Case 2:18-cr-00422-DJH Document 1879 Filed 10/20/23 Page 1 of 15
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`
`
`rafficGary S. Lincenberg (admitted pro hac vice)
` glincenberg@birdmarella.com
`Ariel A. Neuman (admitted pro hac vice)
` aneuman@birdmarella.com
`Gopi K. Panchapakesan (admitted pro hac vice)
` gkp@birdmarella.com
`BIRD, MARELLA, BOXER, WOLPERT, NESSIM,
`DROOKS, LINCENBERG & RHOW, P.C.
`1875 Century Park East, 23rd Floor
`Los Angeles, California 90067-2561
`Telephone: (310) 201-2100
`Facsimile: (310) 201-2110
`
`Attorneys for Defendant John Brunst
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`
`
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`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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`vs.
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`Michael Lacey, et al.,
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`Defendants.
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`
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` CASE NO. 2:18-cr-00422-PHX-DJH
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`DEFENDANT JOHN BRUNST’S
`MOTION TO SEEK ADMISSION OF
`BRUNST’S TESTIMONY RE: STATE
`OF MIND
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`3895279.4
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`BRUNST MOTION TO SEEK ADMISSION RE: STATE OF MIND TESTIMONY
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`Case 2:18-cr-00422-DJH Document 1879 Filed 10/20/23 Page 2 of 15
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`Defendant John Brunst respectfully seeks Court approval to testify as to his state of
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`mind during the defense case. Mr. Brunst files this motion because the anticipated
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`testimony would violate prior Court Orders. If the Court intends to preclude such
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`testimony, Mr. Brunst likely would not testify at trial.
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`I.
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`PROFFERED TESTIMONY
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`Counsel proffers that Mr. Brunst likely would testify, among other things, to the
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`following:
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`• Mr. Brunst rarely met with counsel who advised Backpage on the lawfulness of
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`Backpage’s adult advertising and rarely met with counsel who had handled
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`litigation relating to the adult advertising.
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`• Nevertheless, Mr. Brunst learned about such counsel’s advice and litigation
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`positions. This sometimes came orally or in writing from Mr. Larkin. On
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`occasion, Mr. Brunst heard it from attorneys Don Moon, Liz McDougall, and
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`Steve Suskin. On occasion, Mr. Brunst saw a written legal memorandum. For
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`example, Mr. Brunst saw a legal memorandum prepared by attorney Mark
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`Sableman (a partner at Thompson Coburn) in late 2010 regarding protections
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`afforded to Backpage under the First Amendment and the Communications
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`Decency Act. Advice like this—that Backpage’s adult ad section was protected
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`by both the First Amendment and the Communications Decency Act—was the
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`subject of Mr. Ferrer’s interviews with Government counsel during his pre-trial
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`interviews (see, e.g., 04/05/18 MOI at ¶¶ 67, 88; 04/17/18 MOI at ¶¶ 142, 145).
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`Mr. Brunst’s testimony on this subject is relevant for several reasons: (i) it
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`shows that the banks have long been aware of and communicating about
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`Backpage’s adult ads; (ii) the attorney advice and statements from Mr. Larkin
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`gave Mr. Brunst a good faith belief that the business was operating lawfully;
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`(iii) Bank of Montreal’s (“BMO”) continued banking with the company
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`throughout the relevant time period gave Mr. Brunst comfort that BMO was
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`satisfied that the business was operating lawfully; and (iv) it counters any
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`3895279.4
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`BRUNST MOTION TO SEEK ADMISSION RE: STATE OF MIND TESTIMONY
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`Case 2:18-cr-00422-DJH Document 1879 Filed 10/20/23 Page 3 of 15
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`suggestion by the Government that Mr. Brunst was hiding things about
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`Backpage’s adult ads from banks.
