PHOENIX (CN) — The federal case against former executives and employees of Backpage.com is winding down, with prosecutors wrapping up closing arguments Friday and defense lawyers beginning their own final remarks in the two-month trial.
During closings that began on Thursday afternoon, federal prosecutor Kevin Rapp went point-by-point through the 100-count felony indictment accusing Phoenix New Times founder Michael Lacey, who once owned the classified ads website, and four others of facilitating prostitution in violation of the federal Travel Act and laundering the profits.
Rapp clicked through images on large screens of 50 advertisements, each representing a count in the indictment, depicting barely-dressed women covering their breasts with their hands and offering escort or body rub services for a fee. The government spent the last two months arguing to the jury that those ads were actually selling sex.
“You will see all the indicators of prostitution,” Rapp said.
He reminded jurors that terms often found in the ads like GFE, short for girlfriend experience, and PSE, meaning pornstar experience, are coded terms to advertise sex without being explicit.
The government attorney then moved on to money laundering, arguing that the movement of any “dirty money” is enough to constitute guilt, regardless of whether the movement itself followed legal requirements.
“Defendants knew the money was derived through criminal offense,” Rapp said. He scrolled through images tracking dozens of transactions, all at least $10,000 in value and some in the millions, as they moved from Backpage to a multitude of overseas shell corporations, then back to Lacey and other executives.
Throughout trial the defendants insisted that the goal of those transactions was simply to protect their money from unfair government seizure. Rapp said the true intent was to hide the original source of the money: Backpage.com.
“They had literally millions of reasons not to shut down Backpage,” Rapp said Thursday afternoon, referencing the more than $100 million Backpage made from its adult advertising section each year.
He laid out each defendant's role in the so-called criminal conspiracy:
- Lacey was the face of the company, attending the meetings and defending his website in the press.
- John Brunst, chief financial officer, was the “bagman” ensuring the company stays profitable.
- Scott Spear, executive vice president, oversaw day-to-day operations.
- Andrew Padilla and Joy Vaught, operations manager and his assistant, were the “engine room of moderation,” making it look as thought the website attempted to curb prostitution from the site, when it actually helped pimps and prostitutes alter their ads to attract clientele while remaining undetected by law enforcement.
Rapp also showed a clip from the CNN documentary “Selling the Girl Next Door,” in which a reporter posted a fake ad, without an explicit offer of sex for money, and received calls from people looking to pay for sex within four minutes. He said the fact that the calls came so quickly proves customers on the site knew what the ads were for, even if it wasn't explicitly stated.
Paul Cambria, Lacey's attorney, argued to the judge Thursday morning that the jury should be instructed to judge the ads “on their face,” and if they don’t directly offer sex for money, then the publishers can’t be held liable for what the advertisers do outside the website.
He reminded U.S. District Judge Diane Humetewa, a Barack Obama appointee, that multiple police officers testified in trial that they can’t make an arrest off an advertisement alone. To do so, they’d need to meet with the advertiser and receive a direct offer of sex.
The government countered, saying the evidence presented suggests Backpage encouraged the use of coded terms to avoid a facial liability, but still knew what the ads meant. Humetewa agreed with the government and declined to include the “on its face” language in jury instructions.
Nevertheless, Cambria made the argument to the jury in his closing — the first of five closing arguments to be made by defense counsel — telling jurors it's impossible to tell whether ads are even real without further investigation.
He painted the case as one about knowledge and intent, seeking to disconnect Lacey from liability. Lacey, who owned more than a dozen newspapers, spent his time editing, Cambria said, and relied on Backpage's CEO and eventual owner Carl Ferrer to assure him that every law was being followed.
Cambria revisited dozens of law enforcement thank you letters, including one from the FBI, for Backpage’s help in investigating pimps and prostitutes using the site. He asked the jurors whether it's reasonable for one to assume their actions are legal when law enforcement continually asks for help and sends thanks for it.
Ferrer and Backpage Sales Director Dany Hyer, who both pleaded guilty in 2018, testified against the defendants. They told the jury that everyone involved knew the website was for selling sex and took actions to defend its success.
Cambria cast aside their testimonies, saying they were tainted by government pressure.
“They were testifying with prison bars rattling in their ears,” he said.
Defense closing arguments will pick up again on Tuesday morning.
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