UPDATE 11/21/24, NOON: The Appellate court today issued a ruling denying the motion in regards to Scott Spear and Jed Brunst, but granting it in regards to Lacey and remanding Lacey’s case back to federal Judge Diane Humetewa in Phoenix “for the limited purpose of establishing appropriate conditions of release.” About Lacey, the court writes:

“The district court found, and the government does not dispute, that Lacey is not likely to flee or to pose a danger to the safety of any other person or the community if released. Moreover, Lacey has shown that his appeal raises a ‘substantial question’ of law or fact that is ‘fairly debatable’ and that, if determined favorably to him, is likely to result in reversal on the single count of conviction. Lacey’s case is remanded to the district court for the limited purpose of establishing appropriate conditions of release for Lacey.”

Read the full ruling, here. More when I have it.

UPDATE 11/21/24, 2:45PM: Humetewa issued an order for Lacey’s release “subject to all prior release conditions” and a $1 million bond , which was the bond he was under before turning himself in on 9/11.

The following contains the analysis and opinions of the author and no one else. The author does not speak for the Backpage defendants.

Will the Backpage 3 be home for Christmas or will they continue to be imprisoned for the duration of their appeals, a process that could take 2 to 3 years?

That’s the question currently before the Ninth U.S. Circuit Court of Appeals, where attorneys for Michael Lacey, the former executive editor of Village Voice Media, and two VVM executives, Scott Spear and Jed Brunst, have asked the court to order all three men out on bond pending appeal.

Lacey, 76, is serving a five-year term on one count of international concealment money laundering. Brunst, 72, and Spear, 74, are each serving 10-year sentences for various counts involving conspiracy, money-laundering, and violations of the U.S. Travel Act, which makes it illegal to use a means of interstate commerce to facilitate a business enterprise in breaking state laws against prostitution.

Lacey, Brunst and Spear surrendered themselves to federal custody on Sept. 11. The three men were initially housed in a private prison in Florence, Ariz., run by Core Civic, formerly known as Corrections Corporation of America.  The trio have since been moved and are now in various facilities operated by the U.S. Bureau of Prisons.

Both Spear and Lacey have had health scares while behind bars. Core Civic denied Spear essential medications, with dire consequences. The current state of his health is unknown.

According to a recent filing in federal court, Lacey “suffered a cardiac event” while at Core Civic that resulted in him “falling, hitting his head, and breaking his glasses.” He was rushed to a hospital until his heart stabilized.

These health emergencies illustrate that prison is not a good place for three nonviolent septuagenarians with health issues. Various academic studies have found that incarceration shortens the life of the incarcerated. One study showed that for every year in prison an inmate loses two years of life expectancy.

None of the Backpage 3 have prior criminal histories. Nor have they ever been accused of physically harming anyone. Before presenting themselves to the U.S. Marshal’s Office, they obeyed all of the conditions of their release, never missing a court date.

At their sentencing on Aug. 28, federal judge Diane Humetewa noted that the three men were not a flight risk and posed no danger to the public. She also found that their appeals were not frivolous or intended to cause a delay in their imprisonment.

Both Humetewa and the prosecution previously stated in court — on more than one occasion — that there would be “serious” issues on appeal possibly resulting in the convictions being overturned or remanded back to court for a new trial. But the judge changed course at the sentencing.

She said that, in terms of the law, a substantial issue would be one that was “fairly debatable or fairly doubtful,” but, when it came to the verdicts of all three men, she did not find a “fairly debatable question” on appeal.

Subsequent to their imprisonment, defense attorneys for the Backpage 3 have asked the Ninth Circuit to reverse Humetewa’s decision, arguing that there were a number of serious issues on appeal, issues of “first impression” involving the First Amendment and other federal laws.

As of Nov. 5, the motion was fully briefed before the Ninth Circuit, which is expected to render a decision by the end of the year.

To say the stakes are sky high is an understatement. If the Ninth rules against them, the Backpage 3 could die in prison before their appeals play out.

