A founder of the shuttered classified advertising website Backpage was sentenced on Wednesday to five years in federal prison in connection with a sweeping case that led to the closing of the website and accusations against its executives that they promoted sex trafficking, prosecutors said.
Michael Lacey, 76, of Arizona, was convicted on a single count of international concealment money laundering in November after being charged in a 100-count indictment in 2018 with several other defendants who, prosecutors said, conspired to promote prostitution ads and launder earnings of more than $500 million made from the scheme between 2010 and 2018. The case was tried in the U.S. District Court for the District of Arizona.
In addition to the five-year prison sentence, Mr. Lacey was ordered Wednesday to pay a $3 million fine, prosecutors said.
The jury that convicted Mr. Lacey last year was deadlocked on 84 other charges against him, including several charges that he helped advertise prostitution on Backpage. The deadlock led U.S. District Judge Diane Humetewa to declare a mistrial on those counts. It was the second mistrial in the case. Mr. Lacey would later be acquitted of several of the counts, but could still face 30 of them, according to The Associated Press.
Two other executives, Scott Spear and John “Jed” Brunst, were convicted alongside Mr. Lacey on both money laundering and prostitution facilitation counts.
They were acquitted on some of those charges in April, but each received 10-year sentences Wednesday, according to a spokesman for the Justice Department, Joshua Stueve.
Paul Cambria, Mr. Lacey’s lawyer, called the sentencing on Wednesday a “mistake” and said that they would appeal, adding that there was evidence that Mr. Lacey never concealed financial information. A lawyer for Mr. Brunst, Gary Lincenberg, said his client also planned to appeal.
Backpage was shut down by the government in April 2018. The site was founded in 2004 by Mr. Lacey and James Larkin, who died at 73 before trial last year, prosecutors said.
The site was “the internet’s leading forum for prostitution ads,” prosecutors said, adding that it was its primary way to make money.
Prosecutors said that executives tried to obfuscate or “sanitize” the advertisements by using filters and moderators to remove terms suggesting “sex-for-money.” The executives were also accused by prosecutors of creating overseas shell companies to launder proceeds.
During trial, Mr. Lacey’s lawyer, Mr. Cambria, argued that his client was preoccupied with running a newspaper he owned and wasn’t involved in the day-to-day operation of Backpage and was not aware of the ads for prostitution, The A.P. reported.
Backpage has been at the center of sex trafficking and money laundering cases in multiple jurisdictions. In 2016, the website’s chief executive, Carl Ferrer, was charged in Texas and California on conspiracy and sex trafficking charges, including with a minor.
Mr. Ferrer pleaded guilty in 2018 to charges in both states as part of a plea deal in a separate federal case, in which he pleaded guilty to sex trafficking and money laundering charges.
As part of the deal, Mr. Ferrer acknowledged that he had “long been aware” that most of the advertisements on Backpage for “adult” and “escort” services were actually advertising prostitution.
Also in 2018, Dan Hyer, Backpage’s former marketing director, pleaded guilty to sex trafficking charges, prosecutors said. Several corporate entities connected with the website have also been convicted of money laundering charges, prosecutors said.
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