Morgan Loew:

Hi everyone. I’m Morgan Lowe standing in for Brianna Whitney on this episode of the True Crime Arizona podcast, Backpage, the tragic story of the founders of the Phoenix New Times. This is the story of the rise and fall of two of local journalism’s biggest champions and then biggest pariahs. This week, Michael Lacey was sentenced to five years in federal prison and fined $3 million after he was convicted of one money laundering count. Jim Larkin took his own life in July of 2023. 20 years ago. These two developments would’ve been unfathomable to the journalism community, but this is where we are today. Michael Lacey started the predecessor of the Phoenix New Times in 1970. He was soon joined by Jim Larkin as the business manager. While Lacey focused on editorial that one alternative paper eventually became a chain of 17 alternative weekly newspapers under the umbrella of the Village Voice.

They had a combined circulation of 1.8 million readers and a market value of $400 million. Their articles focused on political corruption, government waste, and edgy features on the arts and society. The writers and editors of these papers won nearly 4,000 journalism awards, including Won Pulitzer, and they were finalists for the Pulitzer five times here in Arizona. Lacey and Larkin took on topics and stories that on several occasions put them in the crosshairs of notorious law enforcement figures. In October of 2007, both men were arrested by detectives working for then Maricopa County Sheriff Joe Arpaio. The New Times had just published an expose revealing a scheme by the county attorney to use a special prosecutor and a grand jury to acquire reporter notes and files and the IP addresses of everyone who had visited the New Times website over a three year period. When asked by a reporter why he was arrested, Lacey replied we’re being arrested for raising hell. Within 24 hours, the charges were dropped. Lacey and Larkin sued Maricopa County for false arrest, settling for $3.5 million. They donated $2 million of that to the ASU Walter Cronkite School of Journalism and Mass Communication to increase Latino and border coverage. But that gift would later be returned to them for reasons we are about to get into with today’s guest, Steven Lemons. Steven is a longtime investigative reporter who has worked for Lacey and Larkin for two plus decades.

Thanks for being here today. Stephen, why did you originally want to work for these two men then?

Stephen Lemons:

Well, because they had created what you might call the island of misfit toys for journalists. I did not have a traditional journalism background. I started out as a writer, but I was trying to write a novel, et cetera, et cetera. Thought I was Thomas Wolfe and then soon learn better and sort of fell into freelancing when I was in Los Angeles and discovered that they had a paper there. It was called New Times LA, and I started freelancing pretty heavily for them and was doing a lot of art stuff and then started doing real journalism and involving investigation and doing politics and stuff like that. And there’s no other place where I would’ve had that kind of career path. Eventually because of business reasons, they closed New Times LA and then I was invited to join Phoenix New Times initially as the food critic that got my foot in the door.

And then they said, well, we think you’re a little too acerbic to be just a food critic. Maybe we want you to do politics. But what I found, I didn’t know this at the time, I didn’t know as much as I do now about Lacey and Larkin’s careers, but their papers reflected their personalities, and Lacey did not come from a traditional journalism background either. He actually was a college dropout. He went to a SU probably for about a year and then dropped out. And as you pointed out, in 1970, they created what was the precursor for New Times, and that was in response to both the Vietnam War and the Kent State massacre. Lacey was an anti-war organizer and was getting in trouble with the law even back then. And for some reason they said, well, they didn’t like the Arizona Republic’s coverage of the Vietnam War.

The Republic was very conservative then, and it was run by a guy named Eugene Pullum, and Pullium always had his opinion on the front page, and he was a pro-war guy, and he didn’t like the demonstrators, and he was denigrating them as hippies, dirty hippies and things like this. And they took great offense to this, but there was no alternative publication. So it was like, Hey, let’s make one. So they did, and it took a while before they really started to establish themselves. But Lacey, he had grown up reading the news. He read the newspaper every day. He’s a very well-read area type person, self-educated. Basically, he realized he didn’t need to go to college. He’s one of those people who already had a vision. And so they start this newspaper. As you pointed out, Larkin came about a year or two later, and they almost immediately started getting in trouble with the authorities.

