Revolution’s End

Tom ZoellnerJanuary 8, 2024
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Valley journalism mogul Michael Lacey spent his life hitting back at the big guys. Then he became one.

Photo Composite by Mirelle Inglefield
Photo Composite by Mirelle Inglefield

Not many people can point to bonding themselves out of jail as a moral high point. But that’s what happened when Michael Lacey, the former owner and executive editor of Phoenix New Times, walked out of the Maricopa County Jail at 4 a.m. one night back
in 2007.

He had angered Sheriff Joe Arpaio with a story about questionable real estate deals, and his arrest was on the flimsiest charges imaginable: disclosing grand jury subpoenas that didn’t even exist.

“We’re being arrested for raising hell,” Lacey told a group of reporters. “It’s sort of a tradition journalism has.”

For those who knew him, this moment was quelle Lacey, the flamboyant publisher who made defiance of authority his personal brand, if not a keynote for life itself. All the way through, he talked about the First Amendment and free speech as zealously as a preacher cites 1 Corinthians.

That jubilant middle finger he gave to the establishment brought him power and money. But the same impulse, years later, has now put the 75-year-old Lacey into a legal predicament that could dog him for the rest of his life. In November, a federal jury convicted him on one count of felony money laundering for moving assets to a Hungarian bank  that he earned from his now-defunct commerce site Backpage, which made hundreds of millions of dollars through sex ads after its founding in 2004. He now awaits sentencing and could face up to 20 years in federal prison.

The six-year legal soap opera stemmed from what Lacey and five co-defendants, including longtime publishing partner Jim Larkin, knew and claimed not to know about what was happening at Backpage.com, the company he created to compete with Craigslist and other online ad boards and later carved off from his chain of alternative weekly newspapers. Lacey escaped 85 other charges, many of them more criminally serious, including facilitating prostitution. The acquittals were characterized by some as an exoneration – but his legacy in Arizona, particularly in the industry he helped shape, remains a matter of fraught debate.

Lacey and his publishing partners never shied from unsavory ads at the New Times, particularly in the early days of its founding. “He was of the opinion that journalism should take people down – the powerful and the corrupt,” said one of his most vocal defenders, former New Times columnist Stephen Lemons. “They were always shooting up, not shooting down. He wanted scalps. Blood in, blood out. But he needed a way to fund that.”

Though Backpage was no longer supporting journalism of any kind when Lacey and his co-defendants were indicted – at that point, it was merely a lucrative ad board – the ideology of free speech was the crux of his legal defense. Backpage was, he wrote in a statement, “nothing but speech – advertisements for jobs, car sales and apartment rentals as well as for dating, escorts and massage. All of which are presumptively protected by the First Amendment.” 

This was a classic anti-authoritarian view. And laying within it was a key trait about Lacey and the New Times’ ethos that readers and critics often misunderstood: It was not a one-note liberal rag that went after Arpaio and John McCain on merely ideological grounds. Lacey mistrusted authority of every flavor and took a Hemingway-like pride in bagging the biggest lions, regardless of political party. “Desert libertarianism on the rocks,” is how rival publisher Bruce B. Brugmann of the San Francisco Bay Guardian once summed it up.

The man with a strangely delicate last name was born in 1948 in upstate New York, the son of an Irish American Merchant Marine sailor turned union enforcer, who had the eight-letter maritime slogan “Hold Fast” tattooed on his knuckles – an affectation the son would later adopt for himself. He graduated high school in Newark, New Jersey, learning to shield a love of books behind a dock brawler’s exterior. His dad had given him something else, a piece of advice he often quoted. “Whenever someone pokes a finger in your chest, you grab that finger, and you break it off at the knuckle.” His father and mother would later die of carbon monoxide poisoning in a trailer in Oswego, New York, an event the son would describe to an interviewer as “a murder-suicide. They were drunk and she turned on the gas.”

