Backpage.com founder Michael Lacey sentenced to 5 years, fined $3 million in prostitution case

Michael Lacey, a founder of the for-profit classifieds site Backpage.com, was sentenced Wednesday to five years in prison and fined $3 million on a single count of money laundering in a sprawling case that includes allegations of a years-long scheme to promoted and profited from prostitution through classified data. advertising.

A jury convicted Lacey, 76, of a single count of international money laundering last year, but stuck with 84 other counts of facilitating prostitution and money laundering. U.S. District Judge Diane Humetewa later acquitted Lacey of dozens of charges for insufficient evidence, but he still faces about 30 counts of facilitating prostitution and money laundering.

Authorities say the site generated $500 million in prostitution-related revenue from its launch in 2004 until it was shut down by the government in 2018.

Lacey’s attorneys say their client was focused on running an alternative newspaper chain and was not involved in Backpage’s day-to-day operations.

But during Wednesday’s sentencing, Humetewa told Lacey that he was aware of the allegations against Backpage and did nothing.

“In the face of it all, you held your own,” the judge said. “You didn’t do anything.”

Two other Backpage executives, chief financial officer John Brunst and executive vice president Scott Spear, were also convicted last year and were each sentenced Wednesday to 10 years in prison.

Prosecutors said the three defendants were motivated by greed, promoted prostitution masquerading as a legitimate classified business and misled anti-trafficking organizations and law enforcement officials about the true nature of Backpage’s business model.

Prosecutors said Lacey used cryptocurrencies and wired money to foreign bank accounts to launder revenue earned from the site’s ad sales after the banks raised concerns they were being used for illegal purposes.

Authorities say Backpage employees would identify prostitutes through Google searches, then call them and offer them a free ad. The site is also accused of having a business arrangement in which it would place ads on another site that allows customers to post reviews of their experiences with prostitutes.

The site’s marketing director has already pleaded guilty to conspiracy to facilitate prostitution and admitted he took part in a scheme to give free advertising to prostitutes to profit from their business. Additionally, the company’s CEO when the government shut down the site, Carl Ferrer, pleaded guilty to a separate federal conspiracy case in Arizona and to state money laundering charges in California.

Two other Backpage employees were acquitted by a jury in the same 2023 trial where Lacey, Brunst, and Spear were convicted on several charges.

At trial, the Backpage defendants were barred from releasing a 2013 memo from federal prosecutors who examined the site and said at the time they had found no evidence of a pattern of recklessness against minors or admissions by key participants that the site was being created. used for prostitution.

In the memo, prosecutors said witnesses testified that Backpage made substantial efforts to prevent criminal behavior on its site and coordinated those efforts with law enforcement agencies. The document was written five years before Lacey, Larkin and other former Backpage operators were charged in the Arizona case.