You could say they got in trouble very early on for this is when abortion was completely illegal. Now they’re different laws, but this was pre Roe v. Wade. They ran an ad for an abortion referral service out of California. Well, this was illegal in Arizona at the time, and they got in trouble for it, and they went to court, they were found guilty, and they appealed, and they appealed to the Arizona Appeals Court, and by that time, Roe v Wade had happened. And so the whole thing was overturned. So they had a very anti-authoritarian view of the world, and I think that’s why I was able to, I have that same view. It’s almost like birds of a feather to, not that I would say that I’m anything like them because I haven’t created my own

Morgan Loew:

Empire.

Stephen Lemons :

Yeah. I mean, they did stuff that normal people don’t do. Right. What were they like as bosses? Once again, initially I was just scared of them. I was a kid, so I didn’t know what to expect, but I learned that they respected, they read everything. So if you wrote something, you had to know that Lacey was going to read it and he might like it or dislike it, and he was going to let you know what he thought. And I think early on he saw that I had some chops and he was willing to give me some rope, and I didn’t hang myself. And so he was a good boss, but there were a couple of times he got mad at me. But I certainly learned that when I learned more about him and that he was a really good editor and had a terrific news sense. If you came to him with a news idea and you could back it up, he would just say, go for it. So it was a tremendous amount of freedom in that sense journalistically,

Morgan Loew:

Especially if you’re pushing the envelope and doing edgy stories. Now, their chain was all over the country, but they lived here in Arizona. Was it hands-on with all of the papers? Was it hands-on with the Phoenix New Time? How did that structure work?

Stephen Lemons:

Well, I think every editor of every paper kind of had their own fiefdom, but you never knew when Lacey was going to drop in. He had an office at the Phoenix New Times in downtown, but didn’t know. You never knew he was going to be in the building. And that was like if Lacey was in the building, everybody started to sit up straight and he might show up for, we had editorial meetings on Monday where everybody would get together and discuss stories, and he loved that. He loved talking about stories, so you didn’t know if he was going to show up or not. And that was true of all of the newspapers. So he might just, they had a paper in, I think they had a paper in Cleveland. They had a paper in San Francisco. They had one all over the place, and you didn’t know if he was going to show up that morning and give you the third degree over your story because he was going to ask you questions and he was going to push you to see if you really had the story, not just that you had the idea, but that you’ve done a little legwork to show that there really was a story there. So they were interesting bosses, but I think good bosses in general.

Morgan Loew:

Larkin ran the business. Lacey ran editorial. They made a lot of money in alternative weeklies, a lot of money in journalism, which is not an easy business to make money in.

Stephen Lemons:

No, but you have to remember, it was a different time. Mean their print journalism now is mostly dead, moribund, so you can’t really compare it. And at that time, newspapers had a lock on all classified advertising, and it was a huge money stream for all of journalism, not just alternative journalism. What they got involved in was they took ads that the Republic would never take ads for head shops, record stores, mom and pop restaurants and escorts and strip tees and things like this that would be too taboo for the Republic to ever go near. So they kind of reaped a windfall by seeing that there was an opportunity here. And of course, the money that they earned through the advertising they put into journalism.

Morgan Loew:

Yeah, I remember picking up the New Times when I was new in the Phoenix area, and you’d read it as much for the journalism in it, which was edgy and push the envelope, as I said, but also looking at these ads, I mean, it was a complete entertainment piece of work. It had everything in it, it seems like.

Stephen Lemons:

Yeah, that’s true of the ads. And it wasn’t just strip tees and stuff. They had a lot of personal ads, and there was something called missed connections, or people would, maybe they saw a woman at a bus stop or something like that. And

Morgan Loew:

Would

Stephen Lemons:

You remember that? It would go, oh, I missed you at the bus. You’re wearing a green dress. And then they would have mailboxes where you could call the mailbox and leave a message for that person. So it was pre-internet basically,

Morgan Loew:

And it was entertaining to say the least. You could probably say that Lacey and Larkin’s real trouble began with the decline in the newspaper ad business, both regular ads and classifieds. They were the bread and butter of newspapers, especially alternative weeklies. But by the early two thousands, Craigslist, Craigslist had cut into that profit margin substantially. Lacey and Larkin responded by creating a site called backpage.com. And although Backpage was a marketplace for all kinds of services and products, really became known for its adult section. And that is what eventually led to its demise due to the actions of the US Justice Department. What is not debatable is the fact that Backpage was a financial success. By February of 2015, Backpage was estimated to be worth $600 million after tussles with then Attorney General Kamala Harris and a Senate subcommittee investigating the company for online sex trafficking. In 2018, the Justice Department announced a 93 count indictment against Lacey Larkin and several other people tied to Page. In short, the charges accused them of money laundering participating in a criminal conspiracy and facilitating prosecution. The first trial ended in a mistrial, the Justice Department announced it would try again. Jim Larkin tragically took his own life before that trial began, and Lacey was found guilty in the fall of 2023 on one count of money laundering. He was acquitted on one other charge, and the jury deadlocked on the 84 remaining charges was back page the beginning of the end for them,

Stephen Lemons:

I guess in hindsight. But going back to 2004, when it was initially created, it was a way to keep the company alive because, and this was interesting during the trial, a guy who had been an advertising executive there, Dan Hyer, who like Carl Ferrer, who created Backpage, flipped and testified on behalf of the government. But what was really interesting about Hyer I found is that hire really explained how Backpage came to be, which is not something that was really gone into in the trial, except through his testimony. And it was interesting. He was talking about, he started out in print, he was print advertising, and in the early aughts, all of a sudden the advertising started to bleed away because Craigslist has started in I think mid to late 1990s. It took a while for them to take hold, but once they took hold, they were garnering all of the classified advertising

Morgan Loew:

Because people could go and advertise and sell something on Craigslist for free and anywhere instead of paying the newspaper or the Alt Weekly. And classifieds really were a source of real money for that industry.

Stephen Lemons:

Huge. I mean, I don’t know if you remember the New Times at one time. I mean, it had maybe 250, 300 pages, and it’s like astounding. I mean, it’s still in existence, but it has about 40 pages now because the advertising is just not there the way it used to be. But in Craigslist, you’re right, did not charge for a lot of their ads. They did charge for some, so they were making money, but it wasn’t charging for everything. So hire explained. Well, we had to do something. He looked at it as either this or we’re going to go out of business. And Jim Larkin was the head of the business side of the paper, as you said. They had a very strict Chinese wall between those two sides. And Larkin sent this guy named Carl Ferrera, who was also a top Ed executive to San Francisco to study Craigslist. And he came back and he told Larkin, we can do the same thing. And so what they did is they just basically copied Craigslist. Initially hire said, because Craigslist was so established by that time, by 2004, it was very difficult for them to gain any advantage or to even grow or start making money. It didn’t make money for quite some time.

What happened was is that Craigslist also had adult advertising for escorts, strip tees, et cetera. Okay? Now these are predated them in print. They were in print as well, and they are facially legal illegal on their face. And for the most part, they were uncontroversial for a long time when they were in print. They were actually in the yellow pages, and in some cases, even in the Republic, especially in the late nineties, and when they needed the money more. But in any case, what happened over time is that Craigslist started to get a lot of pressure because of its adult advertising from different politicians, state attorney, general religious groups, things like this. And they were saying, well, this is just obviously prostitution and Craigslist responsible. So no, this is freedom of speech. And the only thing that’s really illegal when you’re talking about an ad is if it proposes an illicit act.

And in this case, the Illicit Act would be sex for money. So for the most part, the ads themselves were amorphous. They had vague language, and they had photos that were Risa, but they weren’t X-rated for the most part. For a while, they didn’t even have nudity, but these groups, these pressure groups regarded as being something horrible that had to be stopped. And they used sort of this bug bear of sex trafficking and child sex trafficking, which is sex trafficking in general, as opposed to prostitution, which involves consensual commercial sex amongst adults. Sex trafficking involves forced fraud or coercion, and then a subset of that is child sex trafficking, which would involve a minor. What law enforcement was doing was using Craigslist and later Backpage to find children who had been swept into this business and to find women who had been trafficked, but it was a small portion of a larger hole, and the larger hole was adults. But nevertheless, there was a lot of conflation between the two things. It would conflate prostitution with sex trafficking,

Morgan Loew:

And the criminal charges never really revolved around sex trafficking. The Justice Department here in their news release after the conviction, it says, A federal judge in Phoenix today sentenced three owners of Backpage, a prostitution website. So they refer to it as a prostitution website. They say the defendants and their conspirators obtained more than $500 million from operating an online forum that facilitated the exploitation of countless victims. They charge and alleged that these people created this website, and that website was used for prostitution, and they made that argument in court. How successful were they of making that argument?

