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GARY M. RESTAINO

United States Attorney

District of Arizona

KEVIN M. RAPP (Ariz. Bar No. 014249, kevin.rapp@usdoj.gov) MARGARET PERLMETER (Ariz. Bar No. 024805, margaret.perlmeter@usdoj.gov) PETER S. KOZINETS (Ariz. Bar No. 019856, peter.kozinets@usdoj.gov) 

ANDREW C. STONE (Ariz. Bar No. 026543, andrew.stone@usdoj.gov) 

Assistant U.S. Attorneys 

40 N. Central Avenue, Suite 1800 

Phoenix, Arizona 85004-4408 

Telephone (602) 514-7500 

DAN G. BOYLE (N.Y. Bar No. 5216825, daniel.boyle2@usdoj.gov) Special Assistant U.S. Attorney 

312 N. Spring Street, Suite 1400 

Los Angeles, CA 90012 

Telephone (213) 894-2426 

NICOLE M. ARGENTIERI

Acting Assistant Attorney General Criminal Division, U.S. Department of Justice 

AUSTIN M. BERRY (Texas Bar No. 24062615, austin.berry2@usdoj.gov) 

U.S. Department of Justice 

Child Exploitation and Obscenity Section 

1301 New York Avenue, NW, 11th Floor 

Washington, D.C. 20005 

Telephone (202) 412-4136 

Attorneys for Plaintiff

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

United States of America, 

 Plaintiff, 

 v. 

Michael Lacey, et al., 

 Defendants. 

CR-18-422-PHX-DJH 

UNITED STATES’ RESPONSE TO 

DEFENDANT LACEY’S RULE 29 

MOTION CONCERNING COUNT 100 

(Doc. 2004) 

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SUMMARY OF ARGUMENT

Defendant Lacey’s Rule 29 Motion should be denied. Lacey’s Supplement to Rule 

29 Motion Concerning Count 100 (Doc. 2004 (“Supp.”)) does nothing to change that fact. 

To overturn the jury’s verdict, Lacey must overcome the steep hurdle of showing that the 

evidence—“‘view[ed] . . . in the light most favorable to the prosecution’”—could not have

allowed “‘any rational trier of fact’” to find that the ads proposed illegal transactions. 

United States v. Nevils, 598 F.3d 1158, 1163-64 (9th Cir. 2010) (en banc) (quoting Jackson 

v. Virginia, 443 U.S. 307, 319 (1979). Defendant fails to overcome this standard. 

The trial evidence, when viewed in the light most favorable to the United States, 

established Defendant’s guilt of international concealment money laundering for directing 

$16.5 million in Backpage revenue to be wired from Arizona to a bank account in Hungary 

to create a trust for the benefit of his two sons. Indeed, that wire to Hungary concluded a 

series of financial moves that resulted in the money being much more concealed than where 

it started—as Backpage revenue. The trial evidence establishes Defendant Lacey’s guilt 

for three reasons.

First, the trial evidence demonstrated Lacey’s intent behind the transfer of $16.5 

million to Hungary—to put assets somewhere that the government couldn’t access it. Ex. 

1. That’s clear both in an email Lacey sent on July 29, 2016 to his attorney (“i just want 

to put some assets in place where litigious parties, including government parties, can not

access my accounts”), along with his November 2016 meeting at Arizona Bank & Trust 

that Lin Howard recounted in her testimony. Ex. 1; 10/12/23 p.m. Tr. at 11:1-13.

Second, the $16.5 million transfer from Arizona to Hungary was “designed in whole 

or in part” to “conceal or disguise the nature, the location, the source, the ownership, or the 

control of the proceeds” of Lacey’s Backpage profits. 18 U.S.C. § 1956(a)(1)(B)(i). Here, 

there is ample evidence that the transaction was designed to conceal. For example, the 

Ninth Circuit has found that when evidence demonstrates “the charged money laundering 

transaction was the last in a series of transactions made to conceal,” it is sufficient to 

support a concealment money laundering conviction. United States v. Wilkes, 662 F.3d 

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524, 544-45 (9th Cir. 2011). 

Third, Lacey knew Backpage’s revenue was criminal proceeds. Lacey knew exactly 

how Backpage made its money—through promoting the business enterprises that posted 

millions of prostitution ads on their website. Defendant’s Rule 29 Motion should be 

denied.

I. Lacey Intended to Conceal the $16.5 Million

Concealment money laundering occurs when the transaction is “designed in whole 

or in part” to conceal or disguise. 18 U.S.C. § 1956(a)(1)(B)(i) (emphasis added). Courts 

within the Ninth Circuit have relied on this language in affirming § 1956(a)(1)(B)(i) 

convictions and denying Rule 29 motions. See United States v. Singh, 995 F.3d 1069, 1076 

(9th Cir. 2021) (“We conclude, for a host of reasons, that the transactions in question had 

(certainly in part) a concealment purpose.”); United States v. Abouammo, 2022 WL 

17584238, at *16 (N.D. Cal. Dec. 12, 2022) (denying a Rule 29 motion on concealment 

money laundering counts and noting that the “money laundering statute is violated if the 

transaction in question is ‘designed in whole or in part’” to conceal. 18 U.S.C. § 

1956(a)(1)(B)(i).”). Even if Defendant had some other purpose in mind—to transfer 

money to a bank that would not close the account, for example—the United States need 

only prove that the transaction was designed at least “in part” to conceal. The trial evidence 

far exceeded this standard.

