss of income. (ECF No. 5 at p. 17.) On the contrary, Ferrer now admits:

In response [to the credit card companies refusing to do business with 

Backpage], I worked with my co-conspirators to find ways to fool credit 

card companies into believing that Backpage-associated charges were 

being incurred on different websites, to route Backpage-related payments 

and proceeds through bank accounts held in the name of seemingly 

unconnected entities (including, but not limited to Posting Solutions, 

Website Technologies, Website Technologies, and Cereus Properties) . . .

(Ex. B, ⁋ 10(a).) 

II. THE ENDLESS LIES OF BACKPAGE AND ITS ATTORNEYS ARE 

WIDESPREAD, BEGINNING WITH THE COMPLAINT AND TAINTING 

THE ENTIRETY OF ITS CONDUCT THROUGHOUT THIS LITIGATION

A. Backpage’s complaint was a fraud when filed 

On August 21, 2015, two weeks after the United States Senate Permanent 

Subcommittee on Investigations had issued a subpoena to Backpage requesting information 

regarding its business practices, Backpage filed suit against the Sheriff. From day one, 

Backpage’s complaint against the Sheriff was a fraud, neither grounded in fact nor law. From 

the opening salvo through the prayer for relief, Backpage painted a false picture of a first 

amendment-crusading Backpage versus a Sheriff that was trying take away the constitutional 

rights of an information platform and its posters:

Sheriff Dart’s actions to cripple Backpage.com and all speech through the 

site are an especially pernicious form of prior restraint. He has achieved 

his purpose through false accusations, innuendo, and coercion . . . 

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 3 of 22 PageID #:5179 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 16 of 79
4

Moreover, Sheriff Dart’s actions have not only infringed Backpage.com’s 

right to publish and distribute speech, but the rights of millions of the 

website’s users to post and receive protected speech. (ECF No. 1, ¶ 6.)

As shown in the Ferrer and Backpage plea agreements, the above factual 

assertions have always been lies; the speech at issue was never protected by the first amendment, 

and Backpage was a content provider and distributor of illegal, non-protected speech. 

The lies in Backpage’s complaint range from Backpage stating it prohibited and 

prevented illegal content on its platform:

Backpage.com prohibits illegal content and activity on its website and 

takes extensive steps to prevent such misuse, especially to guard against 

any form of human trafficking or child exploitation (ECF No. 1, ¶ 23) 

to Backpage stating it was only a third-party content provider, not an author of the illegal 

advertisements for prostitution:

Sheriff Dart’s actions also violate Section 230 of the CDA, 47 U.S.C. § 

230, as he has no right or authority to preclude or seek to prosecute 

Backpage.com under state law for publishing third-party content (ECF No. 

1, ¶ 56)

to Backpage stating that it was the Sheriff’s actions that caused the credit card companies to stop 

doing business with Backpage:

Thus, because of Sheriff Dart’s actions, Backpage.com is barred from 

credit card services of any of the three largest card companies [American 

Express, Visa, Master Card] or any acquiring banks or credit processing 

companies. (ECF No. 1, ¶ 43.)

B. Backpage follows up its fraudulent complaint with 

a request for a TRO and a Preliminary Injunction

Not satisfied with its fraudulent request for money damages and declaratory relief 

in its Complaint, Backpage also filed an Emergency Motion for Temporary Restraining Order 

and Preliminary Injunction. (ECF No. 5.) In support of the same, Backpage attached the sworn 

declaration of Carl Ferrer (ECF No. 6), which was replete with lies:

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 4 of 22 PageID #:5180 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 17 of 79
5

• Backpage.com does not dictate or require users to post any content. 

Instead, users provide all the content for ads they post using an automated 

interface. Ferrer Declaration, ¶ 4. 

• Backpage.com also employs extensive, voluntary monitoring measures to 

prevent and remove improper user postings. Ferrer Declaration, ¶ 14. 

• The practical effect of Sheriff Dart’s and the credit card companies’ 

actions has been to cut off nearly all revenue to Backpage.com. This 

affects not only adult ads but also other ads for dating, housing, services, 

trades, and sales of goods, among others. Although Backpage.com allows 

payment by bitcoin, this has accounted for a very small percentage of 

purchase on Backpage.com. Ferrer Declaration, ¶ 27. 

• Sheriff Dart’s actions and the termination of credit card services have also 

harmed Backpage.com’s efforts to police and preclude improper ads. 

Ferrer Declaration, ¶ 29. 

And those lies created the basis for this Court to enter a Temporary Restraining Order against the 

Sheriff on July 24, 2015. (ECF No. 29.)

After the TRO was entered by this Court, based on the misrepresentations of 

Backpage, the parties began to engage in limited discovery to determine whether a preliminary 

injunction was appropriate. In this limited discovery period, during which Backpage was 

withholding valuable information from the Sheriff, Backpage was completely stonewalling the 

United States Senate. On August 6, 2015 Backpage informed the Senate that it was refusing to 

provide any information regarding its business practices. See Backpage Answer to Subpoena, 

August 6, 2015; ECF No. 197-1 at 14. And Backpage’s attorneys in this case were aware of 

Backpage’s obstructionist conduct before the Senate as they served as Backpage’s attorneys in 

the Senate proceedings. U.S. District Court for the District of Colombia, Case No. 16-mc-00621 

at ECF No. 6 (Appearance of Robert Corn-Revere). 

During this limited discovery period, Backpage’s lies continued. In answers to 

interrogatories, Backpage referenced the above-cited affidavit from Carl Ferrer, thereby 

perpetuating those falsehoods. Additionally, in its written response to the Sheriff’s interrogatory 

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 5 of 22 PageID #:5181 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 18 of 79
6

number four, Backpage stated that after July 6, 2015 Backpage.com could no longer charge for 

ads because of the Sheriff’s actions to pressure Visa and MasterCard. We now know for certain 

that this is false as Backpage and Ferrer have admitted to setting up straw companies to 

circumvent the credit card companies’ ban. (Ex. A, ⁋ 10(a) and Ex. B, ⁋ 10(a).) 

In preparation for the subsequent preliminary injunction hearing, Backpage’s lies 

continued. In the deposition of Carl Ferrer, he perpetuated the lie that Backpage did not know 

that many ads on its site were for child prostitution, for example:

Q. You are aware that each month hundreds of postings in Backpage’s adult 

services site likely involve minors?

