Case 2:18-cr-00422-DJH Document 2021 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
`
`
`
`
`
`United States of America,
`
`
`
`Plaintiff,
`
`
`v.
`
`
`Michael Lacey, et al.,
`
`
`
`Defendants.
`
`
`
`
`CR-18-422-PHX-DJH
`
`UNITED STATES’ RESPONSE TO
`DEFENDANT SCOTT SPEAR’S
`SUPPLEMENT TO HIS
`RULE 29 MOTION (Doc. 2006)
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`Case 2:18-cr-00422-DJH Document 2021 Filed 12/22/23 Page 2 of 19
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`PRELIMINARY STATEMENT
`Defendant Scott Spear was an instrumental part of Backpage’s ownership and
`executive team for most of the website’s 14-year existence. Spear directly supervised and
`managed Carl Ferrer, who ran the website’s daily operations. Spear launched or oversaw
`the prostitution marketing strategies that cemented Backpage’s place as the internet’s
`leading source of prostitution advertisements after Craigslist shut its Adult section. His
`efforts helped establish the reputation of Backpage’s Escorts section as synonymous with
`sex-for-money among sellers and buyers of commercial sex. And when Backpage’s
`success created reputational problems that triggered a banking crisis for the company,
`Spear turned his attention to helping Backpage shift its banking and credit card processing
`overseas. For these efforts, Backpage paid Spear millions of dollars, with his annual
`compensation reaching nearly $3 million per year in 2013-2015.
`Following a 34-day trial at which 21 government witnesses testified, the jury found
`Spear guilty of counts 1-18, 52-62, 71-78, 85, and 93 of the Superseding Indictment. Doc.
`1977 at 1. The trial evidence far surpasses the minimum required to overcome Spear’s Rule
`29 challenge to the jury’s verdicts, and Spear’s Rule 29 motion should be denied.
`FACTUAL BACKGROUND
`Spear Supervised Ferrer, and Reported to Larkin
`I.
`
`Spear owned Backpage.com (Backpage), along with Michael Lacey, Jim Larkin,
`
`and Jed Brunst. 9/12/23 p.m. Tr. at 11:23-12:5, 78:25-79:1. After Backpage started in 2004,
`Spear became Ferrer’s immediate supervisor. 9/12/23 p.m. Tr. at 10:5-20. Spear, in turn,
`reported directly to Larkin—the company’s CEO. 9/12/23 p.m. Tr. at 15:15-19. Spear’s
`title was Executive Vice President of Backpage’s parent company. Ex. 5.
`
`In 2013, 2014, and 2015, the great majority of Spear’s income—nearly $3,000,000,
`$4,360,000, and $2,800,000, respectively—came from Backpage. 10/13/23 a.m. Tr. at
`127:7-133:14; Ex. 1481.
`
`Spear and Ferrer worked “together very closely,” and “were joined at the hip,” often
`meeting “three times a day.” 9/12/23 p.m. Tr. at 10:10-14. Spear was a “micromanager.”
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`Case 2:18-cr-00422-DJH Document 2021 Filed 12/22/23 Page 3 of 19
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`9/13/23 a.m. at 15:4-8. He required detailed feedback about Ferrer’s work, 9/13/23 a.m.
`Tr. at 15:4-8, which “was to run the site[.]” 9/12/23 p.m. Tr. at 16:7-12.
`II.
`Spear Oversaw the Marketing Strategies that Accelerated Backpage’s Growth
`
`Spear and Ferrer quickly recognized that Female Escorts was the most profitable
`section on Backpage, and that Female Escorts meant “hooker ads.” 9/12/23 p.m. Tr. at
`90:12-91:22; Exs. 1056, 1056a; see Ex. 1057. They focused on escort ads because, based
`on their experience, they “knew the revenue implications”: “Money.” 10/18/23 p.m. Tr. at
`96:1-15. Unlike a job ad, where the need to advertise ends after a position is filled, escorts
`“needed repeat business” and wanted to advertise “everyday.” 10/18/23 p.m. Tr. at 95:8-
`18. Escorts was the vehicle to “grow money on Backpage.” 10/18/23 p.m. Tr. at 96:1-15.
`
`A.