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`• While Mr. Brunst was not involved in the litigation and government
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`investigations involving Backpage’s adult section, he generally monitored these
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`issues. While he played almost no role in the litigation, as the CFO, he tracked
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`litigation because: (i) he was aware of the legal expenses of attorneys
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`representing Backpage; (ii) the auditors sought representation letters from
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`counsel as to risks posed by litigation; and (iii) legal complaints and adverse
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`decisions (the legal decisions as to Backpage were generally all favorable) could
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`impact the valuation of the company, the willingness of investors to invest and
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`banks to lend, and other financial issues. Mr. Brunst relied on favorable court
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`decisions, in particular the McKenna and Dart decisions (but also other
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`Backpage and Craigslist decisions), in believing that he could continue to serve
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`in good faith as CFO of the holding company and perform any parent-level
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`duties related to Backpage. Indeed, if Judge Posner had delivered the opposite
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`opinion in 2015—and determined that Sheriff Dart was justified in his actions
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`because Backpage was operating unlawfully—Mr. Brunst would not have
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`continued to do business with Backpage. Indeed, the majority of the Travel Act
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`and money laundering counts charged against Mr. Brunst occurred during and
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`after the Dart litigation.
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`• Though Mr. Brunst never dealt with state Attorneys General, District Attorneys,
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`and local law enforcement, he was generally aware that some state law
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`enforcement attacked Backpage. He was also aware that none ever succeeded in
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`their legal threats or actions, which gave him further comfort that the company’s
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`compliance efforts and legal advice were sound.
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`• Mr. Brunst was contemporaneously aware of the federal grand jury investigation
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`in the District of Washington. Again, while he was not involved in dealing with
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`litigation counsel or legal strategy, he monitored it from the perspective of the
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`3895279.4
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`BRUNST MOTION TO SEEK ADMISSION RE: STATE OF MIND TESTIMONY
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`Case 2:18-cr-00422-DJH Document 1879 Filed 10/20/23 Page 4 of 15
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`CFO. He learned that the Washington United States Attorney declined to seek
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`an indictment and that there was no legal basis to do so. This further validated
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`Mr. Brunst’s belief that Backpage was operating lawfully.
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`• Mr. Brunst contemporaneously became aware of the California criminal charges
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`against Ferrer, Larkin, and Lacey in 2016-17. Again, that a California judge
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`granted a motion to dismiss these charges gave Mr. Brunst further comfort that
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`Backpage was operating in compliance with the law.
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`• Mr. Brunst was not involved with Backpage’s ad moderation compliance
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`function. But Mr. Brunst was comforted by the fact that Backpage employed
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`a former sex crimes prosecutor (Hemu Nigam) and later hired Craigslist’s
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`outside counsel (Liz McDougall) to oversee this compliance function. Neither
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`Mr. Nigam nor Ms. McDougall ever advised Mr. Brunst of criticisms of the
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`compliance function.
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`• Don Moon is a former county attorney for La Paz County, Arizona, and a highly
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`successful attorney in Arizona with a First Amendment background. Mr. Moon
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`served on the Board of Directors of the holding company (Village Voice Media
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`Holdings [VVMH]). He played a large role in advising the company on legal
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`issues and working with outside counsel. As set forth in Ferrer’s interview
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`memoranda, he frequently advised the company that Backpage’s operations
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`were protected by the First Amendment. Mr. Brunst did not have a lot of direct
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`interaction with Mr. Moon, but was familiar with Mr. Moon’s advice on the
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`First Amendment (sometimes presented by Moon to banking partners) and on
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`other occasions learned the same through Mr. Larkin.
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`• The Government polluted the jurors’ minds with evidence that even the United
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`States Senate investigated Backpage. The Court has precluded the defense from
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`pointing out that a central reason for the Senate hearings was to try to pass new
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`legislation targeted at Backpage’s publication of adult advertising (because no
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`then-existing federal law provided a basis for criminal liability). That certain
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`members of Congress and congressional witnesses were complaining that
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`current laws did not reach Backpage gave Mr. Brunst more comfort that the
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`business was operating lawfully under the laws at that time. On March 21,
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`2018, Congress passed a new law based on two bills, FOSTA (Allow States and
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`Victims to Fight Online Sex Trafficking Act) and SESTA (The Stop Enabling
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`Sex Traffickers Act). The new law, which targeted Backpage.com, expanded
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`federal criminal liability for facilitating sex trafficking and also purported to
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`eliminate Section 230 as a defense for companies like Backpage. Though the
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`Court cut off counsel’s cross-examination of Ferrer as to this part of his
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`motivation to cut a deal, the passage of this law clearly was one of Ferrer’s
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`motives for pleading guilty and shutting down the business. He knew it would
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`at least be more difficult, if not impossible, to continue to operate Backpage
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`once the new law took effect later in 2018.