A. No.

August 18, 2015 deposition of Carl Ferrer. But despite the lies and deceit of Backpage, this 

Court correctly denied its request for a preliminary injunction. Backpage moved to stay the case 

pending an appeal of the denial of its request for a preliminary injunction, and therein lied again. 

Backpage told the Court that VISA and Mastercard had “cut off nearly all revenue to 

Backpage.com.” As set forth above, we now know this to not be true, and to this day, neither 

Backpage nor its attorneys have corrected the record.

C. Backpage continued its lies on appeal

In its opening and reply briefs on appeal, the parade of lies continued. Here are 

two of the most egregious:

• Backpage.com had a multi-tiered system to screen, block and remove 

posts that may be improper. (October 2, 2015 Opening Brief at 5, n.1.)

• [Sheriff] Dart cannot pursue legal claims against Backpage.com under 

state criminal or nuisance laws for allegedly aiding and abetting 

individuals who misuse the site, because the website does not cause this in 

any sense. (November 5, 2015 Reply Brief at 5.)

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 6 of 22 PageID #:5182 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 19 of 79
7

The assertion Backpage made to the Seventh Circuit that it was doing everything it could to 

block prostitution ads when in fact it was helping to write them is as material of a lie as 

Backpage could have made. And that its lawyers then used this lie to make an argument that 

Backpage could never be liable under state criminal laws for aiding and abetting prostitution—an 

argument that was clearly wrong—is exactly the type of argument that Backpage’s lawyers 

should have refused to make. Their participation makes them complicit in their client’s lies.

D. Backpage’s lies continued throughout the litigation

At points that Backpage and its attorneys could and should have come clean about 

Backpage’s lies to this Court, they instead prolonged them. In its Motion for Partial Summary 

Judgment, Backpage made the following false statements:

• Backpage.com also employs extensive voluntary monitoring measures to 

prevent and remove improper user postings. (ECF No. 124-1, ¶ 14.)

• Through its review process, Backpage.com . . . immediately reports any 

that may concern child exploitation to NCMEC (approximately 300 per 

month.) (ECF No. 124-1, ¶ 15.)

Backpage went to great lengths to fight the Sheriff’s Motion for Leave to Amend Affirmative 

Defenses and spent a great deal of effort trying to undercut the importance of the Red Beauty ad 

placed by a member of Sheriff’s Office. As this Court recalls, the Sheriff sought to plead the 

affirmative defense of illegality, and in support provided evidence regarding Backpage sanitizing 

the Red Beauty ad of references indicating the subject was a child. Backpage filed briefs and 

affidavits trying to show that the Sheriff’s claims about the Red Beauty ad were false. See, e.g., 

Backpage’s May 17, 2016 Opposition to Dart’s Motion for Leave to Amend Affirmative 

Defenses. (ECF No. 160.) In fact, the “evidence” provided by Backpage in support of that 

argument was false, but focusing on that misrepresentation misses the larger point. The larger 

point is that Backpage knew that it routinely did exactly what the Red Beauty evidence showed: 

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 7 of 22 PageID #:5183 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 20 of 79
8

sanitize ads of references to the subject of the ads being children, and its tremendous efforts to 

attack the Red Beauty evidence was designed to divert the Court’s attention. What Backpage 

and its lawyers should have done, in fact were required to do, was come clean to the Court and 

admit that it engaged in sanitization of ads, for example, by amending their false complaint.

III. SANCTIONS AGAINST BACKPAGE AND ITS COUNSEL SHOULD BE

AWARDED PURSUANT TO THIS COURT’S INHERENT AUTHORITY

As this Court is aware, it has power to sanction parties and their attorneys under 

several rules and statutes. See, e.g., Federal Rule of Civil Procedure 11, 26, 37 & 56 and 28 

U.S.C. § 1927. In addition to these specific rule and statutory bases, the Court has inherent 

authority to enter sanctions. “[I]f a court finds that fraud has been practiced upon it, or that the 

very temple of justice has been defiled, it may assess attorney's fees against the responsible 

party, as it may when a party shows bad faith by delaying or disrupting the litigation.” Chambers 

v. NASCO, Inc., 501 U.S. 32, 46 (1991). “A court has inherent power, which is to say a common 

law power, to punish by an award of reasonable attorneys’ fees or other monetary sanction . . . 

misconduct by lawyers appearing before it.” Carr v. Tillery, 591 F.3d 909, 919 (7th Cir. 2010)

(citing Chambers, 501 U.S. at 43-46). The Supreme Court has made clear that “the inherent 

power of a court can be invoked even if procedural rules exist which sanction the same conduct.” 

Chambers, 501 U.S. at 49. This Court should use its inherent power to sanction both Backpage 

and its counsel for the lies which Backpage told and which its counsel must have known were 

lies when stated. 

In Chambers, the Court explained that “the District Court could have employed 

Rule 11 to sanction [the plaintiff] for filing ‘false and frivolous pleadings,’ and that some of the 

other conduct might have been reached through other Rules. Much of the bad-faith conduct by 

[plaintiff], however, was beyond the reach of the Rules; his entire course of conduct throughout 

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 8 of 22 PageID #:5184 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 21 of 79
9

the lawsuit evidenced bad faith and an attempt to perpetrate a fraud on the court, and the conduct 

sanctionable under the Rules was intertwined within conduct that only the inherent power could 

address. In circumstances such as these in which all of a litigant's conduct is deemed 

sanctionable, requiring a court first to apply Rules and statutes containing sanctioning provisions 

to discrete occurrences before invoking inherent power to address remaining instances of 

sanctionable conduct would serve only to foster extensive and needless satellite litigation, which 

is contrary to the aim of the Rules themselves.” Id. at 50–51 (citations omitted). 

In Reichmann v. Neumann, 553 F. Supp. 2d 307, 327–28 (S.D.N.Y. 2008), the 

court entered a sanction pursuant to the court’s inherent authority requiring plaintiff and his 

attorneys to pay the defendant’s costs and attorneys’ fees where plaintiff’s attorneys “did not 

reasonably question [plaintiff] or investigate the support for his claims, even as the facts he 

alleged grew more and more implausible.” 

