Lacey/Larkin Judge Tosses Motion Alleging Feds Poisoned Grand Jury Proceedings

GJ Room
Grand juries tend to go where prosecutors lead. (Photo of a grand jury room in Cook County, IL. pmonaghan via Flickr; cropped from original)
The trial judge in the Lacey/Larkin case shot down a powerful defense motion arguing that government lawyers perverted the grand jury process with half-truths and hysteria.

Last week, on Jan. 9, federal Judge Susan Brnovich in Phoenix spiked a defense motion in the Lacey and Larkin case that accused attorneys for the U.S. Justice Department of having “grossly abused the grand jury process” by misleading jurors and smearing the defendants with incendiary and untrue allegations.

The motion, filed in October, draws from discovery in the case, the statements of prosecutors and the 100-count indictment against veteran newspapermen and former Backpage owners Michael Lacey and Jim Larkin. It reveals how government attorneys pulled a bait-and-switch on the grand jury in order to obtain charges against the defendants of conspiracy, money laundering and the promotion of prostitution in violation of the U.S. Travel Act.

But  in her 11-page order, Judge Brnovich rejected this latest attempt by defense attorneys to have the charges against their clients’ dropped. Nor would she agree to release transcripts of secret grand jury proceedings in the case for the defense’s review.

ham sandwich
The sandwich federal prosecutors prefer while indicting the innocent: Ham. (Like_the_Grand_Canyon via Flickr; cropped from original)

Instead, Brnovich found that the defendants “failed to meet the heavy burden of overcoming the presumption of regularity in grand jury proceedings.”

As for the flagrant duplicity that the defense says the prosecution engaged in, Brnovich wrote that such matters should be contested during the defendants’ trial, currently scheduled for May 5, 2020, less than four months away.

Milking a Moral Panic

Brnovich ruled that the defense’s arguments failed to meet the U.S. Supreme Court’s “grave doubts” standard, which holds that a dismissal on the grounds of grand jury abuse is appropriate only if the abuse “substantially influenced the grand jury’s decision to indict,” or if there is “grave doubt” that the decision to indict was free from such influence.

The judge explained that she found the defense’s description of prosecutorial misconduct to be “vague and speculative.” She also wrote that the defense did not show that the prosecutor engaged in “flagrant misconduct” to deceive the grand jury.

As prepared by Ariel Neuman, one of the co-defendants’ attorneys, the defense motion recounts the prosecution’s deceit in accusing Lacey and Larkin of the heinous crime of child sex trafficking, when in fact the defendants are not charged with any form of trafficking, much less child sex trafficking.

Rather, prosecutors have exploited a dangerous, nationwide moral panic that conflates sex trafficking, or coerced commercial sex, with the far more common state crime of prostitution, aka, commercial sex among consenting adults. (Note: The law automatically considers minors engaged in commercial sex as victims of sex trafficking.)

But the feds have not hit Lacey and Larkin, who sold Backpage in 2015, with counts of sex trafficking or child sex trafficking. In fact, the 92-page superseding indictment never alleges Lacey or Larkin were aware of any of the 50 ads that the government has cherrypicked for the indictment, ads that the government says once ran on Backpage and were connected to illegal activity.

This would be nearly impossible as neither Lacey and Larkin have ever been involved in vetting the millions upon millions of classified ads posted to Backpage by its users from the interactive site’s inception in 2004 to its seizure and shut down by the FBI in April 2018.

Moreover, the vast majority of ads on the international site were for mundane offers of everything from dog sitting to apartments for let. Backpage forbade advertisements of sex for money, and regularly reported adult ads suspected of involving minors to the National Center for Missing and Exploited Children (NCMEC), the quasi-governmental agency tasked with the intake of such reports.

The feds allege that the adult ads on the site  — for putatively legal services such as escorts, striptease, erotic massage and the like — were  thinly-veiled come-ons for commercial sex, regardless of an ad’s accuracy or the obvious fantasy involved in anything regarding sex online.

According to prosecutors, Backpage’s owners and employees possessed generalized knowledge that some prostitution was taking place on the site. In an Orwellian twist, the government points to Backpage’s extensive cooperation with law enforcement as evidence of this alleged knowledge of wrongdoing.

Through a unique theory of vicarious liability that could be applied to a telephone company as well as an interactive website, the feds have charged Lacey, Larkin and the rest with the facilitation of prostitution under the U.S. Travel Act, a 1961 law attacking the interstate facilitation of gambling, the illegal liquor trade and prostitution.

