Case 2:18-cr-00422-DJH Document 2020 Filed 12/22/23 Page 1 of 19
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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
`
`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
`
`NICOLE M. ARGENTIERI
`Acting Assistant Attorney General
`Criminal Division, U.S. Department of Justice
`
`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
`
`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE DISTRICT OF ARIZONA
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`
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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.
`
`
`
`
`CR-18-422-PHX-DJH
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`UNITED STATES’ RESPONSE TO
`DEFENDANT LACEY’S RULE 29
`MOTION CONCERNING COUNT 100
`(Doc. 2004)
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`Case 2:18-cr-00422-DJH Document 2020 Filed 12/22/23 Page 2 of 19
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`SUMMARY OF ARGUMENT
`Defendant Lacey’s Rule 29 Motion should be denied. Lacey’s Supplement to Rule
`29 Motion Concerning Count 100 (Doc. 2004 (“Supp.”)) does nothing to change that fact.
`To overturn the jury’s verdict, Lacey must overcome the steep hurdle of showing that the
`evidence—“‘view[ed] . . . in the light most favorable to the prosecution’”—could not have
`allowed “‘any rational trier of fact’” to find that the ads proposed illegal transactions.
`United States v. Nevils, 598 F.3d 1158, 1163-64 (9th Cir. 2010) (en banc) (quoting Jackson
`v. Virginia, 443 U.S. 307, 319 (1979). Defendant fails to overcome this standard.
`The trial evidence, when viewed in the light most favorable to the United States,
`established Defendant’s guilt of international concealment money laundering for directing
`$16.5 million in Backpage revenue to be wired from Arizona to a bank account in Hungary
`to create a trust for the benefit of his two sons. Indeed, that wire to Hungary concluded a
`series of financial moves that resulted in the money being much more concealed than where
`it started—as Backpage revenue. The trial evidence establishes Defendant Lacey’s guilt
`for three reasons.
`First, the trial evidence demonstrated Lacey’s intent behind the transfer of $16.5
`million to Hungary—to put assets somewhere that the government couldn’t access it. Ex.
`1. That’s clear both in an email Lacey sent on July 29, 2016 to his attorney (“i just want
`to put some assets in place where litigious parties, including government parties, can not
`access my accounts”), along with his November 2016 meeting at Arizona Bank & Trust
`that Lin Howard recounted in her testimony. Ex. 1; 10/12/23 p.m. Tr. at 11:1-13.
`
`Second, the $16.5 million transfer from Arizona to Hungary was “designed in whole
`or in part” to “conceal or disguise the nature, the location, the source, the ownership, or the
`control of the proceeds” of Lacey’s Backpage profits. 18 U.S.C. § 1956(a)(1)(B)(i). Here,
`there is ample evidence that the transaction was designed to conceal. For example, the
`Ninth Circuit has found that when evidence demonstrates “the charged money laundering
`transaction was the last in a series of transactions made to conceal,” it is sufficient to
`support a concealment money laundering conviction. United States v. Wilkes, 662 F.3d
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`Case 2:18-cr-00422-DJH Document 2020 Filed 12/22/23 Page 3 of 19
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`524, 544-45 (9th Cir. 2011).
`
`Third, Lacey knew Backpage’s revenue was criminal proceeds. Lacey knew exactly
`how Backpage made its money—through promoting the business enterprises that posted
`millions of prostitution ads on their website. Defendant’s Rule 29 Motion should be
`denied.
`Lacey Intended to Conceal the $16.5 Million
`I.
`
`Concealment money laundering occurs when the transaction is “designed in whole
`or in part” to conceal or disguise. 18 U.S.C. § 1956(a)(1)(B)(i) (emphasis added). Courts
`within the Ninth Circuit have relied on this language in affirming § 1956(a)(1)(B)(i)
`convictions and denying Rule 29 motions. See United States v. Singh, 995 F.3d 1069, 1076
`(9th Cir. 2021) (“We conclude, for a host of reasons, that the transactions in question had
`(certainly in part) a concealment purpose.”); United States v. Abouammo, 2022 WL
`17584238, at *16 (N.D. Cal. Dec. 12, 2022) (denying a Rule 29 motion on concealment
`money laundering counts and noting that the “money laundering statute is violated if the
`transaction in question is ‘designed in whole or in part’” to conceal. 18 U.S.C. §
`1956(a)(1)(B)(i).”). Even if Defendant had some other purpose in mind—to transfer
`money to a bank that would not close the account, for example—the United States need
`only prove that the transaction was designed at least “in part” to conceal. The trial evidence
`far exceeded this standard.