Lacey stated his clear intent behind transferring the $16.5 million to Hungary. He 

did so in an email to his attorney and during a meeting with his bank’s Senior Vice 

President. It’s rare for a defendant to discuss his intentions with such clarity, but Lacey’s 

own words appear to have made the difference for the jury in finding him guilty of Count 

100 when they deadlocked on nearly every other charge against him. 

A. Trial Evidence Supports Lacey’s Intent to Conceal

Lacey’s meeting with Lin Howard, Senior Vice President and Senior Operations 

Manager at Arizona Bank & Trust, provided great insight into Lacey’s mental state before 

he wired the money overseas. 10/12/23 p.m. Tr. at 6:1-4. Howard testified that she met 

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with Defendant Lacey one time for 30-45 minutes in November 2016. 10/12/23 p.m. Tr. 

at 8:19-10:10. When asked how she could remember what occurred in a brief meeting that 

happened nearly seven years before, she testified, “Because at the start of the conversation 

there was a topic that was very unusual and something that I’d never been asked about 

before. So it definitely has stuck with me.” 10/12/23 p.m. Tr. at 10:18-20. Howard then 

recounted that meeting in this manner: 

So he started the conversation by asking us if we knew how assets were 

seized and how assets were protected. He further went on to state that he had 

an attorney named John Becker who had indicated that there were some 

places around the world -- and he mentioned the Cook Islands in which assets

were protected from seizure and then he also mentioned Nevis Island.

He continued on by saying that he wanted to make it clear that he wasn’t 

looking to avoid paying taxes, that he had a BDO he directed to make sure 

that all taxes were paid and no tax shelters were taken, but he was looking to 

see about moving a percentage of his assets offshore in order to protect them 

from government seizure.

10/12/23 p.m. Tr. at 11:1-13.

Howard also testified that during her over 25 years in banking she learned that Nevis 

Island and the Cook Islands had a reputation for being associated with tax shelters and 

money laundering transactions. 10/12/23 p.m. Tr. at 11:14-23; 12:7-15. Lacey’s 

statements “shocked” Howard—she’d never been asked these types of questions before 

during her long banking career. 10/12/23 p.m. Tr. at 13:18-25. 

After the meeting, Howard informed her boss—the bank’s president—about 

Lacey’s statements. 10/12/23 p.m. Tr. at 15:3-5. She did so because the conversation 

“shocked” her and she “never in my years in banking had anybody discuss anything like 

that with me. I was suspicious why it was being brought up and it made me very 

uncomfortable and I wanted to make sure my boss knew.” 10/12/23 P.M. Tr. at 15:6-11. 

Howard’s testimony is corroborated by an email Lacey sent to his attorney a few 

months prior. Ex. 1. In July 2016, Lacey wrote to his attorney John Becker: “i think i am 

ready to move forward with the visit to the Los Angeles lawyer you mentioned who has 

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expertise in off-shore.” Id. “[T]o revisit for just a moment, i am not interested in any tax 

avoidance, i just want to put some assets in place where litigious parties, including 

government parties, can not access my accounts.” Id. 

John Becker served as Michael Lacey’s estate planning attorney in 2016 and 2017.

10/24/23 p.m. Tr. at 66:11-67:6. Becker testified that Lacey wanted to transfer some of his 

money overseas. 10/24/23 p.m. Tr. at 114:11-13. Becker, at Lacey’s behest, transferred 

$16.5 million from Becker’s law firm’s trust (IOLTA) account to a bank in Hungary. 

10/24/23 p.m. Tr. at 114:14-25. Becker understood the money he wired to Hungary at

Lacey’s direction to have been earned from Backpage. 10/24/23 p.m. Tr. at 117:8-13. 

Becker also testified that in 30 years of practicing law, he had never wired millions of 

dollars from his IOLTA account to an overseas account. 10/24/23 p.m. Tr. at 115:6-116:7. 

The testimony by Lin Howard and John Becker corroborated Lacey’s own words in 

his email about why he wanted to send $16.5 million to Hungary—“to put some assets in 

place where litigious parties, including government parties, can not access my accounts.” 

Ex. 1. In other words, to conceal a portion of the money he earned from Backpage. 

