Feds Seize Backpage, Arrest Former Owners in Act of Direct Government Censorship

Image of a middle-aged man frowning while seated at a table before a microphone and a name sign that says "Michael Lacey."
Michael Lacey, appearing at a hearing before the U.S. Senate's Permanent Subcommittee on Investigations in January 2017, where he invoked his rights under the First and Fifth Amendments not to testify. (screenshot of video from Permanent Subcommittee on Investigations )
On Friday, April 6, government agencies siezed Backpage.com, arresting and jailing the site's former owners, veteran newspapermen Michael Lacey and Jim Larkin

UPDATE 4/9/18, 2:43 PM: The indictment has just become available, and you can read it here. Along with Lacey and Larkin, other erstwhile Backpage execs are indicted. CEO Carl Ferrer’s name is not among the indicted, though a “C.F.” is mentioned in the text. At first glance, much of this was in the U.S. Senate’s report on Backpage from January 2017. Also, no one is charged with sex trafficking.

UPDATE 4/9/18, 5:00 PM: Defendants Jim Larkin, Scott Spear, and John “Jed” Brunst had their initial appearances this afternoon before Magistrate Judge Bridget Bade at the Sandra Day O’Connor U.S. Courthouse in Phoenix, Arizona. All three were charged with counts involving money laundering, while Larkin and Spear were also charged with conspiracy and facilitating prostitution.  All three plead not guilty. Brunst and Spear were released on their own recognizance. Larkin is being held pending a detention hearing set for Thursday. Judge Bade set a tentative trial date of June 5, 2018.

Instead of celebrating his recent marriage at a party planned for Saturday at his Paradise Valley home, veteran newspaperman Michael Lacey remained in federal detention over the weekend after his arrest Friday by a legion of law-enforcement officers acting on a sealed federal indictment.

In an armed invasion more appropriate for a cocaine kingpin or Mafia don, the FBI swooped down on Lacey’s house as he and his wife were preparing for Saturday’s celebration. Witnesses and passers-by told Front Page Confidential  that they watched as FBI agents carted away Lacey’s possessions in the aftermath of the raid.

Federal agents also raided the Paradise Valley home of Lacey’s longtime business partner, Jim Larkin, as well as a home Lacey owns in Sedona. Larkin, who along with Lacey once ruled a news empire of seventeen alternative weeklies that grew from the founding of the flagship Phoenix New Times in 1970, is in custody as well.

A notice from the federal government dated April 6, stating that "backpage.com and affiliated websites have been seized."
e-sign of the times: This notice appeared on Backpage’s website on Friday, April 6, as federal agents were arresting Michael Lacey and Jim Larkin. (screenshot via backpage.com)

The pair sold the chain, then known as Village Voice Media (VVM), in 2012, retaining interest in the online listings giant Backpage.com, which separated from VVM as part of the deal.  The FBI also seized Backpage Friday in conjunction with the raids.

The company has long fought allegations that it is an “online brothel” and facilitates sex trafficking. Lacey and Larkin sold their interest in Backpage to CEO Carl Ferrer in 2015.

The 93-count indictment reportedly involves seven individuals, but Lacey and Larkin are the only ones whose names are known at this time.

Ironically, Lacey and Larkin founded Front Page Confidential in 2017 to offer news and analysis on First Amendment issues. Their recent arrests and the government’s move to quash the website are both major assaults on freedom of the press.

Image of two men in a restaurant, in their sixties, smiling. The man on the left, with short hair and glasses holds up a legal document, smiling. The man to the right is also smiling and has thinning hair.
Michael Lacey (left) and Jim Larkin, in August 2017, after a Sacramento judge dismissed pimping allegations against the men. (photo by Stephen Lemons)

Speaking from his office in Buffalo, New York, Lacey’s criminal defense attorney, Paul Cambria, told Front Page Confidential that Lacey will go before a judge at a hearing Wednesday. Cambria said he’d been told that Larkin would see a magistrate on Monday.

An expert in First Amendment jurisprudence who for many years successfully defended porn kingpin Larry Flynt from criminal prosecution, Cambria said he could not discuss the allegations under seal but that his client will plead “not guilty” to all charges.

“We’re going to vigorously seek his release on Wednesday,” Cambria said. “We don’t believe he should be detained, not even a minute. Indeed, pretrial services has recommended that he be released on his own recognizance, and we’re going to follow through with that.”

Cambria decried the FBI’s glaring act of direct censorship in taking down Backpage, which once played host to ads for yard sales and antiques, along with an adult section that the company shuttered in January 2017 on the eve of a Senate hearing into Backpage’s business practices.

