Eighty-six counts of criminal activity—that's what veteran journalist and publisher Michael Lacey faced in the federal case against him, a saga kicked off by federal agents raiding his house and shutting down a website he co-founded in 2004, Backpage. A saga that has stretched on for more than five years, through multiple judges, one mistrial, and the death of Lacey's longtime business partner James Larkin. A case premised on a moral panic that previewed tactics threatening to all sorts of speech.
One count of international concealment money laundering—that's the only charge of which a jury found Lacey guilty. Lacey's offense? Moving money from a U.S. bank to a Hungarian bank in 2017.
Transferring money between bank accounts doesn't seem like it should be a crime. Then again, neither does most of the underlying activity in this case—consensual hookups between adults; providing a platform for sex-worker speech; letting people pay for services with bitcoin, and so on.
The Department of Justice claimed this was about "keeping women and children across America safe" from sex trafficking. But behind that bravado, the government's actual case was clearly something less noble. A performance of protection. A publicity stunt. A massive scapegoating set against the backdrop of a moral panic. And a politicized prosecution against people who engaged in and defended the most dangerous thing to any government: free speech.
Ultimately, the Backpage prosecution was a small-scale tragedy that upended individual lives as well as something much bigger. Its effects were wide-reaching and devastating for many sex workers. And yet—it wasn't ultimately about sexual commerce or sexual crimes, not at its core. This was a warning shot fired at entities that enable all sorts of digital communication and a test bed for further legal attacks on tech companies that won't suppress speech as politicians see fit.
That Lacey was convicted of "international concealment money laundering" is bizarre, since the money transfer was not concealed: His lawyer informed the IRS about it, as required by law. And it was not made for nefarious purposes, according to Scottsdale lawyer John Becker's trial testimony. Lacey had needed some place to park his savings after U.S. banks, scared by a years-long propaganda crusade against Backpage, had decided doing business with the company or its associates was a reputational risk. So Becker and another lawyer advised Lacey to deposit the money—$17 million, on which taxes had been paid—with a foreign bank.
It's hard to see how Lacey conducted a financial transaction "to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity," even if you accept the government's premise that this money was derived from unlawful activity. And, to be clear, I don't accept that premise, since Backpage's business should have been protected by the First Amendment (not to mention Section 230 of federal communications law).
But Backpage made money from adult ads, and the government alleges that some of those ads were illegal enticements to prostitution. Therefore, the case alleged, anything done with money made from Backpage was de facto illegal. That's how Lacey—and former Backpage executives Jed Brunst and Scott Spear—wound up facing money laundering charges for merely moving money around.
That jurors could only agree to convict Lacey on one out of 86 counts highlights the fundamental bankruptcy of the state's case.
And yet—Lacey, age 75, could still spend the rest of his life in prison on this one count, which carries a possible sentence of up to 20 years in prison.
Meanwhile, the verdict, handed down in mid-November, still leaves Lacey in limbo, too. While jurors found Lacey not guilty on one count of international promotion of money laundering, they were hung on the more than 80 other counts, leading Judge Diane Humetewa to declare a mistrial on those. That means federal prosecutors could still try again—a third time, that is.
The most recent trial was their second attempt. Back in 2021, Judge Susan Brnovich declared the first trial a mistrial because prosecutors and their witnesses wouldn't stop smearing the defendants as human traffickers and child predators, even though none of them faced charges involving children or trafficking.
Lacey, Larkin, Spear, Brunst, and the two other Backpage defendants on trial—operations manager Andrew Padilla and assistant operations manager Joye Vaught—were accused of a conspiracy to facilitate prostitution and various acts in furtherance of this alleged conspiracy.
Backpage officially banned ads for illegal activity, including ads promising sex in exchange for money. But the feds argued that some such ads got through anyway, and many others were simply coded offers for commercial sex. The Backpage defendants countered that many forms of sex work are legal (as are ads promising or seeking casual sex). Backpage simply provided a forum for advertising these legal activities, and doing so was protected by both the First Amendment and Section 230, which shields web platforms from liability for content created by their users and for content moderation. If people ultimately engaged in illegal activity after posting or responding to Backpage ads, that was on them.
The jury disagreed in part. Spear was found guilty of 17 counts of facilitating prostitution, and he and Brunst were both convicted of multiple counts of money laundering and conspiracy crimes.
However, the jury acquitted Padilla and Vaught of all charges.
"My client should have never been in this case," Vaught's attorney, Joy Bertrand, said. "She was charged and pressured to cooperate and assist the government, and she had the courage to say no."
