Backpage

Backpage Prosecutors Want to Seize Assets First, Answer Questions Later

Aggressive asset forfeiture collides with First Amendment rights.

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Aggressive civil asset forfeiture is colliding with First Amendment rights in the Justice Department's ongoing efforts against the former executives of Backpage.

Judges from the U.S. Court of Appeals for the 9th Circuit considered claims this week that federal prosecutors have improperly seized the executives' money and property and used dirty tricks to prevent the courts from making things right.

Those challenging the seizures include Michael Lacey and James Larkin, the onetime owners of both Backpage and a host of alt-weekly newspapers, along with their former employees John Brunst and Scott Spear. All four were arrested in April 2018 as part of the federal criminal prosecution of Backpage executives for alleged money laundering, conspiracy, and violations of the Travel Act.

Since that time, the feds have seized "26 real properties (some purchased before Backpage.com ever existed), 89 bank accounts, and 268 domain names" from the defendants, their family members, and associated entities. Prosecutors also seized money held in trusts by the defendants' lawyers, jeopardizing defendants' ability to afford defense counsel as they wait out a trial set to start in May 2020.

In a recent brief, they accuse the feds of trying to "deprive defendants in a criminal prosecution of assets to fund their defense, and subsequent efforts to block defendants from constitutionally challenging the Government's overreaching."

Former Assistant U.S. Attorney Christine Biederman, who recently wrote about the case for Wired ("Inside Backpage.com's Vicious Battle with the Feds") has told writer Steven Lemons that prosecutors have been trying "to delay, and ultimately, prosecutors hope, avoid pretrial review of the seizures."

Thus far, the government has seized "millions of dollars of assets belonging to [Brunst et al] and their family members," according to the February 2019 motion. "All told, the Government obtained at least 24 civil seizure warrants." And nearly all of the assets involved "were derived from [their] publishing activities, including assets earned from decades of operation of the newspapers, long before the creation of Backpage.com."

Herein lies a legal problem. Publishing activity—indeed, any First Amendment–protected activity—is somewhat shielded from pre-trial money-grubbing by the government.

Under the twisted rules of civil asset forfeiture, the government can take money and property from those accused of wrongdoing before actually proving any wrongdoing, so long as there is "probable cause" to believe the assets were used in or derived from criminal activity. But for assets related to potentially First Amendment–protected activities, a higher standard is required. If the government wants to grab those assets pre-trial, it must first show that the speech in question is not constitutionally protected.

Prosecutors argue that they're not required to abide by this higher standard for protected speech because the speech on Backpage was not protected. But "that is the very point it must prove at trial, as well as before it may seize assets," respond the Backpage lawyers in their appeal. If all it took to avoid the higher standard of scrutiny is for prosecutors simply to declare speech unprotected, the higher standard of scrutiny would be meaningless.

At the July 9 hearing, Judge Michelle Friedland asked one of Backpage's attorneys, Robert Corn-Revere, whether making a ruling on seized assets would require a determination of whether seized proceeds stemmed from illegal activity.

"That's the ultimate question of trial," responded Corn-Revere. But in seizing first, figuring that out later, federal prosecutors are "assuming their conclusion, then claiming that they can do the seizure."

Corn-Revere later added that the case was about a "fundamental First Amendment question of whether or not the government can do an ex parte seizure of a publisher's assets, simply by alleging that the publishing is illegal."

To get around such constitutional questions, the government has been arguing about where it is proper to talk about forfeiture issues. Federal prosecutors told the U.S. District Court for the Central District of California (where asset seizure warrants had been issued initially) that the hearing must take place through the court in Arizona (where the Backpage criminal case is ongoing). Then they told the court in Arizona that the hearing must take place through the court in California. Meanwhile, prosecutors kept filing motions to seize more property.

Back in California last fall, prosecutors argued that the court should hold off on the asset forfeiture question pending the resolution of things in Arizona. The court agreed, in October 2018.