`
`Lacey stated his clear intent behind transferring the $16.5 million to Hungary. He
`did so in an email to his attorney and during a meeting with his bank’s Senior Vice
`President. It’s rare for a defendant to discuss his intentions with such clarity, but Lacey’s
`own words appear to have made the difference for the jury in finding him guilty of Count
`100 when they deadlocked on nearly every other charge against him.
`Trial Evidence Supports Lacey’s Intent to Conceal
`A.
`Lacey’s meeting with Lin Howard, Senior Vice President and Senior Operations
`
`Manager at Arizona Bank & Trust, provided great insight into Lacey’s mental state before
`he wired the money overseas. 10/12/23 p.m. Tr. at 6:1-4. Howard testified that she met
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`Case 2:18-cr-00422-DJH Document 2020 Filed 12/22/23 Page 4 of 19
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`with Defendant Lacey one time for 30-45 minutes in November 2016. 10/12/23 p.m. Tr.
`at 8:19-10:10. When asked how she could remember what occurred in a brief meeting that
`happened nearly seven years before, she testified, “Because at the start of the conversation
`there was a topic that was very unusual and something that I’d never been asked about
`before. So it definitely has stuck with me.” 10/12/23 p.m. Tr. at 10:18-20. Howard then
`recounted that meeting in this manner:
`So he started the conversation by asking us if we knew how assets were
`seized and how assets were protected. He further went on to state that he had
`an attorney named John Becker who had indicated that there were some
`places around the world -- and he mentioned the Cook Islands in which assets
`were protected from seizure and then he also mentioned Nevis Island.
`
`He continued on by saying that he wanted to make it clear that he wasn’t
`looking to avoid paying taxes, that he had a BDO he directed to make sure
`that all taxes were paid and no tax shelters were taken, but he was looking to
`see about moving a percentage of his assets offshore in order to protect them
`from government seizure.
`10/12/23 p.m. Tr. at 11:1-13.
`
`Howard also testified that during her over 25 years in banking she learned that Nevis
`Island and the Cook Islands had a reputation for being associated with tax shelters and
`money laundering transactions. 10/12/23 p.m. Tr. at 11:14-23; 12:7-15. Lacey’s
`statements “shocked” Howard—she’d never been asked these types of questions before
`during her long banking career. 10/12/23 p.m. Tr. at 13:18-25.
`
`After the meeting, Howard informed her boss—the bank’s president—about
`Lacey’s statements. 10/12/23 p.m. Tr. at 15:3-5. She did so because the conversation
`“shocked” her and she “never in my years in banking had anybody discuss anything like
`that with me. I was suspicious why it was being brought up and it made me very
`uncomfortable and I wanted to make sure my boss knew.” 10/12/23 P.M. Tr. at 15:6-11.
`
`Howard’s testimony is corroborated by an email Lacey sent to his attorney a few
`months prior. Ex. 1. In July 2016, Lacey wrote to his attorney John Becker: “i think i am
`ready to move forward with the visit to the Los Angeles lawyer you mentioned who has
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`Case 2:18-cr-00422-DJH Document 2020 Filed 12/22/23 Page 5 of 19
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`expertise in off-shore.” Id. “[T]o revisit for just a moment, i am not interested in any tax
`avoidance, i just want to put some assets in place where litigious parties, including
`government parties, can not access my accounts.” Id.
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`John Becker served as Michael Lacey’s estate planning attorney in 2016 and 2017.
`10/24/23 p.m. Tr. at 66:11-67:6. Becker testified that Lacey wanted to transfer some of his
`money overseas. 10/24/23 p.m. Tr. at 114:11-13. Becker, at Lacey’s behest, transferred
`$16.5 million from Becker’s law firm’s trust (IOLTA) account to a bank in Hungary.
