What happens if someone is arrested in Arizona?
The legal process for those arrested can be confusing. Here’s how the legal system works in these cases.
The Republic
Michael Lacey, the former editor in chief of the tabloid New Times, was sentenced Wednesday to five years in prison for laundering proceeds from the sale of Backpage.com, the website he co-founded that prosecutors say became an online brothel.
That financial crime was the only guilty verdict handed down by a federal jury against Lacey in November, following weeks of testimony in federal court in Phoenix laying out the government’s theory of how Backpage worked with prostitutes and pimps to post thinly veiled ads for prostitution.
The jury found Lacey guilty on a single count: setting up a trust in Hungary for the benefit of his sons. Prosecutors said Lacey did this to conceal the origin of the funds. Testimony at the trial showed that Lacey had intended to protect the money from government seizure.
In addition to the prison sentence, Lacey was fined $3 million.
The prosecution had demanded a prison sentence of 20 years and demanded that Lacey be taken into custody immediately.
Lacey, 76, applied for parole.
Also sentenced Wednesday were Scott Spear and Jon Brunst, former Backpage executives. The government also sought 20 years in prison for these men. They were found guilty on many other counts and sentenced to 10 years in prison each. Neither was fined.
All three men were ordered to turn themselves in to the U.S. Marshals Service by noon on Sept. 11. They were ordered to remain in their homes and be placed in shackles before leaving the courthouse on Wednesday. Attorneys for the three men said in court they plan to appeal the convictions.
In a statement released ahead of the two-day sentencing hearing on Tuesday, Lacey said he had little to do with Backpage’s activities.
“It was a business and I didn’t work in a business,” he wrote. “I managed the journalists and editors.”
In handing down the sentence, Judge Diane Humetewa said Lacey had been advised that the money she earned through Backpage came from illegal prostitution ads, including ads for underage girls.
She said it was ironic that she had received letters in defense of his character from former New Times reporters, praising Lacey’s journalism for speaking up for the voiceless and powerless.
“The powerless were the many, many people who posted on Backpage.com,” Humetewa said. The judge said Lacey had “demonstrated an inability to at least acknowledge what was at stake.”
Lacey was a college student when he founded New Times, an alternative weekly newspaper whose mission was to eliminate injustice and celebrate the arts through in-depth journalism.
Decades later, after running a national chain of alternative newspapers, Lacey co-founded Backpage to compete with the online classifieds site Craigslist. That site had upended a lucrative and reliable source of revenue for the print newspapers that Lacey owned and valued.
In 2010, Craigslist closed its erotic section, which featured ads for escort services and massages that law enforcement officials and lawyers said were being used for the purpose of prostitution.
According to prosecutors, Backpage made a deliberate effort to become the new home for these ads. Internal emails that were presented to a US Senate subcommittee under subpoena showed, according to prosecutors, agreements between pimps, prostitutes and Backpage executives.
This also included editing advertisements and images in order to conceal the true intention, according to the public prosecutor’s office.
According to witness statements, the site generated $150 million annually by 2013. According to prosecutors, more than 90 percent of the revenue came from thinly veiled prostitution advertisements.
Former Backpage CEO Carl Ferrer pleaded guilty on his own behalf and on behalf of the website to prostitution-related crimes. The government seized and shut down the website in March 2018, the same day it arrested Lacey at his home.
In addition to Lacey’s sole financial crimes conviction, the jury in November also found the other two Backpage executives, Spear and Brunst, guilty of conspiring to promote prostitution through the ads. It also found both men guilty of several counts of money laundering.
Spear was also found guilty on 17 counts related to certain advertisements that the government alleged were for prostitution.
“I understand their grief and pray for their healing”
On Tuesday, Brunst told the court that his role as chief financial officer was limited to accounting and did not include making decisions about the company’s management. “I would never participate in a conspiracy,” he said.
Brunst expressed regret that Backpage was being abused and that some women who advertised on the site were harmed. “I understand their grief,” he said, “and I pray for their healing.”
A lawyer for Spear, Bruce Feder, said the federal prison system is overcrowded and not designed to care for three men in their 70s with health problems, comparing it to a death sentence.
“These are men who had a business selling ads for $5,” Feder said. The ads were designed to facilitate possible bad deeds by others, he said, but the website and these men did no direct harm.
Spear refused to speak in court.
Lacey also refused to speak. However, when the judge asked if he wanted to speak in court, a hushed conversation ensued between Lacey and his lawyers.
In November, the jury failed to reach a verdict on the charge that Lacey facilitated sex trafficking through the website. It also failed to reach a verdict on more than 30 counts of money laundering.
However, the court found the defendant guilty in connection with a single transaction at a bank in Hungary.
That transaction began when Lacey, along with Spear and Brunst, sold Backpage to Ferrer for about $600 million, of which Lacey received $115 million, according to court testimony.
The money flowed through two companies that prosecutors described as shell companies and was then transferred to Lacey, who then deposited it into five different accounts, court documents show.
In January 2017, Lacey arranged for $16.5 million to be deposited into an account in Hungary to serve as a trust for his sons.
In a letter to his lawyer quoted in a judge’s ruling, Lacey said he did not do this to evade taxes but to prevent “litigants, including government parties, from having access to my accounts.”
Humetewa had upheld the guilty verdict in an earlier ruling, saying there was sufficient evidence to show that Lacey made the transfer, among other things, “to conceal the fact that the true source of the money came from the sale of prostitution ads on Backpage.”
The judge dismissed several sex trafficking and prostitution charges against Lacey in April due to a lack of evidence at trial. She also dismissed several charges and convictions against Brunst and Spear.
Prosecutors have told the court they intend to retry Lacey on the remaining charges.
“They made so many mistakes and spent so much money”
Lacey and James Larkin worked together to build New Times into a groundbreaking tabloid in Phoenix, marketing it in other cities and eventually taking over the Village Voice in New York.
The couple was arrested in March 2018. The case initially went to trial in 2021, but a judge declared the trial invalid after several days of testimony.
Larkin committed suicide in August 2023, a few days before the start of the second trial.
According to a memo Lacey’s lawyers filed with the court before the verdict, Larkin and Lacey had a phone conversation the day before his death. In that phone call, according to the filing, Larkin told Lacey, “Mike, it’s going to be OK. You had nothing to do with Backpage.”
Lacey argued at trial that he had been removed from Backpage and could now focus on journalism. Prosecutors pointed out that Lacey could no longer publish newspapers after the 2012 sale but still retained control of Backpage.
Lacey wrote in a draft opinion piece cited in the indictment that Backpage’s existence means “the world’s oldest business has transparency, data retention and safeguards for the first time ever.”
According to prosecutors, Larkin had highlighted this paragraph and requested its removal.
On Tuesday, several women who were advertised as sex workers on Backpage testified. Destinee Ortiz, who is now 27 and said she was advertised on the site between the ages of 14 and 20, stayed at the hearing for the rest of the day to listen to Lacey’s defense attorneys argue for mitigation. She was not swayed.
“They made so many mistakes,” she said after her testimony on Tuesday. “And so much money.”
Republic reporter Jimmy Jenkins contributed to this article.