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`• Mr. Brunst dealt regularly with the holding company’s financial auditors,
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`Deloitte and BDO. As part of their duties, the auditors assessed contingent
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`liabilities, including any legal exposure facing the company (both civil and
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`criminal) and whether any such legal exposure could call into question the
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`company’s ability to continue as a going concern. Mr. Brunst advised the
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`auditors of the names and contact information of litigation counsel so that the
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`auditors could address any legal questions directly to counsel. Auditors do
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`extensive due diligence. No auditor ever told Mr. Brunst that they believed
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`Backpage was unlawfully facilitating prostitution or engaging in money
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`laundering. No auditor ever refused to take payment from funds generated by
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`Backpage. And when Deloitte withdrew from further work for Backpage,
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`Mr. Brunst was advised that it did so for reputational reasons.
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`• Mr. Brunst was aware that Ferrer repeatedly gave declarations and testified
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`under oath in defense of attacks on Backpage’s adult section. At no time did
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`Ferrer tell Mr. Brunst that Ferrer testified falsely. Ferrer expressed a confidence
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`BRUNST MOTION TO SEEK ADMISSION RE: STATE OF MIND TESTIMONY
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`Case 2:18-cr-00422-DJH Document 1879 Filed 10/20/23 Page 6 of 15
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`in the righteousness of Backpage’s legal position. This gave Mr. Brunst comfort
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`that Backpage was operating lawfully and addressing legal issues how they
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`should be addressed—in the courts.
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`• Mr. Brunst had periodic meetings, calls, and emails with various bank
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`representatives, including representatives of BMO and US Bank, that were
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`referenced in Ferrer’s testimony. Mr. Brunst was at all times transparent with
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`them, answering their questions about Backpage’s adult section, and connecting
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`them to others at the company, including Ferrer and attorneys, where others
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`were in a better position to answer their questions.
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`• In response to an inquiry, Brunst forwarded the Mark Sableman legal memo to
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`the BMO in 2010. See Exhs. 5507 and 5508. The Court sustained the
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`Government’s objection to admission of the exhibits.
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`• He also forwarded the response from VVMH CEO Larkin (Exhibit 616) to
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`BMO. (The Court allowed the prosecution to redact this out and instead
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`introduce Exhibit 616a, thereby precluding the jurors from hearing that
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`Mr. Larkin was representing that the website was “clearly lawful.”) Mr. Brunst
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`would testify that Mr. Larkin’s email was consistent with what Mr. Larkin told
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`him on multiple occasions. Over the years, Mr. Larkin made similar reassuring
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`statements in the context of litigation, attacks by Attorney Generals, grand jury
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`investigations, and the advice that Larkin received from counsel. Mr. Larkin
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`told Mr. Brunst to focus on his work—”stay in your swim lane”—and let the
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`lawyers, Board of Directors, and Larkin address the legal challenges.
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`Based on the Court’s rulings to date, it appears that most, if not all, of this testimony
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`would be precluded.
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`Yet, at the same time, the Court has allowed the government to introduce ad nauseum
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`the irrelevant and highly inflammatory opinions of religious institutions and other NGOs,
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`a New York Times editorialist, and Hollywood celebrities, among others, regarding their
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`views on Backpage, including that the site be shut down. None of this evidence was
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`3895279.4
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`BRUNST MOTION TO SEEK ADMISSION RE: STATE OF MIND TESTIMONY
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`Case 2:18-cr-00422-DJH Document 1879 Filed 10/20/23 Page 7 of 15
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`tethered to any specific advertisement, defendant, or prostitution business enterprise. Most
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`of this purported “notice” evidence never even came to Mr. Brunst’s attention. Nor would
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`any rational CFO of a business base his or her actions on the uninformed lay opinions of
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`individuals and organizations that have agendas adverse to the business. Instead, what
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`a rational CFO would do is look to what federal courts and attorneys with First
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`Amendment expertise were saying about the legality of Backpage’s operations.
