Feds Will Try Backpage Co-Founder Michael Lacey for a Third Time

It's a frightening reminder of how far the government will go to get their way—and to warn tech companies against platforming speech it doesn't like.

Third time's a charm? Let's hope not. More than five and a half years after journalist and Backpage co-founder Michael Lacey was arrested, federal prosecutors have indicated that they will try him for a third time on the same charges.

It's a frightening reminder of how far authorities will go to get their way—and to warn tech companies and publishers against platforming speech the government doesn't like.

When you zoom out a bit, it's clear Lacey's case could have implications for anyone who posts or consumes content online.

How We Got Here

Doesn't the Constitution bar being tried twice on the same criminal charges? Generally, yes—in cases involving an acquittal or conviction, that is. But Lacey's two previous trials resulted in mistrials, meaning the government can take another shot if it likes. And in a motion filed yesterday, prosecutors announced that indeed they would like a do over, again.

The first trial, back in 2021, was declared a mistrial after prosecutors and their witnesses couldn't stop suggesting that Lacey and his co-defendants were charged with child sex trafficking. They were not, and efforts to suggest as much could have seriously prejudiced a jury.

In actuality, Lacey, his longtime (and now deceased) publishing partner James Larkin, and several other former Backpage staffers and executives were charged with violating the federal Travel Act by facilitating prostitution. They were also accused of conspiracy to facilitate prostitution and money laundering in service of this.

The second trial, held last fall, saw a jury totally acquit two of the defendants while two others—Scott Spear and John "Jed" Brunst—were acquitted on multiple charges and found guilty on multiple charges.

Lacey's outcome was also mixed but with far fewer guilty or not guilty verdicts. He was ultimately found guilty on just one count and not guilty on just one count; the jury was hung on the remaining 84 counts. So, federal judge Diane Humetewa declared a mistrial with respect to these 84 counts, allowing (but not requiring) the government to try again.

About That Guilty Verdict…

The 2023 jury found Lacey innocent of one count of international promotion of money laundering but guilty of one count of international concealment of money laundering. It was a weird verdict, considering that the conduct in question was very much not concealed. Lacey moved some money to a foreign bank after U.S. banks were pressured into dropping him. Lacey's lawyers informed the IRS of this action and made all required declarations and disclosures.

Being found guilty of concealing activity that one informs the federal government of doesn't make any sense—and there's a strong chance that a court would reverse Lacey's concealment conviction on appeal.

The possibility of an overturned conviction could be one reason why the Department of Justice has decided to try again.

But it's certainly only part of the explanation.

Public Safety or Retribution? 

The decision to retry makes little sense from a public safety perspective. Lacey is 75 years old and could get a sentence of up to 20 years if the concealment conviction stands. He's already an old man and would be a really old man by the time he got out in that case. Even a sentence of a quarter of the max would put him at age 80 or above upon release.

Of course, Lacey could successfully appeal his conviction or Judge Humetewa could choose a much lighter sentence. But the idea that Lacey is a danger to society if not locked up is absurd—even if you accept the government's allegations against him. Lacey isn't accused of being directly involved in sex work or sex crimes at all, but merely of running a website where some people may have been advertised in coded terms. He's been out awaiting trial for nearly six years, with no incident. And his "crimes" involved very particular circumstances: running an alt-newspaper empire that needed to compete with Craigslist or go broke and thus launched an online classifieds platform that became a popular hub for adult advertising. Does anyone believe he has the impetus, desire, funds, or right cultural moment to do that again?

Clearly, this is more about punishment than public safety. And perhaps some folks in the Department of Justice (DOJ) really do believe that Lacey got away with heinous crimes and should have to pay. (They would have to overlook so much evidence and torture theories of culpability to reach this conclusion, but that's not inconceivable.)

But the aggression with which this case has been pursued also lends itself to a darker interpretation: Lacey is being punished for failing to respect authority, failing to cave and give the government what it thought would be easy to get.

Unlike former Backpage CEO Carl Ferrer, Lacey and the other defendants refused to negotiate a plea deal and denied the government a quick victory lap about stopping "sex trafficking" back when public attention to this case was still strong. They fought hard against various dirty tricks the prosecution attempted and sometimes succeeded, including during the first trial when prosecutors thought they could win by just throwing around sensational and baseless sex-trafficking claims. And for decades before this trial, Lacey fought back against government overreach—and published stories very unflattering to a lot of public figures—as the co-head of alt-weeklies like the Phoenix New Times and the Village Voice.

It's hard not to suspect the retrial is at least partially about retribution—and also butt-covering. The feds put a lot of time, effort, and public relations into this case, only to have two defendants walk entirely and one of their two main targets (Lacey and Larkin were always the big fish here) avoid conviction on 85 of 86 charges they brought.

