Prostitution Site, ‘Backpage’, Owners Sentenced for Website Activities and Money Laundering

In a significant legal conclusion to one of the most notorious cases of online exploitation, a federal judge in Phoenix sentenced the three owners of ‘Backpage’, a widely criticized prostitution website, for their involvement in promoting prostitution and money laundering activities. The sentences mark a pivotal moment in the fight against online platforms that enable human trafficking and exploitation.

Michael Lacey, 76, of Paradise Valley, Arizona, was sentenced to five years in prison and three years of supervised release. Scott Spear, 73, and John “Jed” Brunst, 72, both of Phoenix, received 10-year sentences, also with three years of supervised release. All three defendants have been ordered to surrender to the U.S. Marshals Service by September 11.

“The defendants and their conspirators obtained more than $500 million from operating an online forum that facilitated the sexual exploitation of countless victims,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “The defendants thought they could hide their illicit proceeds by laundering the funds through shell companies in foreign countries. But they were wrong.”

Backpage, once the leading platform for prostitution ads, operated from September 2010 until its seizure by the U.S. government in April 2018. During the trial, it was revealed that Lacey, Spear, and Brunst, as owners of ‘Backpage’, knowingly promoted prostitution through various tactics. They engaged in a reciprocal link program with another website that allowed users to post reviews of prostitution services. The trio also utilized filters and human moderators to remove explicit language indicative of sex-for-money transactions, aiming to create plausible deniability while still profiting from the ads.

Despite these efforts to sanitize the site, their operations were clearly aimed at promoting prostitution. Over the span of their conspiracy, the owners amassed more than $500 million, which they then laundered through a complex web of shell companies across multiple foreign countries.

“These convictions hold accountable three C-Suite executives who controlled an enterprise and its illicit profits,” stated U.S. Attorney Gary Restaino for the District of Arizona. “The courage of the victims of Backpage’s criminal activities is vindicated by the sentences imposed by the Court.”

The recent sentences are the latest in a string of convictions related to Backpage. In 2018, co-founder and CEO Carl Ferrer pleaded guilty to conspiracy to facilitate prostitution and money laundering, and Dan Hyer, the Sales & Marketing Director, also pleaded guilty to facilitating prostitution. Several corporate entities connected to ‘Backpage’ have also pleaded guilty to money laundering charges. Co-conspirator James Larkin, another key figure in the company, passed away in July 2023 before standing trial.

The case has been prosecuted by the U.S. Attorney’s Office for the District of Arizona and supported by the Justice Department’s Criminal Division, with significant assistance from the FBI, IRS Criminal Investigation, U.S. Postal Inspection Service, and state attorney general offices in California and Texas.