Backpage founder Michael Lacey gets 5 years in prison for money laundering

Backpage founder Michael Lacey was sentenced yesterday to five years in prison and fined $3 million after being convicted on one count of money laundering. Lacey, 76, was also sentenced to three years of supervised release, the Department of Justice said in a press release.

Two other Backpage principals—Scott Spear and John “Jed” Brunst—were sentenced to 10 years in prison and three years of supervised release. “The Court also ordered that all defendants turn themselves in to the US Marshals Service by noon on Sept. 11,” the Department of Justice said.

Authorities alleged that Backpage generated over $500 million in revenue from running a forum that facilitated prostitution. While Lacey argued that he wasn’t involved in day-to-day operations, US District Judge Diane Humetewa “told Lacey during Wednesday’s sentencing he was aware of the allegations against Backpage and did nothing,” according to the Associated Press.

“In the face of all this, you held fast,” Humetewa reportedly said. “You didn’t do a thing.” The US government recommended 20-year prison sentences for each of the three defendants.

“The defendants and their conspirators obtained more than $500 million from operating an online forum that facilitated the sexual exploitation of countless victims,” Principal Deputy Assistant Attorney General Nicole Argentieri said. “The defendants thought they could hide their illicit proceeds by laundering the funds through shell companies in foreign countries. But they were wrong.”

Lacey will fight the sentencing. “Paul Cambria, Mr. Lacey’s lawyer, called the sentencing on Wednesday a ‘mistake’ and said that they would appeal, adding that there was evidence that Mr. Lacey never concealed financial information. A lawyer for Mr. Brunst, Gary Lincenberg, said his client also planned to appeal,” The New York Times wrote.

Evidence showed that “Lacey, Spear, and Brunst owned Backpage,” the Department of Justice said. “From September 2010 through its seizure by the United States in April 2018, Backpage was the Internet’s leading forum for prostitution ads.” The defendants “laundered the money through numerous shell companies they created in multiple foreign countries,” the department said.

Lacey acquitted on 50 charges

In November 2023, a jury in US District Court for the District of Arizona convicted Lacey of international concealment money laundering but returned no verdict on 85 other charges related to money laundering and facilitation of prostitution. In April, Humetewa acquitted Lacey on 50 of the charges that the jury did not reach a verdict on. Even “after viewing the record in the light most favorable to the Government, the Court finds there is insufficient of evidence to support convictions” on those counts, she wrote.

Lacey “still faces about 30 prostitution facilitation and money laundering charges,” the Associated Press article said.

The jury found Spear guilty on a conspiracy charge and 38 counts related to facilitation of prostitution and money laundering and acquitted him on the remaining counts. Brunst was found guilty on a conspiracy charge and 33 money laundering charges and was found not guilty on the facilitation of prostitution charges.