In In re Narragansett Clothing Co., 143 B.R. 582 (Bankr. D.R.I. 1992), the court 

granted a motion for sanctions against the bankruptcy trustee and his attorney. The court 

reasoned that “at no time during the pleading and pre-trial stage, nor at the hearing on the merits, 

has there been any discernable or justifiable reason for the Trustee to litigate this matter. While 

[the court did] not, with the benefit of hindsight, like to second guess the litigants in such 

matters, here, with or without hindsight, there was never any reasonable basis upon which the 

Trustee should have incurred legal expense to the estate in litigating this matter. Because of the 

total absence of any merit in the Trustee's position, [the] motion for sanctions is granted, and the 

full amount of its necessary and reasonable attorneys' fees herein are awarded against the Trustee 

and his attorneys, and payment of said sanctions, of course, should not come from estate funds.” 

Id. at 583–84.

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 9 of 22 PageID #:5185 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 22 of 79
10

In In re Evergreen Sec., Ltd., 384 B.R. 882, 937 (Bankr. M.D. Fla.), aff'd, 391 

B.R. 184 (M.D. Fla. 2008), aff'd, 570 F.3d 1257 (11th Cir. 2009), the court awarded as sanctions 

“the amount of $371,517.69, representing approximately fifty-five percent of Evergreen's fees 

and costs incurred in the recusal litigation” to be paid by the party who filed the motion to recuse 

and his law firm, jointly and severally. The court explained that in filing motion for recusal of 

judge, disqualification of Chapter 11 debtor's counsel and his law firm, and revocation of all 

orders entered in main case and proceedings involving their clients, attorneys and law firms 

engaged in “bad faith,” as warranted imposition of sanctions pursuant to court’s inherent powers, 

section of Bankruptcy Code authorizing court to issue any order necessary or appropriate to carry 

out provisions of title 11, and Bankruptcy Rule 9011. Id. Attorneys and firm “conducted no

reasonably thorough and objective investigation of the actual facts” instead constructing their

motion from “gossip, hearsay, untruths, and assumptions,” so that every allegation in the motion 

was objectively frivolous, they relied on inapposite and inflammatory case law to support the 

motion, namely, case law involving criminal investigations of judges, and they filed the motion 

for improper purposes of delaying matters in debtor's case, harassing the court, debtor and 

debtor's attorneys and punishing the court for unfavorable rulings. Id. at 932. 

As seen in the above-cited cases, when a party and its counsel perpetuate a 

meritless case based upon bald-faced lies, the Court should impose sanctions against the party 

and its lawyers for engaging in such egregious conduct. As seen in the fact section above and in 

the sections immediately below, Backpage lied to this Court and its attorneys perpetuated those 

lies when they should have instead brought those lies to the Court’s attention so that it could 

properly and timely address them.

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 10 of 22 PageID #:5186 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 23 of 79
11

A. The Court should use its inherent authority to sanction Backpage

Here, Backpage repeatedly lied to this Court about numerous issues, the most 

mendacious of which are Backpage’s statements that: (1) it did not “sanitize” or “moderate” the 

ads on its website that were, prior to sanitization or moderation, clearly for adult prostitution or 

child prostitution; (2) that VISA and Mastercard ceased doing business with it because of the 

letters sent by the Sheriff; and (3) that it was unable to process credit card transaction or 

otherwise be paid for ads placed on its website. These lies caused the Seventh Circuit to order 

that this Court enter a preliminary injunction, the Supreme Court to deny a certiorari petition, 

and caused this Court to rule against the Sheriff on several motions and allow this case to go on 

for more than another year. This Court should find that Backpage perpetrated a fraud on the 

Court, and that under its inherent authority, sanctions should be awarded to the Sheriff in the 

amount of the reasonable attorneys’ fees for his entire representation in this matter. See 

Reichman, 553 F. Supp. 2d at 319 (plaintiff in breach of contract case sanctioned where he 

brought claim knowing that the dispute had been settled and only dismissed case when 

documents showed up that completely foreclosed his claim).

B. The Court should sanction Backpage’s counsel

Backpage’s counsel may well have known all along about their client’s lies, but 

even if not, they were presented with an abundance of opportunities from very early on in this 

case to know that their client was lying to the Court about the critical issues. They then either 

learned of these lies but did nothing or stuck their heads in the sand. “Sticking 

one's head in the sand is more than undignified. It is sanctionable. In this case appellees' 

attorneys' fees are an appropriate sanction; these are costs that would not have been incurred but 

for a doomed appeal, and the expense should be borne by the side that created them.” Khalil v. 

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 11 of 22 PageID #:5187 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 24 of 79
12

Town of Cicero, 916 F.2d 715 (7th Cir. 1990) (imposing sanctions under Rule 37). See also City 

of Livonia Employees’ Retirement System v. Boeing Co., 306 F.R.D. 175, 181 (N.D. Ill. 2014) 

(Rule 11); Paniagua v. Max 18, Inc., No. 11 C 03320, 2013 WL 5907893, *8 (N.D. Ill. Nov. 4, 

2013) (Rule 11). The following chronology paints the picture of why and when Backpage’s 

counsel knew or should have known that their client was lying to the Court:

In April 2015, the United States Senate, through the Permanent Subcommittee on 

Investigations (the “Subcommittee”), requested an interview to discuss Backpage’s business 

practices. ECF No. 197-1 at 14. On June 19, 2015, after two months of negotiations with 

Backpage’s counsel over specific topics the Subcommittee wished to discuss, the Subcommittee 

interviewed Elizabeth McDougall, Backpage’s general counsel. Id. During that interview, 

McDougall would not answer critical questions regarding Backpage’s procedures for screening 

for illegal content. Id. This was the first red flag that gave an indication that Backpage’s 

procedures may be less than legal. 

On July 7, 2015, two weeks before Backpage filed its complaint against the 

Sheriff, the Subcommittee issued a subpoena to Backpage, seeking, among other things, 

documentation regarding its screening process and data retention policies. Id. On August 6, 

2015, a few weeks prior to the preliminary injunction hearing in this case, Backpage sent the 

Subcommittee a letter stating it was refusing to answer its subpoena. Id. Red Flag Number Two. 