` Content Aggregation
`
`To expand escort ads, Spear directed the roll-out of Backpage’s “content
`aggregation” marketing strategy, “which was internal code for stealing ads from
`Craigslist”—primarily “their Erotic Services” ads. 9/12/23 p.m. Tr. at 26:16-24. Spear and
`Ferrer presented aggregation to Larkin and Brunst as a strategy to meet growth goals in
`2009. 9/13/23 p.m. Tr. at 42:16-43:11. They obtained Brunst’s approval to hire staff to
`execute it. 9/12/23 p.m. Tr. at 30:6-12; id. at 89:1-90:1-7 (discussing plan to “seed the site,
`the Female Escorts category, with 200 independent escorts”). Spear authorized using the
`strategy “in every major metro market in the U.S.” 9/12/23 p.m. Tr. at 29:24-25; see
`9/13/23 a.m. Tr. at 16:18-20:9; Exs. 10 and 10a.
`
`B.
`The Erotic Review
`
`Spear also approved and tracked Backpage’s partnership with The Erotic Review or
`TER, a prostitution review website where “Johns” (purchasers of sex from prostitutes)
`provided “[t]he price of the services and a description of the sexual services along with a
`description of the escort[.]” 9/12/23 p.m. Tr. at 32:1-6; see 9/13/23 a.m. Tr. at 21:21-27:5.
`As Ferrer testified, this partnership “was the secret sauce”: “[B]y having a relationship with
`The Erotic Review, we could make those ads that we stole from Craigslist, we could make
`their phone numbers ring.” 9/12/23 p.m. Tr. at 31:11-16. See id. at 41:23-25 (TER was a
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`Case 2:18-cr-00422-DJH Document 2021 Filed 12/22/23 Page 4 of 19
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`reason why “Backpage became the default choice” when Craigslist shut its Adult section).
`
`Spear was the “main author” of the 2008 budget plan, which informed Larkin and
`Brunst that “we struck a deal with TheEroticReview.com, TER, with reciprocal links it
`created huge brand awareness in this niche industry and increased page views from TER
`by 120,000 per day.” Ex. 23 at 3; 9/13/23 a.m. Tr. at 70:10-73:20. See also 9/13/23 p.m.
`Tr. at 43:12-44:1; Exs. 19, 20. Along with hyper-linking Backpage ads to TER prostitution
`reviews (and vice-versa), see 10/10/23 p.m. Tr. at 134:20-136:9, the TER relationship
`included a “banner ad exchange program” where each website featured banner ads for the
`other. 9/12/23 p.m. Tr. at 35:18-37:2.
`
`Spear closely tracked the relationship, 9/13/23 p.m. Tr. at 65:5-24, and understood
`that “the traffic from The Erotic Review was very, very important for Backpage’s success.”
`9/13/23 p.m. Tr. at 84:24-85:4. For years, Spear, Brunst, and Larkin regularly received
`Google Analytics reports showing The Erotic Review as the number one source of non-
`search engine referrals to Backpage. See, e.g., 9/12/23 p.m. Tr. at 35:6-12, 41:1-7; 9/13/23
`a.m. Tr. at 21:21-27:5; Exs. 19, 986, 986a, 1151, 1151a, 1919, 1919a, 1924, 1926.
`
`Backpage paid TER $4,000 per month for years as part of this relationship. 9/12/23
`p.m. Tr. at 35:18-37:2. Ferrer submitted the invoices to Spear and Brunst for approval.
`9/13/23 p.m. Tr. at 27:17-28:6; id. at 35:11-12. Spear signed the checks for these payments.
`10/10/23 p.m. Tr. at 142:13-143:5.
`
`C.
`Super Posters
`
`
`Backpage also developed an affiliate program with bulk prostitution advertisers, or
`“super posters.” 9/12/23 p.m. Tr. at 41:8-19. Larkin and Spear sent Ferrer to New York “to
`make Backpage successful,” and “early on we identified reaching out to those [super]
`posters[.]” 9/12/23 p.m. Tr. at 41:20-42:23. Super posters received “VIP treatment,”
`including advice on how to tailor their ads for Backpage. 9/12/23 p.m. Tr. at 46:23-47:4.
`
`D.