Stephen Lemons:

Well, I mean, if the process is the punishment, right? I mean, this prosecution is now, if you say it’s still going on, because there will be appeals is in its seventh year. They started in 2018, actually, it started earlier than that. In 2017, a grand jury was opened on them, and in 2017, there was a senate committee hearing where they had one of committee hearing issued a report accusing back page of facilitating sex trafficking. Well, as you point out, that morphed into just being prostitution, not sex trafficking, but it’s almost like trying to say that, oh, I’m not a child, pornographer or something like that. Once you have been labeled in this way, it’s very difficult to defend yourself in the public realm. They had every reason to believe that these, and I think they were, the ads themselves were legal. Interestingly, during trial, they had several police officers testify, and to a man, even the police officers testified on behalf of the government.

They said that within the four corners of the ad, they did not have of most of these ads, they did not have probable cause to an effect to effect a prostitution arrest. So the ads themselves on their face are facially legal. How do you know they involve prostitution? Well, a cop can only find out through a sting, right? He would have to call up the provider, set up a date, and then go and see if there was an offer of sex for money. I mean, sometimes they could do this over the phone, but in reality, they had to do it in person, and a lot of times they wanted it on video. So this is the extent to which law enforcement had to go to actually say, yes, this actually does offer prostitution this ad. Because otherwise, if it didn’t say like, oh, I’m going to have sex with you for a hundred dollars, well, the ads didn’t say that. Right? For a good time, call for a good time call is not illegal, right?

Morgan Loew:

Yeah.

Stephen Lemons:

So therein lies the rub. Therein lies the, and go ahead. I’m sorry. I have those,

Morgan Loew:

Yeah, no, I wanted to point out that you talk to prosecutors, they will likely tell you we are trying to crack down on online prostitution, online sex trafficking, and they have to go after organizations like this one that they claim facilitated this. The idea you would think is to make it harder for sex traffickers or prostitution to take place online for these forums to be used for that kind of activity. But the reality is, is that some prosecutors and the government accountability office sort of found that getting rid of Backpage actually made it harder to go after some of these online pimps and sex traffickers. Why is that?

Stephen Lemons:

Well, because, okay, to back up to 2010, I said that it started in 2004, and Craigslist had same advertisements as well as advertisements for a lot of other stuff. There was the same for Backpage, it had classified ads for selling cars, apartment rentals, et cetera. But in the case of Craigslist, they received so much pressure, they eventually bent the knee basically and gave up the section of their website that was devoted to adult personals or adult advertising. That is, so in 2010, Craigslist, even though I had the most market share in this particular category, it closed that section. Now, there still were some adult advertising that continued in their personal section. They couldn’t really get rid of it completely, but for the most part, they made a good effort to, we’re going to do what the government wants us to do. So in 2010, all of that business goes to Backpage.

All of a sudden, Backpage is making a profit. All of a sudden, Backpage is keeping the newspapers afloat because the money is gone from print publications to online. So it really was strategically, it was the right thing to do for them at the time. I mean, they wanted to stay alive, and they regarded it as an existential threat, the loss of classified advertising. So they had to replace it with something. And the most lucrative aspect of classified advertising, because you can charge more for it, is adult advertising. And as far as they were concerned, I mean as far as I can see, they regarded, they thought they were, what they were doing is legal. They were operating within the legal framework of the First Amendment and also something called Section two 30, which is a federal law that governs the internet

Morgan Loew:

Section 230 of the Communications Decency Act, which basically is still in effect today, which protects internet service providers, social media platforms from being prosecuted for or being liable for the contents of what people post on their sites. You can’t sue Cox Cable because you don’t like something you got through your cable internet. You can’t sue Facebook because somebody said something libelous to you on Facebook. You sue those people.