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`Indeed, we proffer that Dennis Chookaszian,1 Brunst’s expert on the role of a CFO,
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`would testify regarding the “functions” a CFO performs “in a corporate setting, including
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`what is and is not required of a CFO in assessing allegations that a company or one of its
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`subsidiaries has engaged in unlawful conduct.” Dkt. 500 at 4; Dkt. 1081 at 19 (“The Court
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`agrees this testimony is relevant and useful specifically as to Defendant Brunst for the jury
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`to understand his role in the overall corporate structure. The testimony of Mr. Weil will be
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`limited to describing what a CFO does, his role and obligations, but Mr. Weil will be
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`precluded from providing testimony about what Mr. Brunst may have done in the context
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`of this case or anything about his state of mind.”). In other words, Mr. Chookaszian
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`intends to lay out for the jury—without getting into the specifics of what Brunst may or
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`may not have done in this case—the ways in which a CFO gains comfort with the legality
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`of a business, including with respect to challenged industries like an online platform for
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`adult content. Unsurprisingly, Chookaszian would testify that a CFO is better served by
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`relying on rulings from federal judges and attorney advice than the musings of editorialists,
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`media companies, and religious institutions and other NGOs.
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`But if Brunst cannot testify to his good faith reliance on statements from attorneys and
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`court opinions, then he will not testify in his own defense. Nor would he put on testimony
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`1 Mr. Chookaszian is a professor at the University of Chicago’s Booth School of
`Business. He is the former chairman of the Financial Accounting Standards Advisory
`Council, former chairman and CEO of CNA Insurance Companies, and regularly teaches
`courses in corporate governance and the role of the CFO. Earlier this year, after the
`passing of Brunst’s originally designated expert, Roman Weil, Brunst informed the
`Government that Mr. Chookaszian would be serving as Brunst’s expert.
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`3895279.4
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`BRUNST MOTION TO SEEK ADMISSION RE: STATE OF MIND TESTIMONY
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`Case 2:18-cr-00422-DJH Document 1879 Filed 10/20/23 Page 8 of 15
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`from Mr. Chookaszian, if neither Brunst nor his expert can speak to the fact that the role of
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`a CFO involves the very things that Brunst did relative to litigation, court opinions, and
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`attorney advice concerning Backpage. Brunst therefore moves the Court to permit him to
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`testify to this proffered testimony.
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`II.
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`ARGUMENT
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`A.
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`Brunst’s Reliance on Court Opinions Played a Central Role in His State
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`of Mind.
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`1.
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`Backpage v. Dart
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`Mr. Brunst relied on the decision in Backpage.com, LLC v. Dart, 807 F.3d 229, 230
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`(7th Cir. 2015). From the filing of the indictment and through the trial of this case, the
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`Government has put at issue the actions of the major credit card companies, the effect
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`those actions had on Backpage and Defendants, and Backpage’s response. This has been
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`a focal point of the Government’s case against Brunst. At least 71 of the Government’s 98
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`substantive counts in the indictment took place after the Dart letters were sent out, and the
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`Dart litigation commenced in July 2015.
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`While the Government seeks to use the credit card cancellations as “notice” to
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`Brunst that ads on Backpage were illegal, the Seventh Circuit Court of Appeals’ decision
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`in Dart provided Mr. Brunst with notice to the contrary. As the Court knows, following
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`threatening letters sent by Sheriff Tom Dart to Visa and MasterCard, within days, those
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`credit card companies ceased doing business with Backpage. Backpage sued Dart and
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`ultimately secured an injunction before the Seventh Circuit. More than any other event
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`from 2004 to 2018, Brunst relied on the Dart opinion in guiding his actions going forward.
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`In Dart, the Seventh Circuit held the following:
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`• “The Sheriff of Cook County, Tom Dart, has embarked on a campaign
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`intended to crush Backpage’s adult section – crush Backpage, period, it seems
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`– by demanding that firms such as Visa and MasterCard prohibit the use of their
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`credit cards to purchase any ads on Backpage, since the ads might be for illegal
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`sex-related products or services, such as prostitution. Visa and MasterCard
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`3895279.4
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`BRUNST MOTION TO SEEK ADMISSION RE: STATE OF MIND TESTIMONY
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`bowed to pressure from Sheriff Dart and others by refusing to process
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`transactions in which their credit cards are used to purchase any ads on
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`Backpage, even those that advertise indisputably legal activities.” Id. at 230
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`(emphasis added).