`“Moderation”
`
`Spear launched Backpage’s moderation efforts in 2006 with a “PowerPoint to get
`rid of explicit nudity.” 9/12/23 p.m. Tr. at 58:2-5. He coined a standard of “between Hustler
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`Case 2:18-cr-00422-DJH Document 2021 Filed 12/22/23 Page 5 of 19
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`and Playboy.” 9/12/23 p.m. Tr. at 58:15-19. Users weren’t blocked for posting sex act pics;
`“[t]hey could just post again.” 9/12/23 p.m. Tr. at 60:7. Backpage also began sanitizing the
`site of certain “terms [that] made the ads more obvious prostitution[.]” 9/12/23 p.m. Tr. at
`60:8-10, 60:15-17. As Ferrer testified, “we started removing those words from the ad but
`not deleting the ad.” 9/12/23 p.m. Tr. at 60:17-18. Spear approved changes to the terms
`and images that were allowable, and sent Ferrer emails with ads “that need to be cleaned
`up, edited.” 9/13/23 a.m. Tr. at 92:7-10; 9/13/23 p.m. Tr. at 10:2-8. Spear, Larkin, and
`Brunst approved budget increases for moderation, 9/13/23 p.m. Tr. at 106:21-107:2, with
`Spear responding to one such request: “Approved. Go get em.” 9/14/23 a.m. Tr. at 31:13.
`
`By 2010, after Craigslist closed its Adult section, Backpage experienced
`exponential growth in “revenue from online prostitution ads,” as shown in media reports
`that Spear and Ferrer discussed. 9/14/23 a.m. Tr. at 35:23-36:9. At the time, several state
`Attorneys General (AGs) began criticizing Backpage’s “rampant” prostitution advertising.
`9/12/23 p.m. Tr. at 47:9-49:12; Ex. 52. Spear, Ferrer, and Larkin had “watched Craigslist
`be attacked by the Attorney Generals and were very concerned that we’re next[.]” 9/12/23
`p.m. Tr. at 48:18-25, 49:7-15. They discussed “the slow dance strategy with the Attorney
`Generals”—“give them very, very little but create the impression that we’re doing
`something” without harming revenue. 9/13/23 p.m. Tr. at 93:9-22, 94:1-4.
`
`Backpage also started receiving thousands of prostitution investigation subpoenas.
`See, e.g., 9/13/23 a.m. Tr. at 62:16-25. In April 2010, responding to a Lacey email asking
`“is there any evidence of child trafficking anywhere?,” Spear replied: “We have had
`subpoenas that deal with this exact issue. . . . We get a ton of subpoenas that we comply
`with on a daily basis.” Ex. 804. Spear and Brunst approved hiring staff to handle the
`subpoenas. 9/13/23 a.m. Tr. at 62:11-15, 63:11-21, 65:4-9.
`
`To gain the AGs’ “blessing” (Ex. 1021), Larkin and Spear directed Ferrer to “not
`throw the baby out with the bathwater” and “implement the changes gradually, [so] we
`won’t lose revenue[.]” 9/14/23 p.m. Tr. at 25:20-26:7. See also 9/19/23 a.m. Tr. at 30:3-4;
`Ex. 1021. Spear and Ferrer agreed on “cosmetic changes” that didn’t impact revenue.
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`Case 2:18-cr-00422-DJH Document 2021 Filed 12/22/23 Page 6 of 19
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`9/15/23 a.m. Tr. at 9:1-10:23. Ferrer continued to meet with Larkin and Spear about
`moderation changes, communicated the results to staff, and solicited further changes “to
`get approved by Scott.” 9/15/23 a.m. Tr. at 20:11-14, 22:11-12; Ex. 73. One manager
`emailed staff that “Scott’s really pleased with the work we’ve been doing[.]” Ex. 610.
`
`Spear and Ferrer also agreed on a strategy of removing “TER links in ads” by
`January 2011, “[b]ut allow[ing] users to put [in] TER IDs (just no live links).” 9/15/23 a.m.
`Tr. at 24:10-19; Ex. 73. Ferrer testified Johns knew “that when it says ‘highly reviewed’
`and then an ID number that [TER] is the place to go.” 9/15/23 a.m. Tr. at 25:12-19.
