Prosecutors Poisoned Grand Jury Process in Lacey and Larkin Case

Grand Jury Room
Defense attorneys accuse prosecutors of tainting the grand jury's deliberations in the Lacey and Larkin case. (ID 11363643 © Stephen Mcnally |
Defendants in the Lacey and Larkin case allege that prosecutors "grossly abused" the grand jury process to secure an indictment against the veteran journalists.

A powerful new defense motion in the ongoing criminal case involving longtime Phoenix newspapermen and former owners Michael Lacey and Jim Larkin contends that federal prosecutors poisoned the grand jury process, obtaining indictments against the two men and their four co-defendants via deceptive means.

The motion, filed on October 18 in federal court in Phoenix, accuses government attorneys of playing a classic con game of bait and switch on grand jurors in order to score a 100-count indictment against Lacey, Larkin and the others on charges of conspiracy, money laundering and facilitating prostitution across state lines under the U.S. Travel Act.

Drawing on recent discovery in the case, as well as the indictment itself and comments made by prosecutors in open court, the motion prepared by Ariel Neuman, an attorney for one of Lacey and Larkin’s co-defendants, asserts that prosecutors falsely summarized evidence and misled the grand jury by omitting or excising exculpatory material.

Worse still, prosecutors poured gasoline on the pyre by “falsely, repeatedly and irrelevantly” alleging that the defendants “engaged in child sex trafficking and knowingly published ads for sex with underage children,” though the government did not charge the defendants with child sex trafficking or the sex trafficking of adults.

Michael Lacey (left) and Jim Larkin from the early days of the Phoenix New Times, the flagship paper of what became an alt-weekly empire. (courtesy of Jim Larkin)

Instead, the U.S. Attorney’s Office charged Lacey, Larkin, et al., with facilitating prostitution, not sex trafficking.

Sex trafficking is a heinous offense, in which adults are induced into the sex trade through force, fraud or coercion. Federal law automatically considers minors involved in the sex trade to have been trafficked. And naturally, anything involving the abuse of children invokes universal ire.

Which, as the motion observes, is likely why the indictment accuses the defendants of engaging in child sex trafficking “over 20 times,” despite overwhelming evidence to the contrary offered by the avowals of key witnesses and the underlying documents in the case.

Neuman writes:

So why include these untrue allegations before the grand jury and in the Indictment? These are not minor details that the government got wrong; these are explosive allegations that had no place in the Indictment or in the presentation to the grand jury. These are the types of allegations that can overwhelm reason, overwhelm logic, and lead to decisions out of anger and disgust, regardless of what else is presented. The government’s conduct amounts to “prosecutorial impairment of the grand jury’s independent role” and warrants dismissal of the Indictment.

Barring dismissal, the motion requests that U.S. District Court Judge Susan Brnovich, the trial judge in the case, order the release of the grand jury’s transcript to the defense, as it may demonstrate further grounds for dismissing the indictment.

There is no longer a reason for the grand jury’s deliberations to remain secret, the motion argues, now that indictments have been handed down and so-called Jencks Act material, pertaining to statements made by the government’s witnesses, have been turned over to the defense.

Calling Carl Ferrer

The motion also asserts that the government’s star witness, ex-Backpage CEO Carl Ferrer, has contradicted the government’s sex trafficking smear-tactics in statements he made to prosecutors prior to the government’s unsealing of the original indictment on April 6, 2018 — the same day as the FBI’s arrests of Lacey and Larkin and the bureau’s seizure and shuttering of Backpage .

Ferrer has pleaded guilty to one federal count of conspiracy in exchange for his cooperation with the feds. In 2004, Ferrer was an employee of what was soon to be known as Village Voice Media (VVM), the alt-media chain owned by Lacey and Larkin until they sold it in 2012. It was there that Ferrer developed Backpage as a competitor to the listings behemoth, which had obliterated classified ads as a revenue stream for newspapers by providing most of them for free.

Read the defense motion accusing federal prosecutors of misusing the grand jury process in U.S. v. Lacey and Larkin

Both sites featured ads for cars, houses, and yard implements for sale, as well as an adult section containing listings for escorts, body rubs, fetish play, etc., all deemed legal by several federal and state courts. Lacey and Larkin sold their interests in Backpage to Ferrer in 2015.

video screenshot of former owner and CEO Carl Ferrer at a 2017 hearing of the U.S. Senate's Permanent Subcommittee on Investigations
Former Backpage CEO Carl Ferrer during his appearance at a U.S. Senate hearing in January 2017. Ferrer has pleaded guilty to conspiracy and agreed to testify for the federal government (screenshot via Permanent Subcommittee on Investigations)

Relying on uninformed assumptions rather than evidence, federal prosecutors have painted Backpage as a haven for illicit sex, arguing that Backpage knowingly allowed ads concerning prostitution and child sex trafficking to be posted by users, despite the company’s extensive cooperation with law enforcement and its efforts to keep ads offering sex for money off the platform.

The motion states that, during an April 5, 2018 interview with the feds, Ferrer “directly contradicted” the government’s assertions concerning content moderation on the site. But since Judge Brnovich has issued a protective order forbidding the publication of Jencks Act material for now, Ferrer’s quotes have been redacted in the public version of the document.

Still, evidence not under seal and the indictment itself reveal the government’s profound duplicity.

For instance, the indictment falsely asserts that Backpage “sought to create the perception that it was diligently attempting to prevent the publication” of ads involving child sex trafficking, while declining to take necessary steps to block them.

