Backpage founder Michael Lacey was sentenced yesterday to five years in prison and fined $3 million after being found guilty in one count of money laundering. Lacey, 76, was also sentenced to three years' probation, the Justice Department said in a news release.
Two other Backpage executives – Scott Spear and John “Jed” Brunst – were sentenced to ten years in prison and three years probation. “The court also ordered that all defendants surrender to the U.S. Marshals Service by noon on September 11,” the Justice Department said.
Authorities alleged that Backpage generated more than $500 million in revenue by operating a forum that facilitated prostitution. Although Lacey argued he was not involved in the day-to-day operations, according to the Associated Press, U.S. District Judge Diane Humetewa “told Lacey during sentencing on Wednesday that he was aware of the allegations against Backpage and did nothing.”
“In the face of all this, you have stood firm,” Humetewa is reported to have said. “You have done nothing.” The US government recommended a prison sentence of 20 years for each of the three defendants.
“The defendants and their accomplices stole more than $500 million by operating an online forum that facilitated the sexual exploitation of countless victims,” said Assistant Attorney General Nicole Argentieri. “The defendants thought they could hide their illicit proceeds by laundering the funds through shell companies abroad. But they were wrong.”
Lacey will appeal the ruling. “Paul Cambria, Mr. Lacey's lawyer, called the ruling a 'mistake' on Wednesday and said they would appeal. He added that there was evidence that Mr. Lacey never concealed financial information. A lawyer for Mr. Brunst, Gary Lincenberg, said his client also plans to appeal,” the New York Times wrote.
Evidence showed that “Lacey, Spear, and Brunst owned Backpage,” the Justice Department said. “From September 2010 until its seizure by the United States in April 2018, Backpage was the leading online forum for prostitution ads.” The defendants “laundered the money through numerous shell companies they created in multiple countries,” the department said.
Lacey acquitted on 50 counts
In November 2023, a jury in the U.S. District Court for the District of Arizona convicted Lacey of concealing international money laundering, but did not return a verdict on 85 other counts related to money laundering and promoting prostitution. In April, Humetewa acquitted Lacey on 50 of the counts on which the jury did not return a verdict. Even “after reviewing the record in the light most favorable to the government, the court concludes that there is insufficient evidence to support a conviction on these counts,” she wrote.
Lacey “still faces about 30 charges of facilitating prostitution and money laundering,” the Associated Press article said.
The jury found Spear guilty of conspiracy and 38 counts related to promoting prostitution and money laundering and acquitted him on the remaining counts. Brunst was found guilty of conspiracy and 33 counts related to money laundering and not guilty on the promoting prostitution charge.