`
`Backpage also hired internet safety experts, who recommended screening ads
`bought with prepaid cards—an “indicator [of] a potential trafficking ad.” 9/19/23 a.m. Tr.
`at 36:2-8. Spear, Larkin, and Ferrer rejected that change, because “up to 70 percent of our
`transactions came from prepaid cards[.]” 9/19/23 a.m. Tr. at 36:9-19. They also ignored
`recommendations to remove ads visited from TER. 9/19/23 a.m. Tr. at 37:13-38:11.
`
`In late 2010, Backpage learned CNN was planning an exposé about the site. 9/14/23
`a.m. Tr. at 80:20-21. Anticipating the story, Spear approved hiring moderators from an
`India-based company. 9/14/23 a.m. Tr. at 86:19-87:5. Backpage management watched and
`discussed the CNN report in early 2011. 9/15/23 a.m. Tr. at 43:15-44:7. It showed CNN’s
`Amber Lyon posting an ad of herself on Backpage’s Escorts section, using text from a
`Backpage ad selling a 12-year-old girl. Ex. 1052b1. When Lyon posted, her phone
`“start[ed] ringing off the hook.” 9/15/23 a.m. Tr. at 59:16-23. Lacey, Spear, and Brunst
`tried to stop rebroadcasts of the story. 9/15/23 a.m. Tr. at 60:10-62:13.
`
`Following the broadcast, Backpage faced more pressure to remove any references
`to The Erotic Review. 9/15/23 a.m. Tr. at 82:7-16. Ferrer and Padilla discussed leaving ID
`numbers on the site, which Spear approved. 9/15/23 a.m. Tr. at 82:1-24; Ex. 647.
`
`Spear was responsible for Backpage’s terms of use, which he continually modified.
`9/13/23 a.m. Tr. at 14:15-21. He also continued to approve changes to moderation
`guidelines. See, e.g., 9/15/23 a.m. Tr. at 92:10-19; Ex. 1612b; 9/19/23 p.m. Tr. at 98:14-19
`and Exs. 725 and 725b. Near the end of 2012, Larkin, Brunst, and Spear asked Ferrer to
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`Case 2:18-cr-00422-DJH Document 2021 Filed 12/22/23 Page 7 of 19
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`provide a comparison of revenue growth by sections from October 2010 to November
`2012. 9/20/23 a.m. Tr. at 64:6-66:1; Exs. 355, 355b. The comparison showed huge growth
`in Adult compared to all other sections, which Ferrer attributed to the success of the
`company’s moderation strategy. 9/20/23 a.m. Tr. at 65:19-20. See id. at 65:23-66:1.
`
`While Backpage hired Elizabeth McDougall in 2012, “she was sidelined a good
`portion” of the time. 9/26/23 p.m. Tr. at 59:17-60:7; see id. at 60:9-10. The goals of the
`moderation strategy established under Spear never changed: revenue continued to grow,
`with prostitution advertising remaining at the forefront of Backpage’s business until its
`closure in April 2018. See Exs. 1481, 1049b.
`IV.
`Spear Met with NCMEC and Polaris
`
`In late 2010, in response to trafficking concerns raised by the Polaris Project, Spear
`instructed Ferrer to hire a Florida-based moderation vendor to intensify clean-up efforts.
`9/15/23 a.m. Tr. at 33:16-34:13; Ex. 605. Spear then set up a meeting with Polaris. 9/15/23
`a.m. Tr. at 35:8-11; Ex. 1611. Backpage also arranged a meeting with the National Center
`for Missing and Exploited Children (NCMEC). See 9/15/23 a.m. Tr. at 93:12-94:22. Lacey,
`Larkin, Spear, and Ferrer met with NCMEC on March 1, 2011. 10/18/23 p.m. Tr. at 26:23-
`24, 28:5-12. NCMEC presented examples of Backpage ads selling minors for sex and
`referencing their TER reviews. 10/18/23 p.m. Tr. at 34:3-42:4; Ex. 652a. Larkin, Spear,
`and Ferrer then met with Polaris. 10/18/23 a.m. Tr. at 99:16, 100:6-10. Polaris explained
`that, despite moderation, “real trafficking cases were still making their way onto the site,”
`and presented several examples. 10/18/23 a.m. Tr. at 109:21-110:2.
`V.