In the late 1960s, Lacey joined the wave of East Coast anti-war students who migrated to Barry Goldwater’s Arizona to attend college in Tempe. After taking a single journalism class at Arizona State University and becoming incensed at the governor’s refusal to fly the American flag at half-staff for the four students killed by Ohio National Guardsmen at Kent State University, he found a way to merge the literary and bellicose sides of his personality through the founding of a counterculture newspaper in the style of the Berkeley Barb, Harry, The Great Speckled Bird and others popping up in plywood drop boxes around the country in the early 1970s.

Many of these nascent independent weeklies withered and died like old houseplants. But thanks to Lacey’s tank-like determination – he sold his own blood at one point to keep the money coming – the New Times evolved into a regular irritant to Arizona’s power class, publishing an exposé on a governor’s DUI and information on where women could get an abortion in San Diego when it was still illegal in Arizona before the 1973 Roe v. Wade decision.

Lacey partnered with a fellow scrapper named Jim Larkin, who started managing the business side in 1972 and helped him grow a rebranded Phoenix New Times. Eventually enough money came in for them to buy up some of the struggling weeklies of their generation in other cities – Denver, Houston, Miami, among others – and recast them in the same mold as Lacey’s Phoenix flagship, with movie reviews, club listings and sharp commentary.

Critics called them cookie-cutter papers that looked and read the same, and the only thing different about them was the names of the restaurants and local villains they profiled. But New Times put a premium on smashmouth cover stories, bringing in columnists with moxie like the Chicago bulldog Tom Fitzpatrick, and letting them write long and strong. And he was no doughnut-eater lounging behind a desk – his own cover stories sang beautifully. “Our papers have butt-violated every goddamn politician who ever came down the pike,” Lacey told an interviewer. He paid his staffers well and fiercely protected them against backlash. When he swaggered into the newsroom, everyone was aware of it. “I remember every piece of writing advice he ever gave me because it was delivered in a very loud voice,” recalls one of his reporters.

New Times, Inc. would eventually bring in more than 3,800 national and regional awards for its coverage. But just as important as the edgy cover stories, if not more so, was the content found in the back of the book: raunchy classified ads from nude clubs, head shops and massage parlors who could not do business with the straitlaced daily newspapers. They brought in as much as $2,500 a page in those pre-Internet days and became the backbone of the independent-weekly revenue model.

In the Lacey and Larkin cover story in the December 1990 issue of PHOENIX, they were declared the “presslords of America.”; Photos Courtesy PHOENIX magazine Archives
In the Lacey and Larkin cover story in the December 1990 issue of PHOENIX, they were declared the “presslords of America.”; Photos Courtesy PHOENIX magazine Archives
https://www.phoenixmag.com/wp-content/uploads/2024/01/PHM0224LACEY03.jpg

The money flowed in. Lacey bought a yellow Mustang, a house in Paradise Valley and another in Sedona. Never prone to moderation, he began to spend more for a bottle of premium scotch than the monthly rent on some Valley apartments. Larkin acquired a Napa County vineyard. Their detractors may have thought they were Marxists, but few revolutionaries appeared to enjoy the fruits of capitalism more. After he started wearing white linen suits and taking frequent trips to L.A., staffers nicknamed him “Malibu Mike.”

In 2004, they purchased the most storied weeklies in the country, The Village Voice, LA Weekly, The Nashville Scene and several other associated properties to create, in their own estimate, a revenue machine of $180 million a year. When Lacey arrived in Manhattan to introduce himself to the skeptical Noo Yawkers at the Voice, he called himself “this year’s Visigoth, the new asshole in charge,” the epitome of the ancient political aphorism that it is better to be feared than loved.

His mustachioed hippie persona cultivated at Arizona State University had aged into the look of a hardboiled correctional officer. If you clapped him on the back, said a friend, you encountered a wall of iron-like muscle. When he turned on the charm, you felt it hit you like a blast of summer heat. But he was selective with his generosities, and even when the top-shelf booze flowed freely, there was never any doubt as to the identity of the Big Boss. To paraphrase one ex-employee who spoke off the record: He didn’t have friends so much as an entourage.