B. The Transaction’s Purpose Was To Prevent the Government From 

Accessing Lacey’s Accounts

Lacey’s transfer to Hungary was the last in a series of transactions that had the effect 

of concealing the money from “government parties.” The money started as Backpage 

revenue and then moved through two different companies that weren’t named Backpage,

then to Lacey’s five grantor trusts, followed by passing through his attorney’s IOLTA

account, and finally, to a bank in Hungary to establish a trust with his two sons as the listed 

beneficiaries. Ex. 1479 at 34. The purpose of all these transfers was to conceal the fact 

that it was Backpage revenue.

In his Supplement, Defendant cites Cuellar as the best case in support of his Rule 

29 argument. Supp. at 2-3, 8, 13 (citing Cuellar v. United States, 553 U.S. 550 (2008). 

Cuellar, however, is inapposite. Cuellar involved a defendant attempting to drive from 

Texas to Mexico with $81,000 stashed in a secret compartment under the floorboard. Id.

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at 553-54. The money had been bundled in plastic bags and duct tape, and animal hair 

covered the bags. Id. at 554. The Cuellar Court overturned defendant’s conviction for 

international money laundering finding that “merely hiding funds during transportation is 

not sufficient to violate the statute, even if substantial efforts have been expended to 

conceal the money.” Id. at 563. The trial evidence in Cuellar demonstrated that the 

defendant’s purpose for transporting the money to Mexico “was to compensate the leaders 

of the [drug trafficking] operation.” Id. at 566. Accordingly, the Supreme Court held that 

the defendant’s transportation was not “designed in whole or in part to conceal or disguise 

the nature, the location, the source, the ownership, or the control of the proceeds.” Id. at 

568. 

These facts differ starkly from those presented at trial against Lacey. Lacey wasn’t 

secreting money in a car in an attempt to pay a co-conspirator; rather his international 

transaction involved months of planning with an objective to place it outside the reach of 

the government. The facts presented at trial are much more analogous to the Ninth Circuit’s 

decision in Wilkes. 662 F.3d at 544-45. 

 In Wilkes, the defendant was convicted of concealment money laundering for 

payments and gifts to a California congressman in exchange for government contracts. 662 

F.3d at 530-31. He transferred a $525,000 mortgage payment to the congressman in 

exchange for a contract; rather than transmitting the funds directly, Wilkes conducted a 

series of transfers, moving the money to bank accounts under different names. Id. The 

jury found that “the charged money laundering transaction was the last in a series of 

transactions made to conceal [the defendant’s] $525,000 payment to [the congressman] for 

securing government contracts for [the defendant].” Id. at 547. The Wilkes Court drew a 

distinction with the D.C. Circuit case cited by Lacey,1 stating that “[u]nlike in Adefehinti,

where defendants merely allocated the proceeds from a fraudulent sale of property through 

relatively straightforward transactions that ‘amount[ed] to no more than divvying up the 

1 Supp. at 3 (citing United States v. Adefehinti, 510 F.3d 319 (D.C. Cir. 2007)). 

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joint venture’s gains, albeit illegally obtained,’ Wilkes’s effort to disguise the source of the 

kickback to [the congressman] was an additional act that is separately punishable under 

§ 1956(a)(1)(B)(i).” Id. at 547 (citation omitted).

Here, the transactions leading to the $16.5 million wire to Hungary passed through 

many entities, trusts, and an attorney’s account, before finally landing in a bank account in 

Hungary. The jury interpreted these transactions as concealment, and for good reason—

the money that went to Hungary was much more concealed than if Lacey simply transferred 

Backpage revenue to a domestic bank account in his name.

First, the money that Lacey sent to Hungary started with Website Technologies. Ex. 

1479 at 34. The evidence at trial shows that Defendants created Website Technologies so 

they could open bank accounts under a different name other than “Backpage.” 9/21/23 

p.m. Tr. at 89:8-10. Carl Ferrer testified that money that flowed through Website 

Technologies derived primarily “from postings in the female escorts section” on 

Backpage.com and that Website Technologies and Backpage were “the same company.” 

9/21/23 p.m. Tr. at 90:16-22 & 11:23-12:4. Website Technologies was simply a “shell 

company” with a “very generic sounding” name that Defendants used to “open bank

accounts with.” 9/21/23 p.m. Tr. at 89:8-10; see also 9/20/23 p.m. Tr. at 28:19-26.

Defendants then worked hard to ensure that Website Technologies did not become 

affiliated with Backpage. 9/20/23 p.m. Tr. at 71:17-72:4 (“[Brunst] set up Website 

Technologies to handle payroll, 401(k) and to do leases so he wants to ensure that its 

reputation is protected, not affiliated with Backpage.”).

Second, after Website Technologies, the Backpage revenue that made up the $16.5 

million passed through Cereus Properties. Ex. 1479 at 34. Defendants Lacey, Brunst, and 

Spear (along with Jim Larkin) owned Cereus Properties. 9/21/23 p.m. Tr. at 90:23-25. 