In their appeal of that decision, Brunst, Lacey, Larkin, and Spears accused the government of essentially "maneuver[ing] to evade any form of judicial review" of "the legal merits of its pretrial seizure of millions of dollars of publishing assets and proceeds." They asked the 9th Circuit Court of Appeals to reverse the lower court's stay order and "immediately vacate the seizures based on established constitutional rules under the First, Fourth, Fifth, and Sixth Amendments."

The government replied that it was within its rights to "seek civil and criminal forfeiture of the same property," claiming that it had merely been trying to make Backpage argue some of its anti-forfeiture claims in one court and some in the other.

Meanwhile, the government has continued to assert that all the assets it seized were derived from the operation of Backpage, that all ads on Backpage were illegal, and that this is self-evidently true. But it conceded in May that a court hearing on some of the substantive claims brought by the defendants is merited, and it asked the appeals court to send this back to the district court for a limited re-review.

Government lawyers have also argued that there were no free speech issues raised in this case in the first place, since Backpage had already been shut down and, besides, sold by Lacey and Larkin in 2015. "Whose First Amendment rights and what 'publishing assets and proceeds' are implicated here?" they wrote. "Appellants sold their shares in Backpage to [Carl] Ferrer in 2015, and Backpage is defunct."

But Backpage is defunct because of government actions. It's a funny sort of justice that lets the government take your stuff and then say you have no recourse because you don't have that stuff anymore.

In any event, the feds' argument represents a fundamental misinterpretation of the First Amendment issues at play. (The point, after all, is not whether the personal expression of these four defendants is being directly threatened.) It is also a rather disingenuous tack: Elsewhere in the case, in order to hold them responsible for more recent activity, the prosecutors argue that defendants never really did let the company go.

In February, the Reason Foundation (the nonprofit that publishes this magazine), the Cato Institute, and the DK Liberty Project filed an amicus brief in support of the appeal, for the purpose of "amplify[ing] the danger that the government's use of civil forfeiture to seize the assets and proceeds of expressive material poses to free expression."

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  1. Whose feds are these? Trump’s? Obama’s? Bush’s? Clinton’s? Yours? Mine? No, this is the Deep State in action, a machine that runs itself, unelected and unaccountable and absolute ruler of all it surveys. Get used to it.

    1. This seems more like political opportunism, riding on the “sex trafficking” panic.
      Whatever it is it’s pretty disgusting. Backpage was actively helping investigate underage and forced prostitution cases. And now everyone has forgotten that and pretends that this is all good.

      1. None of us in the academic world who are friendly to the law enforcement community, as we are here at NYU, are forgetting anything, but certain individuals who defend Backpage are forgetting that if there’s a crime, there’s no “free speech,” and hence no “first amendment rights” to defend. Before trying to justify their collaboration with the worst elements of our struggling society, the owners of this company should think long and hard about the principles we helped establish in our nation’s leading criminal “satire” case. See the documentation at:

        https://raphaelgolbtrial.wordpress.com/

        1. “…if there’s a crime,…”
          You lose.

          1. Precisely my point–to which it should be added, don’t think we won’t find a crime when we need to. Advertising illegal erotic services is not “free speech,” it’s a criminal act.

            1. Gee, thanks. No need for fact finding, a defense, or a trial then. You’ve got it all sorted out for us. Think of all the money we’ll save when we shutdown the judicial system and just ask you.

    2. I take issue only with your insistence on calling this the “deep state”. It’s too conspiratorial. The “deep state” is broad, expansive and shallow — a single bureau deep in most instances. Plus, it makes you sound crazy or, worse, stupid.

      “…this may be hard for you to understand, but there is no conspiracy. Nobody is in charge. It’s a headless blunder operating under the illusion of a master plan. Can you grasp that? Big Brother is not watching you.”

      1. Then call it the permanent bureaucracy or the “civil service” since it’s all due to the Civil Service Act.

  2. “Aggressive asset forfeiture collides with First Amendment rights.”