`Backpage’s “Escorts” Section Became Synonymous with Prostitution
`
`By 2013, Backpage’s Escorts section had become synonymous with “sex for a fee”
`among buyers and sellers of commercial sex. 10/13/23 a.m. Tr. at 58:19-23 (testimony of
`Lt. Griffin, who investigated the pimps behind Count 2); 10/17/23 a.m. Tr. at 82:1-83:10
`(testimony of N.F.—the victim in Counts 4 and 5—that “Backpage . . . was known for girls
`to use it to escort and to get trafficked,” and “escort” meant the “exchange of sex acts for
`money”); 10/17/23 p.m. Tr. a 35:7-15, 36:23-37:2 (A.C.—the victim in Counts 12 and
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`Case 2:18-cr-00422-DJH Document 2021 Filed 12/22/23 Page 8 of 19
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`14—testifying that after her Backpage ads posted, men would call who “would want to
`exchange money for sex”—i.e., “sexual intercourse”).
`
`Even when a pimp, prostitute, or undercover cop posted in the Escorts section
`without using overt sex-for-money language, the poster’s phone would immediately start
`ringing with calls from Johns. 10/11/23 a.m. Tr. at 123:22-124:4 (B.L.—the victim in
`Counts 16-17—testifying that she would “just copy[ ] the lingo” from other Backpage
`Escort ads, and after she posted on the website “[w]ithin a minute my phone was ringing
`off the hook”); 10/17/23 a.m. Tr. at 85:14-86:3 (N.F. testifying that after her ads posted on
`Backpage’s Escorts section “I started getting a lot of phone calls” and “text messages”
`“within minutes”); 10/12/23 a.m. Tr. at 75:5-9, 77:23-20 (A.B. would “copy and paste”
`from other Backpage ads, and then “start getting calls and text messages” from Johns).
`VI. As Backpage Grew Toxic, Banking Became the Primary Focus
`
`In 2013, Spear continued to supervise Ferrer, and Brunst served as Backpage’s CFO.
`9/20/23 p.m. Tr. at 13:9-14:1. But Spear and Brunst avoided using a “backpage.com” email
`address because of “reputational risk”— Backpage’s name had become toxic. 9/20/23 p.m.
`Tr. at 14:2-9. That toxicity triggered a banking crisis: Moderation was “on the back burner”
`“[b]ecause the barn is on fire[.]” 9/20/23 p.m. Tr. at 47:23-48:7. From 2013 forward,
`company’s “entire focus . . . is banking, is trying to get payments, ways for users to be able
`to pay for ads and then find treasury banking solutions.” 9/20/23 p.m. Tr. at 29:7-16.
`
`In 2013, Backpage’s U.S.-based credit card processor, Litle, announced it was
`dropping Backpage. 9/12/23 p.m. Tr. at 69:17-70:8. Ferrer then “worked] closely” with
`Brunst, Spear, and Larkin “to secure credit card processing from Europe.” 9/20/23 p.m. Tr.
`at 14:22-15:7. When Chase Bank informed Backpage that it “was no longer accepting
`transactions from Backpage.com, due to their involvement in human trafficking,” Ex. 173,
`Backpage responded by directing Chase credit card purchasers to EMP (e-Merchant Pay),
`a European processor that would “use a different billing descriptor that won’t say
`Backpage.com on it.” 9/20/23 p.m. Tr. at 21:7-22; Ex. 173; see also Ex. 1110.
`
`In September 2013, Ferrer wrote Spear and Brunst about Netcash, a Cyprus-based
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`credit card processor. 9/20/23 p.m. Tr. at 13:3-8; Ex. 1092. Ferrer sent the Netcash
`agreement “to Spear to vet,” and updated him about another processor, CCBill. 9/20/23
`p.m. Tr. at 16:19-17:6; see also Ex. 1111. In October 2013, Ferrer emailed Brunst, copying
`Larkin and Spear, about the CCBill contract. 9/20/23 p.m. Tr. at 31:12-37:23; Ex. 752.
`
`In November 2013, Ferrer sent Larkin, Brunst, and Spear a consultant’s
`recommendations on credit card transactions. 9/20/23 p.m. Tr. at 37:24-40:13; Ex. 175.