Cereus Properties collected Backpage money Ferrer, as the nominal owner, owed to 

Defendants Lacey, Spear, and Brunst. 9/21/23 p.m. Tr. at 91:1-17. The source of the 

money that flowed from Website Technologies to Cereus Properties was the prostitution 

ads posted on Backpage. 9/21/23 p.m. Tr. at 91:16-17.

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Third, the money flowed through a series of transactions from Cereus Properties to 

five grantor trusts controlled by Lacey. Ex. 1479 at 34. The $16.5 million was then 

consolidated in Becker’s IOLTA account through five wires totaling $3.3 million each. Id.

Finally, Becker wired the money out of his IOLTA account to Primus Trust Company at 

K&H Bank in Hungary to establish a trust for Lacey’s sons.2 Id. 

These transactions were not “open and obvious” nor were they similar to stashing 

money in a car and driving it to Mexico to compensate a co-conspirator. Instead, like in 

Wilkes, “the jury apparently found that the charged money laundering transaction was the 

last in a series of transactions made to conceal” Lacey’s criminal proceeds. 662 F.3d at 

547. The additional out-of-circuit cases Lacey cites are readily distinguishable. The facts 

presented at trial do not involve simply converting criminal funds to liquid assets;3 using 

criminal proceeds to pay for a cabin;4 secreting money in a car to pay a debt;5 or 

transferring money from a business account to a personal account.6 Finally, Lacey’s stated 

intent to pay taxes on his taxable income and report the Hungarian bank account to the IRS 

2 Lacey’s argument that Becker testified the transaction was “absolutely legal” holds 

no weight, since Becker avowed that he knew nothing about Backpage’s business practices. 

Becker never once reviewed the Backpage website. 10/24/23 P.M. Tr. at 117:14-20. When 

asked if he ever viewed Backpage’s escort section, he responded emphatically, “Absolutely 

not.” 10/24/23 p.m. Tr. at 117:20. Becker instead, “read the New York Times, Wall Street 

Journal, Washington Post. . . . I don’t need to be spending my time reading Backpage.” 

10/24/23 p.m. Tr. at 117:22-24. Becker could not avow that the $16.5 million was not 

“proceeds of a violation or violations of the Travel Act” since he knew nothing about how 

his client earned this money. Doc. 1998 at 43.

3 United States v. McGahee, 257 F.3d 520, 527-28 (6th Cir. 2001) (no design to 

conceal when defendant simply withdrew funds from his account to convert to liquid 

assets).

4 United States v. Rockelman, 49 F.3d 418, 422 (8th Cir. 1995) (using criminal 

proceeds to pay for a cabin did not prove an intent to conceal).

5 United States v. Garcia, 587 F.3dd 509, 517-19 (2d Cir. 2009) (facts very similar 

to Cuellar, which involved transporting money to pay defendant’s debt to a drug dealer).

6 United States v. Blankenship, 382 F.3d 1110, 1128-29 (11th Cir. 2004) (no 

concealment money laundering when defendant simply moved money from his business 

account into his personal bank account). 

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does not overcome the evidence that he intended, at least in part, to conceal this money 

from the government. See infra II(B).

II. Trial Evidence Proved Concealment

A. Lacey’s Series of Transactions Demonstrated Concealment

Lacey’s argument that the trial evidence doesn’t support that his $16.5 million 

Hungarian transaction concealed, in part, “the nature, the location, the source, the 

ownership, or the control of funds” is wrong. First, Lacey relies on the fact that his 

transactions were purportedly “open and obvious.” Supp. at 6, 9. This argument doesn’t 

square with reality. Here’s how the money flowed from Backpage revenue to Lacey: 

1) Backpage.com revenue

↓

2) Website Technologies

↓

3) Cereus Properties

↓

4) Five Two-Year Annuity Trusts

↓

5) Becker & House PLLC IOLTA

↓

6) Primus Trust Company 

(Binghampton Trust—Lacey’s 

two sons were beneficiaries) at

K&H Bank, Hungary.7

Contrary to Defendant’s argument, these transactions were not “open and obvious.” 

Open and obvious would have involved Backpage revenue flowing into a bank account in 

the company’s name and then to Defendant Lacey’s personal bank account. Here, 

Defendant Lacey and his co-conspirators created brand-new companies for the Backpage 

money to flow through (Website Technologies and Cereus Properties) before Lacey sent it 

7 Ex. 1479; 10/17/23 a.m. Tr. at 29-31; 10/24/23 p.m. Tr. at 132:15-16. 

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to five separate trusts he controlled and then back through his attorney’s IOLTA account 

before finally sending it to Hungary to create a trust for the benefit of his two sons. 

Defendant’s international transaction caused the money to be more concealed than it had 

been before, which provides additional support for the jury’s verdict. See United States v. 

Johnson, 440 F.3d 1286, 1291 (11th Cir. 2006). 