    And the fourth, and the fifth, and logic, and ‘truth, justice and the American way’.
    And oh by the way, all asset forfeiture, not just the aggressive kind.
    Absent a guilty finding by a jury, the government should not take anything from anyone. And after a conviction, only a fine that is not excessive.
    And while I am dreaming, a pony for everyone under 12 years old.

    1. And the sixth. Having the “assistance of counsel” implies that people, in general, should be able to pay for such assistance. To deliberately strip defendants of assets so that they will not be able to pay for effective counsel is certainly in violation of the intent of the Sixth Amendment. Feds have admitted to deliberately doing exactly that in some cases. I’m not sure if any such statements have been made in this case, but I don’t think they deny doing that either. Oh, and the treatment given to that grandmother who was in the shower at the time of the arrest is truly shocking. I hope they have a nice big lawsuit planned over that, if it hasn’t been filed yet.

    2. Remember when they said asset forfeiture was to prevent drug dealers from profiting on all of the death and misery they cause, and taking the assets gained from their illegal activity would be used to fund the war on drugs? Remember that?

      Remember how civil libertarians said that this wouldn’t be the case – that this power would be abused?

      Remember how everyone in the mainstream of politics and the media said they were crazy and that would never happen?

      I like the way they don’t even pretend to establish any sort of criminal nexus any more. It is just “we suspect this guy of being a criminal, so we are gonna take everything he has”. Or “someone did a crime here – so we are taking all this stuff…. Who cares if it doesn’t belong to the criminal.”

      Every extreme, nutty, beyond tinfoil hat level theory that I ever heard as a kid has not only come true, but been vastly exceeded. When they invented the social security “trust fund” they warned that if they didn’t do it, they’d have to run nearly a trillion dollar deficit by 2024 to fund entitlements…. How’d that work out? They said we would never be subject to searches while traveling within the US… now we have groping and X-Ray Vision machines from the back of a comic book. And our government would never spy on US citizens… They would never routinely monitor our banking records….

      And on and on…. The most extreme leftist politicians from the 70’s would have their heads explode if they saw the state of things today. And yet we soldier on, looking for new ways to hand over more rights and personal sovereignty to the government.

      1. yeah, just a few years ago “Total Information Awareness” was shut down after citizen protests. Then the government just proceeded to slowly re-implement all of it and then some.

  3. We don’t live in a free country. It is known.

  4. I hate the speech that spewed out by the government concerning all the “save the children” crap along with the lies about “dangerous drugs” and whatever other danger is lurking out there that we need protection from, but I consider even that to be protected speech even though it is more dangerous than what any person could possibly say.
    What is happening is this case is nothing less than deplorable. Civil asset forfeiture is not something that should ever be tolorated in a free and civil society. However, for some reason its acceptable in our country and is normally handled through a process where a person can somewhat defend against it. That process is totally in favor for the government and cant in any way be considered fair (not to mention a violation of the 5th amendment), but it is a process that must be followed. In this case I find it to be real suspect that the govt is playing the game of “the process needs to be handled over there” whether they are “over here” or “over there”. The prosecution in this is not respectable even by govt standards, which is the lowest standard of respectability that I can hold a person to. This case is nothing short of a witch hunt where these two respectable men hurt the feelings of those in authority (using speech) and now that authority is now working to destroy these men. Of course they have disregard our right to freedom of speech in order to accomplish their goal, but that is a side benefit they welcome with glee!
    They are evil, sedistic, and deserve nothing but contempt for who they are…just scumbags!!

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  6. meanwhile, no one is seizing Twitter’s assets for all the trafficking going on there

  7. Whose feds are these? Trump’s? Obama’s? Bush’s? Clinton’s? Yours? Mine? No, this is the Deep State in action, a machine that runs itself, unelected and unaccountable and absolute ruler of all it surveys. Get used to it.

  8. I earned $4500 last month by working online just for 4 to 6 hours on my laptop and this was so easy that i myself could not believe before working on this Website. If You too want to earn such a big amount of money then come and join us.

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