The First Amendment

Lacey’s conviction for international concealment money-laundering is perplexing to say the least. The jury deadlocked on 84 other counts against Lacey, and found Lacey not guilty on one money laundering count.

Humetewa later tossed 50 counts against Lacey, leaving 34 still pending, on which the government could retry him. Prosecutors have signaled that they will await the outcome of the appeals before deciding whether to retry Lacey.

The one conviction against Lacey relates to his transfer of money, in a trust for his sons, to a bank in Hungary. But as a recent filing at the Ninth on Lacey’s behalf shows, there is “no support in the record” for the conviction.

There was no “concealment,” no laundering of funds. The 2017 transfer, which was arranged by lawyers for Lacey, was done in Lacey’s name and done legally, with Lacey’s attorneys filing the proper paperwork with the IRS, a Report of Foreign Bank and Financial Accounts, or FBAR.

Lacey paid taxes on the monies, so the government knew the source of the funds: the 2015 sale of Backpage to the government’s star witness, Carl Ferrer. Post-trial, Humetewa ruled that the “conspiracy” the defendants were accused of ended with the sale of Backpage.

So how could the funds be illicit? The government never traced any of the money transferred overseas to any of the ads mentioned in the indictment or any ads that ever appeared on Backpage.

As Lacey’s attorneys point out to the Ninth, the jury apparently followed the government’s flawed logic regarding the at issue:

“At trial, the government presented several dozen adult entertainment ads and established that, after Backpage published those facially lawful ads, the advertisers engaged in illegal prostitution. But the millions of other adult ads Backpage published were not admitted into evidence or shown to the jury. No competent evidence established [that] those ads proposed illegal transactions (and therefore were unprotected by the First Amendment) or [that] those ads resulted in prostitution offenses (versus the activities [of] proposed dating, massage, stripping, escorting, or BDSM all of which Judge Posner recognized as lawful in Backpage v. Dart . . . Nonetheless, the government told the jury it could conclude all Backpage adult ads were associated with unlawful activity.” (bold in original; link added)

This gets to one of the main issues on appeal, the government’s massive First Amendment violation in assuming that the publication of ads proposing facially lawful transactions would be unprotected if the ads were later discovered to be associated with unlawful activity.

A reply brief filed with the Ninth on behalf of Spear and Brunst takes up the First Amendment arguments in full, and since I’ve gone over these before in other posts, I won’t belabor them here. But the Brunst/Spear reply quotes case law from the Ninth Circuit that all speech and press “are presumptively protected by the First Amendment” and that “the burden rests on the Government” to show otherwise.

The government was only able to make a link between some illegal acts and some Backpage ads after the fact. As several police officers testified at trial, they could not make a prostitution arrest based on the vague language and sometimes risqué photographs in the ads. Perhaps an ad was enough to arouse suspicion. But it did not give them probable cause to haul someone in on charges of soliciting or prostitution.

If there are plausible ways to complete a proposed transaction lawfully, argues the defense, then the speech involved is protected commercial speech. Certainly, that was the case with the adult-themed ads on Backpage, which were facially legal.

All of this is borne out by several federal and state court decisions in Backpage’s favor, ruling that the First Amendment and Section 230 protected Backpage’s right to publish.  These decisions go to the state of mind of the defendants, who had every reason to believe they were complying with the law.

This is another area that offers a “fairly debatable” issue on appeal. The government got to argue that the Backpage defendants were “on notice” from various politicians and activists that there were illegal transactions resulting from ads on Backpage.

But the defendants were precluded from presenting evidence that they had a good faith belief that Backpage was operating legally, despite any such notice, based in part on the aforementioned court rulings.

Indeed, as Lacey’s attorneys attest, the record from the trial is “chock full” of debatable issues, which the defense has laid out for the Ninth Circuit at length.

We can only pray that the deciding panel agrees and frees the Backpage 3 for the duration of the appeal.

Please also see:
Within the Barred Bunker: Michael Lacey Writes from Prison
and
The #Backpage3 Ask 9th Circuit for Release on Bail Pending Appeal