Backpage executives acquitted of previous prostitution, money laundering convictions

PHOENIX (CN) — Five months after a jury convicted them on dozens of prostitution and money laundering charges, a federal judge acquitted former executives of the controversial classified advertising website Backpage.com on most of the counts lodged against them. 

Backpage founder Michael Lacey and two executives Scott Spear and John Brunst were convicted in November after five years of prosecution and two lengthy trials — the first of which was declared a mistrial in 2021, and the second of which came close — over their roles in the Craigslist copycat. 

Lacey and others started Backpage in 2004 to regain advertising revenue for his newspaper, the Phoenix New Times, that was being siphoned by online classified sites like Craigslist. While the website hosted ad space for nearly everything under the sun, it made most of its revenue through its adult section, where pimps and prostitutes regularly advertised illegal sex acts in exchange for payment. 

Federal prosecutors spent two months during trial last year trying to convince a jury that Backpage executives knew of and actively facilitated the promotion of prostitution on their site by encouraging sex workers to post ads and helping them get around language filters to avoid police detection. Prosecutors also accused the defendants of laundering their ill-gotten gains through off-shore shell corporations.

The defendants argue instead that they did everything they could to keep prostitution off their platform, denying having ever facilitated its sale. All their revenue was legally earned and their financial moves were all properly tracked and documented, they say. 

Jurors were on the fence as to most of the counts against Lacey, the former newspaperman who claims the prosecution was an attack against free speech and retribution for the decades he spent calling out the government in his newspaper empire. The jury convicted him of one count of international concealment money laundering and found him not guilty of one count of international promotional money laundering, but reached no verdict on the remaining two conspiracy counts, 50 prostitution counts and 32 money laundering counts. 

Spear was convicted on 18 counts of facilitating prostitution and 23 counts of money laundering. Brunst was convicted of conspiracy to facilitate prostitution and 31 counts of money laundering. 

But after considering motions for acquittal lodged by the three defendants filed midway through trial, U.S. District Judge Diane Humetewa, a Barack Obama appointee, reduced the total number of convictions by more than half. 

Most of the acquitted charges regard transactional money laundering. Humetewa said in her Tuesday order that the government failed to trace the company’s financial moves to a criminal source. She also struck some of the prostitution charges.

The jury found Spear guilty as to counts 1-18, but found him not guilty for the 33 remaining prostitution charges, she reasoned. Furthermore, the ads in counts 19-51 are dated after Lacey sold the company to then-CEO Carl Ferrer, so Lacey can’t be held responsible for those charges. 

Five months after federal prosecutors confirmed they would retry Lacey on the outstanding counts, Humetewa threw a wrench in their plans, eliminating 49 of the 84 counts still in need of a verdict. Still pending before Lacey are eighteen prostitution charges and seventeen money laundering charges. 

Lacey is scheduled to be sentenced on his one conviction, which could carry up to 20 years in prison, on June 17. The three were initially scheduled to be sentenced on May 1, but Humetewa pushed the dates back, most likely in anticipation of this ruling. 

Humetewa acquitted Spear of 10 counts of transactional money laundering, leaving him with only 11 transactional money laundering convictions and 18 prostitution convictions.

He’s scheduled to be sentenced on July 9.

Brunst dodged three international promotional money laundering convictions and 12 transactional money laundering convictions, leaving him with only 16 money laundering convictions and a single conviction on conspiracy to facilitate prostitution. 

He’s set to be sentenced on June 17 alongside Lacey.

Defendants tried unsuccessfully to dismiss the case based on a few late disclosures by the government. While Humetewa found that the prosecution’s failure to produce the documents in a timely manner may have slightly affected certain testimony, she found that it wasn’t significant enough to throw out any testimony, let alone the whole case. 

She also denied the defendant’s Rule 33 motion for a new trial, which was based in part on the same arguments they made against the late disclosures, as well as other instances in which they say the government misrepresented the case to the jury. 

Neither prosecutors nor defense attorneys immediately responded to requests for comment.

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