  “[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.” — from a 2010 email from a Backpage executive.

But the alleged interstate facilitation of crimes of vice committed by consenting adults does not register on the outrage meter quite like anything involving harm to children. And “sex trafficking,” though relatively rare according to government statistics, is currently a focus of intense moral panic throughout the U.S.

Which, as the motion observes, is why the indictment accuses the defendants of engaging in child sex trafficking “over 20 times,” regardless of the patent absurdity of doing so.

Smear Tactics at Work

Defense attorney Neuman deftly explains the psychology behind the prosecution’s dirty pool in the following passage from the motion to dismiss:

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.

Indeed, as reporter and former Assistant U.S. Attorney Christine Biederman noted in her June 2019 cover story for WIRED on the Backpage saga, the strategy that the prosecution will employ in the upcoming trial is something attorneys refer to as “reptile theory.” It’s meant to trigger “the jury’s primitive instincts” and paint Backpage as a “public danger” that must be eradicated to “make the community safer.”

In her Jan. 9 order, Judge Brnovich ruled that child sex trafficking is relevant to six of the charged counts in the indictment, and that “the inclusion of these allegations” is “not overly prejudicial to defendants’ opportunity for fair trial.”

Brnovich admonished the defense that the proper place to counter the prosecution with evidence obtained following the indictment is at trial, not beforehand in what she characterized as “speculative and attenuated arguments” concerning misconduct before the grand jury.

“The court will not engage in such a preliminary trial for defendants and intrude upon the grand jury’s province absent a more particularized showing,” she wrote.

Omissions and Admissions

Grand jury proceedings are secret, and federal grand jury proceedings, doubly so. In Arizona, a good defense attorney will obtain a copy of a state grand jury transcript and scour it for reasons to ask a judge for a remand back to the grand jury.

The defense 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 the bar in federal court is frustratingly higher. In his motion, Neuman recounts several instances where exculpatory statements are simply left out of partial quotes used in the indictment by prosecutors.

Front Page Confidential reviewed several of these misleading omissions when it covered Neuman’s filing in October. Two examples are illustrative.

For instance, the indictment misquotes an October 2010 email from Backpage CEO Carl Ferrer, which plainly stated, “Sex act for money ads are deleted.”

But the government muddles this dictate to make it sound as if ads for commercial sex were permitted on the site.

Similarly, the prosecution cites another email from a Backpage exec dated October 16, 2010, while omitting 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.”

At trial the defense will likely attempt to counter the prosecution’s indictment with documents obtained through discovery, hopefully exposing the government’s selective and one-sided presentation of evidence.

As Neuman observes, the government’s contention that Backpage’s editorial practices were designed to hide illicit activity on the site from law enforcement is undercut by admissions made by Ferrer in an interview with the government prior to the indictment.

Ferrer, who helped found Backpage as a competitor to Craigslist in the early aughts, has pleaded guilty to one federal count of conspiracy in exchange for his cooperation with the feds. It was to Ferrer that Lacey and Larkin sold Backpage five years ago.

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.

Since Judge Brnovich has issued a protective order forbidding the publication of Ferrer’s interview and other interviews of federal witnesses for now, Ferrer’s quotes have been redacted in the public version of the document.

As Neuman points out, Ferrer’s statements are backed up by internal emails from NCMEC, which, “reflect the fact that Backpage was vigilant in cooperating with law enforcement” and that Backpage was “reporting ads potentially involving children to NCMEC,” thus, directly contradicting the indictment’s allegations.

But as is darkly evident from this case, federal prosecutors can indict innocent citizens just as well as they can the proverbial ham sandwich.

Successfully railroading publishers in the United States of America should be a tougher task, given our First Amendment.

However, the government has done its best to rig the game by seizing all of Lacey and Larkin’s funds, which are badly needed for their defense, and by destroying Backpage’s website, the most important piece of evidence in the case.

Expect more sleazy moves from the government as this prosecution proceeds, because a fair fight is not one the government wants.

For more on recent activity in the Lacey and Larkin case, please see:
Judge Sides with Prosecution on Disputed Server Evidence in Lacey/Larkin Case
Judge Rejects First Amendment Arguments Against Feds’ Seizure of Lacey/Larkin’s Assets; Lacey and Larkin Appeal
Prosecutors Poisoned Grand Jury Process 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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