Lacey cites the out-of-circuit Johnson case to support his argument. Supp. at 4. It 

doesn’t. Rather, the Johnson court details the “[e]vidence to consider in determining

whether a transaction was designed to conceal,” which includes: “statements by a 

defendant probative of intent to conceal . . . using third parties to conceal the real owner; 

[and] a series of unusual financial moves cumulating in the transaction.” 440 F.3d at 1291. 

Further, “[a]nother important consideration is whether ‘the money is better concealed or 

concealable after the transaction than before.’” Id. All this evidence was present in 

Lacey’s Hungarian transaction. 

Trial courts within the Ninth Circuit have denied Rule 29 motions in analogous 

factual situations. United States v. Chang, 2020 WL 5702131, at *8-9 (N.D. Cal. Sept. 24, 

2020); Abouammo, 2022 WL 17584238, at *16. In Chang, the defendant argued in a Rule 

29 motion that the jury’s verdict on concealment money laundering must be overturned 

because the transactions were “open,” “notorious,” “typical,” and “easy-to-follow.” 

Chang, 2020 WL 5702131, at *8. The court rejected this argument. 

But Defendant’s characterization of the transfers as “open,” “notorious,” 

“typical,” and “easy-to-follow” simply begs the question. At trial, the 

Government introduced evidence in support of its allegation that the transfers 

were made at least in part to conceal that money in HOC Associates, Inc.’s 

account . . . in order to use the money improperly on personal expenses. 

Although Defendant has posited innocent explanations for the transfers, it 

cannot be said that the jury’s findings of money laundering were 

unreasonable or devoid of factual support. 

Id.

 In Abouammo, the trial court found that a concealment purpose could be found in 

the defendant’s “choice to forego direct transfers from [foreign official] to [defendant’s] 

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Bank of America account, and instead set up a foreign bank account in his father’s name 

to facilitate indirect transfers.” 2022 WL 17584238, at *16. Based on this evidence, the 

court held, “it is entirely rational for a jury to find that the purpose of Defendant’s indirect 

transfers was to conceal that [foreign official] was the source of the funds.” Id. 

Importantly, the Abouammo court found that the more damning transactions were not 

actually the charged counts, but—consistent with Johnson—ruled that the entire context of 

the transactions should be considered. Id. (“True, the Government only charged the 

transfers from Defendant’s Bank Audi account to his Bank of America account and not the 

initial transfers from [foreign official], but the Court need not isolate charged transfers from 

their larger context.”) (citing Cuellar, 553 U.S. at 566 (stating that efforts to conceal funds 

in transport “may suggest that the transportation is only one step in a larger plan”).)

Lacey’s money flow to Hungary demonstrated not only “a series of unusual 

financial moves,” but also the “use of third parties to conceal the real owner.” In addition,

there’s no question this transaction satisfied Johnson’s “important consideration” that “the 

money is better concealed . . . after the transaction than before.” Johnson, 440 F.3d at 

1291. The money started as Backpage revenue and, after five transactions, it landed in a 

Hungarian bank as money in a trust with Lacey’s two sons as beneficiaries. 

Other Ninth Circuit cases support the notion that a transaction need not have been 

particularly complicated, or involve multiple steps, to support a concealment money 

laundering conviction. See, e.g., United States v. Twitchell, 69 F. App’x 892, 894 (9th Cir. 

2003) (“On one of the money laundering counts, the jury also found Twitchell guilty of 

concealing or disguising bank fraud, in violation of 18 U.S.C. § 1956(a)(1)(B)(i), by 

transferring money from his business account at the bank into private investment accounts 

at the brokerage house. A reasonable jury could have found that the deposits of proceeds 

from the bank fraud into brokerage accounts were made to disguise or conceal the 

proceeds.”); United States v. Sun, 673 F. App’x 729, 733 (9th Cir. 2016) (affirming a 

money laundering conviction where “[v]iewing the evidence in the light most favorable to 

the prosecution, a rational jury could find that Sun deposited the illegal cash proceeds from 

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his medical practice into his personal bank account, rather than his business account, with 

the purpose “to conceal or disguise the nature [or] . . . the source” of the proceeds.”); United

States v. Kellum, 119 F. App’x 32, 34 (9th Cir. 2004) (affirming concealment money 

laundering conviction where the defendant purchased a Wells Fargo cashier’s check with 

a manual check drawn on a Fidelity account; “[A] rational jury could find on the 

government’s evidence that by purchasing the Wells Fargo cashier’s check, Kellum helped 

to conceal the Fidelity account as the source of his fraudulently-obtained assets, making it 

harder for federal investigators to discover the existence of the Fidelity account.”); United

States v. Huy Chi Luong, 468 F. App’x 710, 712 (9th Cir. 2012) (“A rational jury could 

also conclude that Luong intended to conceal the source, ownership, or control of the 

$5,000 he paid toward the mortgage of a piece of real property. The government produced 

evidence that the actual owner of the house was Luong, not his parents, whose names were 

on the deed, as well as evidence that the money came from teller’s checks Luong had 

someone else purchase for him.”).

