To some, it may seem like severe punishment for a conviction on a single money laundering charge.
To others, it may seem like a slap on the wrist for someone like Michael Lacey, co-owner of Backpage.com, which made millions sex trafficking underage boys and girls.
Until it was closed down by the federal government in 2018, Backpage was the “world’s biggest online brothel,” taking over from Craigslist, which shut down its “adult services” section in 2010 in response to pressure from Congress and public criticism.
But not Backpage. Lacey and his late business partner, Jim Larkin, seized the illicit cash cow from Craigslist.
They hit the jackpot. Backpage made over $500 million selling ads including those that pimps ran in their Backpage listings, often with revealing photos, enticing “johns,” “tricks” or prostitution clients to use their services. Those services all too often involved underage boys and girls trapped in a life of rape and sexual exploitation.
Government prosecutors insisted in a sentencing memorandum that Lacey and the others “made a calculated decision to pursue a livelihood built on prostitution ads.”
It was dirty money, and hiding it is where Lacey got caught. Lacey walked away with $115 million when he sold Backpage to its co-founder Carl Ferrer. He sent $16.5 million to a bank in Hungary as a “trust” for his sons. That action, the government insisted—and a jury agreed—constituted international concealment money laundering.
In addition to his five-year prison sentence, Lacey, 76, was fined $3 million, which will benefit the Crime Victims Fund. Government attorneys asked for a 20-year sentence, Lacey’s attorney sought probation, but Lacey pulled a five-year stretch from Judge Diane Humetewa. “The powerless were those many, many individuals who were posted on Backpage.com,” she said, adding that Lacey showed “an inability to at least acknowledge what this was all about.… In the face of all this, you held fast. You didn’t do a thing,” she told him.
Humetewa gave Lacey until September 11, 2024, to report to the US Marshals Service to begin serving his sentence, meantime restricting him to his Phoenix home with an ankle monitor. His attorneys are expected to appeal, but Humetewa refused release pending appeal.
Also sentenced were co-owners Scott Spear on 29 counts and John “Jed” Brunst on 17 counts. Each received a 10-year sentence, plus three years of supervised release.
Larkin committed suicide in 2023 before the start of the trial.
Before sentencing, Lacey gave a statement including: “I made no decisions regarding Backpage. It was a business and I did not work in business. I ran the journalists and editors.”
Government prosecutors insisted in a sentencing memorandum that Lacey and the others “made a calculated decision to pursue a livelihood built on prostitution ads, and maintained that path, year after year, supporting a succession of criminal users of their website.” The conspirators used both automated programs and human moderators to filter out terms signaling prostitution in their ads in order to establish “plausible deniability.” Then they laundered the profits through shell companies in foreign nations.
The sentencing is a victory for the Church of Scientology and all those who fought to shut down Backpage and halt its exploitation of children.
But not everyone saw justice in this trial. Tony Ortega, former editor of The Village Voice, which received virtually all its support from Backpage, collected his salary while defending Backpage and praising its founders.
“The First Amendment was shouted down in the name of children,” Ortega wrote. “Having run off Craigslist, reformers, the devout, and the government-funded have turned their guns upon Village Voice Media.”
He even bragged that Lacey and Larkin were “smart enough to start Backpage.com.”
The question is how Ortega managed to avoid being pulled into the government’s legal action against Backpage.
He wrote, “The whole point of Backpage.com is that we aren’t involved after two consenting adults find each other through the community bulletin board.” This was despite untold numbers of underage children being sexually exploited through Backpage as part of a child sex trafficking industry Ortega minimized as a “nonexistent” “national fantasy” with a “catchy name.”
Tony Ortega’s attempt to normalize Backpage didn’t cut it.
Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division, said, “Their sentences should serve as a stark reminder that the Criminal Division and its law enforcement partners are committed to protecting victims and following the money to unmask those who exploit human beings for financial gain.”