But the record does not support the government’s tall tales. Take the whopper that Backpage “artificially limited” ad referrals to the National Center for Missing and Exploited Children (NCMEC), the quasi-governmental institution that processes reports of exploited minors and farms them out to law enforcement.

NCMEC’s Email Trail

The motion quotes internal NCMEC emails that rebut the prosecution’s claims that Backpage artificially limited reports of suspect ads to the organization.

One email from September 2011 noted that Backpage was reporting “over 200 ads per month to NCMEC’s CyberTipline.” The same email stated that Ferrer said law enforcement either “loved” the reports from Backpage or “feel they are getting too many.” According to this email, Backpage unknowingly had been removing police sting ads from the site, because, in an attempt to reel in offenders, the cop-written classifieds made reference to underage women, which Backpage prohibited.

An October 2011 email from NCMEC described Backpage’s “User Safety Section,” which taught users how to report suspicious ads to NCMEC. And a July 2011 NCMEC email detailed how, if Backpage received a valid complaint concerning a minor, moderators would remove the offending ad, report it to the CyberTipline and archive the data pending the receipt of a subpoena from law enforcement.

Over the years, Backpage received numerous thank yous and attaboys from various law enforcement agencies appreciative of the company’s assistance, including its quick turnaround on subpoenas (sometimes as little as a day). Among these is a 2011 commendation from the FBI, signed by Robert Mueller, the bureau’s director at the time.

The defense motion includes a chart showing how the indictment twisted and cherry-picked words and phrases to convey a nefarious meaning at odds with the underlying statement or document. One passage quotes a Powerpoint presentation that refers to three categories of ads, one being “Pimps and Men Looking for Kids.”

What the indictment fails to explain is that the Powerpoint doc, created by a DC-based public relations firm, is referring to “proposed public service ads to be placed on the Backpage website…to dissuade child sex traffickers from using the site.”

This is confirmed not only by the document itself but also by an FBI interview of an executive for the same company. The exec told agents that the presentation was part of a proposed “Child Protection Taskforce,” which would have sponsored fake, illicit ads on Backpage. When someone clicked on one, they would receive the warning, “Sex with a minor is a major crime, you could do jail time.”

The indictment also misquotes an October 2010 email from Ferrer, which stated, “Sex act for money ads are deleted.” But the government muddles this dictate to make it sound like ads involving commercial sex are actually permitted on the site.

Similarly, the prosecution cites another internal email from a Backpage exec dated October 16, 2010, but significantly, the government leaves out the following exculpatory statement:

“[I]f an ad makes a clear reference to sex for money or an image displays a sex act, don’t hesitate deleting it. These are not the type of ads we want on our site at all.”

The October 16, 2010 internal email selectively quoted by the indictment. (from court docs, with the “To” section deleted by FPC’s editor)

Rather, the government lifts partial quotes from the email, making it seem that the executive stated only that he wanted to “avoid deleting ads when possible,” and that editing would be sufficient for “lesser violations.”

The quotes lifted from the Oct. 10, 2010 email as they appear in the superseding indictment. Prosecutors changed the generally exculpatory nature of the email’s text. (from court docs)

As used in the indictment, the quotes convey the opposite of the email’s actual meaning.

Tainting the Grand Jury

Backpage employed a series of filters and human monitors to screen ads for inappropriate content, blocking and removing up to one million ads per month as a result. But the indictment paints a very different picture, one at variance with the truth.

According to the motion, the government’s “factual misrepresentations to the grand jury” are pervasive and involve “misconduct that reaches every aspect of this case.”

Neuman concludes that because of these violations, the defendants were “indicted without probable cause.” At the very least, Neuman suggests the grand jury was unduly influenced by the government’s prevarications.

The government’s big lie — that Lacey and Larkin were engaged in child sex trafficking — is an odious smear, one calculated to prejudice the general public as well as the grand jury and the trial jury — assuming the case goes to trial.

The government’s grand jury shenanigans add to its long list of unscrupulous acts in this case, from seizing the assets of the accused and denying them a hearing to make a First Amendment claim for same, to unsuccessfully attempting to remove the defendants’ First Amendment attorneys and refusing to allow the defense access to Backpage’s servers, which federal agents may have irreparably damaged when they seized the website.

A PR company’s proposed “sting” for Backpage, which prosecutors have falsely characterized in their indictment as involving child sex trafficking. (from court documents)

The government’s big lie — that Lacey and Larkin were engaged in child sex trafficking — is an odious smear, one calculated to prejudice the general public as well as the grand jury and the trial jury — assuming the case goes to trial, as it is currently scheduled to do on May 5, 2020.

Prosecutors have a reason to play dirty. As a WIRED cover story on the case observed earlier this year, neither the facts nor the law are on the government’s side. So government lawyers are employing “what trial lawyers call `reptile theory,'” which involves “tapping into the jury’s primitive instincts,” arguing that the defendants must be convicted to keep the community safe.

Ironically, the government’s takedown of Backpage has made the community less safe by making it more difficult for law enforcement to pursue real traffickers and rescue missing teens.

And as is painfully apparent, the ends in this case do not justify the prosecution’s questionable means.

For more exclusive coverage of U.S. v. Lacey and Larkin, please read:
Feds Bungled Preservation of Server Evidence in U.S. v. Lacey and Larkin
Feds Stonewall on Access to Backpage’s Servers in Lacey and Larkin Case

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About Stephen Lemons

Stephen Lemons is an award-winning investigative journalist with more than 20 years of experience covering everything from government corruption to white-supremacist gangs. In addition to Front Page Confidential, his work has appeared in Phoenix New Times, the Los Angeles Times,, and the Southern Poverty Law Center’s Intelligence Report magazine.

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