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California Court Seizes $16.5 Million Held in Offshore Account

ai-codes-coding-247791-300x165The U.S. government is attempting to seize $16.5 million in bank funds belonging to the operators of the now-shuttered These funds are held in an offshore bank account, sources say.

The seven defendants named in the complaint are Michael Lacey, 69, of Paradise Valley, Arizona; James Larkin, 68, of Paradise Valley, Arizona; Scott Spear, 67, of Scottsdale, Arizona; John “Jed” Brunst, 66, of Phoenix, Arizona; Daniel Hyer, 49, of Dallas, Texas; Andrew Padilla, 45, and Joye Vaught, 37, of Addison, Texas.

According to the forfeiture complaint, the money is in a Hungarian bank account under the name of Primus Trust Company, with Lacey being one of the beneficiaries of the trust. Federal prosecutors are claiming the funds were obtained from illegal activity as a basis for civil forfeiture action.

Backpage was allegedly used to advertise illegal activity, specifically prostitution and sex trafficking, including child sex trafficking. The complaint states that numerous ads were used to sell minors for sex and forcibly traffic adult women for sex. Several of the pimps who used Backpage to advertise their victims were later convicted of sex trafficking offenses.

According to the complaint, the website operators deliberately instituted and maintained policies to cultivate and sustain its promotion of prostitution and sex trafficking. They used “sanitized” language to skirt the law and make the advertising of sex trafficking less overt.

By 2015, several major credit card companies were refusing to process payments to and from out of concern that the accounts were being used for illegal purposes. In response to those measures, Backpage operators allegedly initiated and pursued a wide range of money laundering strategies to conceal the source and location of the revenue the website generated.

The operators purportedly set up foreign persons to “franchise” websites for the sole purpose of accepting credit card payments outside the U.S., with the funds being funneled to Backpage bank accounts. They also designed a mechanism to allow advertisers to buy special “credits” for posting ads. They accomplished this by accepting gift cards, checks, digital cryptocurrencies (Bitcoin, Litecoin, Ethereum, and Bitcoin Cash), or money orders sent to a P.O. Box in Dallas, Texas.

The forfeiture complaint names several assets, including bank funds, cryptocurrencies, website domain names, and real estate property. These assets are allegedly tied to the Backpage operators and were derived from proceeds traceable to multiple violations of U.S. law, including child sex trafficking and racketeering.

These purportedly illegally acquired assets are being seized using a process called civil asset forfeiture, a procedure where law enforcement may take an individual’s property if it is suspected of being involved in criminal activity. Since this is a civil and not a criminal procedure, these seizures are legally unrelated to the criminal case against the defendants named in the complaint. was shut down by the Justice Department in April 2018 after the seven defendants named in the complaint were charged in a 93-count federal indictment for multiple crimes, including facilitating prostitution, conspiracy to commit money laundering, and international promotional money laundering.

“For far too long, existed as the dominant marketplace for illicit commercial sex, a place where sex traffickers frequently advertised children and adults alike,” said Attorney General Sessions on April 9, 2018. “But this illegality stops right now . . . the Department of Justice seized Backpage, and it can no longer be used by criminals to promote and facilitate human trafficking.”

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If your lawful property has been seized, then you should hire an attorney. Contact us to set up a free initial consultation and work with one of Florida’s most experienced civil forfeiture defense attorneys.

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