“Any time that the government shuts down a major form of speech, it has a chilling effect,” Cambria said. “We don’t believe that the government’s actions are constitutional, and we intend to fight them vigorously.”

In its article on the Backpage bust, Phoenix’s paper of record, the Arizona Republic, interviewed Senator John McCain’s wife Cindy about the takedown of Backpage.

Cindy McCain, who volunteers her free time as co-chair of the Arizona Governor’s Human Trafficking Council, seemed to have inside information about the Backpage bust.

She told the Republic that she’d heard that every Backpage office worldwide had been raided and that law enforcement had “confiscated everything and shut the website down.” She did not provide her source for that information.

In a video interview with Republic reporter Richard Ruelas that accompanied the story, Cindy McCain, who inherited control of her father Jim Hensley’s lucrative Anheuser-Busch distributorship upon his death in 2000, was overjoyed by the news of Backpage’s demise.

From the McCain ranch outside Sedona, Cindy McCain remarked that she and others had warned the company’s current and former execs to change their ways.

“We talked to them in committees, we talked to them in our task force in Arizona,” she claimed, adding that “they just wanted no part of this.”

McCain conceded that “I have not personally spoken with sex workers,” but she dismissed the concerns of people who believe the federal government’s recent crackdown on adult advertising will  endanger lives and make it less likely that actual victims of sex trafficking — which federal statute defines as involving children in sex work, or adults through force, fraud or coercion — will be rescued and their victimizers convicted.

A breaking-news story about Backpage that prominently features Cindy McCain is a curious sight, but not unprecedented.

For years she has been an ardent foe of Backpage, claiming without any evidence that the company “sells children for sex” and conflating consensual adult prostitution with sex trafficking (and all adult advertising with illicit activity). She has tirelessly hyped the problem of sex trafficking, despite the fact that the FBI’s own crime stats don’t support the contention that sex trafficking is an epidemic, as Reason.com journalist Elizabeth Nolan Brown has pointed out repeatedly.

Cindy McCain has testified before Congress on the issue and championed the U.S. Senate’s Stop Enabling Sex Traffickers Act (SESTA), which proposed broadening the language of sex-trafficking statutes to make it illegal for anyone to “knowingly” assist, support, or facilitate a violation of the trafficking statute.

Specifically, McCain has stated that the legislation is necessary to carve out an exception to Section 230 of the Communications Decency Act of 1996, which protected — note the past tense — all interactive platforms from liability for content posted by users. On March 21 of this year, the Senate overwhelmingly approved a “Frankenstein bill” that incorporates the worst elements of SESTA  into the House’s version of the legislation, the Fight Online Sex Trafficking Act (FOSTA), which the lower chamber had passed by a wide margin on February 27.

FOSTA creates new felonies for someone who, “using a facility or means of interstate or foreign commerce, owns, manages, or operates an interactive computer service (or attempts or conspires to do so) to promote or facilitate the prostitution of another person.” Facilitating the prostitution of one person could earn a website operator 10 years in prison. For five or more persons, the sentence may go up to 25 years.

Both houses of Congress approved the bill in spite of a letter from the U.S. Department of Justice objecting to parts of the legislation and observing that a retroactivity provision in the bill violates the Constitution’s prohibition on ex post facto laws.

Senator McCain and his spouse both hailed the passage of FOSTA via Twitter, even as fear of the new law’s fallout is prompting a wave of self-censorship online. Backpage rival Craigslist shut down its entire personals section. Reddit axed whole categories of subreddits about sex work. Microsoft updated its terms of service to ban “offensive language,” and a wide array of interactive websites have done away with forums where members exchange information about sex or have gone dark altogether.

FOSTA still awaits President Donald Trump’s signature. During her interview with Ruelas, Cindy McCain said Trump will sign the bill on Wednesday, the day Lacey will be arraigned. She added that she hoped to attend the ceremony in the White House, notwithstanding the ongoing feud between the president and her husband, who has been away from D.C. since mid-December, while he undergoes treatment for an aggressive form of brain cancer.

Left unsaid in the interview is that both McCains have a colossal axe to grind with Lacey and Larkin.

“Any time that the government shuts down a major form of speech, it has a chilling effect. We don’t believe that the government’s actions are constitutional, and we intend to fight them vigorously.” — defense attorney Paul Cambria

It’s worth remembering that during the time Lacey and Larkin owned New Times, the paper exposed McCain’s hypocrisy on a number of issues, from campaign-finance reform to his self-proclaimed status as a maverick.

