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Mike Lacey, Backpage.com, and the mystery of the $5,000 checks

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Mike Lacey exists in the abstract, more myth than man, for a lot of the employees who worked for him.

By the mid-2000s, Lacey was at the helm of a minor publishing empire under the umbrella of Village Voice Media, a chain of alternative weekly newspapers that included the iconic New York paper, the LA Weekly, City Pages, Phoenix New Times -- the brash publication Lacey himself founded in 1970 -- and a dozen weeklies in cities across the country.

Lacey didn't often drop in on the editors and writers in these far-flung cities, preferring to dispatch other managers. What little his writers in places like Minneapolis or Miami knew came through stories that cycled down the corporate chain.

Lacey was demanding. He had a volatile temper. He made enemies and was fiercely loyal to the people he liked. He drank.

There was also the on-the-record proof of Lacey's legend: Often enough, he or one of his newspapers printed an unforgettable story with characters that burst off the page and plot twists no one could have predicted. These stories changed lives, cities, and occasionally landed the people at the center of them in front of a judge.

Lacey split from his role in the newspaper business back in 2012, but he's still involved in one of those stories. He is its main character.

In 2007, Mike Lacey was arrested for his alleged role disrupting a federal grand jury. He and business partner Jim Larkin later won a $3.75 million settlement for false arrest.

In 2007, Mike Lacey was arrested for his alleged role disrupting a federal grand jury. He and business partner Jim Larkin later won a $3.75 million settlement for false arrest.

One former City Pages employee hadn't given Lacey a thought for years, until September 6, when an email arrived from Becker & House, an Arizona law firm that specializes in estate and tax law. The email explained that the firm's client, Michael Lacey, was trying to "develop a database of former employees of the New Times and/or Village Voice Media for communication purposes."

What kind of purposes, asked the ex-employee? The vague reply: Lacey wanted to send a "personal note," rather than an email.

The former employee complied. A couple weeks later an envelope arrived in the mail. Inside was a $5,000 check. An accompanying note said its recipient was a "beneficiary of a gift" from Lacey, "as a small token of his appreciation." It was the first communication this person had ever received from Lacey.

This same experience has been occurring throughout the fall to former Village Voice Media employees. None can explain why their ex-boss, a man a lot of them had never met, would want to give them $5,000.

Another former City Pages staffer also received an email in early September, and figured the whole thing was something to do with a lawsuit involving Lacey and his business partner, Jim Larkin, whose businesses were frequent targets of civil claims. Then the envelope arrived.

"It was pretty much the last thing I expected to get in the mail," the ex-employee says. "I wrote back to the lawyer, and to the woman from the law firm who'd sent the original email, and I said, 'As a journalist, I have to ask, is there something I should know before I cash this?' And the attorney responded right away, and said something like, 'No. It's simply a gift from a kind man.''

The employee deposited the check, but decided not to spend any of it. Not yet. It was too strange.

Reporters are professional gossips, and the story of Mike Lacey's mystery checks swirled in email chains and Facebook groups. No one knew what was up.

City Pages reached out to Lacey on September 29, asking if he would do an interview to explain what's going on. He has yet to respond, nor has anyone from the law office that's been mailing the checks.

Last week, California Attorney General Kamala Harris announced the filing of felony charges against Lacey and Larkin, who are accused of conspiracy to commit pimping; a third man, Carl Ferrer, was apprehended in Houston, Texas, and hit with felony charges of pimping a minor, pimping, and conspiracy to commit pimping.

The charges stemmed from the trio's involvement in Backpage.com, a website that's known as something of a Craigslist for sex workers. (The real Craigslist formerly listed "adult" services, but stopped when authorities came after it.) Some of those sex workers claim Backpage lets them work safely, discreetly, allowing them to avoid pimps. 

Harris and other prosecutors have said a high percentage of the prostitutes found on Backpage.com are underage. In her claim against them, she says Lacey and Larkin (who she claims are controlling shareholders of Backpage) and Ferrer (its CEO) are merely doing a favor for the men who pimp these victims of sex trafficking.

