Backpage.com co-founder released on $1 million bond in prostitution case

[April 14, 2018]  By David Schwartz

PHOENIX (Reuters) - A co-founder of now-shuttered Backpage.com charged with helping mastermind a scheme to use the website to sell sex was freed from an Arizona jail on Friday after posting a $1 million bond secured by real estate.

Michael Lacey, who has pleaded not guilty to state and federal charges stemming from a wide-ranging investigation into the site, was ordered by a U.S. magistrate judge to wear an electronic monitoring bracelet and disclose all his foreign and domestic financial assets.

Lacey wore black-and-white striped jail garb and stood calmly before the judge answering questions about the terms of his conditions.

He declined to speak with reporters as he left the federal courthouse in Phoenix about three hours later, holding hands with his wife and dressed in street clothes.

"I am pleased he is going to be released, so he can set about defending his case," his attorney, Janey Cook, told reporters after the hearing.

Lacey's release came one day after prosecutors announced that the website's chief executive, Carl Ferrer, 57, had pleaded guilty to conspiracy and money-laundering charges in both Sacramento County Superior Court and U.S. District Court in Arizona under deals with state and federal prosecutors that call for him to serve five years in prison.

As part of his agreements with the U.S. Department of Justice and prosecutors from California and Texas, Ferrer agreed to cooperate in the criminal case against Lacey and his Backpage co-founder, James Larkin.

Larkin, who has also pleaded not guilty, is scheduled for a detention hearing on Monday.

The 93-count federal indictment accuses Ferrer, Lacey and Larkin of knowingly facilitating prostitution on the website.

Also charged in the case are Backpage.com Executive Vice President Scott Spear, Chief Financial Officer John "Jed" Brunst, Sales and Marketing Director Dan Hyer, Operations Manager Andrew Padilla and Assistant Operations Manager Joye Vaught.

An image of the current home page of the website backpage.com shows logos of U.S. law enforcement agencies after they seized the sex marketplace site April 6, 2018. backpage.com via REUTERS

Prosecutors say the website has generated some $500 million in prostitution-related revenue since its launch in 2004 and has laundered the funds by routing them through seemingly unrelated entities, using foreign accounts and converting it into and out of cryptocurrencies.
 

Backpage.com was used primarily to sell sex and was the second-largest classified ad service in the United States after Craigslist. The online resource and its affiliated websites were seized last week by U.S. federal law enforcement authorities and taken off the internet.

Ferrer agreed to permanently shut the website as part of his plea deal.

(Reporting by David Schwartz in Phoenix; Writing by Gina Cherelus in New York and Dan Whitcomb in Los Angeles; Editing by Dan Grebler and Richard Chang)

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