PHOENIX (AP) – A founder of the lucrative classifieds site Backpage.com will face his second trial on charges of facilitating prostitution and money laundering in what authorities say was a scheme to sell ads for sex on the site.
Jury selection for Michael Lacy and four former Backpage employees is scheduled to begin Tuesday in federal court. Their first trial ends in a mistrial In September 2021, when a judge reached the decision, prosecutors had numerous references to child sex trafficking in a case where no one had faced such charges.
Lacey founded the Phoenix New Times weekly newspaper with James Larkin, who was charged in the case and died by suicide in July. Lacy and Larkin retained ownership interests in other weeklies such as The Village Voice and eventually sold their newspapers in 2013. But they retained Backpage, which authorities say generated $500 million in prostitution-related revenue from its inception in 2004 until 2018, when it was shut down by the government.
In all, five former Backpage operators pleaded not guilty to charges of facilitating prostitution. Of the five, Lacy and two others pleaded not guilty to money laundering charges.
of the site The marketing director pleaded guilty Conspiracy to facilitate prostitution and admitted that he participated in a scheme to provide free advertising to prostitutes to win their business. Additionally, when the company’s CEO shut down the site, Carl Ferrer, pleaded guilty A separate federal conspiracy case in Arizona and one in California on charges of laundering state funds.
Prosecutors said Backpage’s operators ignored warnings to stop running prostitution ads, some involving children. They are accused of offering free advertising to prostitutes and arranging farming with others working in the sex trade to post ads with the company.
Authorities say BackPage staff will identify prostitutes through Google searches, then call and advertise them for free. The site was also accused of having a business arrangement where it would advertise on other sites that allowed customers to post reviews of their experiences with prostitutes.
Backpage’s operators said they never allowed ads for sex and used human and automated tools to try to remove such ads, and that the site’s content was protected by the First Amendment. Prosecutors said moderation efforts by the site were intended to conceal the true nature of the ads.
Lacey is also accused of using cryptocurrencies and sending money to foreign bank accounts to launder revenue earned from the site’s ad sales after authorities said the banks raised concerns they were being used for illicit purposes.
At trial, the Backpage defendants are barred from bringing up a 2013 memo by federal prosecutors who examined the site and said at the time that they did not uncover evidence of a pattern of neglect toward minors or admissions from key participants that the site was used for prostitution.
In the memo, prosecutors said witnesses examining Backpage made substantial efforts to prevent criminal behavior on its site and coordinated such efforts with law enforcement. The document was written five years before Lacey, Larkin and other former Backpage operators were charged in the Arizona case.
A Government Accountability Office report published in June 2021 stated that the FBI’s ability to identify victims and sex traffickers was significantly reduced after the government seized Backpage, as law enforcement was familiar with the site and Backpage was generally responsive to requests for information.
US District Judge Susan Bronovich, who declared a mistrial during the first attempt to prosecute the Backpage defendants, allowed evidence that people were trafficked using the site, but warned prosecutors not to dwell on details of the abuse. “It looks like the government abused that opportunity,” Bronovich said in announcing the mistrial.
In a pretrial ruling, U.S. District Judge Diane Humetewa, who is presiding over the second trial, repeated that warning to prosecutors.