Backpage had formerly been a part of the New Times/Voice Media empire, a separately operated entity that its journalists were aware of, and often wary of, but took no part in. In 2012, the company split in two, cleaving its clean (if struggling) newspaper business from the controversial personal ad site. Lacey and Larkin kept Backpage.com, getting out of the newspaper business.

At the time of Harris' announcement of charges, Lacey and Larkin were still at large. They submitted to arrest this morning. They face up to six years in prison, if convicted; Ferrer, who has a more hands-on role running the site, is looking at up to 22.

A statement issued on behalf of Backpage, Ferrer, Lacey, and Larkin says their prosecution is "an election year stunt" -- Harris, a Democrat, is running for a U.S. Senate seat in California -- and said the company would fight the "frivolous" case on First Amendment grounds, "as it has done successfully in other cases."

The owners of Backpage.com says Kamala Harris' prosecution is an "election year stunt," an allusion to her campaign for U.S. Senate in California.

The owners of Backpage.com says Kamala Harris' prosecution is an "election year stunt," an allusion to her campaign for U.S. Senate in California.

The whole episode has made most employees who receieved checks all the more uneasy about their involvement. Do I need to tell my bosses? they wonder. Am I in some kind of legal trouble?

One staffer who worked for more than one New Times/Voice paper says anyone who feels "moral queasiness" about taking a check from Lacey is forgetting the old business model.

"You'd have to be pretty willfully ignorant not to realize that part of the revenues that went into your check on a weekly basis were derived, at least in part, from marketing for prostitution."

That former employee got Lacey's check, and "spent a little more freely" in ensuing weeks, but decided to temper that after hearing word of the charges against him.

Privately, a few former employees have grumbled that they're owed at least $5,000 by a company that expected a lot of them and imposed a salary freeze when its print profits started tanking. 

Publicly, most people who took Lacey's money are staying mum about it. On September 16, Paul Demko, a former City Pages staffer who now works for Politico, tweeted a photo of the unexpected check, writing, "This is nuts." Lisa Gray, a writer for the Houston Chronicle, wrote that she'd received the $5,000, but didn't know why. She also didn't disclose if she'd deposited it.

A writer for Dallas Magazine was aware of "seven people here in Dallas" who got checks, but named none of them; one of the sources for this story could think of close to 10 others.

The only person ready to volunteer a guess is Pete Kotz, current editor of City Pages, who worked in different capacities for Lacey over some 15 years.

"He was the most generous boss I ever had," says Kotz, who also received a check. "This didn't surprise me, nor was it out of character. He's a lunatic in the best way."

What does Lacey's generosity, coupled with his legal trouble, mean for people who got the money? Not much at the moment, according to Steven Kessler, a New York attorney who specializes in asset seizures.

Only if Lacey is convicted would his strange spending pattern become a matter for the court. And even then, it might not matter.

Kessler says he's "absolutely" seen cases when someone who knows he's vulnerable to civil or criminal penalties becomes suddenly generous, and starts spending (or giving away) assets. The feds don't often take pity: If the funds from what they consider "ill gotten" gains are all wiped out, they'll start collecting the public debt from everything else you have or own.

But California has a long way to go before it gets to that point.

Internet sites own considerable legal protection from the actions of their users. If someone defames someone on Facebook, for example, the victim will find it nearly impossible to sue Mark Zuckerberg, because it would be equally impossible for Zuckerberg to police everything said on his site.

The same principle applies to Backpage or any other site. The idea behind the law is that without these protections, much of the internet would cease to function. No one could afford to provide constant oversight over millions of users.  

With Backpage's prior track record of defending the website, the case promises to linger for months, if not years. Maybe by that time the check-getters will have some more explanation.

For now, all they've got is a great mystery story about a controversial businessman -- a larger-than-life character wanted by the law -- whose employees were surprised, and then spooked, when he started sending them money. It's the kind of yarn people spin out down the years in barrooms, each turn more unexpected than the last.

Were he not its main character, it's the kind of story Mike Lacey would've loved.