That's got to be embarrassing. No wonder they want another chance.

Michael Piccarreta, a one-time lawyer on Lacey's case, said he wasn't surprised about the government's decision. "The government has been as aggressive on this case as any that I can remember and has put unlimited resources into the case, and they believe the initial verdict was insufficient and unsuccessful," he told Front Page Confidential. "They also know that with their superior resources, they can wear down, financially and emotionally, any citizen."

A Warning to Others

Ultimately, trying Lacey three times on the same charges is such an utter waste of public resources and government time and an astonishing display of how power can trump justice. Remember, this all boils down to Lacey and Larkin daring to allow users to post First Amendment-protected speech that the government told it not to allow.

Of all the potential reasons why the DOJ might be pursuing this so relentlessly, I think the one that makes the most sense is that they've been trying to use Lacey and company as a deterrent.

The treatment of Backpage—from Congress and federal prosecutors—has proved an apt playbook for going after other tech companies in the years since (especially when it comes to companies that run social media platforms). It's served as a sort of instruction manual for threatening entities that allow all sorts of disfavored speech, be it about guns or politics or public health or sex or anything else.

Lacey is meant to serve as a warning to other tech honchos who dare to allow unfettered legal speech. They want to make an example of him, to put him through so much that other publishers and tech executives will just give in.

But how can Backpage serve as a serious warning against other tech platforms defying government demands if the government doesn't actually succeed at getting their pound of flesh? For this to work, they need to win—or at least show that they're willing to run defendants into the ground trying.

There's also a financial component here. The feds seized a lot of cash and other assets from Lacey using civil asset forfeiture.

"The government … confiscated millions of dollars of assets and proceeds not only from [Backpage], but also from defendants' numerous other publishing venues—ventures completely unrelated to the alleged criminality of the site and indisputably protected by the First Amendment," noted a 2019 amicus brief filed by the Cato Institute, DKT Liberty Project, and the Reason Foundation (the nonprofit that publishes Reason magazine).

Civil asset forfeiture doesn't require a conviction to be valid. But it could be harder for the feds to justify keeping Lacey's assets if he's not guilty.

No End in Sight 

Sentencing for Brunst, Spear, and Lacey won't take place until after the judge rules on two outstanding motions from the last trial. (Sentencing for Lacey on the concealment charge may also be postponed until after the new trial.)

One is a rule 29 motion, in which the defense argues that the evidence used to convict was insufficient and thus the conviction must be dismissed.

"The government has not provided this Court with a single case that affirms a concealment money laundering conviction (domestic or international) with facts like this case," write Lacey's lawyers in a January 18 court filing. They note that Lacey "repeatedly stated his intent to file all disclosure forms with the federal government related to the funds, pay taxes on the funds at issue, and avoid tax shelters of any kind; that he "timely filed the required disclosure forms, which identified the attributes of the funds at issue (his relationship to the funds, their location, the amount, etc.)," and that he had "documentation of the purposes of forming the trust that have nothing to do with concealment," among other things.

The other outstanding motion is a motion for a new trial for Lacey, Spear, and Brunst on the charges on which they were found guilty. Their argument is based in part on the government's failure to make timely disclosures before the last trial. This includes "the government's failure to timely disclose Carl Ferrer's emails with its case agent, Lyndon Versoza, which the government disclosed to the defense only after the jury in this case was deliberating," they argue in the December 4 motion. It also includes "the government's failure to disclose the factual information the government developed during its investigation of Backpage.com in the Western District of Washington in 2012-2013…which, among other things, undermines, if not contradicts, the government's trial positions that 'anyone could tell' from looking at the adult ads that ran on Backpage.com that those ads were associated with illegal conduct and that Backpage's moderation practices showed criminal Intent." (More on that Washington investigation here.)

The Damage Done

However this ultimately ends up, the prosecution of Lacey and his co-defendants has already had some major impacts.

Obviously, it's been devastating for the Backpage defendants, who have had to spend more than half a decade so far (and all the money and emotional toil that entails) fighting this.

Spear, Brunst, and Lacey are now facing serious prison time.

Larkin took his own life a few days before the trial started last year.

The prosecution also led to the shutdown of Backpage.com, which reverberated negatively through the sex worker and law enforcement communities.

Many sex workers say the shutdown made their work less lucrative and less safe. Police and other law enforcement—including the FBI—say it made fighting sexual violence and exploitation more difficult.

And an untold number of tech leaders and publishers (or potential tech leaders and publishers) saw what happens when you won't moderate speech to politicians' liking.

Today's Image

Phoenix, 2018 (ENB/Reason)