PHOENIX (CN) — A federal judge denied a motion to dismiss the federal case against Michael Lacey and other former Backpage executives, finding the government's late disclosure of discovery either didn’t violate procedural statute or didn’t prejudice the jury against the defendants.
Five people accused of facilitating prostitution and money laundering through the Craigslist-like website Backpage.com filed the motion in November 2023 after the government disclosed two sets of documents near the end of trial that the defense says should have been provided earlier in the process. One is an asset-tracing report prepared by an IRS investigator that tracked the movement of Backpage funds. The other is a set of emails between star government witness Carl Ferrer and that same investigator.
The defendants argue that prosecutors violated the Jencks Act, which requires the government to disclose all witness statements to the defense as part of discovery so as to give the defense every chance to impeach government witnesses. A violation of the Jencks Act can result in the dismissal of a case, or at least the dismissal of certain testimony.
U.S. District Judge Diane Humetewa ruled Wednesday that neither remedy was appropriate in this situation.
Federal prosecutors disclosed the first subject of the defense’s Jencks claims — a 90-page draft of an asset tracing document that the IRS used to track Backpage money — on Nov. 8, 2023, nearly two weeks after the defense rested its case-in-chief.
Defense attorneys argued that because the report was co-authored by Quoc Thai, another investigator, the report counts as a statement of Thai, and therefore should have been disclosed. But Thai testified in a later evidentiary hearing that he merely made “cosmetic” changes to the report, editing for grammar and structuring the table of contents.
Attorney Gary Lincenberg told Judge Humetewa, a Barack Obama appointee, that because information in the report contradicted statements made on the stand by both Thai and Ferrer, he and other defense attorneys could have used it to impeach the witnesses.
But the government pointed out that all the information included in the draft was copied into civil forfeiture affidavits that were already disclosed to defendants in discovery — so the document didn’t contain any information that defendants didn’t already possess at time of trial.
Because Thai didn’t contribute to the content of the draft report, as was clear from his difficulty answering basic questions about its contents, the draft is not Jencks material and wasn’t subject to prior disclosure, Humetewa wrote in her ruling.
The judge added that, as federal prosecutors explained, defense counsel already knew the information in the report.
“Defendants cannot now fain surprise or claim they were hindered from a more vigorous cross-examination of Thai about his supporting evidence or lack thereof,” she wrote.
The other subject of the defense’s Jencks claim is a batch of emails between Ferrer, the former CEO of Backpage who pleaded guilty to conspiracy to facilitate prostitution in 2018, and IRS investigator Lyndon Versoza. The emails discuss the details of Ferrer’s plea agreement and information about how much he paid his defense team, using Backpage revenue to do so.
Unlike the asset tracing report, Humetewa found that the government did violate the Jencks Act by waiting to disclose Ferrer’s emails. But she concluded that because the statements provided no new information material to the defense, no remedy is required.
“Defendants’ access to these late disclosures had no prejudicial effect on their cross-examination of Ferrer on the benefits of his plea agreement,” Humetewa wrote. “To be sure, the cross-examination was exceedingly thorough. Counsel for defendant (John) Brunst practically went paragraph by paragraph through Ferrer’s plea agreement attempting to extract his understanding of all its benefits.”
The only information she found that may have been new was the amount Ferrer paid his lawyers — $4 million — which contradicted his statement in court that the number was south of $1 million. Humetewa wasn’t convinced the difference was significant.
“Given the thoroughness and totality of Ferrer’s cross-examination, it is difficult for the court to see how refreshing Ferrer’s recollection that $4,000,000, rather than $1,000,000, was paid to his attorneys fees so far could result in prejudice,” she wrote.
The defense also claimed that the government violated a precedent set by Brady v. Maryland, which requires the production of all evidence that may benefit the defense. But because the information in Ferrer’s emails was previously provided to the defense through other means, Humetewa found that no Brady violation occurred either.
Scott Spear and John Brusnt, former executive vice president and former chief financial officer of Backpage, respectively, were convicted in November on multiple counts of facilitating prostitution and money laundering.
Website founder Michael Lacey was convicted on one money laundering count, and acquitted on another but the jury couldn’t decide on the remaining 84 prostitution and money laundering counts. The government plans to retry him on those counts in August.
Neither side has replied to requests for comment.
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