On August 13, 2015 the Subcommittee subpoenaed two Backpage employees, 

Andrew Padilla—the head of Backpage’s moderation department—and Joye Vaught—the 

supervisor in charge of training Backpage’s moderators (not coincidentally, on information and 

belief, two of the people that Carl Ferrer alleges he conspired with, see Plea Agreement at Ex. B

at ⁋ 10(a))—to discuss their job duties. ECF No. 192-1 at 14—15. Instead of answering the 

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 12 of 22 PageID #:5188 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 25 of 79
13

Subcommittee’s questions, both individuals hired an attorney and refused to answer, invoking 

their fifth amendment privilege, stating their answers might tend to incriminate them. Id. at 15. 

Red Flag Number Three. 

On October 1, 2015 the Subcommittee issued a new, more targeted subpoena, 

focusing on Backpage’s moderation efforts, including information related to editing or 

modifying of ads prior to publication—the very information that would have destroyed

Backpage’s argument of immunity under the Communications Decency Act. Id. Backpage 

answered by providing twenty-one pages of publicly available documents and writing a letter 

stating it refused to provide any relevant documents, citing first amendment objections. Id. Red 

Flag Number Four. 

The Subcommittee informed Backpage that its objection was without merit and 

ordered Backpage to comply by November 12, 2015. Id. at 16. Additionally, the Subcommittee 

subpoenaed Carl Ferrer to testify before the Subcommittee on November 19, 2015. Id. Not 

surprisingly, Backpage refused to answer the subpoena and Carl Ferrer did not show up at the 

Subcommittee’s hearing as he had fled the country. Id.; ECF No. 126. Red Flag Number Five. 

On November 30, 2015 the Seventh Circuit reversed this Court’s decision 

regarding the preliminary injunction, finding that “it is unclear that Backpage is engaged in 

illegal activity.” Backpage.com, LLC v. Dart, 807 F.3d 229, 233 (7th Cir. 2015) (emphasis 

added). Given that Backpage was refusing to answer subpoenas regarding its moderation 

processes, and its employees were invoking their fifth amendment privileges against selfincrimination with regard to those processes, it was becoming clear that “illegal activity” may be 

at the heart of Backpage’s functions. 

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 13 of 22 PageID #:5189 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 26 of 79
14

On March 11, 2016 Backpage filed a Motion for Partial Summary Judgment, 

stating that there was no need for the parties to engage in further discovery. ECF No. 124. 

Again, Backpage was pushing to cover up its “illegal activity,” as it did not want the Court to 

allow the Sheriff to see discovery which would demonstrate that the entire case against the 

Sheriff was a farce. 

On March 29, 2016 the Subcommittee filed its Application to Enforce Subpoena 

Duces Tecum with the U.S. District Court for the District of Columbia, and Backpage through its 

counsel (the same counsel that is representing Backpage in this case) filed its opposition to the 

same. ECF No. 197-1 at 16—17; U.S. District Court for the District of Colombia, Case No. 16-

mc-00621 at ECF No. 6 (Appearance of Robert Corn-Revere). Red Flag Number Six. 

On March 30, 2016, the Court denied Backpage’s Motion for Summary Judgment 

without prejudice and ordered the parties to brief any disputed discovery issues. ECF No. 

137. On April 6, 2016 the Sheriff filed a Bench Memorandum, arguing he was entitled to 

discovery on, among other things: (1) Backpage’s purported damages, specifically requesting 

information on lost profits and any illegal contracts for prostitution, as Backpage should not be 

compensated for the same; and (2) Backpage’s moderation practices to show the illegality of 

Backpage’s business. ECF No. 143. 

On April 20, 2016 Backpage filed a response to the Sheriff’s Bench 

Memorandum, arguing Backpage should not have to turn over moderation discovery as the 

Communication Decency Act provides immunity for Backpage as a platform provider. ECF No. 

153. This argument by Backpage’s attorneys was disingenuous at best, as by now they had to 

know that Backpage was a part author in a great majority of the prostitution ads on the website, 

thereby losing any possible immunity under the CDA. As of this date, at the very latest, 

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 14 of 22 PageID #:5190 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 27 of 79
15

Backpage’s attorneys were at best practicing willful indifference to Backpage’s actions, because 

if its attorneys did not know that Backpage was authoring ads for prostitution, that is due to their 

intentionally turning a blind eye to all of the evidence in front of them. 

On April 21, 2016, as part of the Sheriff’s Motion for Leave to Amend 

Affirmative Defenses, the Sheriff informed the Court about the Red Beauty Investigation, during 

which the Sheriff gained first-hand knowledge of Backpage’s sanitization process, proving that 

Backpage was not just an information platform provider but an author of ads purporting to 

prostitute children. ECF No. 155. Rather than acknowledging Backpage’s conduct, Backpage’s 

attorneys accused the Sheriff of creating fake ads that failed to demonstrate any sanitization. 

ECF No. 160. This was obviously false and provides further evidence that Backpage’s attorneys 

were either covering up their clients’ illegal actions or purposefully sticking their heads in the 

sand. 

On May 17, 2016 Backpage’s attorneys filed an opposition brief with the Court, 

arguing that the Sheriff should not be allowed to amend his affirmative defenses as the Sherriff’s 

defense on illegality was “futile” because the Sheriff’s “proposed illegal conduct defense directly 

violates [the CDA].” Id. Again, by now, Backpage’s attorneys should have known that this was 

untrue. 

On August 2, 2016 Backpage sought leave to file a first amended complaint, 

abandoning its request for monetary damages. ECF No. 167. Backpage and its attorneys knew 

that it needed to drop the claim for money damages, otherwise the Court would allow discovery 

into Backpage’s purported lost profits, and its moderation practices for purposes of determining 

which “contracts” were illegal (i.e., payments for ads for prostitution). ECF No. 141 (Transcript 

from March 30, 2016). Backpage knew that if it allowed the Sheriff to dig into its lost profits 

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 15 of 22 PageID #:5191 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 28 of 79
16

claim, the Sheriff would learn (1) that Backpage never stopped making money through Visa and 

MasterCard, and therefore the entire basis for its requested injunctive relief—that Backpage was 

stopped from doing business with Visa and Master Card—was a sham; (2) that Backpage was a 

content provider and could never have any protections under the CDA; and (3) that Backpage 

was laundering money through straw entities. 

On August 5, 2016 the district court in the Senate Action granted enforcement of 

the Subcommittee’s subpoena, rejecting Backpage’s first amendment argument. Senate 

Permanent Subcomm. v. Ferrer, 199 F. Supp. 3d 125 (D.D.C. 2016), vacated as moot sub nom. 

