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UNITED STATES DISTRICT COURT

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UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

_________________

United States of America, )

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

Plaintiff, )

)

vs. ) Phoenix, Arizona

) September 25, 2023

Michael Lacey, et al. ) 3:46 p.m.

)

Defendants. )

_____________________________ )

BEFORE: THE HONORABLE DIANE J. HUMETEWA, JUDGE

REPORTER'S TRANSCRIPT OF PROCEEDINGS

IN-COURT HEARING

Official Court Reporter:

Hilda Elizabeth Lopez, RMR, FCRR

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

401 West Washington Street, Spc 30

Phoenix, Arizona 85003-2151

(602) 322-7256

Proceedings Reported by Stenographic Court Reporter

Transcript Prepared by Computer-Aided Transcription

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A P P E A R A N C E S

For the Government:

UNITED STATES ATTORNEY'S OFFICE

By: Mr. Kevin M. Rapp, Esq.

Mr. Peter S. Kozinets, Esq.

Mr. Andrew C. Stone, Esq.

Ms. Margaret Wu Perlmeter, Esq.

40 North Central Avenue, Suite 1200

Phoenix, Arizona 85004

kevin.rapp@usdoj.gov

peter.kozinets@usdoj.gov

andrew.stone@usdoj.gov

margaret.perlmeter@usdoj.gov

For the Government:

UNITED STATES DEPARTMENT OF JUSTICE

By: Mr. Austin Berry, Esq.

1301 New York Avenue, NW, 11th Floor

Washington, DC 20005

austin.berry2@usdoj.gov

For the Defendant Michael Lacey:

LIPSITZ GREEN SCIME CAMBRIA, L.L.P.

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

42 Delaware Avenue, Suite 120

Buffalo, NY 14202

pcambria@lglaw.com

For the Defendant Scott Spear:

FEDER LAW OFFICE, P.A.

By: Mr. Bruce S. Feder, Esq.

2930 East Camelback Road, Suite 160

Phoenix, AZ 85016

bf@federlawpa.com

- and -

KESSLER LAW OFFICE

By: Mr. Eric Walter Kessler, Esq.

6720 N. Scottsdale Road, Suite 210

Scottsdale, AZ 85253

eric.kesslerlaw@gmail.com

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For the Defendant John Brunst:

BIRD MARELLA BOXER WOLPERT NESSIM DROOKS

LINCENBERG & RHOW, P.C.

By: Mr. Gopi K. Panchapakesan, Esq.

Mr. Gary S. Lincenberg, Esq. - (Telephonic)

1875 Century Park E, Suite 2300

Los Angeles, CA 90067

gpanchapakesan@birdmarella.com

glincenberg@birdmarella.com

For the Defendant Andrew Padilla:

DAVID EISENBERG, P.L.C.

By: Mr. David S. Eisenberg, Esq.

3550 North Central Avenue, Suite 1155

Phoenix, AZ 85012

david@deisenbergplc.com

For the Defendant Joye Vaught:

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

By: Ms. Joy M. Bertrand, Esq.

P.O. Box 2734

Scottsdale, AZ 85252

joy@joybertrandlaw.com

Michael Lacey - Appears by telephone

Andrew Padilla - Presence waived

Joye Vaught - Presence waived

Scott Spear - Presence waived

John Brunst - Present

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P R O C E E D I N G S

(Proceedings commence at 3:46 p.m.)

COURTROOM DEPUTY: Calling the Court to order. This

is Case No. CR 18-422, United States of America vs.

Michael Lacey and others, on for in-court hearing.

Counsel, please announce for the record with the

government going first.

MR. BERRY: Good afternoon, Your Honor, Austin Berry

for the United States. With me here is Peter Kozinets,

Kevin Rapp, Peggy Perlmeter and Andy Stone from the United

States.

THE COURT: Good afternoon.

MR. CAMBRIA: Good afternoon, Your Honor,

Paul Cambria, and my client, Mr. Lacey, is on the phone. Good

afternoon.

THE COURT: Good afternoon.

MR. EISENBERG: Good afternoon, Your Honor,

David Eisenberg on behalf of Andrew Padilla. Mr. Padilla,

well, I will waive his presence for this hearing.

THE COURT: Good afternoon.

MR. PANCHAPAKESAN: Good afternoon, Your Honor,

Gopi Panchapakesan on behalf of Mr. Brunst who is present in

the courtroom, and Mr. Lincenberg is on the phone.

THE COURT: Good afternoon to you.

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MR. FEDER: Bruce Feder for Scott Spear --

MS. BERTRAND: Good afternoon, Your Honor, this is

Joy Bertrand representing Joye Vaught. She has been excused

for today. Thank you.

THE COURT: All right. Mr. Feder, go ahead.

MR. FEDER: Bruce Feder for Mr. Spear, who waives his

presence.

THE COURT: And good afternoon to you. I note

Mr. Lincenberg has dialed in as well, and so we have everyone

here. Please be seated.

I recognize today is a High Holy Day for some of you,

and so I hope to shorten the proceeding, but that will also

depend on what you all have to say, so I appreciate your being

here on this day. It shows a commitment to your clients in the

case, but nevertheless, I take serious note of it.

I have once again reviewed the prior objections to the

exhibits, the response thereto, and the government's reply, and

I'm going to make my findings and ruling and then I'll let you,

once I make my findings and ruling with the specific

categories, I will let you make a record as to any other

argument you wish me to consider, but let me just -- oh, I note

that Mr. Kessler was in a prior court and he will be joining

us, and we'll continue, though, without him, but he'll be here

shortly as Mr. Feder is here on behalf of their client.

I mentioned to you that I'd like you to meet and

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confer and review the court transcript related to the

subpoenas, the multiple exhibits related to subpoenas, subpoena

responses --

(Mr. Kessler is present.)

THE COURT: -- that were outlined in Attachment B of

the government's filing, Document 1801-2, all of these subpoena

responses that were outlined from defense Exhibit 5555 through

5887. And so here's what I have found by my review of the

record:

On the 13th of September Mr. Ferrer testified that

Backpage was receiving subpoenas and that he was involved in

responding to them authenticating records, e-mails, payment and

phone information to turn over, but he did not testify as to

the content of the request that the subpoenas made, or he did

not testify to the agencies that made the request.

He also testified, and the government did not clearly

indicate the date, but at some point in 2007 there was a person

by the name of Tamara Nickel that was hired to respond to the

subpoenas because of the high volume that was received.

And on the 14th he testified in reference to

Exhibit 804 that they responded to a subpoena regarding child

trafficking in 2010. The exhibit, by my review, was an e-mail

that included Mr. Lacey and Mr. Spear. So the defense can

cross-examine him as to his -- this response to that subpoena,

whatever that was, related to Exhibit 804. There was also a

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reference in that testimony to Exhibit 49. Though I did not

pull up that exhibit, I think it was responsive to whatever

that subpoena was.