Stephen Lemons:

It’s sort of common sense really when you think about it. But it’s different from, say, the Fourth Estate when you think of print journalism, because in that case, it’s not an interactive medium, right? For the most part, unless it’s online. And so you have different rules that apply because

Morgan Loew:

Of that. And so one of the things that I read when I was reporting on this was that after Backpage was shut down, this sort of online sex market, online adult, which exists out there, spread out and was all over the place. And in the past, prosecutors, police could go to Backpage and find and look for victims, look for people who were breaking the law. And then after this, after Backpage was shut down, it’s now dispersed in hundreds of sites, the defense attorneys in this. And the defense said, look, we cooperate. We have cooperated with law enforcement in the past. Is that true?

Stephen Lemons:

Absolutely. They actually had a policy of responding to subpoenas within 24 hours subpoenas from law enforcement. They actually created training for law enforcement and how to request information from Backpage and how to find suspect ads, ads that they suspected of being involved in some kind of trafficking. Also, Backpage reported thousands of advertising ads that they were suspected being involved to NCMEC the National Center for Missing and Exploited Children. I can’t remember, but basically it’s like a hub for information about children who are being abducted or children who are involved in some kind of exploitive activity. And so they were doing their best to comply. But the problem was that the goalpost kept getting shifted. And so it was initially, like with Craigslist, for instance, initially Craigslist wasn’t in the very beginning, wasn’t charging for the adult advertising, then the state attorney’s general put pressure on them to start demanding credit cards.

And then after they started taking credit cards, the new rule was, well, look, you’re making too much money off this, so you need to just close down. And in that instance, when you’re talking about you need to close down when the government’s telling you to do something like that, that’s the kind of thing that gets the ire up of two Irishmen who run an alternative paper and they’re going to say, no, we’re not going to just close down because you say we have to close down. What we’re doing is legal. And so there lies the problem. I want to get back to one point you were talking about the cooperation of law enforcement. You’re right after they seized Backpage in 2018, when then arrested Lacey and Larkin and a few others, it was about the same time that they passed a law called FO Cesta, which essentially outlawed anything that facilitated prostitution online.

So there was a double whammy for people who were sex workers. All of a sudden there was not. And also for law enforcement, all of a sudden, as you pointed out, there’s not this one hub, this one place that you can go to for information. All of a sudden it’s spread out and for the most part went overseas to places where the FBI could not subpoena. And this is why, yes, you were mentioning the GAO report. I want to read just a little bit of that. I, because in 2021, the GAO did a study and they wanted to find out, well, what was the result of this getting rid of bank page and false assessor? The combination of these two,

Morgan Loew:

And let me just interrupt. The GAO is the government accountability office, and this is a government agency whose job is to look at how government functions, how agencies function. Sometimes they look into financial ways, sometimes they look at, are we achieving our goals? So this government accountability office looks into the results of what happened when back page was taken down and take it from there.

Stephen Lemons:

Yeah, exactly. And so it’s a very interesting part of the document. It says, according to a 2019 FBI document, the FBI’s ability to identify and locate sex trafficking victims and perpetrators was significantly decreased following the takedown of backpage.com. According to FBI I officials, this is largely because law enforcement was familiar with Backpage, and Backpage was generally responsive to legal requests for information. In contrast, officials said, law enforcement may be less familiar with platforms located overseas. Further obtaining evidence from entities overseas may be more cumbersome and time intensive as those who control such platforms may not voluntarily respond to legal process and mutual legal assistance requests may take months, if not years according to DOJ officials. So it became almost impossible for the FBI to investigate sex trafficking, to rescue endangered women and children because Backpage was no longer there to cooperate with them. The new sites that offer escort advertising are located overseas in places like Crete or places like that, the government, the US government has no authority there, so they can just tell ’em to blow off. And of course, also, another interesting point, in addition to responding to subpoenas, et cetera, they also would send Backpage executives to testify in court against actual sex traffickers.

What they did is they achieved something opposite of their intended effect. They actually hurt the people they thought they were going to try to help.