Indeed, it seems likely the feds charged Vaught and Padilla in an attempt to get them to turn on Lacey and Larkin. It was Lacey and Larkin—along with CEO Carl Ferrer, who did turn state's evidence in exchange for a plea deal—who launched Backpage, profited most from it, and had the most control, at least in the beginning.
It was also Lacey and Larkin who spent decades as journalists and publishers exposing government corruption and opposing everything from the Vietnam War to abortion bans, tough immigration policies, and abuses of police power. And it was Lacey and Larkin who had been fighting government incursions on free speech in court case after court case.
Lacey and Larkin suggested all along that their prosecution was personal, accusing power players like the late Sen. John McCain and his wife Cindy of trying to get revenge for all the times their papers had exposed unflattering facts about them and their associates.
But the case has always been deeply political as well, designed to test the limits of Section 230 and free speech online generally.
Backpage was a test case, chosen because its affiliation with sex workers made it an easy target (a lot of folks are willing to ignore injustice if they think it only affects the wrong kind of people). If the government could get away with doing it to Backpage—that is, demanding control over what sorts of speech the platform allowed, punishing leaders and staff for failing to submit, and using the whole thing as a rallying cry to wrest more regulatory control of online content—they could move on to attacking bigger and more widely-used platforms. And that's exactly what they've done in recent years, going after Twitter, Facebook, and other big tech companies—not to mention "the internet's First Amendment," Section 230, more broadly—using the playbook they perfected with Backpage.
Moral panic about sex trafficking is the underlying current that made all of this possible.
The first two decades of this century have been awash in (unfounded) fear about an alleged epidemic of women and children being forced into sexual slavery—a narrative pushed by people wishing to conflate all sex work with sex trafficking. Activists looking to drum up support for this narrative often zeroed in on escort ads (once easily viewable by anyone who visited the likes of Craigslist, Backpage, or countless other platforms) as "proof" that 21st-century America was awash in what they termed modern slavery. For politicians looking to get some good publicity, attacking these platforms was an easy path.
Meanwhile, political actors of all sorts seized on sex trafficking to push pet schemes, including crackdowns on consensual sexual activity and increasing surveillance of immigrants, online speech, and more. Much like with the war on drugs—which was becoming less and less potent as a ploy for expansions of government power—they seized on this zeitgeist-y boogeyman and used it to expand policing funding, surveillance state powers, and other measures of control. And much of the media, along with others who often style themselves as defenders of free speech, bought—and spread—the government's propaganda, or at least declined to speak against it.
The government tried to confuse the public about the Backpage case from the beginning, shouting about sex trafficking whenever possible and crowing about how Backpage's shutdown was a boon for victims. But law enforcement has said otherwise, both in public and in private, and both before and after the site's seizure. Backpage helped police locate victims and prosecutors build cases against perpetrators, and Backpage executives and staff were cooperative in these efforts. Federal prosecutors themselves admitted it in private memos.
In fact, the FBI told auditors with the Government Accountability Office that since the site's shutdown, stopping sex trafficking has become more difficult.
Countless sex workers have talked about how their work has become less safe since Backpage and similar sites were taken down by the feds. And countless others—sex workers and not—have seen an erosion of their right to free speech online, and not just about commercial sexual activity.
That's the sad legacy of this prosecution: less accountability for sex traffickers, less safety for people in the sex trade, less free speech online for everybody—and a legal playbook for the government to follow for further invasions of Americans' speech and privacy rights.
And to achieve this outcome, law enforcement officials ran roughshod over myriad individual lives. The Backpage defendants had their assets seized, their reputations smeared, and years of their lives stolen, all so the government could further its sex trafficking charade.
Lacey, Brunst, and Spear may spend the rest of their lives in prison. Larkin took his own life last summer, just before the trial started. It's impossible to say why with certainty, but it was also clear to everyone who knew him that the prosecution had severely beaten him down.
"If the government decides to point its finger at you, there's really no question that they're going to try to ruin you," and "given the system and the way it's set up" they have a good chance of succeeding, Larkin told me last spring. By this point, several of the defendants had to get public defenders as they could no longer afford to pay private lawyers. Much of Lacey's and Larkin's assets had been seized, including money they made long before Backpage, and years of fighting these charges without access to that money was taking a toll. "They're going to litigate us until we're dry as beef jerky," Lacey said then.
Backpage surely won't be the last website targeted for allowing speech that the government deems undesirable. And what its case shows is how powerful the law enforcement apparatus can be, and how little the protections supposedly afforded by the law and the constitution matter when agents of the state decide to make an example out of you.
The government will always have more resources—more money, more time, more allies, more influence, more power. Up against that sort of rights-trampling leviathan, what are little things like truth, rights, or justice?
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