Backpage execs indicted on federal prostitution, money laundering charges

AG: “Backpage.com existed as the dominant marketplace for illicit commercial sex.”

Cyrus Farivar – Apr 9, 2018 6:18 pm | 182

Backpage.com CEO Carl Ferrer, left, former owner James Larkin, former owner Michael Lacey, and COO Andrew Padilla sit in Sacramento Superior Court on Wednesday, Oct. 12, 2016. Credit: Hector Amezcua/Sacramento Bee/TNS via Getty Images

Federal prosecutors in Arizona unsealed a 61-page, 93-count criminal indictment of seven men accused of running an online prostitution ring through the website Backpage, which was seized and shuttered last week by authorities.

The seven suspects, who have all been arrested, were charged with conspiracy, facilitating prostitution, and money laundering, among other accusations.

“For far too long, Backpage.com existed as the dominant marketplace for illicit commercial sex, a place where sex traffickers frequently advertised children and adults alike,” Attorney General Jeff Sessions said in a statement. “But this illegality stops right now.”

The government claimed that Backpage had earned hundreds of millions of dollars by engaging in sex trafficking and enabling prostitutes’ work online.

“Virtually every dollar flowing into Backpage’s coffers represents the proceeds of illegal activity,” prosecutors wrote in the indictment.

For years, Backpage has acted with impunity as a place that offered thinly veiled online prostitution ads. In December 2016, Backpage CEO Carl Ferrer and his co-defendants beat back a state prosecution in California. At the time, a Sacramento County judge found that they were not liable due to Section 230 of the Communications Decency Act, which acts as a federal shield for websites that post user-generated material, including (apparently) ads for prostitution.

Curiously, Ferrer was not one of the named seven defendants, which included co-founders Michael Lacey and James Larkin.

Ferrer is only referred to by his initials as “C.F.,” which could suggest that he may be cooperating with government investigators.

Authorities quoted from a 2014 email from C.F. to Larkin and John “Jed” Brunst. The email “attributed Backpage’s success, in part, to its adoption of policies that allowed customers to post ads without leaving any meaningful identifying information—in a list of Backpage’s advantageous policies, it identified ‘Anonymous,’ ‘Prepaid-card friendly,’ ‘User can post paid ads without a valid email address,’ and ‘bitcoin.’”

Prosecutors also asked the judge to not release Lacey on bail, saying that he was a flight risk.