`10/24/23 p.m. Tr. at 114:14-25. Becker understood the money he wired to Hungary at
`Lacey’s direction to have been earned from Backpage. 10/24/23 p.m. Tr. at 117:8-13.
`Becker also testified that in 30 years of practicing law, he had never wired millions of
`dollars from his IOLTA account to an overseas account. 10/24/23 p.m. Tr. at 115:6-116:7.
`
`The testimony by Lin Howard and John Becker corroborated Lacey’s own words in
`his email about why he wanted to send $16.5 million to Hungary—“to put some assets in
`place where litigious parties, including government parties, can not access my accounts.”
`Ex. 1. In other words, to conceal a portion of the money he earned from Backpage.
`The Transaction’s Purpose Was To Prevent the Government From
`B.
`Accessing Lacey’s Accounts
`Lacey’s transfer to Hungary was the last in a series of transactions that had the effect
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`of concealing the money from “government parties.” The money started as Backpage
`revenue and then moved through two different companies that weren’t named Backpage,
`then to Lacey’s five grantor trusts, followed by passing through his attorney’s IOLTA
`account, and finally, to a bank in Hungary to establish a trust with his two sons as the listed
`beneficiaries. Ex. 1479 at 34. The purpose of all these transfers was to conceal the fact
`that it was Backpage revenue.
`
`In his Supplement, Defendant cites Cuellar as the best case in support of his Rule
`29 argument. Supp. at 2-3, 8, 13 (citing Cuellar v. United States, 553 U.S. 550 (2008).
`Cuellar, however, is inapposite. Cuellar involved a defendant attempting to drive from
`Texas to Mexico with $81,000 stashed in a secret compartment under the floorboard. Id.
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`Case 2:18-cr-00422-DJH Document 2020 Filed 12/22/23 Page 6 of 19
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`at 553-54. The money had been bundled in plastic bags and duct tape, and animal hair
`covered the bags. Id. at 554. The Cuellar Court overturned defendant’s conviction for
`international money laundering finding that “merely hiding funds during transportation is
`not sufficient to violate the statute, even if substantial efforts have been expended to
`conceal the money.” Id. at 563. The trial evidence in Cuellar demonstrated that the
`defendant’s purpose for transporting the money to Mexico “was to compensate the leaders
`of the [drug trafficking] operation.” Id. at 566. Accordingly, the Supreme Court held that
`the defendant’s transportation was not “designed in whole or in part to conceal or disguise
`the nature, the location, the source, the ownership, or the control of the proceeds.” Id. at
`568.
`These facts differ starkly from those presented at trial against Lacey. Lacey wasn’t
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`secreting money in a car in an attempt to pay a co-conspirator; rather his international
`transaction involved months of planning with an objective to place it outside the reach of
`the government. The facts presented at trial are much more analogous to the Ninth Circuit’s
`decision in Wilkes. 662 F.3d at 544-45.
`
`In Wilkes, the defendant was convicted of concealment money laundering for
`payments and gifts to a California congressman in exchange for government contracts. 662
`F.3d at 530-31. He transferred a $525,000 mortgage payment to the congressman in
`exchange for a contract; rather than transmitting the funds directly, Wilkes conducted a
`series of transfers, moving the money to bank accounts under different names. Id. The
`jury found that “the charged money laundering transaction was the last in a series of
`transactions made to conceal [the defendant’s] $525,000 payment to [the congressman] for
`securing government contracts for [the defendant].” Id. at 547. The Wilkes Court drew a
`distinction with the D.C. Circuit case cited by Lacey,1 stating that “[u]nlike in Adefehinti,
`where defendants merely allocated the proceeds from a fraudulent sale of property through
`relatively straightforward transactions that ‘amount[ed] to no more than divvying up the
`
`
`1 Supp. at 3 (citing United States v. Adefehinti, 510 F.3d 319 (D.C. Cir. 2007)).
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`Case 2:18-cr-00422-DJH Document 2020 Filed 12/22/23 Page 7 of 19
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`joint venture’s gains, albeit illegally obtained,’ Wilkes’s effort to disguise the source of the
`kickback to [the congressman] was an additional act that is separately punishable under
`§ 1956(a)(1)(B)(i).” Id. at 547 (citation omitted).