On the 15th of September he testified about an ad,

this was after the Amber CNN story, Mr. Ferrer testified about

an ad related to a Salina posting in Las Vegas and Washington

D.C., and this was in relation to checking all subpoenas in

those areas for a match as to this Salina ad. So the

defendants are permitted to introduce any responsive documents

to that subpoena related to this Salina ad and whatever was

produced out of Backpage's finding in Las Vegas and Washington

D.C.

On the 19th Mr. Ferrer testified about receiving an

Arizona Grand Jury subpoena, Exhibit 1911, which he received in

his Dallas office and which he testified he was compelled to

answer. So the defendants can cross-examine him regarding the

responsive documents to that subpoena.

On the 20th he testified about receiving a subpoena

related to Exhibit 1204. This was in regard to a single ad in

the form of a cyber tip response. The exhibit was an e-mail to

Mr. Padilla regarding a 404 lead, and in response to a Sergeant

Fassett e-mail in June 2012. I think this was reference

Exhibit 20 -- excuse me, 1208. And so the defense can

introduce any responsive documents to that inquiry.

Now, as I mentioned on Friday, there was testimony

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about this PSI subpoena request for all e-mails regarding

moderation, and that was a subpoena that was issued in 2016,

and so I'm not entirely sure that the exhibits enumerated in

Attachment B are responsive to that PSI subpoena. And if they

are, as I mentioned on Friday, then the defense is able to

question Mr. Ferrer about that.

But by my view, beyond that, in looking at a sampling

of these defense exhibits in Attachment B, they are, in my

view, very generic responses. They are generic responses in

that someone has dug up a phone number on an X, Y, Z site, just

using X, Y, Z as an example, and some other non-Backpage site

that just says: Hey, we found this on X, Y, Z site. It may

respond to your inquiry. And there are multiple e-mail

communications in that way. Therefore, those types of

responses are irrelevant and they will lead to confusion.

But to the extent that Mr. Ferrer has mentioned

particular subpoenas from agencies and entities, any that I may

have missed beyond what I just recited, so long as the exhibits

are related to that, including the date and time frame in which

he testified receiving those subpoenas, then you may examine

him on that, but I'm going to limit you to five exhibits

because beyond that, if the government objects to cumulative,

then I will likely sustain it.

Any further discussion or points that anyone from the

defense side wishes to make? Let me just go down the road

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here, Mr. Cambria.

MR. CAMBRIA: Yes, Your Honor, are we going to be

permitted to ask him general questions about the nature of his

response; in other words, his interaction with the authorities?

For example, you received a subpoena, they would ask for, let's

say identification information or financial information and so

on, I assume we're going to be able to ask that so that we can

show that they were assisting the police. That's obviously

very important, and that they developed procedures to

streamline that process, including a handbook, if you will, for

the authorities showing them how to rapidly and efficiently get

the information that they need.

I mean, those are general questions about basically

what their relationship was with the authorities, and I think

it's clearly relevant as to intent, so I would hope that that's

not going to be an issue as far as going through generally what

they did.

THE COURT: Well, so is there an exhibit associated

with those line of questions?

MR. CAMBRIA: Well, there are probably many, but

there's a general procedure, and I think we're entitled to show

the relationship, and that -- that they had a procedure. They

would get a subpoena; they would be asked for the following

kinds of information; they kept that information; they provided

that information. They even had a cross-referencing system, if

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you will, where they would say, "Yes, and that ad, by the way,

relates to this ad," and they would do that. Plus, they, in

addition to that, appeared in cases and testified. I mean, all

of that is critical to the defense, and that's just generally

showing what their procedure was.

There are, you know, specific instances, but I want to

show that there was a general cooperation here, and a lot of it

was created by, you know, the people at Backpage to assist

in -- to assist the police in preventing certain things from

happening.

THE COURT: Well, without knowing what the question is

and what the exhibit is, I can't make a ruling, but what I can

say is that because Mr. Ferrer has testified previously to, I

think at one point he said they were averaging like a hundred a

month or something like that, I think you could ask him what

agencies they responded to. I mean, that's relevant. It's

going to take a long time, but, you know, I think that's, you

know, a question that you can. And I don't know what prevents

you from asking and it, and if he can answer it, then I don't

think that the question or the response would be objectionable,

but I won't make a predetermined ruling as to an exhibit that I

have not seen and to questions that have yet to be asked.

So with that guidance, I think that's what I can give

you.

MR. CAMBRIA: Thank you. Yeah, like I say, I wanted

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to set up basically with him the general routine that he

established with all the authorities. They had a general

routine. They would call, they would look, they would respond.

They developed a manual. They showed the police how to use the

manual, how to get the information.

THE COURT: As I noted before, there was that

testimony that he -- that there was a hiring of some individual

in 2007 just to respond to subpoenas. So you know, if he has

some prior knowledge about that beyond 2007, that's probably

also relevant too.

All right. With regard to my ruling in -- with regard

to the Attachment B, anyone else wish to make a record or,

Mr. Eisenberg?

MR. EISENBERG: Thank you, Your Honor. There are, I

don't know how many of those e-mails, we refer to them on the

defense side as attaboys, but I think Your Honor will get the

idea that they are very praise worthy of the cooperation that

was extended to law enforcement by Backpage, including my

client.

What I see in all of those, well, actually what I

don't see in any of them, is any accusations by law enforcement

that Backpage or anybody there is committing a crime. And it

builds up, and perhaps revealing something I would think twice

about, but it builds up an impression that what Backpage is

doing has not been considered by law enforcement to the extent

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of prosecuting them or seeking that they should be prosecuted,

and that does have an impact on a lot of people connected with

Backpage.

So by limiting us to, I think Your Honor said five,

and I'm not sure if you mean five of this type of e-mail.

THE COURT: Yes, this type of e-mail.

MR. EISENBERG: Yes, ma'am.

THE COURT: The e-mails that go along the lines: Here

is the match to the phone number that we found on X, Y, Z web

page. Those are extraordinarily cumulative, and so those are

the e-mails that I'm telling you, pick five, and beyond that I

am going to be thinking about a cumulative effect of those

exhibits because they are, I mean, there is tons of them in

which they are responding. Apparently they are getting one

hundred subpoenas a month at some point. So they are

responding to these it seems like daily, and so I think they

are going to be cumulative. Those are the responses that I'm

talking about.

I didn't see any of the -- like I said, I saw sampling

of them, but I didn't see any of these, whatever you call them,

attaboy letters or whatever they are. I haven't looked at

those.

MR. EISENBERG: Well, Your Honor, those are actually,

they proceed in almost every e-mail, or follow in almost every

e-mail on the same exhibit, the response from law enforcement.

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THE COURT: It says essentially, "Thank you for your

help."

MR. EISENBERG: And other things, "You guys are great.