Senate Permanent Subcomm. on Investigations v. Ferrer, 856 F.3d 1080 (D.C. Cir. 2017). Over

the course of the next three months, Backpage engaged in legal theatrics, requesting appeals and 

stays from the district court’s enforcement order. ECF No. 197-1 at 17—18. Finally, after all 

appeals and stays were exhausted, Backpage started turning over documents. Id. at 18. By the 

end of 2016, Backpage had turned over more than five hundred thousand pages of documents in 

response to the Subcommittee’s subpoena. Id. at 20. 

On August 9, 2016 Backpage again requested that this Court proceed with 

summary judgment proceedings, stating the “Court should reject the Sheriff’s arguments 

[regarding needing additional discovery] again and move this case forward to consideration and 

briefing of summary judgment on liability and declaratory relief.” 

On September 26, 2016 and December 23, 2016, Carl Ferrer was indicted in the 

State of California for taking part in a pimping conspiracy and money-laundering conspiracy. 

Ex. C. The December indictment detailed efforts that Backpage had undertaken to set up sham 

companies to bypass detection by American Express. Id. According to the indictment, in May 

of 2015, in only the State of California, Backpage was able to conduct $48,288.25 worth of 

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 16 of 22 PageID #:5192 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 29 of 79
17

transactions, even though American Express had ceased processing Backpage transactions on 

May 1, 2015. Id. Attorneys for Backpage in this case also represented Carl Ferrer in the 

indictment proceedings. Ex. D. 

At this point there is direct evidence, known to Backpage’s attorneys, that 

Backpage and its CEO, Carl Ferrer, had lied to this Court. Specifically, in paragraph 4 of both 

the complaint and the amended complaint, which was filed just prior to the indictments, 

Backpage stated that due to the Sheriff’s letters, American Express, Visa and Master Card all 

blocked use of their cards for any and all purchases on the website. ECF No. 1; ECF No. 173. If 

Backpage was circumventing the blocks being administered by the credit card companies, and 

still using American Express, Visa and Master Card to accept payment, this directly affects 

Backpage’s theory of causation and its requests for relief. Specifically, if Backpage was still 

running transactions through the credit card companies, albeit illegally, Backpage was never 

suffering the harm it alleged in its complaint.

Instead of bringing the above to this Court’s attention, as they were obligated to 

do, Backpage’s attorneys chose to do nothing, except press forward with Backpage’s request for 

summary judgment. In fact, since learning that Backpage had lied in the amended complaint 

pending before this Court, Backpage sought summary judgment or a summary judgment hearing 

on four separate occasions. See Opposition to Defendant’s Motion for Leave to File SurResponse Opposing Backpage’s Motion to Renew Summary Judgment Proceedings (November 

23, 2016) (ECF No. 191) (stating “the Court should set a hearing on the Plaintiff’s motion for 

summary judgment at the earliest possible date”); Opposition to Suggestion of Mootness 

(February 21, 2017) (ECF No. 196) (stating the Court should “hold this case is moot and 

expeditiously proceed to Plaintiff’s motion for summary judgment”); Plaintiff’s Motion for 

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 17 of 22 PageID #:5193 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 30 of 79
18

Sanctions Based on Sheriff Dart’s Fraud on the Court (December 15, 2017) (ECF No. 205) 

(stating that Backpage seeks an order requiring that “[a] schedule be set for briefing and 

argument on Plaintiff’s motion for summary judgment,” even though it was completely unrelated 

to the motion it filed); Plaintiff’s Reply to Sheriff Dart’s Opposition to Motion for Sanctions 

Based on Sheriff Dart’s Fraud on the Court (February 2, 2018) (ECF No. 214) (“Backpage filed 

its Motion for Sanctions and asked this Court to order ... a briefing schedule for resolution of the 

case on summary judgment”). Once Backpage’s attorneys learned that the factual basis for the 

entire amended complaint was false, namely that Backpage was still actively using credit cards 

to pay for services on its website, they had a duty and an obligation to inform the Court and the 

Sheriff’s attorneys of the same, at a minimum, by amending their errant pleading. Instead, they 

ran from that obligation, and pushed this Court for an entry of summary judgment in their 

client’s favor, even though such a judgment would have been based on a fraud. 

On January 19, 2017 after reviewing documentation provided and testimony 

regarding Backpage’s business practices, the Subcommittee issued a report from its investigation 

titled Backpage.com’s Knowing Facilitation of Online Sex Trafficking. ECF No. 197-1. In the 

report the Subcommittee found that Backpage had knowingly concealed evidence of criminality 

by systematically editing its adult ads, and that it knowingly facilitated prostitution and child 

trafficking. Id. 

On September 15, 2017, the Sheriff sought leave to issue subpoenas to discover 

evidence proving that Backpage has been and is engaged in criminal activities, including the 

solicitation of prostitutes and creation of advertisements for prostitution. ECF No. 201. The 

evidence was discovered in the Philippines in a non-related case. Id. The Sheriff explained in 

his motion that based on the date range of a few of the incriminating documents that were 

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 18 of 22 PageID #:5194 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 31 of 79
19

available from the docket in Backpage’s case against Missouri Attorney General Hawley, it 

appeared that Backpage was sanitizing ads of their criminal content in 2015 and 2016, the same 

time it was telling this Court that it was not. Id. 

In response to the Sheriff’s request, Backpage’s attorneys did not tell this Court 

about any of the evidence that they had discovered over the course of the last eighteen months, 

but rather, pushed forward and continued to argue that the Court should reject the issue raised in 

the Sheriff’s motion as those issues already had been considered by the Court. ECF No. 204.

Counsel for Backpage, throughout the course of this litigation, their representation 

of Backpage in the Subcommittee proceedings, and their representation of Carl Ferrer in his 

California criminal proceedings, learned of information disproving the facts alleged by Backpage 

in its amended complaint. At the very least, counsel for Backpage, in this case, learned that (1) 

Backpage, even after the attempted ban by the credit card companies, was still able to use credit 

cards to process payments for services provided through Backpage.com; and (2) Backpage was 

sanitizing its ads such that it was an information content provider, and not afforded protections 

by the Communications Decency Act. Even with such knowledge, they performed no 

investigation into the same, and failed to inform the Court of evidence discovered. Such 

“ostrichism” is shocking and sanctionable.