`The recommendations included using names, internet addresses, and billing descriptors
`that don’t include “Backpage.” 9/20/23 p.m. Tr. at 38:24-42:22. Backpage’s executives
`started “open[ing] up holding companies with innocuous names like Classified Solutions,
`Payment Solutions, just general-sounding companies that you don’t know really—they
`don’t say Backpage.” 9/20/23 p.m. Tr. at 15:12-23; 10/10/23 p.m. Tr. at 74:13-14.
`
`The recommendations also included “load balancing across many banks with
`different billing descriptors”; this meant “adding a lot of banks” and “distributing . . .
`transactions” to stay below thresholds that would otherwise trigger reviews by Mastercard
`and Visa. 9/20/23 p.m. Tr. at 38:10-23. Backpage accordingly used Classified Solutions
`(in England) for credit card processing with EMP (in Bulgaria), and spread payments from
`EMP across other banks including Borgun (in Iceland) and Bank Frick (in Liechtenstein).
`9/20/23 p.m. Tr. at 43:18-44:6; 9/21/23 p.m. at 76:3; Ex. 6189.
`
`These funds were then sent to BMO in the United States, where Backpage had an
`account under the name of “Website Technologies.” 9/20/23 p.m. Tr. at 27:10-28:12. As
`Ferrer testified, Brunst “want[ed] to ensure that [Website Technologies’] reputation is
`protected, not affiliated with Backpage.” 9/20/23 p.m. Tr. at 72:2-4; Ex. 177.
`
`In late 2013, Ferrer and Spear presented an annual business plan to Larkin and
`Brunst. 9/20/23 p.m. Tr. at 44:8-19; Exs. 1116, 1116a. In January 2014, Ferrer sought
`signatures to open an account at still another bank, Werther/PrivatBank, to receive
`payments from EMP. 9/20/23 p.m. Tr. at 69:8-11; Ex. 869. Ferrer wrote Spear and Brunst
`because they “sign . . . and vet the agreements[.]” 9/20/23 p.m. Tr. at 70:21-71:1.
`
`When US Bank gave notice in April 2014 of dropping the company, Brunst wrote
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`Spear, Ferrer, and others that “[w]e will move all banking under Website Technologies at
`BMO.” 9/20/23 p.m. Tr. at 72:5-73:4; Exs. 178, 178a. Ferrer then updated Spear and Brunst
`that Chase had “figured . . . out” that Backpage was allowing customers to use Chase cards
`by using “a different billing descriptor,” “so we just have to change again.” Ex. 1120;
`9/20/23 p.m. Tr. at 90:17-24, 91:25-92:4. “[B]ecause Scott Spear likes to take his time
`vetting these agreements,” Ferrer urged quick action. 9/20/23 p.m. Tr. at 92:14-15.
`VII. Spear’s Involvement Continued Post-Sale
`
`In April 2015, Lacey, Larkin, Brunst, and Spear purported to sell Backpage to Ferrer
`for $600 million. 9/12/23 p.m. Tr. at 78:1-8. The price would be paid as an “earn-out”—
`“whenever money came in [to Backpage’s accounts], [the sellers] would find a way to get
`[the money] swept to . . . their banks accounts.” 9/12/23 p.m. Tr. at 78:3-14. Spear, Brunst,
`and Larkin received a five-year business plan on April 10, 2015, because they were
`“monitoring the business very closely.” 9/21/23 a.m. Tr. at 71:22-11; Exs. 884, 884a. Ferrer
`then emailed Spear and Brunst to inform them that customers could now purchase credits
`on seemingly unrelated sites and use those credits to buy Backpage Escort ads. 9/21/23
`a.m. Tr. at 73:14-75:2; Ex. 1670. In February 2018, Spear met with Larkin and Ferrer to
`discuss taking over Backpage’s operations. See Ex. 1796; 9/22/23 a.m. Tr. at 55:14-59:9.
`ARGUMENT
`The Evidence Shows Backpage Published Prostitution Ads
`A.