Thank you for your cooperation. We really appreciate it." But

nothing in there with respect to anything pertaining to

Backpage itself as being involved in allegations pertaining to

this case.

THE COURT: Well, here too, I am going to limit you

because here too only, unless they refer back to these

particular areas that Mr. Ferrer has previously testified to,

are you going to introduce a subpoena through him? I don't

know what the subpoena asked for. It may ask for some generic

information, it may ask for a particular phone number, it may

ask for the identity of an individual that's been listed

presumably on Backpage. It could be anything. And so I don't

have the context of which to make a relevancy determination

when I don't know what the information was that's being asked

for when these are very generic responses.

So in that regard, I would say no. Be very cautious

about that. All right.

MR. EISENBERG: Thank you, Your Honor. Just let me

add that the subpoenas do pertain to specific individuals or

specific postings, because otherwise the subpoena response

would be meaningless.

THE COURT: Okay. Mr. Panchapakesan, is there

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something else you wanted to add?

MR. PANCHAPAKESAN: No, Your Honor.

THE COURT: Mr. Feder.

MR. FEDER: Three specifics, Judge. You may recall

that the, over objection, that the government brought out from

Mr. Ferrer a letter from a, some kind of law enforcement

officer from Montgomery County, Maryland, and the letter

accusing Backpage of doing something wrong was allowed into

evidence. There are three of these letters in this category

that are from Montgomery County law enforcement. Two from

Montgomery County; one from Baltimore County, on or about the

same time that are on the list of the ones that the government

opposes that we should be able to bring in to counter the

impression that was created by that; that at least some law

enforcement people in the very same county thought well of

Backpage and weren't making these accusations.

THE COURT: What are the exhibit numbers?

MR. FEDER: They are, either I made a mistake, and

it's certainly possible, or the government did. One of them

is, I think we're unclear on 5638, but also 5653 and 5618.

MR. BERRY: Can I get those numbers again?

MR. FEDER: 5618, 5638, 5653.

MR. BERRY: 5353 --

MR. FEDER: The one you guys are on is 5638 on your

list is from Phoenix. I thought it was Montgomery County.

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THE COURT: I have 5618, 5638 and 5653.

MR. FEDER: Right.

THE COURT: I'll look at that.

MR. FEDER: Thank you.

THE COURT: And Ms. Bertrand.

MS. BERTRAND: Your Honor, I have nothing further to

add. Thank you.

THE COURT: All right. Let's move on to -- I'm going

to take the Dart litigation next. It is true that Mr. Ferrer

did testify using this term "credit card Armageddon," and but I

think the defense even acknowledges that he did not refer to

any litigation including the Dart litigation. And so to the

extent that he testified inconsistently to a declaration in a

prior court proceeding, you'd have to let me know what that

declaration includes and point me to the prior inconsistent

statement that he made.

But I can tell you that I'm not going to permit you to

bring any of that Dart litigation in because it is not related

to the charges in this case. It's a complete different

litigation on a complete different set of facts. And so at

this juncture, unless you can point to some inconsistent

statement that he made in trial with his, any prior court filed

declaration, then you're not going to be permitted to ask him

about that lawsuit.

Do you wish to make a further record, Mr. Cambria?

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MR. CAMBRIA: No, Your Honor.

THE COURT: Mr. Eisenberg?

MR. EISENBERG: No, Your Honor.

THE COURT: Mr. Panchapakesan?

MR. PANCHAPAKESAN: I do, Your Honor. Can I approach

the lectern?

THE COURT: Oh, you know, I am so sorry, before you do

that, I forgot to give the government the opportunity if you

wanted to respond on the subpoena issue.

MR. BERRY: Your Honor, the only thing I wanted to

just clarify for the record is you've been talking about

Attachment B to our 1801, which are the e-mails that we were

objecting to --

THE COURT: Yes.

MR. BERRY: -- and Mr. Eisenberg was talking about

e-mails and the attaboys and that sort of thing. There are two

categories. We stipulated that they can introduce basically

the hundred or so in Attachment 1, and so I wanted to clarify

that for the record. To the extent that the Court is limiting

them to the five, we are talking about Attachment B, and

you're, and I think your ruling, and just seeking clarification

for the defenses' benefit and ours, if they choose to move in

those hundred that we're stipulating to, that they are

permitted to do so; is that correct?

THE COURT: Yes.

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MR. BERRY: So to the extent they are worried we can

only do five, we are letting in a hundred in this category of

attaboys. It's a second category that we're saying at some

point it becomes cumulative, and that's what you're talking

about.

THE COURT: Yes.

MR. BERRY: Okay. That's all I wanted to address on

the record, Your Honor.

THE COURT: Okay.

Mr. Panchapakesan.

MR. PANCHAPAKESAN: So Your Honor, in terms of the

Dart litigation, you know, the facts we intend to present, we'd

ask to present, the narrative is essentially, one, in late

June 2015 Sheriff Dart, who is a sheriff in Chicago, sends

threatening letters to Visa and Mastercard. Those are actually

government exhibits, Government Exhibits 459, 478. Within a

matter of days those credit card companies terminated the

relationship with Backpage.

The first thing that Backpage does, and keep in mind,

this is post sale of the business when Carl Ferrer is the

owner, when he's the CEO, Backpage sues Sheriff Dart in federal

court, and the goal of that lawsuit, we think Ferrer will

acknowledge this, is to get their credit card processing back

because what Backpage believes is that these threats from

Sheriff Dart are what caused the terminations rather than

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anything they had done.

During this time period, which is June to

November 2015, Backpage, including Mr. Ferrer, is actively

communicating with the credit card companies. So he's trying

to get their processing back. He's communicating with the

credit card processors, he is communicating with Visa,

Mastercard about this notion of suing Sheriff Dart in an effort

to try to convince the credit card companies to come back.

And ultimately, in November 2015 the Seventh Circuit

issues an opinion that says Dart has been enjoined from

threatening Backpage's credit card relationships, and that is a

decision that Ferrer is aware of. He's deposed in the case; he

submits a declaration in the case, so he's acutely aware of

litigation, and he's talking to our clients, my client in

particular, about the result in that case and what it means.

Now, Your Honor is correct that I think Mr. Ferrer, I

would say artfully avoided referencing Dart during his

testimony, but he was asked on September 21st at page 78 of the

transcript, he was asked, "Do you come to learn why they are

terminating your accounts," meaning the credit card accounts.

He says, "I do. There was pressure put on them. They didn't

want to be involved in content that was affiliated with the

prostitution."

So we would think if we would ask him, what pressure

were you referring to, he is going to acknowledge that pressure

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came from Sheriff Dart.

And furthermore, I think what the Court should

understand is that throughout Mr. Ferrer's interviews with the

government, there's ten or 15 interviews or something like

that, they are documented in FBI 302s and he's adopted them,

Ferrer makes references to Dart, something like 35 to 40 times.

