Case 2:18-cr-00422-DJH Document 1607 Filed 06/15/23 Page 1 of 5
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`GARY M. RESTAINO
`United States Attorney
`District of Arizona
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`KEVIN M. RAPP (Ariz. Bar No. 014249, kevin.rapp@usdoj.gov)
`MARGARET PERLMETER (Ariz. Bar No. 024805, margaret.perlmeter@usdoj.gov)
`PETER S. KOZINETS (Ariz. Bar No. 019856, peter.kozinets@usdoj.gov)
`ANDREW C. STONE (Ariz. Bar No. 026543, andrew.stone@usdoj.gov)
`Assistant U.S. Attorneys
`40 N. Central Avenue, Suite 1800
`Phoenix, Arizona 85004-4408
`Telephone (602) 514-7500
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`DAN G. BOYLE (N.Y. Bar No. 5216825, daniel.boyle2@usdoj.gov)
`Special Assistant U.S. Attorney
`312 N. Spring Street, Suite 1400
`Los Angeles, CA 90012
`Telephone (213) 894-2426
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`KENNETH POLITE
`Assistant Attorney General
`Criminal Division, U.S. Department of Justice
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`AUSTIN M. BERRY (Texas Bar No. 24062615, austin.berry2@usdoj.gov)
`U.S. Department of Justice
`Child Exploitation and Obscenity Section
`1301 New York Avenue, NW, 11th Floor
`Washington, D.C. 20005
`Telephone (202) 412-4136
`Attorneys for Plaintiff
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE DISTRICT OF ARIZONA
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`United States of America,
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`Plaintiff,
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`v.
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`Michael Lacey, et al.,
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`Defendants.
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`CR-18-422-PHX-DJH
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`UNITED STATES’ RESPONSE TO
`DEFENDANTS’ MOTION IN LIMINE
`TO PRECLUDE EVIDENCE RE
`MERSEY AND ELMS
`(Doc. 1593)
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`Case 2:18-cr-00422-DJH Document 1607 Filed 06/15/23 Page 2 of 5
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`The Court should deny Defendants’ motion to preclude evidence relating to
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`unindicted co-conspirators David Elms and William “Dollar Bill” Mersey, including
`statements made by them. Elms and Mersey affirmatively furthered the charged
`conspiracy—which lasted from 2004 through April 2018—and their statements are thus
`admissible pursuant to Fed. R. Evid. 801(d)(2)(E). (See Doc. 230, ¶196; Doc. 929 at 7-10.)
`Argument
`Relevance. The court previously denied the United States’ motion to admit
`1.
`communications with Elms and Mersey, finding “the Court cannot in any way determine
`the veracity of the claim that the communications further the conspiracy without
`determining the content of the specific statements, and whether they were made in a context
`that furthered the conspiracy.” (Doc. 1162 at 3.) But here, Defendants take issue with the
`timing of the communications, arguing that “evidence disconnected from those ‘fifty
`distinct occasions’ [on which Defendants published the ads described in the SI’s Counts 2-
`51] is relevant neither to the Travel Act counts, nor can it be admitted under the co-
`conspirator hearsay exception.” (Doc. 1593 at 4.) This argument has no basis in fact or law.
`(1) Doc. 946 supports a broader concept of relevance and admissibility regarding
`the counts (see, e.g., Doc. 946 at 13 (“The [SI’s] 92 detailed pages of allegations directly
`bearing on Defendants’ Travel Act violations surely place them on notice of their
`association with individuals and groups engaged in the business of prostitution.”); Doc.
`946 at 13-14 (explaining that Defendants’ publication of the 50 ads identified in Counts 2-
`51 were part and parcel of “a continuous course of conduct where Defendants facilitated
`‘unlawful activity…’)
`(2) in denying Defendants’ written mistrial motion, filed after the United States’
`opening statement, the Court rejected the same argument that (based on a single, out-of-
`context, quote from Doc. 946 at 13) all non-charged ads, all non-charged victims, and all
`other evidence not directly relating to the 50 ads are irrelevant or otherwise inadmissible.
`(See Doc. 1272 at 1-3; Doc. 1275 at 1-11; Doc. 1342 at 7 and 9; Doc. 1603; see also U. S.
`v. Fuchs, 218 F.3d 957, 961 (9th Cir. 2000) (“In order for the conspiracy to have occurred
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`Case 2:18-cr-00422-DJH Document 1607 Filed 06/15/23 Page 3 of 5
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`during the statute of limitations period, only one overt act in furtherance of the conspiracy
`must have occurred during that period.”)
`a.
`Backpage’s Reciprocal Link Agreement with The Erotic Review (TER).
`The SI details Backpage’s reciprocal link relationship with TER, and the critical
`role that relationship played in Backpage’s development as a source of online prostitution
`ads. (SI ¶¶45-58.) Ferrer is expected to testify that he met TER’s founder, Elms, in person
`(with Defendant Spear’s knowledge and approval) to further a profitable business
`relationship. Ferrer also had numerous email exchanges with Elms that discussed
`compensation, efforts to disguise their relationship, and how to increase referral traffic,
`among other things.1 In 2009, Elms was arrested for his involvement with an escort service
`known as Desert Divas. (See Ex. A; Trial Ex. 573.) Larkin alerted Spear and Ferrer to the
`story about three months after Elm’s arrest. (See Ex. A; Trial Ex. 28.)