`
`Here, the transactions leading to the $16.5 million wire to Hungary passed through
`many entities, trusts, and an attorney’s account, before finally landing in a bank account in
`Hungary. The jury interpreted these transactions as concealment, and for good reason—
`the money that went to Hungary was much more concealed than if Lacey simply transferred
`Backpage revenue to a domestic bank account in his name.
`
`First, the money that Lacey sent to Hungary started with Website Technologies. Ex.
`1479 at 34. The evidence at trial shows that Defendants created Website Technologies so
`they could open bank accounts under a different name other than “Backpage.” 9/21/23
`p.m. Tr. at 89:8-10. Carl Ferrer testified that money that flowed through Website
`Technologies derived primarily “from postings in the female escorts section” on
`Backpage.com and that Website Technologies and Backpage were “the same company.”
`9/21/23 p.m. Tr. at 90:16-22 & 11:23-12:4. Website Technologies was simply a “shell
`company” with a “very generic sounding” name that Defendants used to “open bank
`accounts with.” 9/21/23 p.m. Tr. at 89:8-10; see also 9/20/23 p.m. Tr. at 28:19-26.
`Defendants then worked hard to ensure that Website Technologies did not become
`affiliated with Backpage. 9/20/23 p.m. Tr. at 71:17-72:4 (“[Brunst] set up Website
`Technologies to handle payroll, 401(k) and to do leases so he wants to ensure that its
`reputation is protected, not affiliated with Backpage.”).
`
`Second, after Website Technologies, the Backpage revenue that made up the $16.5
`million passed through Cereus Properties. Ex. 1479 at 34. Defendants Lacey, Brunst, and
`Spear (along with Jim Larkin) owned Cereus Properties. 9/21/23 p.m. Tr. at 90:23-25.
`Cereus Properties collected Backpage money Ferrer, as the nominal owner, owed to
`Defendants Lacey, Spear, and Brunst. 9/21/23 p.m. Tr. at 91:1-17. The source of the
`money that flowed from Website Technologies to Cereus Properties was the prostitution
`ads posted on Backpage. 9/21/23 p.m. Tr. at 91:16-17.
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`Case 2:18-cr-00422-DJH Document 2020 Filed 12/22/23 Page 8 of 19
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`Third, the money flowed through a series of transactions from Cereus Properties to
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`five grantor trusts controlled by Lacey. Ex. 1479 at 34. The $16.5 million was then
`consolidated in Becker’s IOLTA account through five wires totaling $3.3 million each. Id.
`Finally, Becker wired the money out of his IOLTA account to Primus Trust Company at
`K&H Bank in Hungary to establish a trust for Lacey’s sons.2 Id.
`
`These transactions were not “open and obvious” nor were they similar to stashing
`money in a car and driving it to Mexico to compensate a co-conspirator. Instead, like in
`Wilkes, “the jury apparently found that the charged money laundering transaction was the
`last in a series of transactions made to conceal” Lacey’s criminal proceeds. 662 F.3d at
`547. The additional out-of-circuit cases Lacey cites are readily distinguishable. The facts
`presented at trial do not involve simply converting criminal funds to liquid assets;3 using
`criminal proceeds to pay for a cabin;4 secreting money in a car to pay a debt;5 or
`transferring money from a business account to a personal account.6 Finally, Lacey’s stated
`intent to pay taxes on his taxable income and report the Hungarian bank account to the IRS
`
`
`2 Lacey’s argument that Becker testified the transaction was “absolutely legal” holds
`no weight, since Becker avowed that he knew nothing about Backpage’s business practices.
`Becker never once reviewed the Backpage website. 10/24/23 P.M. Tr. at 117:14-20. When
`asked if he ever viewed Backpage’s escort section, he responded emphatically, “Absolutely
`not.” 10/24/23 p.m. Tr. at 117:20. Becker instead, “read the New York Times, Wall Street
`Journal, Washington Post. . . . I don’t need to be spending my time reading Backpage.”