So when the government is questioning Mr. Ferrer about the

credit card ban in advance of trial, Mr. Ferrer is orienting

himself in terms of Dart. He uses words like -- he talks about

the "Dart incident," the "Dart credit card ban." He uses terms

like "credit card Armageddon/Dart incident." That's what he is

saying in the interviews with the government. These are prior

statements that we think we ought to be able to impeach him

with.

THE COURT: Before you go on, I guess I can tell you

this: You can ask him to clarify what he meant by the "credit

card Armageddon." If he says, well, Sheriff Dart, and I think

his testimony was Sheriff Dart was writing these letters, and

so it concerned the credit card companies. But what I'm saying

is you cannot bring in anything related to the litigation.

It's confusing and it doesn't relate to this particular case or

the counts in the case.

So you can probe what he meant by "credit card

Armageddon," you can probe what happened as a result of

Mr. Dart's inquiries, but do not bring up the litigation.

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That's all I am telling you.

MR. PANCHAPAKESAN: Just briefly, if I can address the

litigation piece and then move on. So there are

contemporaneous exhibits. One of them is a government exhibit,

for example, which is, this is -- so there's Exhibit 6025,

which is a defense exhibit. That's a communication between

Mr. Ferrer and Trent Voigt, who was the CEO of JetPay, that

that's their payment processor. He tells Mr. Voigt essentially

in this exhibit, he says, quote, "If we win on Dart, then Visa

has cover for protected speech."

So in other words, during the course of this

litigation, Ferrer is of the state of mind, and keep in mind,

the government is claiming he is in a conspiracy with our

clients at this time, so his state of mind is relevant, he's of

the state of mind that this litigation is important because, A,

it's what Backpage does immediately in response to credit card

Armageddon; and B, he thinks that prevailing in a litigation,

he is telling these credits card companies, telling the

processors, he thinks that is the key to getting the credit

card companies back. That's one exhibit.

Another one, for example, is Government Exhibit 1127.

So this is July 1st, 2015 email from Ferrer, and then it's

internal at Backpage, and he says: Mastercard and Sheriff Dart

are now deciding what is legal in their legal speech. We have

a good track record on these issues.

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Ferrer is communicating internally in this time period

that there is this litigation, he thinks they are going to win,

and they can get their credit card processing back.

In terms of the litigation broadly, I think my

response is this: We think it's relevant because the

government has used this sort of term "credit card Armageddon"

to suggest that the cancellation of the credit cards put our

clients on notice that -- that there was something illegal

going on on the website; that the termination established that

notice.

And so the litigation is relevant to show that, A,

here's what they did in response, which is to sue; and B, the

result, which was favorable for them, affects their state of

mind because it's something they are relying on to say, no,

it's not something we did. It was just this threat from a law

enforcement officer, which is what caused the termination as

opposed to something wrong with Backpage website.

In terms of the notion toward litigation generally, I

just have two points. One, we would ask to be able to do what

the government did with the PSI report. So the PSI report, as

the Court recognizes, that's a Senate hearing. It's sort of a

quasi-judicial hearing that produces this report, right, that

has factual findings. It's almost like court opinion.

Mr. Ferrer is asked, "Did you read this? Was it publicly

available? Did you discuss it with the defendants? Did you

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have a reaction to it?" And there is testimony elicited about

what it put him on notice of.

We think in fairness, since that sort of testimony is

out there about prior proceedings, that we ought to be able to

do something similar, you know, within reason with foundation

in terms of the litigation.

THE COURT: Well, I'll just say this to that: But

that litigation is irrelevant because it's premised on a

different set of accusations and facts, and the Court made

findings based on a different record, and so it leads to

confusion and it's not relevant to the charges here. So I'll

give the other comment some consideration, but that's my

comment for now.

MR. PANCHAPAKESAN: Okay. Thank you, Your Honor.

THE COURT: Mr. Feder, did you have anything to add to

the record with regard to the Dart?

MR. FEDER: Not to Dart. I want to talk about the

McKenna case.

THE COURT: Well, let me move on then because -- what

is it with regard to McKenna that you want to discuss?

MR. FEDER: One second. On the 19th, both in the a.m.

and p.m. sessions, on numerous occasions the government asked

Mr. Ferrer about some correspondence with Mayor McGinn of

Seattle, and was allowed, over objection, to bring in a letter

from him talking about age verification, why can't Backpage do

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age verification procedures.

They then went on to talk about Attorney General

McKenna, who they had meetings with. Again, the subject matter

was age verification, you should implement them and you would

save a lot of people. And the implication was from Mr. Ferrer

that Backpage refused to do that because they wanted to make

more money and it would cost them money.

They even went to the extent of talking about, well,

if you -- you could have age verification in bars, and that's

easy enough, why can't you do it in the -- in the Internet

situation? And here's a quote from McKenna because they

obviously know about McKenna.

THE COURT: What is the exhibit that you're referring

to that you want to introduce?

MR. FEDER: Pages are in the a.m. session, pages 61,

77-78, 80-81, 85-86; and then in the p.m., pages 9-10, 41-42.

THE COURT: You didn't respond to my question.

MR. FEDER: I misheard it.

THE COURT: What was the exhibit, if any, that you're

referring to?

MR. FEDER: Oh, the exhibits that they were using, you

mean?

THE COURT: That you intend to use.

MR. FEDER: That I intend to use would be

Exhibit 5079, which is the McKenna decision.

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Let me just -- it's very specific. I understand your

rulings, Judge, on cases that have different facts, different

laws, but this was very specific because what happened in

Washington state is after Backpage didn't do what the A.G.

McKenna wanted and Seattle Mayor McGinn, they passed a law, a

criminal law, that says, if an underage person is published,

then the publisher is going to be criminally prosecuted.

And as a result of that, Backpage brought litigation,

brought a lawsuit, an injunction lawsuit, against Washington

State in federal court. And specifically, here's the part of

McKenna that answers what the government has done, which is to

basically skew the truth-seeking process to go all the way up

to, hey, you can have age verification process, and Backpage

refused to do it. When in fact, in the litigation, here's what

the Judge said in McKenna. At first blush, quote, on page 14,

this is the Westlaw: At first blush, requiring publishers to

check identification before publishing an escort ad seems as

commonsensical as requiring bar owners to check identification

before allowing patrons to enter the door, period.

There is, however, a few differences between these two

scenarios. The latter is an identification requirement related

to conduct, drinking alcohol in a bar. The former is an

identification requirement imposed by the government and

punishable by imprisonment related to speech. Since there is

no constitutional right to drink alcohol, Court is tasked with

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upholding the constitution if a bar identification verification

process results in a line forming outside the door, or causing

some restaurants to stop serving -- to liquor -- however,

because there is a constitutional right to free speech, the

constitution cannot permit similar collateral consequences in

the First Amendment context.