`The United States anticipates that the trial testimony will show that, although
`Defendant Padilla sent an email to Backpage staff instructing them to remove TER
`references from postings in 2011, Backpage continued to publish review identification
`numbers that “Johns” could use to look-up TER reviews of prostitutes. (See Doc. 1591, Ex.
`A.)2 As further evidence that Backpage continued to allow TER identifiers in Backpage’s
`ads, a reporter raised the issue with Backpage in 2016. (See Ex. A, Trial Ex. 836.)
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`b.
`Backpage’s Affiliate Partnership with William “Dollar Bill” Mersey.
`The SI also details Backpage’s relationship with “super affiliate” Mersey. (SI ¶¶59-
`67). Mersey received discounts and commissions on thousands of Backpage prostitution
`ads. (SI ¶¶59-67.) Larkin directed Ferrer to develop partners, including Mersey, for
`Backpage’s adult section. In a 2009 email from Mersey to Ferrer, Mersey boasts that he
`has “forwarded millions of dollars to Village Voice” in the last 10 years. (See Ex. B, Trial
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` 1(See Ex. A, Trial Exs. 19, 20, 28, 558-560, 564, 564(a), 567, 567(a), 568, 570, 571, 573,
`575, 575(a), 647a-e, 837, 1154, 1172, 1946, 1946a, and 1946b.)
`2 Defendant Padilla concluded his email by directing staff with questions “to contact him
`or [Defendant] Joye [Vaught].” (See Doc. 1591, Ex. A.)
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`Case 2:18-cr-00422-DJH Document 1607 Filed 06/15/23 Page 4 of 5
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`Ex. 582.) He exchanged numerous emails with Ferrer that discussed compensation, his
`placement of ads, and complaints about the removal of “his” postings.3 The relationship
`with Mersey was terminated in 2012, but only after Backpage received a subpoena from
`the IRS.4
`Evidence concerning Elms and Mersey is relevant to the charged
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`c.
`offenses under Fed. R. Evid. 401-402. This evidence, at a minimum, shows that
`Defendants knew that their website was in the business of publishing prostitution
`solicitations. See U. S. v. Lacey, 423 F. Supp. 3d 748, 760-61 (D. Ariz. 2019) (discussing
`how these prostitution marketing strategies demonstrated Defendants’ intentional
`operation of Backpage as a prostitution-advertising website). Importantly, it shows that
`Defendants intended to facilitate their customers’ prostitution businesses by working with
`websites like TER and advertisers like Mersey.
`2.
`The Conspiracy Between Defendants, Elms, and Mersey. This Court has ruled
`that it requires proof that the emails furthered the conspiracy before allowing their
`admission. (Doc. 1212 at 3-5.) While it cannot rely solely on the coconspirator statements
`themselves, U. S. v. Castaneda, 16 F.3d 1504, 1507 (9th Cir. 1994), Ferrer is expected to
`testify about the context and circumstances surrounding these emails. He will explain how
`Elms and Mersey were critical to prostitution marketing strategies during the early years
`of the conspiracy (2004-2012). (See also SI ¶¶9, 34, 45-67.) Last, the United States
`anticipates that the proof at trial will show that Elms and Mersey were participants in a
`“chain”-type conspiracy. (Cf. Mot. at 6 and n.2.)
`In sum, the communications were made in furtherance of the conspiracy by co-
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`conspirators who had a vested interest in the success of the conspiracy. The emails should
`be admitted under Rule 801(d)(2)(E) and Defendants’ motion should be denied.
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`3 (See Ex. B, Trial Exs. 34, 36, 39, 39(a), 41, 42, 42(a), 582, 738, 739.)
`4 (See Ex. B; Trial Exs. 738, 739.)
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`Case 2:18-cr-00422-DJH Document 1607 Filed 06/15/23 Page 5 of 5
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`Respectfully submitted this 15th day of June, 2023.
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`GARY M. RESTAINO
`United States Attorney
`District of Arizona
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`_s/Kevin M. Rapp_________
`KEVIN M. RAPP
`MARGARET PERLMETER
`PETER KOZINETS
`ANDREW STONE
`DANIEL BOYLE
`Assistant U.S. Attorneys
`KENNETH POLITE
`Assistant Attorney General
`Criminal Division, U.S. Department of Justice
`AUSTIN M. BERRY
`Trial Attorney
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`CERTIFICATE OF SERVICE
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`I hereby certify that on June 15, 2023, I electronically transmitted the attached
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`document to the Clerk’s Office using the CM/ECF System for filing and transmittal of a
`Notice of Electronic Filing to the CM/ECF registrants who have entered their appearance
`as counsel of record.
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`s/ Daniel Parke
`Daniel Parke
`U.S. Attorney’s Office
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