Backpage.com Co-Founder Michael Lacey Sentenced to Five Years in Prison for Money Laundering in Prostitution Case
Michael Lacey, a co-founder of the notorious classified ad website Backpage.com, was sentenced on Wednesday to five years in federal prison and fined $3 million for a single count of money laundering. This case has exposed a yearslong scheme in which Backpage allegedly facilitated and profited from prostitution through its online platform.
Lacey, 76, was convicted last year of international concealment money laundering by a federal jury, but the jury deadlocked on 84 other charges related to prostitution facilitation and money laundering. U.S. District Judge Diane Humetewa subsequently acquitted Lacey of dozens of these charges due to insufficient evidence. However, he still faces approximately 30 remaining charges related to prostitution facilitation and money laundering.
International concealment money laundering is a serious federal offense that involves the movement of money across international borders to conceal the origins, ownership, or destination of funds derived from illegal activities. This charge is part of the broader category of money laundering crimes, which are prosecuted under various sections of the U.S. Code, including 18 U.S.C. § 1956.
The international concealment money laundering charge stems from allegations that Lacey used various methods to obscure the origins and ownership of proceeds generated by the website's illegal activities. Prosecutors presented evidence that Lacey and his co-defendants used sophisticated methods, including cryptocurrency transactions and foreign bank accounts, to launder revenue from Backpage’s ad sales after banks raised concerns about the site’s illegal activities. Backpage employees reportedly engaged in proactive efforts to attract sex workers to the site, even offering free advertisements to gain their business.
Backpage.com, which was operational from its inception in 2004 until it was shut down by the federal government in 2018, reportedly generated $500 million in revenue connected to prostitution-related advertisements. Prosecutors argue that Lacey, alongside other Backpage executives, engaged in illegal activities that fueled the site’s profits under the guise of operating a legitimate classified ad business.
During the sentencing, Judge Humetewa addressed Lacey directly, emphasizing that he was fully aware of the allegations surrounding Backpage and chose not to act. “In the face of all this, you held fast,” Humetewa told Lacey. “You didn’t do a thing.”
Lacey's lawyers have maintained that their client was primarily focused on managing an alternative newspaper chain and was not involved in Backpage's day-to-day operations. However, the judge's comments suggest that Lacey's passive stance on the allegations contributed to his legal culpability.
Two other Backpage executives, Chief Financial Officer John Brunst and Executive Vice President Scott Spear, were also sentenced on Wednesday. Both were convicted last year and received ten-year prison sentences for their roles in the scheme. Like Lacey, they have been ordered to report to the U.S. Marshals Service within two weeks to begin serving their sentences.
Prosecutors argue that Lacey, Brunst, and Spear were driven by greed, using Backpage to promote prostitution while misleading anti-trafficking organizations and law enforcement about the site's true operations.
