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ELIZABETH A. STRANGE 

First Assistant United States Attorney 

District of Arizona 

KEVIN M. RAPP (Ariz. Bar No. 14249, kevin.rapp@usdoj.gov) DOMINIC LANZA (Cal. Bar No. 225989, dominic.lanza@usdoj.gov) MARGARET PERLMETER (Ariz. Bar No. 024805, margaret.perlmeter@usdoj.gov) Assistant U.S. Attorneys 

40 N. Central Avenue, Suite 1800 

Phoenix, Arizona 85004-4408 

Telephone (602) 514-7500 

JOHN P. CRONAN 

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

REGINALD E. JONES (Miss. Bar No. 102806, reginald.jones4@usdoj.gov) Senior Trial Attorney, U.S. Department of Justice Child Exploitation and Obscenity Section 

950 Pennsylvania Ave N.W., Room 2116 

Washington, D.C. 20530 

Telephone (202) 616-2807 Attorneys for Plaintiff 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

United States of America, 

 Plaintiff, 

 v. 

1. Michael Lacey 

 Defendant. 

CR-18-00422-PHX-SPL (BSB) 

UNITED STATES’ REPLY IN 

SUPPORT OF MOTION FOR 

DETENTION PENDING THE 

IMPOSITION OF RELEASE 

CONDITIONS 

[Detention Hearing Set: April 11, 2018] 

The United States previously filed a motion explaining why defendant Michael 

Lacey (“Lacey”) is a flight risk, and potential danger to the community, and thus should 

not be released from custody unless and until stringent release conditions are imposed. See 

CR 13. In response, Lacey filed a pleading arguing that he should be released on his own 

recognizance with very modest conditions. See CR 23. Through this reply, the United 

States seeks to address Lacey’s arguments. 

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A. Nature And Circumstances Of Offense

The United States showed in its motion that Lacey faces the real possibility of 

spending the rest of his life in prison if convicted of all or even some of the 79 counts with 

which he is charged. See CR 13 at 4. In his response, Lacey does not dispute that the 

charges are very serious and carry a substantial potential punishment—instead, he focuses 

on the other § 3142(g) factors. 

B. Strength Of The Evidence

The United States argued in its motion that the strength-of-the-evidence factor 

supports a flight-risk determination because the grand jury has already returned an 

indictment, the indictment contains a detailed summary of some of the incriminating 

evidence against Lacey, and the United States Senate separately issued a 50-page report 

recognizing the criminal nature of Lacey’s contributions to Backpage. See CR 13 at 4-5. 

In response, Lacey argues that the strength-of-the-evidence factor favors him 

because the theory underlying the indictment in this case has “been repeatedly litigated, 

and in each case, rejected on First Amendment grounds.” See CR 23 at 3-4. See also id.

at 11-12 (“Courts have uniformly held that Backpage’s publishing and receiving payments 

for online ads is legal, such ads are constitutionally-protected speech, and the government 

cannot pursue criminal charges against a website operator based on accusations of 

generalized knowledge . . . .”). Lacey further asserts that he and Backpage have prevailed 

“without exception in every civil or criminal action in the past” (id. at 12) and that “no 

court, state or federal, has accepted the government’s asserted theory of criminality in this 

case” (id. at 14). 

Although a detention hearing is not the correct forum for addressing the ultimate 

merit of these arguments, the United States cannot help but point out that Lacey’s claims 

are factually inaccurate. First, Lacey is simply wrong in his claim that “no court” has ever 

accepted the theory that a website or website operator may be criminally prosecuted under 

federal law for knowingly facilitating prostitution. In United States v. Omuro, N.D. Cal. 