They intentionally put this evidence on leading right

up to the door of the filing of the lawsuit. They even used

the example that then became part of the McKenna decision. And

to allow them to get away with that, Judge, would just be

simply an egregious violation of the Sixth Amendment, and to

allow them to use this Court's orders as both a sword and a

shield instead of just a shield.

They are abusing this Court's order. If they stayed

away from it and they didn't put that, the letter in from Mayor

McGinn or they didn't talk about A.G. McKenna, that would have

been one thing. They did purposefully. There is no way around

it, done that. And our only response to that cannot be, well,

how come you didn't get an I.D.? Because they litigated it,

and the judge, of course, found that -- that what the mayor and

the A.G. were asking for was unconstitutional, a violation of

the First Amendment.

And if the Court is going to let them get away with

it, that's fine, but that's the record. We should be able at

the very least, I hope, artfully steer around what the

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litigation, other aspects were, but certainly as to that

paragraph that I just put on the record, Mr. Ferrer should not

be able to get away with what is in essence misrepresentations

or half truths.

THE COURT: I will look at the exhibit, but I'm going

to tell you that nothing I've heard, Mr. Feder, at this point

has persuaded me to change my ruling or to adjust it in any

way. And in particular, not to introduce some prior litigation

about a specific Washington state statute that has nothing to

do with this, the charges in this case.

MR. FEDER: It has to do with the I.D. verification

that they went to great lengths to talk about that Backpage

refused to do, and it left an unfair impression with the jury

that they were just refusing to do something as opposed to

doing what parties are supposed to do to, settle their

differences, and that is go to court and resolve it. And there

is an opinion that says they didn't have to do that because it

was an unconstitutional imposition on the First Amendment.

I will steer around if the Court orders, the rest of

the decision, but this cannot stand. That will be simply

outrageous.

THE COURT: Well, I may be simply outrageous then. I

am not going to change my ruling.

MR. FEDER: The testimony -- there is a number of

exhibits that are mentioned. I can give them to you, but in

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the transcript that I just gave you it talks about the McGinn

letter and various other things.

THE COURT: Thank you, Mr. Feder.

MR. PANCHAPAKESAN: Sorry to interrupt. I heard that

the line is silent, is what I'm being told, the dial-in line?

THE COURT: Let me try. Ms. Bertrand, can you hear

me? We'll try rebooting it.

COURTROOM DEPUTY: Counsel, can the parties hear us?

MS. BERTRAND: We can. Thank you.

THE COURT: I heard Ms. Bertrand.

Mr. Lincenberg, can you hear us?

MR. LINCENBERG: Yes. Can you hear me?

THE COURT: Yes. All right. I don't know where we

dropped you off. Mr. Feder has finished speaking about

McKenna. Did you hear that?

MR. LINCENBERG: No, we were dropped off about ten

minutes ago. I can obviously get filled in by other counsel or

a summary of where the Court is at. That would be helpful.

THE COURT: I will not recount Mr. Panchapakesan's

statement to the Court because I think he can probably brief

you on that, or you can receive a transcript of the proceeding.

MR. LINCENBERG: We heard the Dart argument. We got

dropped off right before that.

THE COURT: As I said, you can review the transcript

of that, but Mr. Feder laid a record as to why he should be

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able to read in paragraphs of the McKenna decision, and I have

so far denied that.

And so let me inquire, Ms. Bertrand, with regard to

what I had previously discussed, which was actually related to

the Dart litigation, did you have anything further to add?

MS. BERTRAND: No, not regarding the Dart litigation.

Thank you.

THE COURT: All right. Let me see if government

wishes to respond to either the Dart litigation or McKenna?

MR. BERRY: Your Honor, with regard to, I am going to

start in reverse order here, just for my memory's sake.

With regards to McKenna issue, I think the Court is

obviously leaning in the direction of excluding that, and we,

of course, would strenuously object to reading to the jury or

cross-examining Mr. Ferrer with portions of a Court opinion.

Yes, Judge Posner said some things the defense liked;

the court in Washington said things the defense liked, but as

Your Honor has repeatedly pointed out, those are different

facts, different cases, different statutes, and it would be

extremely confusing to the jury for us to have to hash that out

in front of them.

And that transitions to the Dart issue. In Document

516 filed with this court, we filed an attachment which was

listed as Exhibit A, so 516-1, that is the order from the

Northern District of Illinois sanctioning Backpage for their

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misrepresentations in the Dart litigation. And so if any of

this Dart litigation comes up, we don't have any choice but to

start trying to explain to the jury, well, how did it actually

shake out? And one of the things that shook out was Backpage

was sanctioned $250,000 for their misrepresentations in that

litigation that occurred before Judge Posner issued that

decision that they liked so much. So they want to get into

that great favorable decision that we didn't have to do this.

That's exactly what the mini trial is that 403 says we should

not engage in, so we think the Court is correct leaning towards

excluding that stuff all together.

THE COURT: All right.

MR. PANCHAPAKESAN: Can I just briefly respond on this

point?

THE COURT: Yes, Mr. Panchapakesan.

MR. PANCHAPAKESAN: My understanding, I don't have the

document in front of me, my understanding is that Sheriff Dart

sought sanctions before the District Court when the indictment

in this case was issued, and that's because Ferrer's

declaration in that case was inconsistent with what the

indictment here says.

My understanding is that Ferrer defaulted in that case

so there was a sanctions order issued, but I don't understand

the sanction order to be, to predate Judge Posner's opinion,

but that's my understanding.

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THE COURT: So here's exactly an example of why we're

not going to get into Dart litigation because it leads down

this path of what occurred in the litigation and has nothing to

do with the allegations in the case, and so I think counsel are

making my point.

Let me move to --

MR. LINCENBERG: Your Honor, may I -- Your Honor, will

the Court indulge me to have a short reply to what government

counsel just argued?

THE COURT: Well, you have Mr. Panchapakesan here, but

I will permit you, yes.

MR. LINCENBERG: I'll keep it short, Your Honor. Your

Honor, if the facts as the government's position is that the

facts are irrelevant, or the Court's position is it's relevant

because Dart wasn't a Travel Act case, but for the same reason

all of the government's evidence of credit card Armageddon

should have been excluded and should be excluded as irrelevant

because it's not a Travel Act case.

To the extent that those facts that the government

claims underlie the termination of credit cards are relevant,

then they are equally relevant for the defense to explore. And

so if the Court is not going to explore the litigation itself,

then the Court should exclude all evidence based upon those

same facts.

THE COURT: All right. Let's move forward. With

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regard to specific exhibits, and I asked in particular that the

government reply to the outline of cases in defendant's

response at Document 1803 regarding these cases and

nonprivileged letters and memorandum from, quote-unquote,

professionals, and I've looked at the cases. I've looked at

both parties' description of them. And let me just say that I

think there are differences, which don't change this Court's

analysis on the advice of counsel.