Morgan Loew:

So this originally goes to trial and it ends in a mistrial because of prosecutors. Explain what happened, because I could bring it up, but I don’t think I would get it as clear. Why did the judge throw that case out at first?

Stephen Lemons:

Yeah, it was interesting because it was a judge, Susan Bernavich, and the federal judge was initially overseeing the case and as a trial judge, and she had made an earlier ruling because the defense did not want sex trafficking as a buzzword is bad, so you don’t want to be associated with it. So the defense was saying, look, these guys are not charged with sex trafficking or anything to do with sex trafficking. Rather, it’s a law called the Travel Act, which makes it illegal to facilitate a business that’s breaking a state law involving prostitutions. It’s very cumbersome and complex, and that’s harder to explain to a jury than just saying sex trafficking or even child sex trafficking because then you’ve flipped a switch, put up this red flag that the jury cannot ignore. So the defense wanted to exclude that, and Bevi said in her ruling that she ruled that sex trafficking was a subset of prostitution and therefore the government could mention it as long as they didn’t go too far. That was kind of like a ruling.

Morgan Loew:

So

Stephen Lemons:

She was trying to split the baby, I think. And so what happened is the prosecutors are not known for subtlety, and they went into the trial, their opening statement mentioned sex trafficking and children more than 64 times. I mean, it was absurd. Basically, if you were listening to this, you would think these guys are on trial for sex trafficking,

Morgan Loew:

And they weren’t on trial for sex, and they weren’t on trial for,

Stephen Lemons:

So after three days of this nonstop bs, really, they called for a mistrial. And I was surprised by the decision. I thought she was going to reject it, but she went back and did the right thing. She read the transcripts and she said, yeah, you guys have gone way too far. This is over the top and it has to stop. So that was the way it was. That’s how the mistrial happened.

Morgan Loew:

Mistrial. So at that point, you’ve got this idea which the GAO uncovered that there are problems with taking down back page. You have a first trial, the mistrial oftentimes after a mistrial, prosecutors drop charges. Not always. I don’t know what the percentage is, but it happens. In this case, the prosecutors came back and came at it again, you covered the case. You’ve covered this. Did you get the sense that these prosecutors were overzealous?

Stephen Lemons:

Well, in my opinion, yes it was that there was total overkill, but I should have pointed this out at the beginning that I certainly do not speak for the defense or the defendants. I only speak for myself. But having observed it, and I would say that I’m partisan. And I think that the sense that, in the sense that I think Lacey and Larkin were given a raw deal. I think this was a case that should not have been pursued by the Justice Department, but nevertheless, they did pursue it. And yes, you’re right. They continued to go after it. I mean, it was interesting because initially there were six defendants. One of them, as you pointed out, Jim Larkin ended up killing himself, I think was driven to despair by an unending prosecution. I mean, they couldn’t evade this. The prosecutors were going to keep coming after them no matter what.

And I think that was part of what drove Larkin into despair, into killing himself. I don’t know for certain, but I think it was that. And then also the government had seized all of their assets or nearly all of their assets, making it very difficult to pay for lawyers. Sometimes these are like top-notch lawyers that you have to, to go up against the federal government, and you’re dealing with what they call novel issues of law, meaning that this has never been done before. This is in some ways an experimental prosecution because even though they’ve used the travel Act previously and they’ve gone after things like prostitution online, previously, people pled out, as often happens when you’re facing prosecution. But Lacey and Larkin didn’t plead out and they fought it.

Morgan Loew:

And that kind of leads me into what I want to ask you now. They could see the writing on the walls here. The government was cracking down on adult websites, websites that could facilitate prosecution. Craigslist got out of the business. Other companies did. They have just said, okay, you know what? This is the way this is turning. Let’s get out of this business. Why do you think they didn’t do that? They already had so much money. They had been successful. When is enough enough? And what is it about those two characters, those two people that told them to say, we’re going to fight this instead of shutting it down or ending that business. And at the end of the day, their website, whether it was a crime or not, the jury decided, but it did facilitate prostitution. Why didn’t they just get out of the business?

