Cook County Sheriff Tom Dart has asked a federal judge to reconsider his decision to not order sanctions against the lawyers who represented Backpage.com in litigation against the Cook County Sheriff’s Office, saying new testimony from Backpage’s indicted CEO showed lawyers from the firm of Davis Wright Tremaine knew more than they said about the online classified site’s success at using cryptocurrency and other alternative routes to evade the sheriff’s try to shut Backpage down over sex trafficking.
On April 22, Dart filed a motion in Chicago federal court before U.S. District Judge John Tharp, asserting the sheriff is owed another chance to make the Davis Wright Tremaine firm pay for their part in allegedly helping Backpage and its executives allegedly mislead the judge about the company’s financial capabilities while arguing in court Dart was violating their constitutional rights.
The motion comes about a month after Judge Tharp granted Dart’s request to order Backpage to pay the sheriff’s office $250,000 “as a partial offset of fees and costs incurred by the Sheriff in responding to Backpage’s misrepresentations.”
Cook County Sheriff Tom Dart
Backpage had sued the Sheriff’s Office in 2015, alleging the sheriff had overstepped in contacting credit card companies to discourage them from processing payments from advertisers the company asserted it relied upon for revenue.
Dart had moved to pinch Backpage’s business over allegations sex traffickers used Backpage to promote and facilitate prostitution and human trafficking.
The company ultimately secured an injunction against the sheriff’s office, arguing he had violated their constitutional speech rights by attempting to shut down the platform.
A few months later, however, several Backpage executives were indicted, and CEO Carl Ferrer pleaded guilty, to charges of money laundering and facilitating prostitution. Ferrer pleaded guilty to state charges in Arizona and California, as well as federal charges.
As part of that plea, Ferrer admitted the company’s civil rights lawsuit against Dart was a “hoax” and “fraud” on the courts.
In response, Dart asked the court to punish Backpage for its conduct. But the sheriff went further, also asking the judge to cite Backpage’s lawyers from the DWT firm. Dart asserted the lawyers either knew or should have known Backpage was lying and misleading the courts about the case.
In his March 25 ruling, Tharp said sanctions against Backpage were “unquestionably warranted,” as the company and its executives had lied about the “irreparable harm” Backpage would suffer after the credit card companies moved to restrict Backpage’s ability to process payments, and pinning that blame on the sheriff.
Rather, the judge noted, Backpage had found ways around the credit card restrictions and otherwise remained financially sound, until the moment its executives were criminally charged.
“The Court therefore has no difficulty in concluding that in conducting this litigation, Backpage.com knowingly took positions that were factually unsupported and made numerous false statements to advance its claim against Sheriff Dart,” Judge Tharp wrote in his March 25 ruling. “Indeed, it is difficult to imagine how Backpage.com could have advanced its claim if, in lieu of the false allegations identified above, it had included the admissions it made in its plea agreement.”
However, the judge said he could not extend that view to Backpage’s attorneys at DWT.
“The premise of the Sheriff’s motion for sanctions against Backpage’s counsel is essentially that counsel failed to discover the transgressions that Backpage and Ferrer admitted to when they pled guilty,” Tharp wrote. “Even accepting arguendo that there was reason to doubt representations that Ferrer and other Backpage officials made to them, the Sheriff’s motion falls short in documenting any instance in which counsel (as distinguished from Backpage) made or facilitated a specific representation of fact that was known to be untrue when it was made.
“And when Backpage and Ferrer acknowledged under oath that their prior representations about Backpage’s operation and content of its ‘adult’ classified section were false, DWT promptly moved to withdraw as counsel.”
Since that ruling, however, Dart said further testimony from Ferrer has been made public, in which the former Backpage CEO asserts “DWT provided legal advice concerning a range of additional legal issues, including credit card payment processing issues and cryptocurrency issues.”
“According to Ferrer, DWT’s representation was provided through ‘scores’ of telephones conversations and hundreds of emails soliciting advice,” Dart’s motion claims.
The sheriff asserts this should alter Judge Tharp’s previous determination the DWT attorneys had put forward any facts “known to be untrue” during the litigation.
“… We now know that not only did DWT have specific proof via the California Indictment that Backpage was able to circumvent the credit card bans to gain significant income from commercial transactions for at least one year following the filing of its complaint against the Sheriff, but that DWT was counseling Backpage on these very issues,” Dart’s motion argues. “This is damning testimony against DWT, especially since DWT never brought any of this information to the Court’s attention, and continued to prosecute Backpage’s claim for injunctive relief for over 18 months after the California Indictment.”
Dart has asked the judge to allow the Sheriff’s Office to conduct further discovery to “gather more specific information regarding the role played by DWT in Backpage’s fraud.”
DWT has not yet replied to the sheriff’s filing.
Dart’s office is represented in the action by attorneys with the firm of Kozacky Weitzel McGrath P.C., of Chicago.