`The Ads in Counts 2-18 Were for Prostitution
`Spear’s primary argument is that the United States didn’t prove that the ads
`underlying Counts 2-18 “proposed illegal transactions” and thus fell outside the First
`Amendment. Mot. at 6. The Court agreed with Defendants’ request to instruct the jury on
`the First Amendment, and provided the following instruction:
`
`All speech is presumptively protected by the First Amendment to the United
`States Constitution. However, the First Amendment does not protect speech
`that proposes an illegal transaction. Prostitution is illegal in 49 states and
`most of Nevada. It is the government’s burden to establish that each of the
`ads alleged in this case is an ad for prostitution and not for another purpose
`such as an ad for an escort, dating or massage service. If you find that an ad
`proposes an illegal transaction, it is not protected by the First Amendment.
`
`I.
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`Doc. 1998 at 48. Spear agrees that the instruction “included the correct legal standard.”
`Doc. 2009, Mot. at 17. The jury is presumed to have followed it. United States v. Reyes,
`660 F.3d 454, 468 (9th Cir. 2011). To overturn the jury’s verdicts, Spear 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).
`For several reasons, Spear cannot meet this heavy burden. First, posting in
`Backpage’s Escorts section—where the ads in Counts 2-18 appeared—itself indicated that
`the ads were for prostitution. Supra at 6-7; see also Exhibit A (chart summarizing the
`evidence showing that each of the 17 ads in Counts 2-18 were for prostitution).
`
`Second, eight of the ads (Counts 3, 6-11, and 18) were posted by P.R., whom Ferrer
`knew to be a prostitute. Exs. 504-511; 9/14/23 p.m. Tr. at 79:7-80:6. Ferrer emailed with
`her from about 2010 to 2018. 9/14/23 p.m. Tr. at 797-12. He repeatedly assisted her with
`her Backpage advertising. See 9/14/23 p.m. Tr. at 80:7-108:8; 9/15/23 a.m. Tr. at 7:19-21.
`
`Third, all the ads used language indicative of prostitution. P.R.’s ads included the
`prostitution transaction code word “roses”—“shorthand for dollars,” “donation”—
`indicating payment, and “independent”—meaning not under a pimp’s control. Exs. 504-
`511; 10/18/23 p.m. Tr. at 37:11; 10/12/23 p.m. Tr. at 32:3-11; 9/21/23 a.m. Tr. at 16:12-
`16, 48:23-25. Other ads used “New In Town,” which Spear and Ferrer knew was code for
`prostitutes or victims who traveled a circuit or were shuttled among different locations.
`Exs. 215, 215a, 217, 217a; 9/21/23 a.m. Tr. at 21:20-22:15; Exs. 104, 104a; 9/19/23 a.m.
`Tr. at 33:10-20; 9/19/23 p.m. Tr. at 53:18-54:7. Several included “in call”—prostitution
`code for when the John goes to the prostitute. Exs. 212a, 214, 214a; 9/13/23 a.m. Tr. at
`30:3-31:21; 10/13/23 a.m. Tr. at 59:23-60:7. Many had other prostitution code terms like
`“real pics,” “clean,” “hygienic,” and “discrete.” Exs. 212a, 216, 216a, 504-511; 9/21/23
`a.m. Tr. at 16:3-11; 10/13/23 a.m. Tr. at 76:3-77:22. Some had spelled-out phone numbers,
`often seen in prostitution ads where the posters sought to evade law enforcement. Ex. 212a,
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`10/13/23 a.m. Tr. at 60:13-61:7. While Spear asserts that the ads didn’t contain “sex act
`terms or acronyms” (Mot. at 2), Backpage’s moderation strategy—which Spear
`launched—was intentionally designed to remove such overt terms. See supra at 3-6.
`
`Fourth, seven ads (Counts 4, 5, 12, 13, 15, 16, and 17) were “moderated” before
`publication by having one or more pictures removed from the originally submitted ads. See
`Exs. 214, 214a, 215a, 216, 216a, 217, 217a; Doc. 230, ¶ 201. Ferrer and his staff were
`carrying out moderation policies that Spear had originated when they published the ads.
`
`Spear asserts the ads didn’t propose illegal prostitution because several “disclaimed
`being solicitations of prostitution[.]” Mot. at 10. But this was a prostitution marketing tool.
`Victim B.L. testified that her pimp included disclaimers in the Count 16 and 17 ads (Exs.