IV. BACKPAGE’S COUNSEL SHOULD BE 

SANCTIONED UNDER 28 U.S.C. § 1927

Sanctions under § 1927 should be awarded when counsel acts in an objectively 

unreasonable and vexatious manner. Grochocinski v. Mayer Brown Rowe & Maw LLP, 452 B.R. 

676, 685 (N.D. Ill. 2011), aff'd, 719 F.3d 785 (7th Cir. 2013). “Objective bad faith does not 

require a finding of malice or ill will; reckless indifference to the law will qualify. If a lawyer 

pursues a path that a reasonably careful attorney would have known, after appropriate inquiry, to 

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 19 of 22 PageID #:5195 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 32 of 79
20

be unsound, the conduct is objectively unreasonable and vexatious.” Id. When determining 

whether an attorney's actions were objectively reasonable, the court “may infer intent from a 

total lack of factual or legal basis for a suit.” Id. See also Kotsilieris v. Chalmers, 966 F.2d 

1181, 1184–85 (7th Cir.1992) (counsel sanctioned under § 1927 when “counsel acted recklessly, 

counsel raised baseless claims despite notice of the frivolous nature of these claims, or counsel 

otherwise showed indifference to statutes, rules, or court orders”). 

Now that the criminal indictment and guilty pleas from Backpage and Carl Ferrer 

have come to light, it is clear that almost every paper filed and proceeding conducted was tainted 

by false representations, omissions and outright lies. It is obvious that counsel knew or should 

have known that Backpage was engaged in a criminal conspiracy, and yet its attorneys continued 

to make false assertions and fight all attempts by the Sheriff to uncover the truth. By repeatedly 

filing false declarations and motions intended to thwart attempts to reveal the illegitimacy of 

their client’s business, Backpage’s counsel have shown utter disrespect for the judicial process 

and the rule of law. Similar actions have resulted in the imposition of harsh sanctions against the 

attorneys. See Kapco Mfg. Co., Inc. v. C & O Enterprises, Inc., 886 F.2d 1485, 1490 (7th Cir. 

1989) (imposing sanctions against attorney for the cost incurred by the defendants in defending 

the litigation where the actions of the plaintiff’s attorney “evidenced a disregard for an orderly 

and truthful resolution of the dispute”). Here, the Court needs to simply look at the indictment 

and plea filed in the criminal case and the misrepresentations and deceit on the Court that 

Backpage’s attorneys have engaged in throughout the proceedings becomes clear. 

Considering Backpage’s admission in the plea agreement that it fraudulently 

implemented methods of continuing to receive payment after credit card companies ceased doing 

business with them, it appears the damages initially claimed in this case were non-existent. “An 

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 20 of 22 PageID #:5196 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 33 of 79
21

award of sanctions is proper if the attorney ‘has acted in an objectively unreasonable manner by 

engaging in a serious and studied disregard for the orderly process of justice or where a claim is 

without a plausible legal or factual basis and lacking in justification.” Lightspeed Media Corp. v. 

Smith, 761 F.3d 699, 708 (7th Cir.2014) (quoting Walter v. Fiorenzo, 840 F.2d 427, 433 (7th Cir.

1988)). Similarly, Backpage’s claim that it did not sanitize or moderate ads to remove the 

appearance of adult and child prostitution is equally sanctionable as there has been ample 

evidence in other courts to prove otherwise, and Backpage’s attorneys were part of these 

proceedings too. 

Even if counsel for Backpage try to claim ignorance as to the false nature of the

claims when they were initially filed, the Seventh Circuit has interpreted 28 U.S.C. § 1927 as the 

appropriate source of authority “to impose a continuing duty upon attorneys to dismiss claims 

that are no longer viable.” Intellect Wireless, Inc. v. Sharp Corp., 87 F. Supp. 3d 817, 848–49 

(N.D. Ill. 2015). Its attorneys also cannot claim that they could not act because of their duty to 

Backpage to keep confidential Backpage’s illegal conduct. Cleveland Hair Clinic, Inc. v. Puig, 

200 F.3d 1063 (7th Cir. 2000) (concluding that the district court did not abuse its discretion in 

sanctioning an attorney for providing false information and failing to disclose relevant 

information when awarding attorneys’ fees and costs incurred as a result of bad conduct, in 

which the Court cited to a comment to Rule of Professional Conduct 3.3 which states the “duty 

to protect client confidentiality does not come before the duty to be honest with the court”).

There is too much evidence of illegality for counsel not to have been cognizant of 

the false pleadings and deceit. The Sheriff requests, if not already sufficient by this written 

motion and attached evidence, limited discovery to prove that Backpage’s counsel knew the 

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 21 of 22 PageID #:5197 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 34 of 79
22

pleadings, discovery responses, filings and statements in open Court were false when made, 

followed by an evidentiary hearing, supplemental briefing and an award to promote justice.

WHEREFORE, for the foregoing reasons, the Sheriff requests that this Court 

enter an order:

1. permitting limited discovery;

2. holding an evidentiary hearing on sanctions;

3. permitting supplemental briefing on the appropriateness and amount of 

sanctions; and

4. for any other relief the Court deems appropriate. 

Respectfully submitted,

THOMAS J. DART,

SHERIFF OF COOK COUNTY, ILLINOIS

By: Paul J. Kozacky

 One of his attorneys

Paul J. Kozacky

Alastar S. McGrath

Jerome R. Weitzel

KOZACKY WEITZEL MCGRATH, P.C.

55 West Monroe Street, 24th Floor

Chicago, Illinois 60603

(312) 696-0900

Case: 1:15-cv-06340 Document #: 226 Filed: 04/26/18 Page 22 of 22 PageID #:5198 Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 35 of 79
Exhibit D

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 36 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 37 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 38 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 39 of 79
Exhibit E

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 40 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 41 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 42 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 43 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 44 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 45 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 46 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 47 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 48 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 49 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 50 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 51 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 52 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 53 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 54 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 55 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 56 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 57 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 58 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 59 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 60 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 61 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 62 of 79
Exhibit F

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 63 of 79
Bill To:

Backpage.com, LLC

1201 E Jefferson

Phoenix, AZ 85034

Invoice No: 1313

Date: Jan 1, 2008

Referrals that convert!