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`• “[W]hile [Dart] has a First Amendment right to express his views about
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`Backpage, a public official who tries to shut down an avenue of expression of
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`ideas and opinions through ‘actual or threatened imposition of government
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`power or sanction’ is violating the First Amendment.” Id. (quoting American
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`Family Association, Inc. v. City & County of San Francisco, 277 F.3d 1114,
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`1125 (9th Cir.2002)) (emphasis added).
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`• The Court extensively detailed the threatening nature of the Dart letter,
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`observing that “[u]pon receipt of the letter MasterCard forthwith stopped
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`allowing its credit cards to be used to purchase ads anywhere on Backpage’s
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`website. Visa followed suit. So the threats had worked. And so just two days
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`after Dart’s letter was sent, the Cook County Sheriff’s Office was able to (and
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`did) issue a triumphant press release captioned ‘Sheriff Dart’s Demand to
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`Defund Sex Trafficking Compels Visa and MasterCard to Sever Ties with
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`Backpage.com.’ Notice ‘demand,’ not request; notice ‘compels,’ not persuades;
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`notice ‘sever ties,’ not ‘refuse to make payments for ads in the adult section of
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`the Backpage website.’” Id. at 229 (emphasis added).
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`• The Court rejected and openly mocked a declaration submitted by Martin Elliot,
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`an executive of Visa, who claimed that “at no point did Visa perceive Sheriff
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`Dart to be threatening Visa.” Id. at 233 (“But what would one expect an
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`executive of Visa to say? ‘I am afraid of the guy?’ ‘He is in effect calling me
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`an accomplice of a criminal organization (Backpage), and I’m afraid he might
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`pull strings to get me investigated and even prosecuted by any one of several
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`federal or state agencies?’”). Indeed, Judge Posner observed that Visa
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`employees dealing with Dart acknowledged that the “subtle messages [Dart’s
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`office has] been sending us . . . could easily be taken for blackmail.” Id.
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`(emphasis added).
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`Each of these portions of the Dart opinion—relied on by Brunst—directly counters
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`any purported “notice” the Government asks the jury to infer from the credit card
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`terminations.
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`Critically, in holding that Dart had violated Backpage’s First Amendment rights, the
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`Court found:
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`The district judge remarked “that the majority of the advertisements [in
`Backpage’s adult section] are for sex”—but a majority is not all, and not all
`advertisements for sex are advertisements for illegal sex. There is no
`estimate of how many ads in Backpage’s adult section promote illegal
`activity; we just gave examples of some that do not.
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`Id. at 234 (emphasis added).
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`This portion of the Dart opinion directly contradicts Ferrer’s trial testimony and
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`undermines the Government’s central claim: that escort ads are synonymous with illegal
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`prostitution ads. Ultimately, the Seventh Circuit enjoined Dart from further interfering
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`with Backpage’s relationships with financial institutions. Id. at 239. Brunst relied on this
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`opinion written by one of the most respected (conservative) jurists of our time and formed
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`an impression that: (1) the major credit card companies terminated their relationships with
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`Backpage in response to illegal and unconstitutional threats from law enforcement;
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`(2) Backpage’s First Amendment rights were violated by Dart; and (3) even if a majority
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`of the ads on Backpage are for sex—as the government alleges here—that does not mean
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`those ads were for illegal sex.
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`The Government has thrown up smoke and mirrors in response to Dart. They seek
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`to impugn the Seventh Circuit’s ruling by claiming that the facts underlying the opinion
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`have changed in light of their indictment. Not only is that immaterial to Mr. Brunst’s good
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`faith defense, but it also is flat wrong. Sheriff Dart’s evidence in that case essentially
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`mirrored the Government’s evidence here, including:
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`• Allegations regarding “sponsored ads,” an “affiliate program,” and reciprocal
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`links. Exh. 5902 at 480, 491 (Dart’s appendix on appeal).