No. CR 14-CR-336, the founder of the website www.myRedBook.com was convicted of 

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violating 18 U.S.C. § 1952—the very crime charged in this case. In the factual basis of his 

plea agreement, Omuro admitted that “[t]he website hosted advertisements, the vast 

majority of which were posted by prostitutes containing their picture[s], and in most 

instances, the sexual services they offered, and their rates. . . . The website also allowed 

site users to submit, search, and read reviews of the services offered by particular 

prostitutes. . . . As such, the website promoted and facilitated the carrying on of prostitution 

throughout California, elsewhere in the United States, and Canada.” Similarly, in United 

States v. Hurant, E.D.N.Y No. CR 16-45, the founder of the website www.Rentboy.com

was convicted of violating 18 U.S.C. § 1952. In his sentencing memo, Hurant admitted he 

“was well aware . . . that the escort ads he posted . . . were thinly-veiled proposals of sexual 

services in exchange for money.”1

 And again, in 2012, the Department of Justice obtained 

the forfeiture of the website www.escorts.com based on similar conduct. See 

https://archives.fbi.gov/archives/philadelphia/press-releases/2012/internet-escortservices-firms-charged-with-money-laundering-sentenced-in-federal-court. 

The results in these cases are hardly surprising and easy to harmonize with the First 

Amendment. Long ago, the Supreme Court recognized that “[w]e have no doubt that a 

newspaper constitutionally could be forbidden to publish a want ad . . . soliciting 

prostitutes.” Pittsburgh Press Co. v. Human Relations Comm’n, 413 U.S. 376, 388 (1973). 

Put simply, the First Amendment does not protect speech promoting criminal conduct. See, 

e.g., United States v. Stevens, 559 U.S. 460, 468-69 (2010) (“From 1791 to the present, 

. . . the First Amendment has permitted restrictions upon the content of speech in a few 

limited areas, and has never include[d] a freedom to disregard these traditional limitations. 

 

1

 Hurant has other parallels to this case. In its Hurant sentencing memo, the 

government stated that although the Rentboy.com website “had disclaimers that claimed 

that the advertisements on the site were for companionship only and not for prostitution,” 

the company’s employees would often reject ads containing explicit offers of sex for 

money “but allow the ad to be resubmitted with different language. In many cases, 

Rentboy.com employees would just edit the advertisement’s language and approve it.” 

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These historic and traditional categories long familiar to the bar—including obscenity, 

defamation, fraud, incitement, and speech integral to criminal conduct—are well-defined 

and narrowly limited classes of speech, the prevention and punishment of which have never 

been thought to raise any Constitutional problem.”) (citations omitted); United States v. 

Meredith, 685 F.3d 814, 819-20 (9th Cir. 2012) (applying “the First Amendment exception 

that allows the government to regulate speech that is integral to criminal conduct”); United 

States v. Rahman, 189 F.3d 88, 116-17 (2d Cir. 1999) (“[F]reedom of speech . . . do[es] 

not extend so far as to bar prosecution of one who uses a public speech . . . to commit 

crimes.”). See also Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y., 447 

U.S. 557, 563-64 (1980) (“[T]here can be no constitutional objection [under the First 

Amendment] to the suppression of . . . commercial speech related to illegal activity.”). 

Second, Lacey is also wrong in his claim that he and Backpage have prevailed 

“without exception” in all previous civil and criminal cases brought against them. In 2015, 

the Washington Supreme Court denied Backpage’s and Lacey’s motion to dismiss a civil 

lawsuit brought by three minor girls who had been “bought and sold for sexual services 

online on Backpage.com.” See J.S. v. Village Voice Media Holdings, Inc., 359 P.3d 714, 

715-16 (Wash. 2015). The Court held that, because the plaintiffs had plausibly alleged that 

Backpage does “more than just provide a forum for illegal content” and affirmatively 

shapes the content of users’ ads through “posting rules [that are] ‘designed to help pimps 

develop advertisements that can evade the unwanted attention of law enforcement, while 

still conveying the illegal message,’” the plaintiffs should be permitted to conduct 

discovery “to ascertain whether in fact Backpage designed its posting rules to induce sex 

trafficking.” Id. at 718. Tellingly, in 2017, following extensive discovery, the trial judge 

in the J.S. case denied Backpage’s motion for summary judgment. See Exhibit A. 