One measure of Lacey’s reach: In assigning this article, PHOENIX magazine editors found it difficult to find a seasoned freelance writer in the Valley who had not worked full-time for Lacey or at some point drawn a paycheck from the New Times, making a disinterested voice on his myriad controversies hard to find. This includes editor Craig Outhier, who wrote music items for the paper in the late 2000s. (Full disclosure: I’ve freelanced several stories for New Times over the years. Lacey also married a former girlfriend of mine a year after we broke up, but it was not acrimonious.) Several former staffers were reluctant to speak on the record, citing mixed feelings about Lacey’s legacy and that of New Times.

A few of them also accepted and cashed the surprise $5,000 checks that Lacey issued to dozens of former employees in various cities in 2016, shortly before Backpage CEO Carl Ferrer was arrested in Texas and it became obvious that Lacey and the rest of the Backpage leadership were in the crosshairs of the law. Dispensed via a legal proxy and offered without strings, the check payments were possibly part of a strategy to preemptively disqualify potential witnesses and testimony, some ex-staffers speculated.

Most of Lacey’s ex-employees seem to have struggled with the same internal reckoning: New Times and Backpage sex ads had paid for some important journalism. But what was the cost? And who was hurt by it behind closed doors?

Still, it was hard to deny Lacey had instincts for picking the right battles. And in 2007, one of his many antagonists back in Arizona gave him a gift – that gift of being conspicuously arrested in front of his Paradise Valley house and turned into a First Amendment martyr outside the jail at 4 a.m.

The famously heavy-handed lawman of Maricopa County, Sheriff Joe Arpaio, had grown tired of reading negative stories about himself in New Times, including a probe into some of his land holdings around Fountain Hills. In the course of that story, the paper had matter-of-factly published his home address – not exactly a state secret – but it provided a wedge for Arpaio allies in the county attorney’s office. They leaked a rumor that a grand jury was going to subpoena not just the notes of New Times journalist John Dougherty, who wrote the story, but the browsing data on anyone who had visited the newspaper’s website. It is a misdemeanor to publicly reveal the existence of such an order before it is served, but Lacey was undaunted, blowing the whistle on the subpoena with a story titled “Breathtaking Abuse of the Constitution.”

That turned out to be a self-fulfilling prophecy. Detectives from Arpaio’s shadowy “Threat Assessment Squad” arrested Lacey after midnight at his Paradise Valley mansion and took him to a holding cell before he was released. Then came a surprise: The subpoenas were a lie from the start. A county prosecutor had been bluffing. Lacey and Larkin sued and won $3.75 million, which they donated to a fund for Latino victims of the sheriff’s immigration policies.

Lacey and Larkin could afford to be generous. Though ad revenue from their print publications was diminishing, they had pivoted to digital with Backpage. According to testimony in the federal trial, Larkin was the first in the company to sense the existential threat posed by the Internet, dispatching an operative to Northern California to study Craigslist and create an analogue.

When Craigslist shut down its erotic services ads in 2010, Lacey and Larkin inherited a virtual fleshpot monopoly. The content that had previously been shoved to the rear of the publication now became top of the agenda. When the pair decided to divest themselves of Village Voice Media two years later, they held onto Backpage, which ultimately amassed revenue in excess of $500 million before its shuttering.

They framed the sale in characteristically pugnacious terms. It was no retreat into sleaze merchandizing, but a grand battle “over the First Amendment, free speech on the Internet and Backpage.” But were there peddlers of child pornography and trafficked victims hiding within all the ads for hot-oil massages and fetish partners? The site used internal protocols to flag troubling words like “Lolita” and “fresh,” signaling children for sale to those who knew the lingo. “For the very first time, the oldest profession in the world has transparency, record-keeping and safeguards,” Lacey wrote.

But it was not good enough for a few U.S. Senate Republicans, who subpoenaed more than 1 million emails and commissioned a 2017 report titled “Backpage.com’s Knowing Facilitation of Online Sex Trafficking,” alleging the protective controls were merely a ruse for encouraging pimps to use different and more creative euphemisms to describe their intended felonies. Lacey always thought that the hidden source of the Senate’s ire was John McCain, a frequent subject of unflattering coverage in New Times, as was his wife, Cindy.