`10/24/23 p.m. Tr. at 117:22-24. Becker could not avow that the $16.5 million was not
`“proceeds of a violation or violations of the Travel Act” since he knew nothing about how
`his client earned this money. Doc. 1998 at 43.
` United States v. McGahee, 257 F.3d 520, 527-28 (6th Cir. 2001) (no design to
`conceal when defendant simply withdrew funds from his account to convert to liquid
`assets).
`4 United States v. Rockelman, 49 F.3d 418, 422 (8th Cir. 1995) (using criminal
`proceeds to pay for a cabin did not prove an intent to conceal).
`5 United States v. Garcia, 587 F.3dd 509, 517-19 (2d Cir. 2009) (facts very similar
`to Cuellar, which involved transporting money to pay defendant’s debt to a drug dealer).
`
` 3
`
` 6
`
` United States v. Blankenship, 382 F.3d 1110, 1128-29 (11th Cir. 2004) (no
`concealment money laundering when defendant simply moved money from his business
`account into his personal bank account).
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`Case 2:18-cr-00422-DJH Document 2020 Filed 12/22/23 Page 9 of 19
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`does not overcome the evidence that he intended, at least in part, to conceal this money
`from the government. See infra II(B).
`Trial Evidence Proved Concealment
`II.
`Lacey’s Series of Transactions Demonstrated Concealment
`A.
`Lacey’s argument that the trial evidence doesn’t support that his $16.5 million
`
`Hungarian transaction concealed, in part, “the nature, the location, the source, the
`ownership, or the control of funds” is wrong. First, Lacey relies on the fact that his
`transactions were purportedly “open and obvious.” Supp. at 6, 9. This argument doesn’t
`square with reality. Here’s how the money flowed from Backpage revenue to Lacey:
`1) Backpage.com revenue
`↓
`2) Website Technologies
`↓
`3) Cereus Properties
`↓
`4) Five Two-Year Annuity Trusts
`↓
`5) Becker & House PLLC IOLTA
`↓
`6) Primus Trust Company
`(Binghampton Trust—Lacey’s
`two sons were beneficiaries) at
`K&H Bank, Hungary.7
`Contrary to Defendant’s argument, these transactions were not “open and obvious.”
`
`Open and obvious would have involved Backpage revenue flowing into a bank account in
`the company’s name and then to Defendant Lacey’s personal bank account. Here,
`Defendant Lacey and his co-conspirators created brand-new companies for the Backpage
`money to flow through (Website Technologies and Cereus Properties) before Lacey sent it
`
`
`7 Ex. 1479; 10/17/23 a.m. Tr. at 29-31; 10/24/23 p.m. Tr. at 132:15-16.
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`Case 2:18-cr-00422-DJH Document 2020 Filed 12/22/23 Page 10 of 19
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`to five separate trusts he controlled and then back through his attorney’s IOLTA account
`before finally sending it to Hungary to create a trust for the benefit of his two sons.
`Defendant’s international transaction caused the money to be more concealed than it had
`been before, which provides additional support for the jury’s verdict. See United States v.
`Johnson, 440 F.3d 1286, 1291 (11th Cir. 2006).
`
`Lacey cites the out-of-circuit Johnson case to support his argument. Supp. at 4. It
`doesn’t. Rather, the Johnson court details the “[e]vidence to consider in determining
`whether a transaction was designed to conceal,” which includes: “statements by a
`defendant probative of intent to conceal . . . using third parties to conceal the real owner;
`[and] a series of unusual financial moves cumulating in the transaction.” 440 F.3d at 1291.
`Further, “[a]nother important consideration is whether ‘the money is better concealed or
`concealable after the transaction than before.’” Id. All this evidence was present in
`Lacey’s Hungarian transaction.
`
`Trial courts within the Ninth Circuit have denied Rule 29 motions in analogous
`factual situations. United States v. Chang, 2020 WL 5702131, at *8-9 (N.D. Cal. Sept. 24,
`2020); Abouammo, 2022 WL 17584238, at *16. In Chang, the defendant argued in a Rule
`29 motion that the jury’s verdict on concealment money laundering must be overturned
`because the transactions were “open,” “notorious,” “typical,” and “easy-to-follow.”