B. Filing An FBAR Did Not Immunize Lacey From Guilt

Lacey’s argument that his filing of a Report of Foreign Bank and Financial Accounts 

(FBAR)—18 months after sending the money to Hungary and four months after he was 

indicted in this matter—somehow reflects an intent not to conceal is wrong. Informing the 

United States, after the fact, that Lacey controlled a Hungarian bank account that had $16.5 

million as part of a trust for his sons’ benefit is not inconsistent with his stated intent to 

“mov[e] a percentage of his assets offshore in order to protect them from government 

seizure.” 10/12/23 p.m. Tr. at 11:1-13. 

The United States needed to prove the following three elements with respect to 

Count 100: (1) defendant Lacey transported money from a place in the United States to or 

through a place outside the United States; (2) defendant Lacey knew that the money 

represents the proceeds of a violation or violations of the Travel Act; and (3) defendant 

Lacey knew the transportation was designed in whole or in part to conceal or disguise the 

nature, location, source, ownership, or control of the proceeds of the Travel Act 

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violation(s). Doc. 1998 at 43. A rational juror could have easily found that Lacey’s stated 

intent of “plac[ing] assets in place where litigious parties, including government parties, 

can not access my accounts” overrides any subsequent tax filing. Ex. 1. 

This issue is amplified when the actual FBARs (Trial Exs. 5541, 5545, and 5546) 

are examined. The information included in these three tax forms is minimal. It only 

includes Lacey’s personal information and the information for the Hungarian Trust.8 Id. 

What these FBARs fail to report to the United States is the nature and source of the money. 

Nowhere in any of these filings does Lacey disclose to the United States that the money in 

his Hungarian trust emanated from Backpage revenue, i.e., “from postings in the female 

escorts section.” 9/21/23 p.m. Tr. at 90:16-22. That omission alone is sufficient for a 

rational juror to have found that Lacey engaged in concealment money laundering. 

This case is nothing like the Gotti case Lacey cites to bolster his argument. Supp. 

at 6 (citing United States v. Gotti, 457 F. Supp. 2d 411 (S.D.N.Y. 2006)). Defendant’s 

attempt to analogize the representations made by Gotti in his plea agreement to Lacey’s 

representations in the FBAR fails. The issue in Gotti was that the defendant entered into a 

plea agreement where he “admitted that [certain] properties were acquired through income 

obtained from racketeering activities, and the Government accepted a cash payment in lieu 

of forfeitures of those specific properties.” 457 F. Supp. 2d at 427-28. Accordingly, the 

court found that the “Government is now estopped from claiming that Gotti is laundering 

money by exploiting the very asset that it released to him in exchange for a cash payment. 

Furthermore it defies logic to allow a defendant to be charged with purchasing the same 

property twice—first with one source of funds and then with another.” Id. at 428. 

Contrast the facts in Gotti with Lacey’s three FBAR filings that only provided the 

foreign bank account information. Indeed, the United States could not utilize Lacey’s 

8 Lacey’s filings appear to satisfy the FBAR requirement, which is also minimal. 

According to the IRS website, “For each account you must report on an FBAR, you must 

keep records with this information: name on the account, account number, name and 

address of the foreign bank, type of account, and maximum value during the year.” 

https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank- and-financial-accounts-fbar (last visited Dec. 19, 2023). 

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FBAR filings to seize the assets as material information was missing. For example, there’s 

nothing in this filing that ties the money to Backpage. By eliminating the connection 

between the $16.5 million and Backpage, Lacey achieved his goal of concealing this money 

from government seizure. Based on the evidence, especially when viewed in the light most 

favorable to the United States, a rational juror could easily find Lacey committed 

concealment money laundering.

III. Lacey Had Knowledge that Hungarian Trust Funds Were Proceeds of Travel 

Act Violations

The second element of international concealment money laundering is that Lacey 

“knew that the money represents the proceeds of a violation or violations of the Travel 

Act.” Doc. 1998 at 43. The trial evidence is overwhelming that Lacey knew how Backpage 

earned its revenue—through prostitution advertisements.

A. The $16.5 Million Need Not Be Related to the Ads in the 50 Travel Act 

Counts

As an initial matter, the $16.5 million at issue in Count 100 need not have been 

derived from one of the 50 charged ads that constitute the substantive Travel Act counts in 

the Superseding Indictment. The jury simply needed to find that Lacey “knew” the money 

represented the proceeds of promotion of business enterprises involving prostitution 

offenses. Doc. 1998 at 24, 43. It is of no moment that the jury failed to find Lacey guilty 

of the substantive Travel Act counts. Any argument to the contrary is nonsensical. Doc. 