Let me point out in Cheek vs. United States, there the

Court did not opine on the admissibility of the evidence, and

that case does not stand for the proposition that defendants

can use certain exhibits to cross-examine Mr. Ferrer about the

advice from attorneys that he or any other defendant received

without first establishing those four elements that go to

advice of counsel.

The State vs. Munoz case, the Ninth Circuit's 2000

opinion, this related to the admissibility of the attorney

opinion letter that was not contested at trial because that --

that attorney was a key witness for the government, and so

there was no question or argument about the admissibility of

that letter, so it doesn't fit squarely here.

And I will say just in terms of looking at these

exhibits, Exhibit 5329, this is a general introduction letter

from some lawyer about: I was newly hired. And it then offers

some broad statements. I don't think it's relevant. It is

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actually an attorney-client letter. Again, I don't know

whether or not there's a privileged communication that's been

waived there. It doesn't seem to me that that letter was in

response to any particular question. These are just general

statements about really not anything that I can tell, and so

that exhibit is, in my view, not admissible.

Exhibit 5507 clearly discusses the CDA and Section

230. I've already ruled that any exhibits that reference the

CDA or rely upon it are not relevant.

I'm not entirely sure what 6025 relates to, what the

impetus for that particular exhibit and statement was, and so

at this juncture I don't find it relevant. I'm trying to read

my own handwriting on this.

6043, this was some sort of a communication by

Scott Spear regarding the assistance of counsel. Here too, I

don't know that there's any waiver and what the question was

specific to receiving the assistance of counsel, what the

question was posed, and, therefore, my prior ruling stands.

There is also this communication by Mr. Suskin in

Exhibit 6109 regarding his opinion that there's no liability.

But there again, I don't know what the question was to

Mr. Suskin. I don't know if there's been a waiver that has not

been shown to me. I don't know what the four factors that are

required by the Ninth Circuit in advancing an advice of counsel

defense is, and so on my review those particular exhibits are

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not admissible.

And I want to point something out the government

pointed out in their reply that at some point defense counsel,

I think it was Mr. Cambria, used the term "professional," that

this was a professional outfit, a professional operation, and I

went back to look at that McLennan opinion where that Court

basically said: Defendants who claim good faith based upon

reliance of a professional must show those four factors.

So whether or not you call them professional, if they

are attorneys that are hired to provide this kind of advice,

what have you, that's irrelevant. The four factors must be

linked before the Court before making that argument, and so I

don't find any reason in the briefing to change my -- my prior

ruling that any lawyer advice that is given is meaningless

unless you know what the question was that was put before them.

And until we have that, and the response was related to that

question, you can't bring it in. It's just -- that's my ruling

and I am not going to adjust it.

MR. CAMBRIA: May I be heard, Your Honor?

THE COURT: Yes, you may be further heard.

MR. CAMBRIA: First thing is first, there is a

commingling, if you will, by the government of the good faith

defense and the advice of counsel defense. They are two

separate things. The cases do not require a specific

foundation like in an advice of counsel for good faith. For

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example, in the cases that we cited, one of which was, if you

recall this, some of it was involved in marketing, and they

called an individual to testify about highs and lows and

averaging in marketing, that's not an attorney at all. And

there wasn't any requirement in any of those cases that there

are four specific or two or even one factor as opposed to a

fact that may affect the state of mind of the defendant.

Look at Cheek, for example, Cheek is different. Cheek

obviously is an IRS case, and specific intent, as in the Travel

Act, is relevant. And basically there it was a matter of,

here's somebody that goes to people who aren't even lawyers and

listens to what they have to say and is -- is allowed,

according to the decisions, to come in and say, "Well, I can't

have a criminal intent. I believed what I was told by lay

people," if you will. In some cases it's, "I believed what I

was told by certain lawyers who wrote letters." Not even that

fellow's lawyer, but just a lawyer that wrote letters.

They didn't have a lawyer-client relationship, and

those types of things are admissible and there isn't any

foundation of four different factors.

The government keeps trying to weld these two

together, advice of counsel and good faith. They are

different. And it may very well be that we would have evidence

of good faith if we were able to satisfy the several factors,

then we might also have evidence of advice of counsel and be

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entitled to an instruction on that, but they are not mutually

exclusive.

And so each of these cases, especially the Sixth

Circuit case that we cited, that talked about the Travel Act,

and if you'll recall there that was a case where an individual

was doing bingo, I guess in Kentucky, and his good faith

evidence that he wanted to put in was that he was told he

couldn't, was that an assistant D.A. told him that if things

are legal in Kentucky and a deputy sheriff told him things are

legal in Kentucky, and they had excluded that, and the Court

found that that was reversible because it affected his argument

that he was operating in good faith as opposed to demonstrating

a specific intent to break the law.

So first of all, there is no case that says good faith

has a four-prong foundation. That's advice of counsel. They

are different things. And so what we're saying is anything

that could affect the specific intent of our clients, that

would affect their state of mind, is admissible as good faith.

The government here, for example, they've put in what

they felt was evidence of criminal mind, criminal intent; for

example, the Attorney General's letters and so on, and they are

not tied to the Travel Act. They are not tied to the 50 ads

that are in this indictment. They are not tied to anything.

They are just a dump of information which the government says,

oh, well, see, this shows that they are being told they were

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violating the law, and we should be able to put in the answer

to demonstrate, no, our state of mind is influenced by this,

which was the response, and that would demonstrate our good

faith. That would be our position to argue that. That

demonstrates our good faith.

None of the cases that deal with good faith have a

cataclysmic, if you will, foundation except to say, "Here's

what I was told." And the courts have even gone so far to say

that you could be told something that's laughable and it's

still admissible at that point.

So here we are, we're saying all we want to show is

that -- here's what is unfair about what they have done: They

put in the Attorney General's letter, so now you have all these

Attorney Generals, and the jury is sitting here going, wow, all

these chief law enforcement people around the country are

telling these people they are doing something wrong, they must

be doing something wrong. We have a response to that.

106 says that a response should be given when it

fair -- when it's fair. Without the response, the jury could

very well conclude, well, they didn't even respond. That would

be like me accusing you of something, Your Honor, God forbid,

and you would not answer and then somebody goes, well, must

have been true; there was no response.

So here we are sitting here, we have good faith

evidence. We have decisions from courts, we have statements

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from attorneys, we have activities that occurred that would

influence our state of mind. There is no case that says this,

this, this and this needs to be established before you can put

in state of mind evidence. That's advice of counsel. It's in

two stages. I could have both. I could have state of mind and

then if I achieve the foundation I could get an instruction on

advice of counsel, but right now we would like to put in, for

example, the answers to the accusations to show our state of

mind was influenced by those answers that were created by lay

people, by lawyers, by others.

