PHOENIX — The jury in the federal retrial in Arizona of former Backpage.com owner Mike Lacey and some of the company’s executives reached a verdict Thursday, finding Lacey guilty on one count of international concealment money laundering.
The jury “deadlocked on prostitution-related charges filed against former New Times editor Michael Lacey, but found him guilty of a financial crime" related to the operation of Backpage, the Arizona Republic reported, after news of the verdict was first published on X.com by Phoenix journalist Stephen Lemons, who attended all hearings and posted regular updates throughout the proceedings.
The jury, however, found two former Backpage executives, Scott Spear and John “Jed” Brunst, guilty of “using the website to facilitate prostitution,” the Arizona Republic noted. “The jury also found the two guilty of some financial crimes, but not guilty of others.”
Former Backpage execs Joy Vaught and Andrew Padilla were found not guilty.
“One count of a 100,” Lacey’s attorney, Paul Cambria, told XBIZ after the verdict was returned. “We have a very good basis to have it vacated, however.”
The jury was supposed to begin deliberations the last week of October, but was dismissed by U.S. District Judge Diane Humetewa on Nov. 1, after a potential COVID outbreak in the courtroom. It reconvened Tuesday, when deliberations began. On Wednesday afternoon, the jury asked the judge for clarification on what would happen if they were unable to reach a verdict on one of the counts.
The verdict is the conclusion of a protracted, years-long process that included questionable seizure of defendants’ assets, controversial strategies by federal prosecutors, judges with apparent conflicts of interest, a mistrial and the July suicide of Lacey’s business partner and co-defendant, Jim Larkin, days before the scheduled beginning of the retrial.
Prosecutors dropped the charges against Larkin after his death, leaving the five remaining defendants collectively facing 100 felony counts. Padilla and Vaught were charged even though they apparently had no policymaking authority in the company.
The defendants were charged with 50 counts of violating the Travel Act — dealing with “interstate and foreign travel or transportation in aid of racketeering enterprises” — for publishing ads for escorts, dating and massage that ran on Backpage, as well as one count of conspiracy to violate the Travel Act. Lacey and two of the execs also faced additional money laundering and conspiracy charges.
As XBIZ has been reporting from the start of the protracted ordeal, Backpage.com was shuttered and seized by federal authorities in 2018, days before President Trump signed FOSTA into law. The government accused Lacey, Larkin and other company executives of a number of crimes related to their ownership of the popular adult-oriented classifieds website. The case was subsequently used by several political figures, including Vice President Kamala Harris, as an example of the need for the FOSTA Section 230 exception.
Federal prosecutors accused the company of “participation in a conspiracy to facilitate and promote prostitution,” money laundering, human trafficking and other charges, which were strongly disputed by the defense.
In September 2021, Judge Susan Brnovich declared a mistrial, ruling that the government and its witnesses “crossed the line several times” by inaccurately implying that the case involved CSAM and child exploitation, even after she admonished them not to do so.
The current retrial began in August 2023, under Judge Humetewa.
A Trial With Crucial Ramifications for All Sex Work Online
Lemons tirelessly kept a running chronicle of the sprawling proceedings through the website Front Page Confidential.
Front Page Confidential is the last remaining outlet of the once-powerful Village Voice Media organization headed by Lacey and Larkin, which by the 2010s had grown from a local Arizona operation into a conglomerate owning several of the largest, most prestigious alt-weeklies in the country, including the Village Voice and the LA Weekly.
The jury heard first the defense summation. On Nov. 1 the government offered its rebuttal to the defense’s closing statements through prosecutor Austin Berry, an attorney with the U.S. Department of Justice’s obscenity section.
Berry, Lemons wrote, “portrayed standard online industry practices — like moderation, aggregation, and reciprocal links — as evidence of knowledge of wrongdoing. Berry’s interpretation of the U.S. Travel Act should scare the bejeezus out of any and all social media sites because it holds that generalized knowledge of possible misuse of an interactive website by its users is enough to convict a site’s former owners, operators, and employees with wrongdoing.”
Moreover, Lemons explained, the Travel Act “is a Kennedy-era law that was passed to go after the mafia, not newspaper owners and publishers.”
Berry also told the jury that they should disregard mentions of content moderation practices because in the government’s view, “Moderation is a game. It’s a joke. It’s not good faith.”
Noting the defense's argument that, in order to be found guilty, the defendants would have to have intended to facilitate the escort, dating, and massage businesses connected to the 50 ads at the heart of the case, Lemons opined, “It’s tough to facilitate a business enterprise that you have no knowledge of, and the prosecution cannot show that any of the five defendants on trial ever saw these 50 ads.”
Lemons quotes Berry as stating during his rebuttal, “I’m not going to show you a jury instruction saying we must prove that any defendant had specific knowledge of these particular ads because it isn’t in there. We don’t have to do that.”
Another prosecutor, Andrew Stone, told the judge during a meeting last week that the government’s position since 2018 has been that its case does not rest on whether the defendants knew about the specific ads in question, but on issues related to the “maintenance of the site.”
The government’s case, Lemons explained, “is based on two assumptions: 1) that all the ads on Backpage were blatant prostitution ads; and 2) that the defendants had general knowledge that prostitution resulted from ads on the site. If this theory prevails — that you can assume criminality, despite law enforcement stating, repeatedly that the content of the ads did not give them probable cause to make an arrest, and that general knowledge is enough to gain a conviction with federal laws — then all speech on interactive websites is at risk, because everyone who works for, helps operate, or co-owns those sites, is a possible target of federal prosecution.”