Backpage.com founder Michael Lacey sentenced to five years in jail, fined $3M for cash laundering

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PHOENIX (AP) — Michael Lacey, a founding father of the profitable categorized website Backpage.com, was sentenced Wednesday to 5 years in jail and fined $3 million for a single cash laundering depend in a sprawling case involving allegations of a yearslong scheme to advertise and revenue from prostitution by way of categorized advertisements.

A jury convicted Lacey, 76, of a single depend of worldwide concealment cash laundering final 12 months, however deadlocked on 84 different prostitution facilitation and cash laundering fees. U.S. District Decide Diane Humetewa later acquitted Lacey of dozens of fees for inadequate proof, however he nonetheless faces about 30 prostitution facilitation and cash laundering fees.

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Authorities say the location generated $500 million in prostitution-related income from its inception in 2004 till it was shut down by the federal government in 2018.

Lacey’s attorneys say their consumer was centered on working another newspaper chain and wasn’t concerned in day-to-day operations of Backpage.

However throughout Wednesday’s sentencing, Humetewa informed Lacey that he was conscious of the allegations towards Backpage and did nothing.

“Within the face of all this, you held quick,” the choose stated. “You didn’t do a factor.”

Two different Backpage executives, chief monetary officer John Brunst and government vice chairman Scott Spear, additionally had been convicted final 12 months and had been every sentenced on Wednesday to 10 years in jail.

Prosecutors stated the three defendants had been motivated by greed, promoted prostitution whereas masquerading as a legit categorized enterprise and misled anti-trafficking organizations and regulation enforcement officers in regards to the true nature of Backpage’s enterprise mannequin.

Prosecutors stated Lacey used cryptocurrency and wired cash to international financial institution accounts to launder revenues earned from the location’s advert gross sales after banks raised issues that they had been getting used for unlawful functions.

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Authorities say Backpage staff would determine prostitutes by way of Google searches, then name and supply them a free advert. The positioning is also accused of getting a enterprise association during which it might place advertisements on one other website that lets clients submit evaluations of their experiences with prostitutes.

The positioning’s advertising director has already pleaded responsible to conspiring to facilitate prostitution and acknowledged that he participated in a scheme to offer free advertisements to prostitutes to win over their enterprise. Moreover, the CEO of the corporate when the federal government shut the location down, Carl Ferrer, pleaded responsible to a separate federal conspiracy case in Arizona and to state cash laundering fees in California.

Two different Backpage staff had been acquitted of fees by a jury on the similar 2023 trial the place Lacey, Brunst and Spear had been convicted of some counts.

At trial, the Backpage defendants had been barred from mentioning a 2013 memo by federal prosecutors who examined the location and stated on the time that they hadn’t uncovered proof of a sample of recklessness towards minors or admissions from key individuals that the location was getting used for prostitution.

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Within the memo, prosecutors stated witnesses testified that Backpage made substantial efforts to forestall felony conduct on its website and coordinated such efforts with regulation enforcement businesses. The doc was written 5 years earlier than Lacey, Larkin and the opposite former Backpage operators had been charged within the Arizona case.

A Authorities Accountability Workplace report launched in June famous that the FBI’s potential to determine victims and intercourse traffickers had decreased considerably after Backpage was seized by the federal government as a result of regulation enforcement was accustomed to the location and Backpage was usually attentive to requests for info.

Prosecutors stated the moderation efforts by the location had been aimed toward concealing the true nature of the advertisements. Although Lacey and Larkin offered their curiosity in Backpage in 2015, prosecutors stated the 2 founders retained management over the location.

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