Michael Lacey, a co-founder of the popular classified website Backpage.com, has been sentenced to five years in prison for money laundering. The case involves allegations of a long-running scheme to promote and profit from prostitution through classified advertisements.
Last year, Lacey, aged 76, was convicted of international concealment money laundering but the jury could not reach a verdict on 84 other charges related to prostitution facilitation and money laundering. Despite being acquitted of some charges due to insufficient evidence, Lacey still faces around 30 counts of prostitution facilitation and money laundering.
It is reported that Backpage.com generated approximately $500 million in revenue related to prostitution from the time it started in 2004 until it was closed down by the government in 2018. Lacey’s legal team argues that he was mainly focused on running an alternative newspaper chain and was not actively involved in managing Backpage on a daily basis.
Two other executives from Backpage, CFO John Brunst and EVP Scott Spear, were also convicted last year and each received a 10-year prison sentence on Wednesday. Prosecutors claim that the defendants were primarily driven by greed, promoted prostitution while posing as a legitimate classified business, and provided misleading information to anti-trafficking organizations and law enforcement.
Lacey allegedly used cryptocurrency and wired money to foreign bank accounts to launder profits from the website’s advertising sales after banks raised concerns about potential illicit activities. It is also accused that Backpage employees would identify prostitutes through Google searches and offer them free advertisements in an effort to attract their business.
In a separate case, the marketing director of the site pleaded guilty to conspiring to facilitate prostitution and admitted to providing complimentary ads to prostitutes to gain their patronage. The former CEO of Backpage, Carl Ferrer, pleaded guilty to federal conspiracy charges in Arizona and state money laundering charges in California after the government shut down the site.
Despite efforts by the site to moderate content, prosecutors claim that these actions were aimed at masking the true nature of the advertisements. While Lacey and his co-founder James Larkin sold their shares in Backpage in 2015, prosecutors argue that the duo maintained control over the operations of the website.