My team and I specialize in placing banner ads and one way in bound links with high conversions and SEO.

Description Estimated new referrals per mo Cost per visit Amount

Feb Banner ad placement 450,000 .00888 $4,000

Subtotal $4,000

Sales Tax na

Total $4,000

Remit Payment to:

Elms Web Services, Inc.

5228 W 124th St

Hawthorne, CA 90250

T 310.491.1451 F 310.491.1452

Email: david@elmsweb.com

Elms Web Services, Inc.

Invoice David Elms

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 64 of 79
Exhibit G

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 65 of 79
"TheEroticReview.com" Founder 

David Elms Arrested in Phoenix, 

Suspected of Trying to Hire Killer

Ray Stern | February 17, 2009 | 9:49am

• Facebook

• Twitter

•

• email

• Print Article

AA 

The founder of theeroticreview.com, a Web site the New York Times calls the 

Amazon.com of prostitution, has been arrested in Phoenix on suspicion of trying to 

kill one person and seriously injure another, selling drugs and misconduct with 

weapons.

David Elms, 38, was booked into the Maricopa County jail early this morning after 

he arrived in Phoenix from California, following information about him that police 

gleaned from the "Desert Divas" escort service investigation. Here's the straight 

poop from Sergeant Andy Hill's news release:

Suspect: Elms, David; A/M; DOB 4/09/71; booked into Maricopa County Jail for 

one count of conspiracy to commit murder; one count of conspiracy to commit 

aggravated assault; one count of conspiracy to possess narcotic drugs for sale; one 

count of conspiracy to commit misconduct involving weapons; one count of 

possession of drug paraphernalia

Continue Reading

Victim 1: 32 year old female

Victim 2: 62 year old male

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 66 of 79
Phoenix Police Department investigators recently received information that Mr. 

Elms wanted to hire someone to kill the listed female victim. Investigators met with 

Mr. Elms after he arrived in Phoenix from California just after midnight on 

February 15, 2009. 

Mr. Elms was arrested about 30 minutes later after probable cause was developed 

to arrest him for the listed charges. Investigators state that Mr. Elms contracted to 

have the woman killed and the listed adult male victim seriously injured. Mr. Elms 

was arrested without incident by officers from the Phoenix Police Department's 

Special Assignments Unit.

Some of you have asked if the information received is related to the recent "Desert 

Divas" case. Investigators said it is related because information in this conspiracy 

to commit murder case came from a suspect in the "Desert Divas" case. 

Investigators are looking into whether there is any other connection.

This investigation is continuing.

The above-referenced New York Times story says Elm's popular Web site rates 

high-end escort services and makes it easier for customers to hook up with 

prostitutes in the same area. Elm has supposedly made a comfortable living from 

the site -- and there are plenty of perqs.

From the article:

"He is the most influential man in the prostitution business in America," said Jason 

Itzler, the former head of NY Confidential, an escort ring. Mr. Itzler was released 

from prison last year after serving 30 months for the attempted promotion of 

prostitution.

...

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 67 of 79
Mr. Elms usually does not say much publicly about his Web site, asserting that 

reporters twist his words. But in an interview with MSNBC.com in 2006, Mr. Elms 

said that he started The Erotic Review in 1999 because he wanted to empower the 

customers of prostitutes.

"I was getting ripped off," he said. "There was no way to hold people accountable 

for their actions."

If you like this story, consider signing up for our email newsletters.

SHOW ME HOW

X

Newsletters

• Film

• Promotions

• Events

• Daily Weekly

All-access pass to the top stories, events and offers around town.

• No Thanks

• Sign Up

And here's a sample from his site:

Clicking on one of the "providers" gets you contact and personal info. As in, really

personal:

Elms is in the middle of a federal copyright infringement lawsuit and was fighting 

drug and weapons charges back in June (we're not sure how that turned out). The 

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 68 of 79
latest charges are his most serious yet -- and he'll be stuck with the "plead to the 

lead" policy of Maricopa County Attorney Andrew Thomas.

Will Elms' next Internet venture have something to do with prison sex?

Ray Stern has worked as a newspaper reporter in Arizona for more than two decades. He's won 

many awards for his reporting, including the Arizona Press Club's Don Bolles Award for 

Investigative Journalism.

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 69 of 79
Exhibit H

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 70 of 79
To: Scott Spear[scott.spear@villagevoicemedia.com]; Carl Ferrer[carl.ferrer@backpage.com]

From: Jim Larkin

Sent: Mon 5/11/2009 7:27:57 PM

Subject: johns accused of favorably rating escorts on Erotic Review in exchange for discounts 

Authorities: 43 more indicted in Desert Divas prostitution bust

Arizona Republic, May 9, 2009

Authorities on Friday announced that 43 more people have been indicted 

on charges of having roles in a prostitution syndicate that earned an 

estimated $18 million over six years.

Those arrested as part of the latest phase of the Desert Divas 

prostitution scandal included four "VIP customers" accused of 

favorably rating escorts online in exchange for reduced rates for sex.

Others answered phones or photographed the women for advertisements, 

according to investigators.

Most of those included in the April 23 indictment are accused of being 

prostitutes, including Jillian Lybarger, a Maricopa County sheriff's 

detention officer.

Friday's announcement came less than one month after Desert Divas 

founder Paul Nichta and others pleaded guilty to a variety of felony 

charges.

Maricopa County Attorney Andrew Thomas and Phoenix detectives said the 

latest waves of arrests stretched from Phoenix to Colorado, Florida 

and Washington.

More than 20 people have yet to be arrested as part of the latest 

indictment, officials said.

Phoenix police Lt. John Collins said the VIP customers indicted this 

spring rated Desert Divas escorts on the California-based Erotic 

Review prostitution Web site - an action that authorities said they 

would prosecute as a felony for supporting a criminal enterprise.

Reach the reporter at michael.ferraresi@arizonarepublic.com.

Content-Type: text/plain; charset=US-ASCII

Content-Transfer-Encoding: 7bit

Content-Disposition: inline

Authorities: 43 more indicted in Desert Divas prostitution bust

Arizona Republic, May 9, 2009

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 71 of 79
Authorities on Friday announced that 43 more people have been indicted 

on charges of having roles in a prostitution syndicate that earned an 

estimated $18 million over six years.

