Backpage.com founder Michael Lacey sentenced to 5 years in prison

Michael Lacey, founder of the lucrative classifieds website Backpage.com, was sentenced on Wednesday to five years in prison and a fine of three million dollars for a single count of money laundering. The far-reaching case is based on allegations that he promoted prostitution for years using classified ads and profited from it.

A jury found Lacey, 76, guilty last year on a single count of international money laundering, but could not agree on 84 other counts of promoting prostitution and money laundering. U.S. District Judge Diane Humetewa later acquitted Lacey of dozens of charges due to insufficient evidence, but he still faces about 30 counts of promoting prostitution and money laundering.

According to authorities, the website generated $500 million in revenue from prostitution from its inception in 2004 until it was shut down by the government in 2018.

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

But during the sentencing hearing on Wednesday, Humetewa told Lacey that he knew about the allegations against Backpage and did nothing.

“Despite all this, you remained steadfast,” said the judge. “You did nothing.”

Two other Backpage executives, Chief Financial Officer John Brunst and Deputy Chief Executive Officer Scott Spear, were also convicted last year and each sentenced to 10 years in prison on Wednesday.

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

Prosecutors alleged that Lacey used cryptocurrencies and transferred money to foreign bank accounts to launder revenue from the site's ad sales after banks raised suspicions that the money would be misused for illegal purposes.

Authorities say Backpage employees identified prostitutes through Google searches, then called them and offered them a free ad. The website is also accused of having a business arrangement in which it placed ads on another website where customers could post reviews of their experiences with prostitutes.

The site's marketing director has already pleaded guilty to conspiracy to promote prostitution, admitting to being involved in a scheme that included placing free ads to prostitutes in order to recruit them as customers. In addition, Carl Ferrer, the company's CEO when the site was shut down by the government, pleaded guilty to a separate count of conspiracy in Arizona and one count of money laundering in California.

Two other Backpage employees were acquitted of charges by a jury in the same 2023 trial, in which Lacey, Brunst and Spear were found guilty on some counts.

During the trial, the Backpage defendants were barred from accessing a 2013 memo from federal prosecutors investigating the website, which said they found no evidence of a pattern of recklessness toward minors, nor did key participants admit that the website was being used for prostitution.

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