I mean, if you look at Cheek and some of the other

cases, they didn't have a lawyer-client relationship with

individuals that generally put out opinions, but they use them,

and the Court said that that was -- that it was appropriate to

do so. What I find really appropriate about Cheek is that the

lady that's in the hall down here in this courtroom whose named

after was in the majority opinion there as well, and it seems

to me that when you read these cases, there is no special

foundation. All there is is somebody said something or you've

seen something, including, including public documents, public

documents have been included in good faith and you can rely on

them.

In one case we had a situation where the individual

said, "Well, my mother was a citizen, so I didn't think I had

to check in," and so on, and they put -- they will put those

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records in, and they said you could rely on those. The jury

may not buy it, but it's evidence that you are able to put in

on good faith. So here, we're sitting here. Right now they

created this impression where the Attorney General letter, just

as an example, that we were accused of these things and we

never responded, so we must be guilty.

In fairness, we should be able to put our response in

and we should be able to be in a position to argue to the jury

in the end, look, they had this response. In good faith they

felt they were doing the right thing. That is a distinct

defense separate from advice of counsel, and we should be able

to do it.

THE COURT: Are you finished?

MR. CAMBRIA: It looks like I am. Yes.

THE COURT: All right. Mr. Berry.

MR. BERRY: Well, that was a lot. I will try to be

brief about this. I think that we have litigated this ad

nauseam, was the reason we filed the Motion in Limine. We have

addressed this multiple times before Your Honor, and I think

you have correctly consistently ruled that there are four

factors that they have to go through to be able to meet this

defense.

As we put in our most recent filing, we are not afraid

of this defense. We are not trying to prevent them from

engaging in advice of counsel defense if they comply with the

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law. If they are not willing to do that, then it's not fair to

the United States to have them get up there and say, "And now

who was it that said this to you, Mr. Ferrer, who gave you this

advice," so and so, "and was that person an attorney?" And

turn and wink at the jury.

You can call it professional, you can call it

nonprofessional attorney opinion. My father-in-law would say

you can call it bananas because the bottom line is they are

trying to smuggle in this defense with this idea it's good

faith. On that point, we are also not shying away that the

Ninth Circuit says good faith is a valid defense. We are not

suggesting that is not true and that's not the law in the Ninth

Circuit. That's absolutely the law, but you can't do it the

way that they are doing it.

And what they are trying to do is just say that it's

general good faith and, oh, by the way, it happened to be an

attorney. Wouldn't you rely on that too, ladies and gentlemen

of the jury?

So we think Your Honor is correct in these rulings and

we ask you to stand by those rulings. If Your Honor is

inclined to be receptive to any of the arguments that you've

heard today from the defense, we would be happy to brief this

further, but as I said, I think you've heard enough on this.

THE COURT: Just so I will reflect on Mr. Cambria's

statements, but at this juncture I am not inclined to change my

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ruling.

I think those were the only issues that you raised in

your objections to exhibits; is that correct?

MR. BERRY: I wanted to double-check that, Your Honor.

We went through each of the advice of counsel exhibits that we

listed. I think the only one that I don't have a note that you

addressed was -- was 6066, and if you addressed that I

apologize, but I didn't make a note about that. I assume your

ruling would be the same on that one. That is --

THE COURT: That was the e-mail between Mr. Ferrer,

Mr. Spear and someone named Alex about the Terms of Use and

banner ads; is that right?

MR. BERRY: Yes.

THE COURT: This falls into one of those categories.

I don't know what the question was.

MR. BERRY: Right.

THE COURT: I don't know whether or not there's a

waiver, and so as far as I can see it is not admissible under

those prior statements I made.

MR. BERRY: And then --

THE COURT: Just let me just note for the record,

Ms. Bertrand also has disconnected and she's not --

MS. BERTRAND: I am here.

THE COURT: Oh, okay. Did you not disconnect?

MS. BERTRAND: I am here.

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THE COURT: Okay.

MR. PANCHAPAKESAN: Sorry to interrupt.

MS. BERTRAND: Looks like Mr. Lincenberg is with that

same group. I have been here. I have heard everything.

THE COURT: Mr. Lincenberg, are you still there?

MR. LINCENBERG: I am, Your Honor.

THE COURT: Okay. All right. You can continue.

MR. BERRY: Yes, Your Honor, sorry. Just very

quickly. Going through our brief in 1801 section 2, subsection

(a), other litigation, I take your ruling without going exhibit

by exhibit is those are not admissible, and then the same with

section B, the ones listed there. If I am incorrect, we'd like

a clarification on that.

THE COURT: No. That is -- my ruling will stand with

those as well.

MR. BERRY: With regards to Attachment A, the ones we

are stipulating to, obviously no problem there. They can do

what they want with those.

Then with Attachment B, the 220 additional, here, go

find some other links to these other websites, your ruling was

on the five there.

THE COURT: Well, my ruling -- yes, yes, and it's

confined again to what Mr. Ferrer testified on those particular

days that I outlined at the very beginning, and that relates

there to the five that they are permitted to introduce.

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MR. BERRY: That's all from me, Your Honor.

THE COURT: Let me just, sorry, Mr. Feder, you were

saying something.

MR. FEDER: I thought the Court was still considering

the three, three that we discussed that were from Maryland in

response to the Ferrer's testimony about the law enforcement

person from Montgomery County.

THE COURT: I was going to look at that and I will let

you know tomorrow.

MR. PANCHAPAKESAN: There was a specific exhibit I

wanted to be heard on briefly.

THE COURT: What was that?

MR. PANCHAPAKESAN: 5507, I wanted to be heard on

that.

THE COURT: That was raised by the government.

MR. PANCHAPAKESAN: Yes, Your Honor.

THE COURT: What is it 5507?

MR. PANCHAPAKESAN: On page 3 of Docket 1801.

THE COURT: Okay. What do you wish to say?

MR. PANCHAPAKESAN: So 5507, Your Honor, there is

actually a companion exhibit, which is 5508, that was not in

the government's filing, that's an October 18th, 2010, e-mail

from my client to the Bank of Montreal.

THE COURT: Sorry, I am sorry, 5507; is that right?

MR. PANCHAPAKESAN: 5507 is an attorney opinion

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letter.

THE COURT: And is that listed in Attachment A or

Attachment B?

MR. PANCHAPAKESAN: It's actually in their brief.

It's in the chart. I can look at the top of page 3.

THE COURT: Not one of the stipulated --

MR. PANCHAPAKESAN: Right.

THE COURT: Okay. Yes.

MR. PANCHAPAKESAN: Just a little background on this.

So the companion exhibit is 5508, which is not listed there,

but that's an October 2010 e-mail from my client, Mr. Brunst,

to Mary Latta, who is a representative of Bank of Montreal. As

the Court knows at this point, Bank of Montreal was a major

lender to the parent company of Backpage from about 2006 to

2014, and so my client's role as CFO was to communicate this

sort of thing to lenders, meaning the business and legal risk

involved with Backpage.