`216, 216a) because “[h]e was trafficking.” 10/11/23 p.m. Tr. at 27:12-29:16. Another
`victim, J.T., testified that similar language—“donations are for time and companionship
`only”—was “there so tricks [i.e., Johns] would know that we’re not law enforcement to
`make them feel comfortable.” 10/18/23 a.m. Tr. at 77:6-9. See also 10/18/23 a.m. Tr. at
`77:10-21 (disclaimers aimed to minimize law enforcement attention “so we don’t get in
`trouble” “[b]ecause it’s against the law” “[t]o sell your body”). In sum, the disclaimers
`were more proof that the ads offered illegal services. And if they posed any conflict in the
`evidence, Rule 29 requires the Court to resolve all such conflicts in favor of the verdicts.
`Nevils, 598 F.3d at 1164. Under the Jackson/Nevils standard, Spear’s motion fails.
`
`B.
`Spear’s Recycled First Amendment Challenge Fails
`
`Spear’s argument that the United States had to prove that the ads “expressly
`propose[d] facially illegal transactions” attempts to relitigate the First Amendment
`instruction—and is barred by law of the case. Mot. at 7-8. On October 26, 2023, the Court
`decided this exact issue. See 10/26/23 a.m. Tr. at 60:21-25. Defendants’ position
`confusingly suggested that the jury could not consider abundant evidence that the ads’ text
`and context—including their use of coded prostitution transaction terms and placement in
`Backpage’s Escorts section—showed the ads proposed illegal transactions. 10/26/23 a.m.
`Tr. at 60:3-8, 60:20-61:9; 63:11-64:20. It also contradicted evidence that Spear and others
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`at Backpage had deliberately embraced a moderation strategy of scrubbing the most overt
`sex-for-money references in Backpage’s ads, while still conveying the illegal message.
`10/26/23 a.m. Tr. at 60:9-18. And it went against the law of the case, including Doc. 793
`at 9-12, which recognized the United States could satisfy the First Amendment by showing
`that Defendants published veiled prostitution ads. 10/26/23 a.m. Tr. at 61:10-62:21.
`
`The Court agreed with the United States when it finalized the First Amendment
`instruction. 10/26/23 a.m. Tr. at 66:18-67:8. Spear’s motion doesn’t add anything new—it
`merely recycles the same arguments the Court rejected. See Mot. at 5-11; Doc. 1666 at 2-
`3; 10/26/23 a.m. Tr. at 64:21-65:23.
`
`Spear’s arguments still lack merit. This case is about commercial speech—
`advertising. Valle Del Sol Inc. v. Whiting, 709 F.3d 808, 818 (9th Cir. 2013). Commercial
`speech is subject to lesser protection—and “commercial speech related to illegal activity”
`has no First Amendment protection. Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Commn.
`of New York, 447 U.S. 557, 563-64 (1980). Prostitution ads are not protected. Doc. 793 at
`14; Pittsburgh Press Co. v. Human Relations Comm’n, 413 U.S. 376, 388 (1973).
`
`There is no requirement that an ad “necessarily” or explicitly propose an illegal
`transaction on its face to fall outside of First Amendment. Jurors may consider both text
`and context in assessing the ads, including use of coded prostitution terms, cross-references
`to reviews on prostitution websites, and placement in categories synonymous with
`prostitution. See Doc. 793 at 9-11; Pittsburgh Press, 413 U.S. at 388 (employment ads
`were unlawful based on the context of their placement in gender-specific categories);
`United States v. White, 610 F.3d 956, 960 (7th Cir. 2010) (“that a request for criminal
`action is coded or implicit does not change its character as [unprotected] solicitation”).
`
`Spear doesn’t provide any contrary Ninth Circuit cases. For example, in IMDb.com
`Inc. v. Becerra, 962 F.3d 1111, 1123 (9th Cir. 2020) (Mot. at 7), the court distinguished
`Pittsburg Press from situations
`involving
`the publication of truthful, fact-based
`information that was lawfully obtained. IMDb is not a commercial speech case, and it says
`nothing about whether the legality of a proposed transaction must be determined solely
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`from an ad’s express language, without considering coded terms or other text and context.
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`Valle Del Sol Inc. v. Whiting, 709 F.3d 808, 814, 823 (9th Cir. 2013) (Mot. at 5, 7),
`held that Ari