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`3895279.4
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`Case 2:18-cr-00422-DJH Document 1879 Filed 10/20/23 Page 11 of 15
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`• A New York Times op-ed written by Nicholas Kristoff, entitled “Where Pimps
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`Peddle their Goods.” Id. at 352.
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`• An affidavit from the National Association of Attorneys General, attaching the
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`letters the Government has put into evidence here. Id. at 352, 386-426.
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`• An Affidavit from Staca Shehan (NCMEC). Id. at 352.
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`• Affidavits from local law enforcement officers on the Government’s witness list
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`here.
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`• Allegations regarding certain forms of payment, including virtual currency
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`(“The Backpage Defendants accept Bitcoin because they know that such
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`payments are largely untraceable and therefore attractive to traffickers and other
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`predators.”). Id. at 480-81.
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`In other words, in issuing its ruling, the Seventh Circuit was relying on a record that
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`tracks the Government’s indictment and evidence at trial in the instant case. Further, the
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`Supreme Court denied certiorari in Dart, and the opinion remains good law.2
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`The current state of the record in this trial is that in 2015 there was a “credit card
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`Armageddon” triggered by Dart. The Government wants the jury to believe that this
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`would put Brunst on notice of an illegality even though the Court in Dart validated
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`Backpage’s position on allegations nearly identical to those here, and excoriated Sheriff
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`Dart for doing what he did to ruin Backpage’s business. Moreover, for evidence to be
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`In 2018, after pleading guilty and reversing his story, Ferrer was sanctioned by the
`District Court. This does nothing to negate Brunst’s reliance in 2015 on the Dart opinion.
`Moreover, the Seventh Circuit recently affirmed the continuing vitality of Dart. See
`Webber v. Armslist LLC, 70 F.4th 945 (7th Cir. 2023) (“[I]n Backpage.com, LLC v. Dart,
`this court considered whether a county sheriff violated the First Amendment by threatening
`credit card companies with criminal prosecution as accomplices to illegal activity being
`advertised on an online forum. This court . . . not[ed] that under ordinary understandings
`of culpable assistance of wrongdoers, entities that know the information’s content do not
`become liable for the poster’s words. We therefore expressed doubt that the online forum
`could be held liable for aiding and abetting a crime just because they were aware that users
`had posted ads for illegal conduct. We acknowledged, however, that the CDA did not
`immunize the online forum from federal criminal liability.”) (internal citations omitted).
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`3895279.4
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`Case 2:18-cr-00422-DJH Document 1879 Filed 10/20/23 Page 12 of 15
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`admissible as to a defendant’s state of mind, the evidence need not be “legally controlling”
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`or provide a complete defense to the charged crime. Dkt. 1643 at 11. It must only tend to
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`show the defendant’s state of mind at the time of the alleged charges. That is plainly the
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`case as to Brunst’s reliance on Dart, as the vast majority of the charges against Brunst
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`occurred after the litigation was commenced.
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`Indeed, while trying to keep out the fact that Defendants are immunized from
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`criminal liability under state law by Section 230, the Government has elicited testimony
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`from prior state prosecutors that Backpage was violating their state laws. The Court has
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`prohibited the defense from correcting this smear campaign. The Court has also allowed
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`testimony regarding the Senate PSI committee hearing and report, but precluded the
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`defense from getting into the motivations of that committee, namely to pave the way for
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`the passage of FOSTA/SESTA, which amended the CDA. A juror could easily be
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`“confuse[d]” by the Government’s presentation of such evidence and be misled into
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`believing that what a State AG or Senate committee believed about Backpage is “legally
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`controlling” here. Dkt. 1643 at 11. But the Court allowed such evidence in on the basis
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`that these prior investigations were not-for-the-truth “notice” to Defendants that there were
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`illegal ads for prostitution on the site. The plain language of Judge Posner’s opinion in
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`Dart contradicts the inferences that one would draw from the Government’s evidence in
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`this regard.
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`B.
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`Other Court Cases Guided Brunst.
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`Brunst also relied on other cases like Backpage.com, LLC v. McKenna, 881 F.