Some of the pieces hit particularly close to home, such as the 2000 cover story “Haunted by Spirits,” which detailed McCain’s relationship to the beer industry and the politician’s reliance on his wife’s fortune. The article also explored the source of Cindy McCain’s wealth: Her father, Jim Hensley, was a convicted bootlegger who mixed with organized-crime figures before founding Hensley & Co. in 1955.

But the 1994 bombshell, “Opiate for the Mrs.,” written by Amy Silverman, was the pièce de résistance. The story exposed the McCain machine’s Arizona apparatus as it endeavored to silence a former employee of Cindy McCain’s nonprofit American Voluntary Medical Team, which flew medical supplies and doctors to Third World countries and war-torn areas.

The whistleblower had tipped off the U.S. Drug Enforcement Administration that Cindy McCain was addicted to Vicodin and Percocet, and that she had been using AVMT as her personal pharmacy, pilfering the pills to feed her addiction. Silverman’s story destroyed the McCains’ attempt to spin the tale as that of a senator’s spouse heroically going public with her drug habit in order to help others in a similar situation.

All of which sheds additional light on Cindy McCain’s cameo in a story about Michael Lacey’s arrest and Backpage’s eradication.

But the McCains’ victory lap may prove premature.

After all, this is not Lacey and Larkin’s first tangle with the law on behalf of the First Amendment. In October 2016, then-California Attorney General and now U.S. Senator from California Kamala Harris pressed pimping charges against Ferrer, Lacey, and Larkin, having the men arrested and holding them without bond for days, then parading them before television cameras in orange jumpsuits and caging them in an in-court jail cell as they sought release on bail.

They were freed on bond and fought their case, winning dismissals of the pimping charges by Sacramento Superior Court judges on two separate occasions. Money-laundering charges are pending in California, but Backpage lawyers recently moved for dismissal, alleging widespread abuse of power by the AG’s office, including the violation of California privacy laws and the U.S. Constitution’s Fourth Amendment prohibition on unreasonable search and seizure.

Most famously, Lacey and Larkin were arrested in 2007 by deputies in the employ of infamous Maricopa County Sheriff Joe Arpaio on trumped-up charges of having revealed grand jury secrets. Motivated by revenge for years of unflattering coverage in Phoenix New Times, Arpaio sought to retaliate by using his office to pursue the men.

Arpaio’s gambit failed, the charges were dropped, and Lacey and Larkin sued. They ultimately won a $3.75 million settlement from Maricopa County, which they used to found the Lacey and Larkin Frontera Fund, a nonprofit that donates money to deserving Latin-American organizations throughout Arizona.

Regarding the litigation over Backpage, Lacey and Larkin have spent millions of dollars defending themselves in court, usually winning, with federal and state judges agreeing with them that both the First Amendment and Section 230’s grant of immunity for interactive platforms apply to Backpage’s listings.

Because of these efforts, courts have struck down laws in four states that were passed in an attempt to hold Backpage accountable for ads posted by others. When Cook County, Illinois, Sheriff Tom Dart admonished credit-card companies not to do business with the site, Backpage sued and won an injunction from a panel of the Seventh U.S. Circuit Court of Appeals, in an opinion written by recently retired Judge Richard Posner.

In language that could apply to this past week’s censorship of Backpage, Posner wrote that “a public official who tries to shut down an avenue of expression of ideas and opinions through ‘actual or threatened imposition of government power or sanction’ is violating the First Amendment.”

In Cambria, Lacey has a legal bulldog who has been down rough roads with other clients. In 1978, Cambria was with Larry Flynt in Gwinnett County, Georgia, when the publisher of Hustler and another lawyer, Gene Reeves, were gunned down in an assassination attempt on the porn mogul by a deranged, white-supremacist serial killer who was teed off at an interracial photo spread in Flynt’s magazine.

Flynt and Reeves both survived, though the shooting left Flynt paralyzed from the waist down. Over the years, police arrested Flynt many times as he fought for the right to publish Hustler, a war Flynt won through a series of grueling legal frays, often with Cambria as his attorney.

“We’ve had plenty of interesting battles over the years,” Cambria told Front Page Confidential.  “I’m looking forward to this one. I’m not pleased that someone like Mr. Lacey would be detained even for a minute, especially when so much speech is involved. But this isn’t the first time we’ve seen this kind of thing. So we just keep our head down and keep driving.”

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, Salon.com, and the Southern Poverty Law Center’s Intelligence Report magazine.

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