$215 Million Backpage Settlement For Sex Trafficking Survivors

LOS ANGELES – The Justice Department today filed a settlement agreement reached between the parties in the civil forfeiture case involving Backpage.com, a now-shuttered internet forum for prostitution ads that included ads depicting sex work of children, in which $215 million in assets traceable to Backpage’s profits, and previously seized by the government from Backpage and its agents, will be forfeited to the United States.

The forfeited assets – comprised of cash, cryptocurrency, and one parcel of real estate in San Francisco – will be available for a remission process to compensate victims of the crime. Details about the remission process will be announced at a later date. The forfeiture represents more than 80% of the value of the property seized or restrained in the case.

“This settlement agreement marks a significant milestone in a criminal case involving the sexual exploitation and trafficking of countless women and children,” said United States Attorney Martin Estrada. “The nine-figure dollar amount forfeited in this case will allow for victims to recover and show that individuals who profit from such exploitation and trafficking risk both prison time and financial ruin.”

For most of its 14-year existence, Backpage dominated the online market for illegal sex work advertising in the United States. While Backpage offered many categories of advertisements, in most years, more than 90% of Backpage’s revenue and activity occurred in the adult-related ad sections. Backpage monetized these advertisements by allowing a variety of pay-for options such as posting ads across multiple geographic areas and increased ad promotion. The company’s CEO eventually admitted that most of the website’s adult ads were for prostitution.

In April 2018, several Backpage-related corporate entities, including Backpage LLC, pleaded guilty in Arizona federal court to conspiracy to engage in money laundering. Several Backpage owners and executives also have been convicted in this matter, including Michael Lacey, 76, of Paradise Valley, Arizona, was sentenced to five years in prison; Scott Spear, 74, of Phoenix, was sentenced to 10 years in prison; and John “Jed” Brunst, 72, of Phoenix, was sentenced to 10 years in prison. Lacey is free on bail pending appeal.

According to court documents and evidence presented at trial, from September 2010 until its seizure by the United States in April 2018, Backpage was the internet’s leading forum for prostitution ads. The conspirators knowingly promoted prostitution via various marketing strategies. For example, they engaged in a reciprocal link program with an independent web forum that permitted “johns” to post reviews of prostitution acts with specific women. Additionally, the conspirators used an automated filter and human moderators to remove terms known to indicate sex-for-money, while still allowing the ads to be posted. Through this attempt to sanitize the ads, the conspirators sought “plausible deniability” for what the conspirators knew to be ads promoting prostitution. Over the life of the conspiracy, the conspirators earned more than $500 million. To preserve the money earned, Lacey, Spear, and Brunst laundered the money through numerous shell companies they created in multiple foreign countries.

The United States Postal Inspection Service, the FBI, and IRS Criminal Investigation investigated this matter. The United States Attorney’s Office for the District of Arizona, which prosecuted the underlying criminal cases, provided substantial assistance.

Assistant United States Attorney Jonathan S. Galatzan of the Asset Forfeiture and Recovery Section is prosecuting this case.

The case name and number in this matter are United States of America v. $1,546,076.35 In Bank Funds Seized from Republic Bank of Arizona Account 1889, et al., CV 18-08420 (C.D. Calif.).

Ciaran McEvoy
Public Information Officer
ciaran.mcevoy@usdoj.gov
(213) 894-4465

More information is available on the Central District of California U.S. Attorney’s Office website.

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