Those arrested as part of the latest phase of the Desert Divas 

prostitution scandal included four "VIP customers" accused of 

favorably rating escorts online in exchange for reduced rates for sex.

Others answered phones or photographed the women for advertisements, 

according to investigators.

Most of those included in the April 23 indictment are accused of being 

prostitutes, including Jillian Lybarger, a Maricopa County sheriff's 

detention officer.

Friday's announcement came less than one month after Desert Divas 

founder Paul Nichta and others pleaded guilty to a variety of felony 

charges.

Maricopa County Attorney Andrew Thomas and Phoenix detectives said the 

latest waves of arrests stretched from Phoenix to Colorado, Florida 

and Washington.

More than 20 people have yet to be arrested as part of the latest 

indictment, officials said.

Phoenix police Lt. John Collins said the VIP customers indicted this 

spring rated Desert Divas escorts on the California-based Erotic 

Review prostitution Web site - an action that authorities said they 

would prosecute as a felony for supporting a criminal enterprise.

Reach the reporter at michael.ferraresi@arizonarepublic.com.

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 72 of 79
Exhibit I

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 73 of 79
App.000260

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 74 of 79
Exhibit J

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 75 of 79
Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 76 of 79
Exhibit K

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 77 of 79
From: Wick, Amanda (CRM) <Amanda.Wick@CRM.USDOJ.GOV> 

Sent: Wednesday, November 7, 2018 6:17 PM

To: mlp@pd-law.com

Cc: Reid, Patrick (CRM) <Patrick.Reid@CRM.USDOJ.GOV>

Subject: RE: Andrew Padilla: seizure warrants issued for IOLTA funds to defend Mr. Padilla / request for 

seizure affidavit

Mike, 

Kevin forwarded me your email so that I could address your concerns. First, it might help for me 

to clarify a few things as some of the information in your email isn’t quite accurate. We actually 

obtained two seizure warrants for funds contained within two different IOLTA accounts, both 

held in the name of Piccarreta Davis Keenan Fidel PC. One (attached hereto as “36A 37 38 40 

JPMC”) is for $10,000 from a JP Morgan Chase bank account ending in -9285. The second 

(attached hereto as “36B Grand Point”) is for $740,000 from a Grand Point bank account 

ending in -3985. 

I’m not sure who the “they” is that you reference in your email below, but my supervisor at DOJ 

has told any counsel that inquired that this case is being prosecuted out of the District of 

Arizona and MLARS is assisting on asset recovery issues only. As a result, we would have to 

consult with the prosecutors in Arizona to confirm what the status of the criminal case was, 

whether discovery had been provided, whether the warrant was under seal and, if not, whether 

we could provide it upon request. Given that the warrant affidavit would likely be produced at 

some point during discovery, we didn’t think the prosecutors in Arizona would object, but we 

needed to check with them before sending out the warrant affidavit. I anticipate having an 

answer on that tomorrow.

Finally, the warrant needs to be executed within 14 days, the deadline for which is Wednesday, 

November 14th. We give law firms the opportunity to wire funds to the United States, in lieu of 

serving the warrants on the banks, because we are trying to minimize any disruption the warrant 

could have on your IOLTA accounts. I’m sure Patrick told you that, often when we serve a 

seizure warrant on a bank to seize funds from an IOLTA account, the bank freezes the accounts 

entirely and sometimes more accounts than the ones listed in the warrant. Because of the 

adverse effects that can cause, we work very hard to coordinate with law firms to effectuate the 

turnover of the funds with as little impact on the firms as possible. However, some firms do 

decline to wire funds in lieu, and in that situation, we serve the warrants on the bank, as 

authorized by the court, prior to the 14th day. 

To the extent a law firm has earned fees that have not been moved from the IOLTA to an 

operating account, we request that substantiating bills (redacted for attorney-client privilege) be 

submitted to us for due diligence review, and once reviewed, we subtract that amount from the 

seizure amount, as we are not seeking to seize earned fees. 

Should you wish to make a Monsanto claim, we offer every defendant the opportunity to show 

that they are financially unable to pay for their defense without the funds we are seizing. 

Because of the timeliness of the warrant, we will be seizing the funds before the 14th, but if you 

can make a showing that your client has no other funds with which to pay for his defense, we are 

happy to review those materials and consider releasing some amount back to pay legal fees. 

I hope that answers your questions, but if not, please do not hesitate to call me at my direct line 

below. Thank you for your time and assistance with this matter.

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 78 of 79
Sincerely,

Amanda Schlager Wick

Trial Attorney, Asset Forfeiture & Money Laundering Unit

Money Laundering & Asset Recovery Section (MLARS)

1400 New York Ave. NW, 10th Floor

U.S. Dept. of Justice, Washington, D.C. 20004

(202) 514-2842

(202) 597-0435 (cell)

(202) 514-5522 (fax)

CONFIDENTIALITY NOTICE: This communication with its contents and attachments, if any, may contain 

confidential, law enforcement sensitive, privileged attorney/client communications or work products, 

and is not subject to disclosure. It is solely for the use of the intended recipient(s). Unauthorized 

interception, review, use, or disclosure is prohibited. If you believe that you have received this 

communication in error, please notify the sender immediately and permanently delete the email, any 

attachments, and all copies from your computer.

From: Barbara Polowetz <bpolowetz@pd-law.com> 

Sent: Wednesday, November 7, 2018 3:51 PM

To: Rapp, Kevin (USAAZ) <KRapp@usa.doj.gov>

Cc: Michael Piccarreta <mlp@pd-law.com>

Subject: Andrew Padilla: seizure warrants issued for IOLTA funds to defend Mr. Padilla / request for 

seizure affidavit

Kevin:

I just was advised by Patrick Reed of DOJ that they’ve issued a seizure 

warrant for the IOLTA funds that can be used to defend Mr. Padilla in this 

criminal case. They are forwarding me the warrant. They indicated that at 

DOJ, the supervisors have strongly urged the Arizona prosecutors to 

disclose the seizure affidavit as soon as possible. I am requesting that the 

seizure affidavit be provided immediately so that I may review it in 

conjunction with the seizure warrant to determine what legal remedies in 

the forfeiture and/or the criminal case are appropriate.

Mike Piccarreta

Case 2:18-cr-00422-DJH Document 446-1 Filed 01/23/19 Page 79 of 79