Backpage founders charged with money laundering and aiding prostitution

Federal authorities have charged the two founders of classified site Backpage.com, along with five other employees, with laundering money and facilitating prostitution. According to The Washington Post, the Justice Department claims Backpage took “consistent and concerted action” to knowingly allow ads for illegal sex work. The indictment alleges that “virtually every dollar flowing into Backpage’s coffers represents the proceeds of illegal activity.”

Law enforcement agencies seized Backpage’s servers last week, and co-founder Michael Lacey was charged in a sealed 93-count indictment, which has now been revealed. Lacey, as well as his co-founder James Larkin, were already charged with violating California money laundering laws, although a judge threw out state-level pimping charges.

These federal charges are unrelated to the Stop Enabling Sex Traffickers Act, a controversial bill that would make website operators liable for illegal content posted to their sites. That bill is still awaiting Trump’s signature, although it’s already had an effect on other classified sites, leading Craigslist to pull its personal ads section.

Beyond Lacey and Larkin, the Backpage indictment includes charges against the site’s chief financial officer, operations manager, assistant operations manager, and marketing director. It also charges the executive vice president of one of Backpage’s parent companies. Backpage CEO Carl Ferrer, who was previously charged with pimping in California, was not charged in this indictment.

The Justice Department claims Backpage’s owners tried to cover up the fact that most of its “adult services” ads involved prostitution, and that Backpage allowed child sex traffickers to keep ads on the site as long as they deleted age-related keywords. The indictment also claims that Backpage disguised payments for illegal services by having customers funnel money to foreign bank accounts or apparently unrelated companies, or by transferring funds into cryptocurrency.

Attorney General Jeff Sessions characterized the charges as a blow against human trafficking, saying law enforcement had “put an end to the violence, abuse, and heartache that has been perpetrated using this site.” As journalist Melissa Gira Grant pointed out on Twitter, the indictment overwhelmingly accuses Backpage of knowingly allowing ads related to prostitution in general, not children or victims of human trafficking. It does claim that Backpage failed to remove ads that included codewords for underage sex workers, opting to simply add the words to a general language filter.

Backpage’s adult classified ads pages made it a legal target for years, with critics claiming that it facilitated sex trafficking. The site’s owners said they were exercising their right to freedom of speech, and sex workers argued that Backpage allowed them to work more safely by screening clients. Some anti-trafficking investigators also said that having a popular, centralized site made it easier to find and catch sex traffickers. The site finally closed down the adult section last year, but reportedly continued to feature ads for prostitution among its “dating” ads before its shutdown last week.

Update 6:20PM ET: Added details from indictment and Justice Department press release.

https://www.theverge.com/2018/4/9/17216988/backpage-founders-federal-charges-prostitution-money-laundering-shutdown