`Chang, 2020 WL 5702131, at *8. The court rejected this argument.
`
`But Defendant’s characterization of the transfers as “open,” “notorious,”
`“typical,” and “easy-to-follow” simply begs the question. At trial, the
`Government introduced evidence in support of its allegation that the transfers
`were made at least in part to conceal that money in HOC Associates, Inc.’s
`account . . . in order to use the money improperly on personal expenses.
`Although Defendant has posited innocent explanations for the transfers, it
`cannot be said that the jury’s findings of money laundering were
`unreasonable or devoid of factual support.
`
`Id.
`In Abouammo, the trial court found that a concealment purpose could be found in
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`the defendant’s “choice to forego direct transfers from [foreign official] to [defendant’s]
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`Bank of America account, and instead set up a foreign bank account in his father’s name
`to facilitate indirect transfers.” 2022 WL 17584238, at *16. Based on this evidence, the
`court held, “it is entirely rational for a jury to find that the purpose of Defendant’s indirect
`transfers was to conceal that [foreign official] was the source of the funds.” Id.
`Importantly, the Abouammo court found that the more damning transactions were not
`actually the charged counts, but—consistent with Johnson—ruled that the entire context of
`the transactions should be considered. Id. (“True, the Government only charged the
`transfers from Defendant’s Bank Audi account to his Bank of America account and not the
`initial transfers from [foreign official], but the Court need not isolate charged transfers from
`their larger context.”) (citing Cuellar, 553 U.S. at 566 (stating that efforts to conceal funds
`in transport “may suggest that the transportation is only one step in a larger plan”).)
`
`Lacey’s money flow to Hungary demonstrated not only “a series of unusual
`financial moves,” but also the “use of third parties to conceal the real owner.” In addition,
`there’s no question this transaction satisfied Johnson’s “important consideration” that “the
`money is better concealed . . . after the transaction than before.” Johnson, 440 F.3d at
`1291. The money started as Backpage revenue and, after five transactions, it landed in a
`Hungarian bank as money in a trust with Lacey’s two sons as beneficiaries.
`
`Other Ninth Circuit cases support the notion that a transaction need not have been
`particularly complicated, or involve multiple steps, to support a concealment money
`laundering conviction. See, e.g., United States v. Twitchell, 69 F. App’x 892, 894 (9th Cir.
`2003) (“On one of the money laundering counts, the jury also found Twitchell guilty of
`concealing or disguising bank fraud, in violation of 18 U.S.C. § 1956(a)(1)(B)(i), by
`transferring money from his business account at the bank into private investment accounts
`at the brokerage house. A reasonable jury could have found that the deposits of proceeds
`from the bank fraud into brokerage accounts were made to disguise or conceal the
`proceeds.”); United States v. Sun, 673 F. App’x 729, 733 (9th Cir. 2016) (affirming a
`money laundering conviction where “[v]iewing the evidence in the light most favorable to
`the prosecution, a rational jury could find that Sun deposited the illegal cash proceeds from
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`his medical practice into his personal bank account, rather than his business account, with
`the purpose “to conceal or disguise the nature [or] . . . the source” of the proceeds.”); United
`States v. Kellum, 119 F. App’x 32, 34 (9th Cir. 2004) (affirming concealment money
`laundering conviction where the defendant purchased a Wells Fargo cashier’s check with
`a manual check drawn on a Fidelity account; “[A] rational jury could find on the
`government’s evidence that by purchasing the Wells Fargo cashier’s check, Kellum helped
`to conceal the Fidelity account as the source of his fraudulently-obtained assets, making it
`harder for federal investigators to discover the existence of the Fidelity account.”); United
`States v. Huy Chi Luong, 468 F. App’x 710, 712 (9th Cir. 2012) (“A rational jury could
`also conclude that Luong intended to conceal the source, ownership, or control of the
`$5,000 he paid toward the mortgage of a piece of real property. The government produced
`evidence that the actual owner of the house was Luong, not his parents, whose names were
`on the deed, as well as evidence that the money came from teller’s checks Luong had
`someone else purchase for him.”).
`Filing An FBAR Did Not Immunize Lacey From Guilt
`B.