Stephen Lemons:

Well, there are a couple of answers to that. First, they’re Irish, so they don’t take to being told what to do. Okay, so that’s right off the bat. And they had spent their whole lives defying authority, and their whole lives had been, I mean, law enforcement, as you pointed out, had gone after them before police chiefs, sheriffs, et cetera, had arrested them. So they were used to being this kind of scrutiny and they didn’t bend. That was their rule. I mean, now you can say, of course, like myself, and I’m probably going to bend because I’m just a little guy. I’m don’t have the resources to fight law enforcement. But it takes a certain kind of person to say, no, we’re not going to do that. And these were self-made men. These were men who came out of the Sixties where defiance of authority was a big deal, and they were not going to be told what to do.

And also, the second part of that is they believed they were squarely within the law, and they had reason to believe that they had very expensive First Amendment attorneys, white shoe law firms, telling them that this is perfectly legal. There’s nothing illegal about it. And of course, you have to remember, these same sort of ads were in the back of the New Times and the other publications when it was all about print. And then added to that, they had about eight federal cases, some of them appellate court cases ruling that bank page was protected, not just by Section two 30, but by the First Amendment. So you have this body of law basically telling you that what you’re doing is legal. These ads are legal. They’re protected by freedom of speech. And also you’re of, you’re the kind of person that doesn’t just bow down when you’re told. So it was a combination, I think, of these things now. Yeah, okay. In hindsight, I mean, you might say, well, they should have got out it earlier. Well, I guess if they were different people, if there were more ordinary people, they probably would’ve done that.

Morgan Loew:

The prosecutors, the Justice Department in its statements in its prosecution said that this was about the money and that they stayed, and they did this because they made a lot of money. You’re saying that wasn’t the driving principle, or was that part of it?

Stephen Lemons:

Well, let’s put it this way. They were already rich prior to Backpage, so I don’t think that it was money, but I am sure that people look at it that way. And I can’t say, okay, well, the money had no part of it. However, the thing is, you have to have a lot of money to have a fight like this. And you could also say that you could go back to this guy, Larry Flynt, a First Amendment hero, but at the time, you could have said, well, he got arrested many times and went to prison more than once, and now he’s considered to be a First Amendment hero. But at the time, you could have said, well, why don’t you just stop publishing that magazine?

Morgan Loew:

And I think that listeners may not realize that a lot of our First Amendment, Supreme Court decisions, these decisions that protect a lot of freedom of speech were based on lurid cases, lurid defendants like Larry Flynt, the most famous of those. And so I guess there’s a possibility that they were thinking this might become one of those cases,

Stephen Lemons:

And it might still, I mean, the thing is it’s not over, and there will be an appeal, and even the judge and the prosecutor both agree that there are serious issues of law that will have to be decided by the Ninth Circuit. Interestingly, as you pointed out at the very beginning, the jury was hung on 84 counts. The judge later after the trial acquitted Lacey on 50 counts, leaving 34 counts outstanding that the government still could bring against him for another third trial.

Morgan Loew:

They could come back.

Stephen Lemons:

They could come back for a third trial. But the thing is, they said they do not want to want to wait until see what the appeals court does, which means to me, they’re afraid it’s going to be overturned or sent back to the judge for a new trial.

Morgan Loew:

Interesting. The prosecutors were asking for 20 years against Lacey for the money laundering case, for the money laundering charge. The money laundering charge in very brief terms was because he had moved some money into a trust overseas,

And he issued a statement the morning before the sentencing began, and it said, much has been made that I opened a trust in Europe for my children. These funds were transferred at the suggestion of attorneys. When FBI agents intimidated American bankers from doing business with me, I was found guilty on one count of concealment. This is simply a mistake. Nothing was concealed. My lawyers filed a notice annually with the same federal government that is now prosecuting me. The government knows exactly how much money is in the account and where the account is. Prosecutors were asking for 20 years. They got five. Judge said five, you were in the courtroom. What was the reaction?