Afterward, Backpage agreed to enter into a confidential settlement with the plaintiffs. It is 

difficult to understand how Lacey considers this case to be part of an uninterrupted string 

of victories. 

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A recent decision from the District of Massachusetts further belies Lacey’s 

representation that he has prevailed “without exception” in all previous Backpage-related 

cases. Less than two weeks ago—on March 29, 2018—the Hon. Leo Sorokin issued a fivepage order denying in part a motion to dismiss that Lacey had filed in a civil case brought 

by a different underage victim who had been trafficked via Backpage. See Jane Doe No. 

1 v. Backpage.com, LLC, 2018 WL 1542056 (D. Mass. 2018). The ruling explained that, 

because the plaintiff had made a plausible allegation that Backpage had “redrafted [her] 

advertisement . . . to suggest she was an adult,” the alleged conduct was not covered by the 

CDA’s grant of immunity. Id. at *1. Here, similarly, the indictment contains allegations 

that Backpage helped edit and redraft prostitution advertisements. 

Third, although it is true that Lacey and Backpage have prevailed in a number of 

prior cases that sought civil remedies or that turned on whether Backpage could be 

prosecuted under state criminal law (see CR 23 at 11-12), those cases are easily 

distinguishable. First, those cases are distinguishable for the obvious reason that the CDA 

provides a broad grant of immunity in such contexts. This, however, is a case brought 

under federal criminal law—a context in which the CDA has no application. See 47 U.S.C. 

§ 230(e)(1) (“Nothing in this section shall be construed to impair the enforcement of 

. . . [any] Federal criminal statute.”). Indeed, the successful prosecutions in the 

myRedBook.com, Rentboy.com, and escorts.com cases demonstrate that federal 

criminal liability may be imposed under these circumstances. Second, those cases are 

also distinguishable because, with one exception (People v. Ferrer), they were decided 

prior to the release of the PSI report in 2017. That report addressed documents and other 

evidence that were not available when the cited cases were decided. (So, too, did the grand 

jury investigation in this case.) 

Fourth, and finally, Lacey’s discussion of a 2013 ruling arising from a different 

grand jury investigation in the Western District of Washington (see CR 23 at 12) is 

particularly inappropriate. As an initial matter, the orders that Lacey has attached as 

Exhibits E and F to his pleading are, in fact, sealed orders that cannot be disclosed in this 

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fashion. Undersigned counsel has discussed this exact point with Lacey’s counsel in the 

past. Furthermore, Lacey’s counsel are aware of (and participated in) subsequent 

proceedings in which Lacey’s current arguments concerning the relevance of the Western 

District of Washington orders were rejected. 

C. Defendant’s History And Characteristics

The United States argued in its motion that, although certain aspects of Lacey’s 

history and characteristics are favorable to him, his extensive foreign assets, foreign travels, 

and efforts to hide multi-million dollar stashes of money overseas create a significant risk 

of flight. See CR 13 at 5-7. 

Lacey responds by identifying certain awards he received during his publishing 

career, discussing his wrongful arrest in a prior unrelated case, touting his charitable and 

philanthropic contributions, emphasizing his ties to the community, and noting that he has 

abided by his release conditions in the California case. He also argues, in reliance on 

United States v. Hoover, 2014 WL 2094201 (D. Ariz. 2014), that “the mere opportunity to 

flee is not enough to justify detention.” 