`Lacey’s argument that his filing of a Report of Foreign Bank and Financial Accounts
`
`(FBAR)—18 months after sending the money to Hungary and four months after he was
`indicted in this matter—somehow reflects an intent not to conceal is wrong. Informing the
`United States, after the fact, that Lacey controlled a Hungarian bank account that had $16.5
`million as part of a trust for his sons’ benefit is not inconsistent with his stated intent to
`“mov[e] a percentage of his assets offshore in order to protect them from government
`seizure.” 10/12/23 p.m. Tr. at 11:1-13.
`
`The United States needed to prove the following three elements with respect to
`Count 100: (1) defendant Lacey transported money from a place in the United States to or
`through a place outside the United States; (2) defendant Lacey knew that the money
`represents the proceeds of a violation or violations of the Travel Act; and (3) defendant
`Lacey knew the transportation was designed in whole or in part to conceal or disguise the
`nature, location, source, ownership, or control of the proceeds of the Travel Act
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`violation(s). Doc. 1998 at 43. A rational juror could have easily found that Lacey’s stated
`intent of “plac[ing] assets in place where litigious parties, including government parties,
`can not access my accounts” overrides any subsequent tax filing. Ex. 1.
`
`This issue is amplified when the actual FBARs (Trial Exs. 5541, 5545, and 5546)
`are examined. The information included in these three tax forms is minimal. It only
`includes Lacey’s personal information and the information for the Hungarian Trust.8 Id.
`What these FBARs fail to report to the United States is the nature and source of the money.
`Nowhere in any of these filings does Lacey disclose to the United States that the money in
`his Hungarian trust emanated from Backpage revenue, i.e., “from postings in the female
`escorts section.” 9/21/23 p.m. Tr. at 90:16-22. That omission alone is sufficient for a
`rational juror to have found that Lacey engaged in concealment money laundering.
`
`This case is nothing like the Gotti case Lacey cites to bolster his argument. Supp.
`at 6 (citing United States v. Gotti, 457 F. Supp. 2d 411 (S.D.N.Y. 2006)). Defendant’s
`attempt to analogize the representations made by Gotti in his plea agreement to Lacey’s
`representations in the FBAR fails. The issue in Gotti was that the defendant entered into a
`plea agreement where he “admitted that [certain] properties were acquired through income
`obtained from racketeering activities, and the Government accepted a cash payment in lieu
`of forfeitures of those specific properties.” 457 F. Supp. 2d at 427-28. Accordingly, the
`court found that the “Government is now estopped from claiming that Gotti is laundering
`money by exploiting the very asset that it released to him in exchange for a cash payment.
`Furthermore it defies logic to allow a defendant to be charged with purchasing the same
`property twice—first with one source of funds and then with another.” Id. at 428.
`
`Contrast the facts in Gotti with Lacey’s three FBAR filings that only provided the
`foreign bank account information. Indeed, the United States could not utilize Lacey’s
`
`8 Lacey’s filings appear to satisfy the FBAR requirement, which is also minimal.
`According to the IRS website, “For each account you must report on an FBAR, you must
`keep records with this information: name on the account, account number, name and
`address of the foreign bank, type of account, and maximum value during the year.”
`https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-
`and-financial-accounts-fbar (last visited Dec. 19, 2023).
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`FBAR filings to seize the assets as material information was missing. For example, there’s
`nothing in this filing that ties the money to Backpage. By eliminating the connection
`between the $16.5 million and Backpage, Lacey achieved his goal of concealing this money
`from government seizure. Based on the evidence, especially when viewed in the light most
`favorable to the United States, a rational juror could easily find Lacey committed
`concealment money laundering.
`III. Lacey Had Knowledge that Hungarian Trust Funds Were Proceeds of Travel
`Act Violations
`The second element of international concealment money laundering is that Lacey
`“knew that the money represents the proceeds of a violation or violations of the Travel
`Act.” Doc. 1998 at 43. The trial evidence is overwhelming that Lacey knew how Backpage
`earned its revenue—through prostitution advertisements.
`The $16.5 Million Need Not Be Related to the Ads in the 50 Travel Act
`A.
`Counts
`As an initial matter, the $16.5 million at iss