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`Supp. 2d 1262, 1268 (W.D. Wash. 2012), in which Backpage successfully challenged the
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`constitutionality of a proposed law in Washington that would criminalize the knowing
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`publication of “explicit or implicit” offers for sex. Here, the Government seeks to apply
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`the Travel Act much like the Washington statute that a federal court found unconstitutional
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`under the First Amendment because:
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`[A] publisher who receives notice that content might be illegal would have
`no incentive to ensure that such content is in fact illegal. Rather, the rational
`choice in such a scenario is to remove the content as quickly as possible,
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`3895279.4
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`Case 2:18-cr-00422-DJH Document 1879 Filed 10/20/23 Page 13 of 15
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`whether or not it constitutes protected speech.
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`Id. at 1278 (emphasis in original).
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`This federal court opinion was monumental, and Brunst familiarized himself with it
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`at the time. Brunst’s reliance on this opinion is highly relevant, given the recent testimony
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`from state and local cops who have admitted that there is no probable cause for
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`a prostitution arrest on the face of an advertisement, even if (as Detective Murry and other
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`cops have testified) the advertisement has express sex for money language. There has
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`been no trial testimony—nor could there be any testimony—that Defendants knew each of
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`the fifty charged ads was for illegal prostitution before the ads were published or while
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`they were live on the website. Indeed, there has been no testimony that Brunst even saw
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`any ad on Backpage before it was published, let alone one of the fifty charged ads. What
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`the McKenna court presciently observed is that the First Amendment presents a roadblock
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`to criminal liability “in a regime”—like the one the Government seeks to impose here—“in
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`which such liability is triggered only by notification or knowledge that ‘illegal’ content is
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`available on an actor’s website.” Id. Brunst relied on this language, which directly
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`undermines the inferences the Government seeks to draw from its core evidence that
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`Defendants merely were “on notice” that some ads published on the site led to prostitution
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`transactions. Id. at 1279 (“[W]here an online service provider publishes advertisements
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`that employ coded language, a reasonable person could believe that facts exist that do not
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`in fact exist: an advertisement for escort services may be just that.”).
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`C.
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`Brunst’s Good Faith
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`Brunst’s role was not to manage Backpage attorneys (whether in-house or outside
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`counsel).3 Brunst was not aware of whether counsel opined on the specific ads or wire
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`transfers charged in the indictment. As previously noted, he is not asserting an advice of
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`counsel defense. His level of knowledge of such advice and court opinions is generally set
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`forth above and was generally for the purpose of answering questions raised by investors,
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`3 Brunst did regularly deal with transactional counsel on other issues.
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`3895279.4
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`Case 2:18-cr-00422-DJH Document 1879 Filed 10/20/23 Page 14 of 15
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`financial institutions, and auditors. This advice was often provided to him by Larkin and
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`others involved in the management of Backpage. For example:
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`• As Ferrer testified, Brunst was not part of Backpage’s moderation efforts. But
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`he understood that the company had hired (1) Hemu Nigam, a former state and
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`federal prosecutor who prosecuted sex and internet crimes, and (2) Liz
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`McDougall, a former partner at Perkins Coie who had represented Craigslist, to
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`oversee the company’s moderation practices.
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`• As Ferrer testified, Brunst was not consulted on the State AG response letters.
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`But he understood that the company had retained Samuel Fifer, a partner at
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`Dentons and First Amendment expert, to address the State AGs’ concerns.
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`• During regular meetings with BMO from 2006 to 2014, Don Moon, a Backpage
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`in-house attorney and VVMH board member, or another lawyer, was sometimes
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`present to address questions from the banks regarding legal issues facing the
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`company.
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`• Brunst also relayed such advice to financial institutions, as reflected in
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`Exhibits 5507 and 5508 (a legal opinion letter sent to BMO in October 2010),
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`which the Court precluded Defendants from asking Ferrer about.
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`Brunst’s reliance on (1) the company’s hiring of counsel to address legal matters
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`facing Backpage and (2) his relaying of this advice to financial institutions in
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`a non-privileged context tends to negate the Government’s assertions that Brunst
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`(1) knowingly entered into a con