Two former executives for the now-shuttered classified site Backpage.com are scheduled to be sentenced Tuesday in Phoenix for conspiring to facilitate prostitution by selling sex ads.
A prosecutor has recommended five years of probation and restitution payments for former CEO Carl Ferrer and sales director Dan Hyer, both of whom pleaded guilty to conspiracy in 2018. The prosecutor said both men acknowledged their crimes and cooperated with authorities by testifying against a company founder during the 2023 trial.
Backpage founder Michael Lacey was convicted of a single count of international concealment money laundering and sentenced to five years in prison and fined $3 million, though he remains free while he pursues an appeal. Chief financial officer John Brunst and executive vice president Scott Spear are each serving 10-year sentences for conspiracy and money laundering convictions.
Prosecutors had argued that Backpage’s operators ignored warnings to stop running prostitution ads, some involving children. The operators were accused of giving free ads to sex workers and cultivating arrangements with others who worked in the industry to get them to post ads with the company.
Backpage’s operators said they never allowed ads for sex and made an effort to try to delete such ads by assigning employees to remove them and creating automated tools. Their legal team maintained the content on the site was protected by the First Amendment.
In pleading guilty, Ferrer acknowledged knowing a majority of Backpage’s revenues came from escort ads, conspiring to sanitize ads by removing photos and words that were indicative of prostitution and publishing a revised version of the notices.
In sentencing memos, both the prosecutor and Ferrer’s attorneys say he helped shut down the site through his cooperation.
His lawyers say Ferrer provided evidence linking defendants to the criminal enterprise and testified that Backpage’s increase in revenue stemmed mostly from prostitution.
Hyer has previously participated in a scheme to give free ads to sex workers in a bid to draw them away from competitors and win over their future business.
His attorney said her client is sincerely remorseful for his actions and contributed directly to the convictions of other defendants.
Lacey’s first trial in 2021 ended in a mistrial when another judge concluded prosecutors had too many references to child sex trafficking in a case where no one faced such a charge.
Before launching Backpage, Lacey founded the Phoenix New Times weekly newspaper with James Larkin, who was charged in the case and died by suicide in 2023 just before the second trial against Backpage’s operators was scheduled to begin.
Lacey and Larkin held ownership interests in other weeklies such as The Village Voice and ultimately sold their newspapers in 2013. But they held onto Backpage, which authorities say generated $500 million in prostitution-related revenue from its inception in 2004 until 2018, when the government shut it down.
A U.S. Government Accountability Office report released in June 2021 said the FBI’s ability to identify victims and sex traffickers had decreased significantly after Backpage was seized by the government, because law enforcement was familiar with the site and Backpage was generally responsive to requests for information.
The application deadline for Fast Company’s Most Innovative Companies Awards is Friday, October 3, at 11:59 p.m. PT. Apply today.