At 9 a.m. on April 6, 2018, armed law enforcement once again showed up at Lacey’s Paradise Valley home to arrest him, just hours before a party to celebrate his recent marriage. But this time, the charges of facilitating prostitution held far more gravity than those accrued in his fight against Arpaio. FBI agents handcuffed him and seized cash, computers and his wife’s wedding ring – assets with a potential link to the Backpage profit stream.

A long legal odyssey lay ahead. Lacey and Larkin hired top lawyers Paul Cambria and Thomas Bienert to throw obstacles in the way. The pandemic intervened. Then Judge Susan Brnovich declared a mistrial in 2021 after she ruled prosecutors had consistently violated her order to not make inflammatory allusions to child sex-trafficking that appealed to jurors’ emotions. Determined prosecutors only refiled.

Lacey held firm. Even if sex crime flourished in his classifieds, his lawyers argued, federal law had no prohibition against prostitution. They also pointed to a 2021 report from the Government Accountability Office that found the end of Backpage had made sex crimes even harder to discover and prosecute because “the market became fragmented.”

Theoretically, Lacey had an even more powerful amulet in his pocket: Section 230 of the Communications Decency Act. “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider,” goes the key sentence, sometimes called “the 26 words that created the Internet.” Others have called it the “First Amendment of the Internet.” Cited and endorsed by such social media giants as Facebook, X (formerly Twitter) and Google, it holds – in its most liberal interpretation – that a website may legally host the most offensive and illegal content imaginable, as long as a third party uploaded it and the website in question didn’t create it.

But the Section 230 argument didn’t hold much sway in court. Judge Diane Humetewa barred mention of it. “We’d go down a rabbit hole of irrelevant testimony that would lead to confusion,” she explained.

Still ahead lies sentencing for the money laundering count, a possible appeal and the question mark as to whether prosecutors will refile any of the 84 charges on which the jury could not agree.

Wealth and notoriety aside, Lacey is just as much a product of his era as anyone – and that era, for better or worse, was already dying by the time his case went to trial. The New Times unquestionably enriched the civic life of Phoenix over the course of more than five decades, exposing its wrongdoing and highlighting its excellent aspects. But it has since withered to a husk, a victim of the Internet and changing reading habits.

The question of his legacy is a bit more complicated for those who admired him. Unarguably, many in the journalism and legal worlds are sympathetic. Last summer, about two months before his sentence was handed down, 42 of his most prominent ex-editors and -writers, along with local figures in law and politics, issued a joint statement decrying his treatment at the hands of federal prosecutors. “We believe Lacey is the target of a vindictive prosecution, resulting from his 40-plus years as a muckraking journalist,” the statement read, characterizing it as “un-American and unconscionable” that someone could be “[prosecuted] for third-party speech simply because the authorities find that speech unacceptable.”

Lacey’s attorneys did not respond to a request to make their client available for an interview. But his friend and longtime employee Lemons views the last stand at Backpage in idealistic terms and has vociferously protested the verdict on his site Front Page Confidential. “The thing that’s really going on is rebellion,” he wrote of Lacey and Larkin. “They’re children of the Sixties. And the power they’re defying now is the federal government.”

To others, Lacey’s story has the ring of a tragic American archetype: the hippie genius who went corporate, got rich and sold out, his romanticism curdled into rank capitalism. Another way of saying it is that the back pages rose up and took over the front pages.

Still others see a deeper dynamic in his lifelong First Amendment warriorship: a preternatural urge to stir up trouble, wherever he could find it. “He was blinded by the fight,” says Lisa Davis, one of his former editors, who now works as a journalism professor at Santa Clara University. “He was always successful in playing the underdog, kicking the big guy in the shins. At some point, he became the big guy. And I’m sure that was difficult for him.”

 

An earlier online version of this story incorrectly identified former New Times reporter Ray Stern as the author of the story that resulted in Michael Lacey’s arrest by Maricopa County Sheriff Joe Arpaio.