946 at 17; United States v. Lazarenko, 564 F.3d 1026, 1033–34 (9th Cir. 2009) 

(government need not allege all the elements of the specified unlawful activity when 

bringing money laundering charges); see also United States v. Golb, 69 F.3d 1417, 1429 

(9th Cir. 1995) (same); United States v. Yagman, 2007 WL 9724388, at *20 (C.D. Cal. 

May 3, 2007) (collecting cases); United States v. Cherry, 330 F.3d 658, 667 (4th Cir. 2003) 

(“It is clear that a defendant may be convicted of money laundering even if she is not a 

party to, much less convicted of, the specified unlawful activity.”); United States v. 

Richard, 234 F.3d 763, 766-69 (1st Cir. 2000) (money laundering conviction “does not 

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require proof that the defendant committed the specified predicate offense”); United States 

v. Martinelli, 454 F.3d 1300, 1312 (11th Cir. 2006) (“It is by now abundantly clear that in 

a money laundering case (or in a money laundering conspiracy case), the defendant need 

not actually commit the alleged specified unlawful activity.”); United States v. Awada, 425 

F.3d 522, 525 (8th Cir. 2005) (“[T]here is absolutely no requirement that a money 

laundering defendant also be involved in the underlying crime.”); United States v. 

Mankarious, 151 F.3d 694, 703 (7th Cir. 1998) (rejecting “the defendants’ argument that 

the district court’s dismissal of the mail fraud counts mandates the reversal of the money 

laundering convictions”); United States v. Kennedy, 64 F.3d 1465, 1479-80 (10th Cir. 

1995) (affirming money laundering convictions despite acquittal of specified unlawful 

activity).

B. Lacey Knew How Backpage Earned Its Revenue

Lacey’s knowledge about Backpage’s business practices were made readily 

apparent by the trial evidence. 

1. Lacey’s Own Words

Perhaps the best evidence supporting Lacey’s knowledge are his own words. In 

“Backpage.com Understood,” Lacey wrote in detail about Backpage’s business practices, 

adult advertising on Backpage and Craigslist, and why—in his view—Backpage’s 

existence was a positive for society: 

Less than a year ago, Craigslist announced it was discontinuing its adult 

advertising owing to pressure from the same activists who are now targeting 

Backpage.com.

Nearly all the media reports concerning Backpage have failed to note that 

Craigslist actually still does feature adult advertising. A quick perusal of the 

“casual encounters” section of the site reveals explicit sexual language and 

imagery, including full nudity, and in some cases, photos of graphic sex acts. 

Craigslist’s “therapeutic massage” category also features ads that clearly 

refer to prostitution, including posts from masseuses offering “outcall” 

services in local hotels.

. . . .

Still, thanks to the publicity surrounding Craigslist’s purported departure 

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from the market last year, Backpage was swamped with a huge influx of new 

adult advertising.

. . . .

Backpage is part of the solution. Eliminating our adult advertising will in no 

way eliminate or even reduce the incidence of prostitution in this country 

. . . . If anything, it will simply make it far more difficult for law enforcement 

to arrest and prosecute those who seek to harm children. 

For the very first time, the oldest profession in the world has transparency, 

record keeping and safeguards. Driving adult activity back into the shadows 

doesn’t end the activity, it ends the safeguards. 

Ex. 113a (emphasis in original). 

Lacey demonstrated his understanding about the types of ads Backpage published, 

understanding that ads that include “‘outcall’ services,” “clearly refer to prostitution.” Id. 

And that Backpage provided “transparency” for prostitution. Id. In 2012, Lacey made his 

general feelings about prostitution clear when he wrote that, “Jim [Larkin] and I believe in 

legalized prostitution.” Ex. 1911b.

2. CNN Exposé

In late 2010, Backpage learned CNN was planning an exposé. 9/14/23 a.m. Tr. at 

80:20-21. Backpage management watched and discussed the CNN report in early 2011. 

9/15/23 a.m. Tr. at 43:15-44:7. It showed CNN’s Amber Lyon posting an ad of herself on 

Backpage’s escorts section, using text from a Backpage ad selling a 12-year-old girl. Ex. 

1052b1. When Lyon posted, her phone “start[ed] ringing off the hook.” 9/15/23 a.m. Tr. at 

59:16-23. Lacey, Brunst, and Spear tried to stop CNN from rebroadcasting the story. 

9/15/23 a.m. Tr. at 60:10-62:13.