Stephen Lemons:

Oh, they were pissed. Prosecutors. The prosecutors were definitely pissed. They were expecting it was going to be 20 years. In fact, there were two co-defendants, and they each got 10 years. And so they looked at Lacey as the prize. They wanted his head on a stick, and they thought they were going to get it. But you have to go back to the fact that they initially filed 86 charges against Lacey. That’s more than any other defendant in this case. And Lacey himself really didn’t have anything to do with Backpage. He owned half of it, practically half of it, but it was being run by Larkin who runs the business side of the papers. And so he didn’t, to hold him the most culpable is kind of like nuts, right? So I remember asking Larkin, of course, when he was still alive. I was like, why does, I mean, Lacey didn’t have anything to do with Backpage. Why does he have more charges than you do? Because you basically created a Backpage. And he said, well, the tall nail gets hammered. And

Morgan Loew:

He was the face, he was the outspoken one. He was the one who was the journalist. At the end of the day, this is a sad story about two titans of the journalism world. I mean, they started with an alt paper in college and it became an empire, and their papers did a lot of great work. And then it morphed, and it became this lurid story about a website that has adult ads and corn to the government facilitates prostitution. You’ve known them for 20 plus years. What’s your reaction to what this does to the epitaph of the lives and careers?

Stephen Lemons:

Well, I would say that epitaph has yet to be written. And when it comes to someone like Lacey, I admire him even more, having looked into the face of the most powerful entity on the planet and said, no, I’m not going to do what you tell me to because I believe that I’m right. Interesting. It was another interesting thing about what the judge did when she was laying down the sentences. She took a long time to explain her reasoning for each sentence, and you have to go through, there’s certain things she has to take into consideration. And she acknowledged that Lacey was a great journalist, but she also basically bought into the prosecution’s line about that he was responsible somehow for this. And one of her aspects of what her decision was is called deterrence, not deterrence for other people, but deterrence for Lacey. What would deter him from committing a crime? Of course, he’s not a criminal, but in the future, and the judge said, there is no deterrence with Mr. Lacey because he doesn’t believe he did anything wrong, which is an interesting comment, right?

Morgan Loew:

Yeah. I mean, they take remorse and accountability into sentencing. They’re required to. Do you wonder if he were to say, I’m sorry, and were to have apologized instead of being defiant, if the sentence would’ve been, I mean, got five, they were asking for 20, maybe the judge would’ve sent us him to probation or home arrest or what his attorneys were asking.

Stephen Lemons:

Yeah, they wanted probation. Well, he was interviewed about this by Reason Magazine at length, both he and Larkin, and both of them said, we’re not going to do that. They want us to cry and ask for our mommies, and we’re not going to do that one. And then Lacey, I remember Lacey said, you can’t convince me I’m not innocent. And then Larkin replied, yes, we’re innocent. So they had this conviction and they were not going to be moved by it. I think what happened with Larkin is that as this dragged on, it looked like it was never going to go away. Basically, the government had made a decision, we’re going to make an example out of you, and we don’t care. And I could go through a lot of the things the government has done in this case, which are unusual, to say the least. They broke a lot of rules. They destroyed a lot of evidence. There were actual memos, internal DOJ memos from 2012 and 2013, which said, don’t prosecute Backpage. Backpage is helping us. And also the First Amendment applies. But they kept that out of the courtroom. They also kept the GAO report out of the courtroom. They weren’t allowed to, so the jury never heard

Morgan Loew:

That government accountability report.

Stephen Lemons:

They never heard that. They didn’t know that there were federal cases where they were told that Backpage was legal. They weren’t, they weren’t allowed to bring in advice of counsel. There was just a number of things like they were barely able to mention the First Amendment, which is outrageous to me. But

Morgan Loew :

So you think these are issues that are likely to come up on appeal?

Stephen Lemons:

Oh, most certainly.

Morgan Loew:

And so it’s not, yeah, as you said, it’s the epitaph is not written yet. And it is interesting because you can look at these men as champions of the First Amendment and journalism, or you can look at them as people who made a ton of money with a website that facilitated prostitution. Or you could look at them as both, because people are complicated. Stephen, thank you for sharing your insights and your experience in this as this. If we have an appeal and there’s a decision on an appeal coming up, I’d love to have you back

Stephen Lemons:

On. Sure. Thank you.

Morgan Loew:

Thanks for listening to this episode of True Crime Arizona, Brianna Whitney. We’ll be back here with another episode very soon.

Please also see:
WATCH: Reason’s Backpage Documentary, Now on YouTube
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