Update, August 1, 2020:  On July 28, the Ninth Circuit issued an order dispensing with the need for oral arguments in the case. It states: “The court is of the unanimous opinion that the facts and legal arguments are adequately presented in the briefs and record, and the decisional process would not be significantly aided by oral argument.”

The Ninth Circuit Court of Appeals has tentatively scheduled a First Amendment scrimmage over millions of dollars in unconstitutionally-seized assets belonging to veteran newspapermen Michael Lacey and Jim Larkin for early August in Pasadena, Calif.

In a notice posted recently to the appeals’ docket, the court announced that, unless a three-judge panel of the Ninth decides to rule on the parties’ briefs alone, oral arguments in the case will take place remotely on August 11, with attorneys and judges appearing via video or telephonically.

The Ninth’s courthouses have been closed to the public due to the COVID-19 pandemic since mid-March. A standing order from the court notes that such arguments will be livestreamed.

It will be the second trip to the Ninth in about a year for Lacey and Larkin as they battle on two fronts to beat back the federal government’s attempt to imprison them for the rest of their lives. The stakes could not be higher for the two men, who need access to their money — much of it acquired over their 40-plus years in the newspaper business — in order to pay the immense legal bills in their criminal case in Phoenix, Arizona, which currently is set to go to trial on August 17.

However, the broader implications of the battle involve the First Amendment rights of all publishers, interactive websites and pretty much anyone who cares about freedom of speech on the internet.

The Wolf at the Door

The central question is whether the federal government should be allowed to have a de facto back door to censorship: first, by declaring speech illegal without a hearing; second, by falsely charging the owners (and former owners) of an outlet with a mountain of outrageous crimes, premised on the speech being illegal; and finally, freezing all of their assets in order to hobble their defense.

It’s a situation summed up by Lacey and Larkin’s First Amendment attorney, Robert Corn-Revere, in a May 19 reply brief:

“The issue on appeal is straightforward: Can the government seize proceeds from publishing before trial based on unadjudicated allegations that the speech lacks First Amendment protection? The plain answer is ‘no,’ and the government has taken great pains to avoid dealing with the merits for the past two years.”

Front Page Confidential has followed the asset seizures since they took place at the beginning of the case, and recently recounted the arguments of both sides.

Basically, the government claims all of Lacey and Larkin’s assets are either from the online listings giant Backpage.com or have been tainted by same. The feds contend that the entirety of speech on Backpage’s platform was illegal due to the adult ads that ran on the site, which is patently absurd for a number of reasons.

Reportedly, less than one-third of the millions of ads posted per month by users were adult listings. The rest were ads for pedestrian commercial transactions, such as car sales, rooms to let, yard sales, and so forth.

And under First Amendment law, the government is not allowed to assume that adult ads, or ads in the site’s personals section, were for illegal services, such as prostitution.

Posner’s Rule

This is a point federal and state courts throughout the country have made in relation to adult ads, whether on Backpage or other sites, or in newspapers. As federal Judge Richard Posner astutely noted in a 2015 opinion in Backpage’s favor at the Seventh Circuit Court of Appeals, “not all advertisements for sex are advertisements for illegal sex.”

Indeed, the good judge highlighted certain categories of sex work that would be legal in most if not all parts of the country:

“Fetishism? Phone sex? Performances by striptease artists? (Vulgar is not violent.) One ad in the category ‘dom & fetish’ is for the services of a ‘professional dominatrix’—a woman who is paid to whip or otherwise humiliate a customer in order to arouse him sexually . . . It’s not obvious that such conduct endangers women or children or violates any laws, including laws against prostitution.”

Another such category would be escort services. Paying for companionship generally is legal and licensed in the U.S., as long as it does not involve sex for money. And offers of sex for money were forbidden on Backpage.

Moreover, Backpage had a multi-tiered moderation system, involving both human and computer moderation, to screen for illegal content.

The company cooperated extensively with law enforcement, responded to subpoenas within 24 hours of receipt, and testified at the trials of actual sex traffickers, earning plaudits from the FBI and countless cop shops around the nation.

Nevertheless, the FBI seized the website on April 6, 2018 and took it offline. Despite having sold Backpage in 2015, Lacey and Larkin were arrested and later charged with 100 counts of conspiracy, money laundering and the promotion of prostitution in violation of the U.S. Travel Act.

The feds claim they have probable cause and that’s enough for them to seize the defendants’ assets, which they did in the Central District of California, opening up a two-front war on Lacey and Larkin. Prosecutors also seized millions of dollars set aside to pay defense attorneys’ fees, forcing lawyers for two of Lacey and Larkin’s four co-defendants to withdraw from the case.

Financial Terrorism

Additionally, the feds placed liens on all of Lacey and Larkin’s properties, thereby, preventing their sale. And the government demanded $1 million from each man to guarantee their release from custody — with ankle monitors — despite pretrial services declaring that the two men should be set free on their own recognizance.

The strategy: tie up Lacey and Larkin’s money in order to hobble their defense. But as Corn-Revere hammers home, both in his opening brief and his reply to the government’s response, First Amendment jurisprudence demands a higher standard than mere probable cause, which means the warrants used to seize those funds are invalid and Lacey and Larkin are entitled to the return of their assets.

“The government may not restrain or punish publication of speech absent proof of illegality—mere allegations or probable cause are not enough,” Corn-Revere writes. “The government may never presume its conclusion that speech is unlawful. First Amendment protections apply regardless of whether government actions threaten speech rights directly or indirectly.”

What’s left to be seen is if a three-judge panel of the Ninth will agree. If not, the government could repeat this thuggery on any publication or interactive website that it wants.

And ICYMI, please read:
Lacey/Larkin Shred Feds’ Blueprint for Censorship in Asset Seizure Fight
and
Prosecutors in Lacey/Larkin Case Jump the Shark in Their Most Obnoxious Pre-Trial Motion To Date