3. NCMEC Meeting

In addition to Lacey’s own words describing Backpage’s business practices and his 

acknowledgment that the company earned money through prostitution advertisements, in 

March 2011, he also attended a meeting at the National Center for Missing and Exploited 

Children (NCMEC). Ex. 651; 9/19/23 a.m. Tr. at 10:24-12:1; 10/18/23 p.m. Tr. at 28:2-

12. In the meeting, NCMEC’s CEO showed the Backpage attendees, including Lacey, ads 

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from their website and said, “Come on, these ads are prostitution.” 9/19/23 a.m. Tr. at 

12:20-21. Lacey then responded that NCMEC was engaged in “mission creep,” and it 

wasn’t their mandate to be involved with prostitution. 9/19/23 a.m. Tr. at 13:2-4. After 

NCMEC’s CEO and Lacey argued, NCMEC then presented a series of Backpage ads to 

Lacey that contained links to The Erotic Review embedded in them. 9/19/23 a.m. Tr. at 

16:1-21; Ex. 652a; 10/18/23 p.m. Tr. at 33:18-20 (“examples of connections between The 

Erotic Review and advertisements that were on Backpage”). At that meeting, NCMEC 

explained that the “connection should be severed between The Erotic Review and 

Backpage because individuals were very clearly outlining the [prostitution] activity that 

was occurring.” 10/18/23 p.m. Tr. at 36:15-18. Even if Lacey had plausible deniability 

about Backpage’s relationship with The Erotic Review before March 2011, he cannot claim 

it thereafter.

4. Auburn Theological Seminary Meeting

In December 2011, Lacey also met with representatives from the Auburn 

Theological Seminary. 10/11/23 p.m. Tr. at 58:8-59:23; 9/19/23 p.m. Tr. at 26:2-6. At that 

meeting, a representative from the seminary stated that prostitution on sites like Backpage 

led to child prostitution and “one child is too many.” 9/19/23 p.m. Tr. at 35:19-23. In 

response, Lacey stated “that’s not realistic policy; that’s a bumper sticker.” 9/19/23 p.m. 

Tr. at 36:1-2. Lacey also expressed frustration with the meeting, “[h]e didn’t understand 

why religious leaders would stick their noses in his – in Backpage’s business, and that he 

also said something to the effect of adults – consenting adults can do what consenting adults 

want to do. Why would you stop them.” 10/11/23 p.m. Tr. at 65:20-25. Isaac Luria, who 

attended the meeting, concluded that Lacey “believed prostitution was occurring on the 

website and that that was legitimate.” 10/11/23 p.m. Tr. at 67:21-22. 

5. Law Enforcement Subpoenas

During its 14-year existence, Backpage received thousands of prostitution 

investigation subpoenas. See, e.g., 9/13/23 a.m. Tr. at 62:16-25. In April 2010, Lacey 

inquired in an email “is there any evidence of child trafficking anywhere?,” Spear replied : 

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“We have had subpoenas that deal with this exact issue. . . . We get a ton of subpoenas that 

we comply with on a daily basis.” Ex. 804.

6. New York Times

In January 2012, Nicholas Kristof of the New York Times, published a column titled 

“How Pimps Use the Web to Sell Girls.” 9/19/23 p.m. Tr. at 44:8-14; Ex. 1200. Kristof 

wrote about how after Craigslist “backed out of the sector,” “[p]imps then moved to 

Backpage.com.” Ex. 1200. Lacey read the piece and responded, “we do how many million 

ad and he picks out one, tells us at end of day and wants our total response by am? [O]f 

course there are kids who get through system[,] as there are in bars.” Ex. 714a. 

These examples do not encompass the entire universe of evidence proving Lacey 

not only knew about how Backpage earned its criminal proceeds, but was an active 

participant in the criminal conspiracies. For the instant motion, however, it is sufficient 

that the evidence proved that Lacey knew how Backpage earned money; through 

promoting the businesses that paid for prostitution advertisements on their site. Defendants 

made numerous arguments about why Backpage did not engage in violations of the Travel 

Act, but the jury—at least with respect to Defendants Brunst and Spear—rejected those 

arguments. The jury carefully considered the evidence presented against Lacey too, 

finding him not guilty of Count 63, guilty of Count 100, and failing to reach a verdict on 

the remaining 82 counts. The jury’s careful consideration and work should not be 

overturned. The trial evidence proving Lacey guilty of Count 100 is ample, especially 

when considered under the liberal Jackson/Nevils standard.

CONCLUSION

Defendant Lacey’s Supplement to his Rule 29 Motion provides no further support 

for the underlying motion. The evidence at trial supports a rational juror finding that Lacey 

is guilty of Count 100. Lacey’s Rule 29 Motion should be denied. 

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Respectfully submitted this 22nd day of December, 2023.

 GARY M. RESTAINO United States Attorney District of Arizona

 NICOLE M. ARGENTIERI

Acting Assistant Attorney General Criminal Division, U.S. Department of Justice 

s/Andrew C. Stone 

KEVIN M. RAPP

MARGARET PERLMETER

PETER KOZINETS

ANDREW STONE

DANIEL BOYLE

 Assistant U.S. Attorneys 

 AUSTIN M. BERRY

Trial Attorney 

CERTIFICATE OF SERVICE

I hereby certify that on December 22, 2023, I electronically transmitted the attached 

document to the Clerk’s Office using the CM/ECF System for filing and transmittal of a 

Notice of Electronic Filing to the CM/ECF registrants who have entered their appearance 

as counsel of record.

s/ Daniel Parke 

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