Further, Mr. Ferrer testified to a couple of exhibits

involving the Bank of Montreal, Exhibit 616a was one of them.

That's November 10th communication with the bank. Exhibit 886

is another one. And the gist in Mr. Ferrer's testimony, for

example, the transcript is 9-21 at page 92 to 93, the gist of

Mr. Ferrer's testimony is that my client acted deceptively to

the bank.

And so what this e-mail and memo goes to is, one, my

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client's good faith towards disclosing the legal risks of the

Backpage enterprise to the bank; and then two, to rebut this

charge of Mr. Ferrer that my client was acting deceptively

toward the bank.

As to the memo, Your Honor is correct that it does

largely deal with the CDA, but on page 21 of the memo, page 21,

5507, it specifically talks about criminal liability; talks

about aiding and abetting prostitution; it talks about

promotion of prostitution. There is even a section, I think on

page 23, that the heading is, even if Section 230 does not

apply, the First Amendment would prevent imposition of criminal

liability. So it is -- in a sense it's talking about the

Travel Act. It doesn't say those words, but that is what the

Travel Act is, is the criminal aiding and abetting of

prostitution.

And I think the best case for the admission of this

letter is the U.S. vs. Way case. That's --

THE COURT: It's kind of, as you've already described

it, and I will look at it again, criminal liability, aiding and

abetting of prostitution, is shielded by the, I think you said

something about the First Amendment, it's wrong. It's not a

correct statement of the law.

MR. PANCHAPAKESAN: Well, Your Honor, I mean, under

the case law, it's not -- it wouldn't be coming in for the

truth of the matter. It would be coming in to show that my

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client is making a good faith attempt to disclose to the bank,

look, here's the risk. It's not only a civil risk, but it's a

criminal risk; right? Here's what our attorney is saying in a

nonprivileged communication. And so it's not the truth. It

just goes to the fact that the CFO is trying to make an attempt

to be open and honest with the bank, and it counters this

notion that he is being deceptive or tricking the bank.

And just sort of the last point I want to make more

broadly is, is that there are numerous exhibits that were

introduced in Mr. Ferrer that are attorney communications. So

anytime the Court sees names like Steve Suskin or Samuel Fifer

or Ed McNally, or Liz McDougall, all of them are attorneys, and

I think there was some testimony to that effect, at least as to

Mr. Suskin, that he was in-house counsel. There is also

government exhibit, like Exhibit 588, slide 23, which talks

about legal strategy for 2010, and the government elicited

testimony from Mr. Ferrer as to what that means, this sort of

slow dance with the Attorneys General.

So the point is the government, through Mr. Ferrer,

has used the fact of attorney communication, the fact of legal

strategy as evidence that our clients are engaged in bad faith.

So I think to some extent that opens the door to us being able

to come back and say, no, the existence of attorneys is

actually good faith, and I think that door is opened by some of

the specific testimony and exhibits that Mr. Ferrer was asked

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about.

THE COURT: And I think I just make the observation

that there's a reason why the Courts treat communication by

lawyers differently, and that's why you have these bright-line

requirements and all of the hurdles that have to be met before

even generic communications by lawyers comes about.

And so anything further, Mr. Panchapakesan?

MR. PANCHAPAKESAN: Only thing I would point out, Your

Honor, is I think one of the cases, I don't know if Your Honor

mentioned this case, United States vs. Way, that's an Eastern

District of California case that we site in our briefing.

THE COURT: I read it.

MR. PANCHAPAKESAN: And what that court says is

evidence regarding this letter, attorney opinion letter, and

defendants' awareness of its content are admissible on the

question of whether defendant acted with a culpable state of

mind.

The Court goes on to say: Whether the defendant is

entitled to an --

THE REPORTER: Slow down.

MR. PANCHAPAKESAN: The Court says: Whether the

defendant is entitled to an advice of counsel jury instruction

will be resolved at the appropriate time.

So in other words, what the Court is saying is there

is a bright-line distinction. On the one hand, evidence

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negates intent, and on the other an advice of counsel defense

for which the Court accurately points out there are certain

predicates required for that. And so I think that's part of

what Mr. Cambria is saying is there is a distinction, I think,

between on the one hand evidence, even if it's a nonprivileged

attorney communication that negates intent on the one hand, and

on the other advice of counsel which requires a jury

instruction.

THE COURT: All right. Well, again, I will think

about Mr. Cambria's oral presentment, but at this juncture my

ruling stands.

Now, we are at the 5:00 o'clock hour. And let me just

say this, Mr. Feder, and to all counsel, I understand that

folks get fatigued. This is a very long trial, very long days,

lots of exhibits, but I ask each of you to remember your

professional responsibility in presentment to the Court.

Mr. Feder, while the record did not reflect when I

sustained an objection on Friday, you fairly well stomped your

foot, stopped, dropped your jaw and rolled your eyes at me. I

didn't take kindly to it. And I suspect more importantly for

your, on your behalf, the jury I'm sure may not have deemed it

in the best of light.

So be aware, be mindful that the jury is always

watching, and don't become argumentative with the witness

because you're passionate about your case. I understand that

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sometimes it will happen, but I will not hesitate to remind you

to take a moment to step back and cool off. Do bear that in

mind.

If there's nothing further, then I will look at these

other few matters and I will visit with you right before we

bring the jury in. Do be mindful that we start at 8:45

assuming all our jurors are there.

Let me make one last comment while it's on my mind.

We have a looming government shutdown. Assuming that the folks

can get their act together, we won't have to worry about it,

but I only say this because I'd like government counsel to give

me assurances that after next -- after when do we come back the

10th of October, if we are still in a government shutdown, that

government counsel will be here because the Court will be in

operation, and I'll let the jurors know that as well. So

please let me know that tomorrow if you would.

MR. BERRY: I think Mr. Rapp has a response.

MR. RAPP: Judge, we are all, believe it or not, we

are all essential. All the attorneys on this team, we intend

to be here.

MR. CAMBRIA: Objection.

THE COURT: And that is duly noted. All right. With

that, I will see you tomorrow.

(Proceedings concluded at 5:04 p.m.)

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C E R T I F I C A T E

I, HILDA E. LOPEZ, do hereby certify that I am duly

appointed and qualified to act as Official Court Reporter for

the United States District Court for the District of Arizona.

I FURTHER CERTIFY that the foregoing pages constitute

a full, true, and accurate transcript of all of that portion of

the proceedings contained herein, had in the above-entitled

cause on the date specified therein, and that said transcript

was prepared under my direction and control.

DATED at Phoenix, Arizona, this 12th day of October,

2023.

s/Hilda E. Lopez_______

HILDA E. LOPEZ, RMR, FCRR

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