Backpage Founders Indicted With Prostitution, Money Laundering

The backpage.com site.
The backpage.com site. (backpage.com)

Seven people employed by the sex ad website Backpage.com, including its founders Michael Lacey and James Larkin, were charged in a 93-count indictment unsealed on Monday that included among the accusations knowingly facilitating prostitution.

The indictment, which also includes money laundering charges, was made public after Backpage.com and its affiliated websites were seized on Friday by U.S. federal law enforcement authorities and taken off the internet.

Attorneys for Lacey could not be immediately reached, and the public court docket had not yet listed any counsel for Larkin.

"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.

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"But this illegality stops right now."

Lawmakers and law enforcement officials have long been working to crack down on the website, which was used primarily to sell sex and was the second largest classified ad service in the United States after Craigslist.

Backpage and some advocacy groups have argued that the ads on the site were free speech protected by the U.S. Constitution.

The unsealed indictment, returned by a federal grand jury in Arizona, lays out details concerning 17 alleged victims, including both adults and minors as young as 14 years old, who were trafficked on the site.

In one case, a customer murdered one of the victims and attempted to burn her corpse, an official from the U.S. Attorney's Office in Arizona said. Later, when the victim's father tried to have his daughter's pictures and ads taken down, the website did not immediately comply, according to the official.

In addition to charging Larkin and Lacey, the indictment also charged Backpage.com's executive vice president Scott Spear, its chief financial officer John "Jed" Brunst, its sales and marketing director Dan Hyer, operations manager Andrew Padilla and its assistant operations manager Joyce Vaught.

The court records did not yet list any attorneys for Spear, Brunst, Hyer or Padilla, and an attorney for Vaught could not immediately be reached.

In the indictment, the U.S. Justice Department accuses Backpage of earning $500 million in prostitution-related revenue since its inception in 2004, and of money laundering that entailed routing funds through seemingly unrelated entities, wiring money in and out of foreign accounts and converting it into and out of bitcoin and other cryptocurrencies.

Backpage associates were also actively involved in editing ads and advising on how they should be worded, according to the indictment.

Prosecutors also alleged that the website's employees sought to actively mislead the public about its sincerity of efforts to prevent prostitution ads.

The indictment said that in private, Lacey "bragged about the company's contributions to the prostitution industry, writing in one internal document 'Backpage is part of the solution.'"

The indictment relies on the same law used in a similar case in California several years ago against the founder of MyRedbook.com, who pleaded guilty to charges that the website hosted ads largely posted by prostitutes.

A Justice Department official said the case against Backpage does not rely on sex trafficking charges, but rather on charges connected to prostitution, which are easier to prosecute.

To prove sex trafficking, prosecutors would need to show each individual ad either involved a minor, or featured an adult who was selling sex through force or coercion.

Last month, Congress passed legislation that makes it easier for state prosecutors and sex-trafficking victims to sue website operators that facilitate online sex trafficking.

The bill, which President Donald Trump is expected to sign into law this week, amends the Communications Decency Act, which largely shielded website operators from state criminal charges or civil liability if they were facilitating sex ads or prostitution.

Efforts to get that law changed were featured prominently in a Netflix documentary called "I am Jane Doe."

© 2018 Thomson Reuters. All rights reserved.

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