Prosecutors Want Lacey Sentenced on Bogus Allegations

Editor, writer and hell-raising journalist Michael Lacey
A federal judge delayed Michael Lacey's sentencing in the Backpage case till Aug. 27. Meanwhile, prosecutors demand that he be sentenced for crimes he did not commit and has not been charged with.

On Wednesday in Phoenix’s federal court, U.S. District Court Judge Diane Humetewa rescheduled a sentencing hearing for veteran newspaperman Michael Lacey and two others in the Backpage case, setting it to begin on Tuesday, Aug. 27 at 9:30 a.m.

The hearing was previously set to start on July 9. Humetewa left the door open to the possibility of a further delay, instructing the parties to file any objections they may have to the new sentencing date.

Humetewa’s order states that the U.S. Probation Office requested the delay so it has time to lodge revised presentence reports for each of the defendants.

presentencing report assesses various factors involving the defendants, recommending sentencing options to the judge.

The reports for Lacey and the others have been filed under seal. But, to some extent, what the reports currently say can be gleaned from the defense’s objections to the reports and the prosecution’s responses to those objections.

In a brief filed on June 28, prosecutors argued that the presentence report should be allowed to reference a list of heinous crimes — such as rape, murder and child sex trafficking — which the defendants are not accused of and could never be accused of.

These subjects were largely excluded from the 2023 trial, and rightfully so. The prosecution’s introduction of prejudicial material during the first Backpage trial in 2021 led the judge at the time, Susan Brnovich, to declare a mistrial due to egregious misconduct on the part of prosecutors.

Lacey and five others, including his business partner Jim Larkin, faced a 100-count indictment involving money laundering, conspiracy and violations of the U.S. Travel Act, which outlaws the use of a tool of interstate commerce to facilitate a business enterprise engaged in certain illegal acts, such as violating state laws against prostitution.

Impoverished by the government’s seizure of nearly all his assets and driven to despair by a ruthless prosecution, Larkin killed himself before the start of the second trial in 2023.

In November, after eleven weeks of proceedings, the jury acquitted two defendants on all counts.

Lacey was convicted on one count of international concealment money laundering, which carries a maximum punishment of 20 years in prison. In spite of this, there was no “concealment.” Lacey’s attorney testified that he informed the IRS of the legal transfer as required by federal law. Notably, Lacey is not charged with tax-evasion.

The jury was hung on 84 counts regarding Lacey. Judge Humetewa later acquitted Lacey on 50 of those counts, leaving 34 remaining. Lacey’s other two co-defendants were found guilty on dozens of counts, some of which were tossed by Humetewa after the fact. All three men plan to appeal.

Shockingly, despite the hung counts, the prosecution wants Lacey sentenced as if he had been convicted of those counts.

The prosecution also wants to introduce victim statements during the sentencing hearing, though Lacey and the others are nonviolent white-collar defendants in their 70s who have never physically harmed anyone.

This gambit is particularly absurd in Lacey’s case. Who exactly would be a victim of “international concealment money laundering”? Literally, no one.

Such is the danger of the prosecution’s theory of the case, which seeks to hold operators of interactive websites vicariously responsible for illicit acts somehow linked to third-party user-generated content.

The broad application of this extra-legal rule would result in widespread self-censorship and the end of internet as we know it.

Tellingly, the prosecution’s brief cites Dominique Roe-Sepowitz, a professor of social work at Arizona State University, as an expert on prostitution and sex trafficking. Roe-Sepowitz’s research using Backpage has been criticized by sex worker rights activists and others as biased. Many of Roe-Sepowitz’s studies have been funded in whole or in part by ASU’s McCain Institute, the namesake nonprofit of Lacey and Larkin’s bitterest enemies, John and Cindy McCain.

“Riddled with Misstatements”

A brief filed on June 20 by Lacey’s attorney Paul Cambria details numerous defense objections to the presentence report, describing it as “riddled with misstatements of fact and half-truths” and presenting “an expansive, one-sided and materially inaccurate narrative of the conduct underlying the numerous unresolved charges.”

Some of the report’s inaccuracies involve such basic errors as misstating the counts of which one of Lacey’s co-defendants was convicted.

The 2011 certificate awarded to Backpage by FBI Director Robert Mueller

Others are more far-reaching, such as the contention that Lacey “oversaw” Backpage’s “policies and strategic direction.” According to the defense brief, the presentence report also asserts that Lacey was “aware most of the adult and escort ads” on Backpage “were ads for prostitution” and that he “took steps to intentionally facilitate that illegal activity.”

In fact, Lacey co-owned the holding company of which Backpage.com was once a part — the same holding company that once included the 17-newspaper chain Lacey was the executive editor of, Village Voice Media.

Lacey vociferously and publicly defended Backpage’s First Amendment right to publish, but he played no role in the operation of the website. This was acknowledged by the government’s star witness, Carl Ferrer, who testified that Lacey did not attend any of the company’s meetings, that Lacey was largely concerned with the editorial content of the newspaper chain, and that Lacey was “a layer apart” from Backpage’s administration.

As for the assumption that all of the adult-themed ads on Backpage were blatant offers of sex for money, this was belied by the government’s law-enforcement witnesses at trial, who testified that the content of the ads, on their face, did not give police probable cause to make a prostitution bust. If the cops couldn’t make such assumptions about the ads, why should Lacey or anyone involved in Backpage be held to a higher standard?

As Cambria’s brief points out, “Because no one could know, from the face of an ad, alone, the intent of the creator of the ad, Lacey, an individual who co-owned a company that owned Backpage cannot have knowledge of the illegality of any particular ad, among tens of millions of ads . . .”

Indeed, the jury did not convict Lacey on any of the 51 counts related to violations of the Travel Act. So, the assertion that he helped facilitate illegal activity in this regard runs contrary to the findings of the jury, which did not return verdicts on Lacey’s Travel Act counts. Under the law, Lacey, like all defendants, is presumed innocent until proven guilty.

Finally, Lacey and his co-defendants had every reason to believe that Backpage was operating legally. Not only were they advised time and again by their attorneys that Backpage was protected by the First Amendment and Section 230 of the Communications Decency Act, a series of decisions by federal district and appellate courts said as much.

And, as two secret DOJ memos observed, Backpage cooperated extensively with law enforcement, answering thousands of subpoenas in a timely manner and helping the police investigate sex trafficking and other violence against women and children. Backpage even earned a certificate of commendation in 2011 from FBI Director Robert Mueller.

Given this, why would the defendants believe that Backpage was doing anything wrong? Indeed, Backpage’s partnership with the authorities demonstrably made women and children safer, as is evidenced by a 2021 report by the U.S. Government Accountability Office.

What explains the apparent one-sidedness of the presentence report?

Cambria reveals that the presentence report itself acknowledges that its “narrative” came “directly from the prosecutors and case agents, who face no consequences for discussing the unresolved conduct, in stark contrast to Mr. Lacey, who must remain silent to preserve his defenses” due to the possibility of a third trial on the outstanding 34 counts on which the jury was hung.

Talk about a uniquely unjust situation. Hopefully, the Probation Office’s pending rewrite will address the reports’ obvious flaws.

Please also see:
Judge Acquits Journalist Michael Lacey on 50 of 84 Counts in Backpage Case
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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