Federal prosecutors want to retry former Phoenix journalist on prostitution charges related to Backpage

Federal prosecutors intend to retry Michael Lacey, the former editor of Phoenix New Times, on charges he enabled prostitution through the Backpage.com website that grew out of the printed tabloid weekly.

This would mark the government’s third attempt to convict Lacey on charges he intentionally managed Backpage in a way that made it easy for prostitutes, pimps and customers to do business.

Ads on Backpage used thinly veiled language to mask the illegal transaction, prosecutors told jurors during the 2023 trial. Executives worked to corner the market on prostitution ads, pushing for ever-growing profits, prosecutors said, showing internal documents as evidence.

Attorneys for the Backpage executives and employees argued to the jury that Backpage merely hosted ads and that the government could not prove that prostitution activities resulted from any ad.

Lacey’s defense attorney, in particular, told jurors Lacey had a hands-off relationship with Backpage's operations since it started in 2004, leaving it to others to manage the site while he concentrated on the journalism created by New Times.

Lacey and his longtime business partner James Larkin sold New Times in 2012, but retained control of Backpage. At the time, they said the sale was meant to keep the Backpage controversies from clouding the work at New Times.

In the trial that started in August, Lacey faced more than 80 charges related to the case, some accusing him of facilitating acts of prostitution and others accusing him of money laundering. In November, a jury deadlocked on 84 of the charges, including all of the prostitution-related crimes.

The jury exonerated Lacey on one money laundering charge, but found him guilty of another.

The sole guilty conviction against Lacey was on charge No. 100 in the indictment. It was the last read in open court, a process that took nearly 30 minutes because of the host of charges and defendants.

The single count involved a January 2017 transfer of $16.5 million to a bank in Hungary. The money-laundering charge, according to the indictment, said Lacey did so knowing the money represented the gains from illegal activity and that he attempted to conceal it.

Government prosecutors, in their filing Tuesday, said they believed the retrial could wait until other legal matters from the case play out. Lacey’s attorneys have joined in motions to reverse the jury’s verdict. And no sentencing date is set.

An attorney for Lacey, Paul Cambria, did not immediately return an email requesting comment.

Last trial led to dozens of convictions

At the end of the 2023 trial, two other Backpage executives, Jed Brunst and Scott Spear, were found guilty of a involvement in a conspiracy to facilitate prostitution through the website. Spear also was found guilty of an additional 17 prostitution related charges stemming from specific ads that ran on Backpage.

In addition to prostitution convictions, Spear was convicted of 21 counts of money laundering. Brunst was convicted of 33 counts of money laundering.

The jury exonerated two Backpage employees, Andrew Padilla and Joye Vaught, who faced only prostitution-related charges. The employees were tasked with editing and moderating ads to fit ever-shifting standards of decorum set by management.

Prosecutors at trial suggested those standards ebbed and flowed depending on the amount of media, political and law enforcement attention Backpage was feeling. And, prosecutors said, always with an eye on keeping the lucrative website operating.

Prosecutors also filed charges against James Larkin, the longtime business partner of Lacey. In July, days before the retrial, Larkin died by suicide in the desert east of Phoenix.

Lacey started New Times in 1970. He and Larkin turned it into a force in Phoenix journalism. Lacey edited the publication that became known for lively coverage of the arts scene and for hard-hitting news. Larkin figured out how to make the weekly, which was distributed for free on street corner stands, a thriving business.

New Times grew into a chain of weeklies in several cities. It eventually grew to swallow the vanguard of such so-called alternative papers, the Village Voice in New York City.

The website, Backpage, got its name from the literal back page of classified ads on the back of the tabloid. It was similar in style and substance to the website Craigslist.com, which would disrupt traditional journalism’s revenue stream from classified ads.

Over time though, both websites grew heavy with advertising for adult services.

Under pressure, Craigslist stopped its adult advertising section in 2010. Backpage stood poised to receive the onslaught of adult-oriented ads.

Larkin wrote in an internal email that Craiglist stopping its adult section meant that it was “possible that this will mean a deluge of adult content ads for backpage.com.”

How Backpage ended up in federal court

Backpage had faced media and law enforcement scrutiny. But a U.S. Senate subcommittee with subpoena power obtained internal Backpage emails that it said showed the company was not a passive publisher of ads, but aimed to corner the market.

When the committee’s report was released in January 2017, then-Sen. Claire McCaskill, a Democrat from Missouri and a former prosecutor, said it was a “treasure trove” of evidence and encouraged prosecutors to use it to hold the operators of Backpage accountable.

One internal email obtained by the Senate subcommittee contained a draft of a proposed opinion column written by Lacey that mentioned the editing of ads that seemed obviously for prostitution. But he defended the publication of the ads.

“Backpage is part of the solution,” Lacey wrote in the column, as quoted in the indictment. “For the very first time, the oldest profession in the world has transparency, record keeping and safeguards.”

Federal prosecutors met with Backpage executives in February 2018. After that meeting, the CEO of the website, Carl Ferrer, cut a deal agreeing to testify. During the 2023 trial, Ferrer told jurors that after the meeting with prosecutors, “I came to the conclusion maybe the best thing for me to do is to shut down the site.”

He pleaded guilty to prostitution charges on behalf of both himself and the Backpage website.

Lacey, Larkin and the other Backpage executives and employees were arrested in April 2018. The federal government also seized the website.

The case went to trial for the first time in September 2021. But the judge declared a mistrial after only a few days of testimony. The second trial started in August, with the jury getting the case in early November. Jurors took more than two weeks to reach a verdict.

Reach the reporter at 602-444-8473 or at richard.ruelas@arizonarepublic.com.

This article originally appeared on Arizona Republic: Michael Lacey could face 3rd trial in Backpage prostitution case