Backpage.com co-founder released on $1 million bond in prostitution case

PHOENIX (Reuters) - Backpage.com’s co-founder was released on Friday on a $1 million bond secured by real estate in Phoenix after pleading not guilty to state and federal charges stemming from a broad investigation of the sex ad website.

Michael Lacey, whom prosecutors called the mastermind behind the operation, will also wear an electronic monitoring bracelet and disclose all his foreign and domestic financial assets, Magistrate Judge Bridget Bade at the U.S. District Court in Arizona ordered.

Lacey, 69, wore black-and-white jail stripes and stood calmly before the judge answering questions about the terms of his conditions.

“I am pleased he is going to be released, so he can set about defending his case,” Lacey’s attorney Janey Cook said in an interview after the hearing.

Several Backpage.com employees were charged in a 93-count indictment unsealed on Monday that accused them of knowingly facilitating prostitution. Lacey personally faces 79 criminal counts.

Prosecutors have accused the website of generating $500 million in prostitution-related revenue since launching in 2004, in addition to money-laundering by routing funds through seemingly unrelated entities, using foreign accounts and converting it into and out of cryptocurrencies.

Backpage.com was used primarily to sell sex and was the second-largest classified ad service in the United States after Craigslist. The online resource and its affiliated websites were seized last week by U.S. federal law enforcement authorities and taken off the internet.

Lacey’s release came a day after the website’s chief executive, Carl Ferrer, 57, entered guilty pleas to conspiracy and money-laundering charges in both Sacramento County Superior Court and U.S. District Court in Arizona under agreements with state and federal prosecutors that call for him to serve five years in prison.

As part of his agreements with the U.S. Department of Justice and with prosecutors from California and Texas, Ferrer agreed to cooperate in the criminal case against Backpage.com co-founders Lacey and James Larkin, who also pleaded not guilty and has a detention hearing scheduled on Monday.

Also charged in the indictment were Backpage.com Executive Vice President Scott Spear, Chief Financial Officer John “Jed” Brunst, Sales and Marketing Director Dan Hyer, Operations Manager Andrew Padilla and Assistant Operations Manager Joye Vaught.