Feds Will Retry Lacey, Humetewa Seals Trial Exhibits

Jim Larkin (left) and Michael Lacey: Larkin killed himself shortly before trial, Lacey will now be retried on 84 counts where the jury returned no verdict
Jim Larkin (left) and Michael Lacey: Larkin killed himself shortly before trial, Lacey will now be retried on 84 counts where the jury returned no verdict
The U.S. Attorney's Office for Arizona has informed Judge Humetewa that it will retry veteran journalist Michael Lacey on 84 hung counts; Humetewa seals exhibits at government request.

The following opinion/analysis reflects the views of the author and no one else.

On Tues., Jan. 23, the U.S. Attorney’s Office in Phoenix informed federal Judge Diane Humetewa of its intention to retry veteran journalist Michael Lacey on 84 counts, for which a jury did not return verdicts during a 2023 trial.

The U.S. Attorney’s decision means the Backpage case, which began in April 2018 with the FBI’s destruction of the website and the arrests of six people, including Lacey, 75, and his longtime business partner, the late Jim Larkin, will drag on into its seventh year and likely longer.

Michael Lacey and Don Bolles
Veteran newspaperman Michael Lacey next to the bust of Don Bolles, donated by Lacey to Phoenix’s Clarendon Hotel, where Bolles was assassinated in 1976 (Stephen Lemons)

On Nov. 16, 2023, after an 11-week trial, a federal jury in Phoenix found Lacey guilty of one count of international concealment money laundering and not guilty of one money laundering count.

The jury was hung on 84 additional counts related to violations of the U.S. Travel Act involving the “facilitation” of prostitution via adult ads on Backpage, as well as assorted conspiracy and money laundering charges.

Judge Humetewa declared a mistrial on those counts, the second mistrial in the history of the case.  The first was declared in 2021 after just three days of testimony due to egregious prosecutorial misconduct.

Lacey’s co-defendants all fared differently. Joye Vaught and Andrew Padilla, two former employees of Backpage, were found not guilty of all charges. This, despite the government’s perfervid attempts to paint them as criminals.

As to Jed Brunst, former Chief Financial Officer of Backpage’s holding company, the jury found Brunst guilty of one conspiracy count and more than 30 money laundering counts. Scott Spear, an executive VP, was found guilty on 39 counts, including allegations of money laundering, conspiracy, and violations of the U.S. Travel Act.

Jim Larkin had been a codefendant. He died shortly before the trial, driven to suicide by the federal government’s grueling prosecution and its seizure of nearly all of Larkin and Lacey’s assets, including more than $10 million in attorney trust accounts, which were set aside to pay legal expenses.

Larkin
Newspaperman Jim Larkin, one of the original defendants, who died about a week before the 2023 trial was scheduled to begin (via Wikipedia)

As a result, several defense lawyers were forced to leave the case early on. Three of the defendants ended up with appointed attorneys paid for by the government.

Tucson attorney Michael Piccarreta was one of the defense lawyers forced to withdraw from the case in 2019 after the government’s seizures. Piccarreta, a former president of the Arizona State Bar, was not surprised by the government’s decision to retry Lacey.

“The government has been as aggressive on this case as any that I can remember and has put unlimited resources into the case, and they believe the initial verdict was insufficient and unsuccessful,” he said. “They also know that with their superior resources, they can wear down, financially and emotionally, any citizen.”

He added, “Unless the courts stop them, they are incapable of stopping themselves.”

Another possible reason for the government’s decision: Lacey’s guilty verdict on the charge of international concealment money laundering does not fit the facts.  During the trial, Scottsdale attorney John Becker testified that he helped Lacey transfer nearly $17 million to a bank in Hungary after they consulted with a Los Angeles attorney who specialized in such transactions.

Becker told the court that Lacey was forced to do this because U.S. banks would not do business with Lacey, in part due to pressure from the government. The transfer was 100 percent legal, Becker testified. Every year, he filed the appropriate paperwork for the transfer with the Internal Revenue Service, and all taxes were paid. Lacey is not charged with tax evasion.

As a result, the conviction could be overturned on appeal.

“Obviously, they feel that that conviction will not withstand careful scrutiny,” Piccarreta said of the prosecution. “So they want these [84 counts] as potential backups.”

Judge Humetewa has not scheduled a sentencing date for Lacey, Spear and Brunst. (Lacey’s sentencing would likely occur after the new trial.) Several motions before the court remain outstanding, including a motion to dismiss the case, referred to as a Rule 29 motion, and a motion for a new trial on the guilty counts.

On Monday, Humetewa granted a government request to effectively seal exhibits of ads that once ran on Backpage, some of which the government obtained via the Wayback Machine.

The government’s motion for a protective order was filed on Nov. 8, near the end of the trial, in reaction to a request to the clerk of court from Bisbee journalist David Morgan, who asked for copies of all exhibits in the case.

In its response to the government’s motion, the defense argued that a less restrictive course would be to redact any identifying information in the ads.

The government did not file a reply to the defense’s response.

Humetewa’s decision reads, in part:

“All ‘identifying information’ and images of the individuals depicted in the ads and exhibits shall be returned to the United States or destroyed at the conclusion of this case. If defense counsel chooses to destroy rather than return, each counsel shall provide a sworn statement to the United States stating the date on which the documents were destroyed and the Bates numbers and/or Exhibit numbers of the documents destroyed.”

The order prevents attorneys from releasing the exhibits to a third party. However, Humetewa wrote that the exhibits can be used for appeals.

Please also see:
What’s Next for the Backpage Defendants?
and
Backpage Trial Ends with Precious Little Justice and a Mountain of Misery

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

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