These arguments are unavailing. As an initial matter, Lacey fails to acknowledge 

that multiple recipients of his Backpage-derived contributions have refused to accept (or 

attempted to give away) his money after learning of its provenance. See, e.g., 

https://www.azcentral.com/story/news/politics/arizona/2017/04/18/rep-kyrsten-sinemasays-she-giving-away-backpage-owners-donations/100584648/. Additionally, the Hoover

case does not support Lacey’s position that he should be immediately released from 

custody without posting a significant bond. Indeed, the defendant in Hoover was similar 

in many respects to Lacey—Hoover was a “62-year-old U.S. citizen” with “no prior 

criminal history” who was “an experienced international traveler” and held extensive 

international assets. Id. at *3-4. These factors, along with others, led the magistrate judge 

in the Hoover case to conclude “there are no combination of release conditions that would 

reasonably assure that Hoover will appear at trial as required given his foreign connections 

to property and money; his international travel experience; his remarkable ability and 

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willingness to conceal money and property; [and other factors].” Id. at *12. Furthermore, 

although the district court in the Hoover case later authorized the defendant to be released 

with conditions, those conditions were similar to the conditions sought by the United States 

here (e.g., a large bond). 

D. Danger To The Community

In its motion, the United States argued that, because the Backpage website has 

contributed to massive victimization (i.e., danger to the community), the Court should 

impose a release condition precluding Lacey from making any future efforts to exert 

control over the website. See CR 13 at 7. In his response, Lacey argues that no such danger 

exists because he sold his interests in Backpage in 2015 and because the website is no 

longer in operation. See CR 23 at 2 (“[The government] claims Mr. Lacey represents a 

danger to the community because of his connection to a website which he sold in 2015 

. . . .”); CR 23 at 14 (“[T]he government has seized and shut down the website operated by 

Backpage. A fortiori, if he is released, he could not engage in the offense conduct for which 

he is accused.”) 

Notwithstanding the overheated rhetoric in Lacey’s pleading, the parties’ respective 

positions on the danger-to-the-community issue are actually quite similar. The United 

States simply wishes to ensure that Lacey does not make a future attempt to regain or exert 

control over Backpage. Lacey, meanwhile, appears to concede that he has no intention of 

doing so. Thus, the Court should impose the release condition the United States requested. 

E. Conclusion

For all of the foregoing reasons, the Court should not release Lacey without first 

imposing the stringent release conditions detailed in the United States’ motion, including 

the posting of a sizeable bond. 

Furthermore, should Lacey identify funds or assets that could be used to secure a 

suitably-large bond, the Court should conduct an inquiry into the source of those funds or 

assets. The Bail Reform Act codified a district court’s authority to conduct such an inquiry, 

which is often called a Nebbia hearing. 18 U.S.C. § 3142(g)(4) (“[T]he judicial officer 

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. . . shall upon the motion of the Government . . . conduct an inquiry into the source of the 

property to be designated for potential forfeiture or offered as collateral to secure a bond, 

and shall decline to accept the designation, or the use as collateral, of property that, because 

of its source, will not reasonably assure the appearance of the person as required.”). Here, 

Lacey should not be permitted to use the proceeds of the charged crime to secure his release 

pending trial. United States v. Sharma, 2012 WL 1902919, *4 (E.D. Mich. 2012) (holding 

that although “there is no iron-clad rule that a defendant must show that collateral to 

support pre-trial release was lawfully acquired,” “the legislative history of the [Bail 

Reform] Act makes clear that Congress believed, in most cases, the potential loss of the 

fruits of an alleged crime will not reasonably assure the appearance of the defendant at 

trial” and that “[a]bsent exceptional circumstances, bail funded in part from alleged 

criminal activity does not adequately assure the appearance of the defendant; instead, as 

the Senate Committee found, forfeiture of the proceeds of a crime is simply a business cost 

of avoiding prosecution, leaving the defendant no worse off than before he engaged in 

criminal activity, but far better off than if in prison”). 

Respectfully submitted this 10th day of April 2018. 

 ELIZABETH A. STRANGE 

 First Assistant United States Attorney 

 District of Arizona 

 JOHN P. CRONAN 

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

 /s Kevin Rapp

 KEVIN M. RAPP 

 DOMINIC LANZA 

 MARGARET PERLMETER 

 Assistant U.S. Attorneys 

 REGINALD E. JONES 

 Senior Trial Attorney 

 U.S. Department of Justice, Criminal Division 

 Child Exploitation and Obscenity Section 

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