Backpage.com, CEO plead guilty in California, Texas and Arizona

The chief executive of Backpage.com, a website investigators have described as an “online brothel,” pleaded guilty Thursday to California money-laundering charges, while the company itself pleaded guilty to human trafficking in Texas.

In addition to those pleas, federal prosecutors in Arizona announced Thursday Backpage.com and CEO Carl Ferrer had pleaded guilty to conspiracy charges on April 5.

Under the California plea agreement, Ferrer will cooperate in prosecuting Backpage.com’s creators and will serve no more than five years in state prison. He pleaded guilty to one count of conspiracy and three counts of money laundering in California.

In the Arizona plea, Ferrer acknowledged knowing that a great majority of Backpage.com’s ads were for sex services. He also admitted to conspiring with others at the company to launder the proceeds from such ads after credit card companies and banks refused to do business with the site.

Ferrer also agreed to make the company’s data available to law enforcement as investigations and prosecutions continue. The guilty pleas are the latest in a cascade of developments in the last week against the company founded by the former owners of the Village Voice in New York City, Michael Lacey, 69, and James Larkin, 68.

The company founders were among company officials indicted by a federal grand jury in Arizona, while Ferrer, 57, was noticeably absent from the indictment. The U.S. Justice Department also seized and shut down the website used to prominently advertise escorts and massages, among other services and some goods for sale. Authorities allege the site was often used to traffic underage victims, while company officials said they tried to scrub the website of such ads.

Attorneys for the company and the three men did not respond to multiple telephone and email messages from The Associated Press.

“Human trafficking is modern-day slavery, and it is happening in our own backyard,” California Attorney General Xavier Becerra said in a statement announcing the plea deal. “The shutdown of Backpage.com is a tremendous victory for the survivors and their families. And the conviction of CEO Ferrer is a game-changer in combating human trafficking in California, indeed worldwide.”

Larkin remains jailed in Arizona while he awaits a hearing Monday on whether he should be released after pleading not guilty to federal charges alleging he helped publish ads for sexual services. Magistrate Judge Bridget Bade said Thursday that attorneys have agreed on the terms of release, but other details must be ironed out.

Four employees and the site’s founders pleaded not guilty to the federal charges.

Lacey and Larkin also earlier pleaded not guilty to the California charges after Sacramento County Superior Court Judge Larry Brown last year allowed the state to continue with money laundering charges. Prosecutors allege Backpage’s operators illegally funneled nearly $45 million through multiple companies and created websites to get around banks that refused to process their transactions.

But Brown threw out pimping conspiracy and other state charges against Backpage’s operators. Brown ruled that the charges are barred by a federal law protecting free speech that grants immunity to websites posting content from others.

President Donald Trump this week signed a law making it easier to prosecute website operators in the future.

Paxon called Thursday’s pleas “a significant victory in the fight against human trafficking in Texas and around the world.”

Texas state agents raided the Dallas headquarters of Backpage and arrested Ferrer on a California warrant after he arrived at Houston’s Bush Intercontinental Airport on a flight from Amsterdam on Oct. 6, 2016. The Dutch-owned company is incorporated in Delaware, but its principal place of business is in Dallas.

House bill targets money laundering by human traffickers

WASHINGTON (AP) — The government would take modest steps toward hindering money laundering by human traffickers under legislation approved Tuesday by the House as lawmakers found a widely popular cause to tackle in a mostly discordant election year.

The bipartisan bill would require an existing presidential task force to recommend how Congress can better thwart money laundering by traffickers. Another federal council would suggest improvements in how U.S. agencies train investigators to pursue such cases.

The State Department would also have to factor money laundering into its annual rating of how well countries combat human trafficking.

The House approved the bill, 408-2. It now goes to the Senate.

Estimates of human trafficking victims vary, but recent reports put the number at tens of millions of people globally. It generally includes coerced sexual exploitation, prostitution, military service, labor and even organ donation.

The House also approved a separate bill imposing harsher penalties on predators convicted of stalking children, including people who pursue them online. The bill would add five years to maximum federal prison terms for convicted stalkers of minors under age 18. Victims’ advocates say 7.5 million people are stalked annually in the U.S., with federal figures showing that about 1 in 4 of them report online stalking.

The bill was approved 409-2 and now goes to the Senate. The strong bipartisan support for both bills is crucial for legislation to move through Congress in the months approaching the November midterm elections. Partisan divisions are likely to block approval of major measures on infrastructure, immigration, health care and other high-profile issues.

President Donald Trump is expected to sign related legislation this week making it easier for prosecutors and sex trafficking victims to take legal action against websites that list ads for prostitutes. Children’s advocates say such advertising is one way minors are sexually exploited.

The measure sharpens current law by opening the door to criminal and civil action against sites that assist advertisers of sexual trafficking. That broadens current laws, which until now have made it a crime to participate directly in a sex trafficking enterprise.

Last week, federal authorities took down Backpage.com, a classified ad website whose listings include sexual services. Site founders Michael Lacey and James Larkin and five others face federal charges of facilitating prostitution and money laundering, according to an indictment unsealed Monday.

Backpage.com founders accused of promoting prostitution, money laundering

By Samuel Chamberlain

The founders of Backpage.com, the notorious website best known for hosting sex and prostitution-related classified advertisements, have been indicted with five other people on federal charges, the Justice Department announced Monday.

The 93-count indictment accused website founders Michael Lacey, 69, and James Larkin, 68, of facilitating prostitution and money laundering.

Executive vice president Scott Spear, 67, was charged with facilitating prostitution and money laundering, while chief financial officer John Brunst, 66, was charged with money laundering.

Sales and marketing director Dan Hyer, 49, operations manager Andrew Padilla, 45, and assistant operations manager Joye Vaught, 37, also were charged with facilitating prostitution. The indictment alleged that Padilla threatened to fire any employee who acknowledged in writing that the escorts depicted in ads were actually prostitutes.

The seven people charged in the federal indictment were accused of trying to sanitize ads by removing photos and words that indicated prostitution — before publishing revised versions of the notices. The company also allegedly laundered money by wiring ad proceeds into foreign bank accounts.

In addition to the indictments, the Justice Department confirmed that it had seized Backpage.com and affiliated websites on Friday.

Attorney General Jeff Sessions described Backpage.com as “the dominant marketplace for illicit commercial sex, a place where sex traffickers frequently advertised children and adults alike.”

He added, “But this illegality stops right now.”

Backpage.com let users create posts to advertise items for sale, seek roommates, participate in forums, promote upcoming events or post job openings. But the site also included listings for adult escorts and other sexual services, and authorities said advertising related to those services had proved extremely lucrative.

Last year, the website’s chief executive Carl Ferrer, along with Lacey and Larkin, pleaded not guilty to money laundering charges in California, where state prosecutors said the website operators had illegally funneled money through multiple companies and created various websites to get around banks that refused to process transactions.

The California state attorney general’s office also had moved to file pimping, conspiracy and other charges against the Backpage.com operators.

However, a judge dismissed them, saying they related to the publishing of sex-related advertisements and could not be filed because of a federal law protecting free speech that grants immunity to websites that post content created by others.

In the past, the site’s operators challenged the California charges on First Amendment grounds.

Officials have struggled with how to deal with the website without violating free speech protections.

Backpage.com is a Dutch-owned limited liability corporation incorporated in Delaware, but its principal place of business is in Dallas. Federal officials said Backpage.com has kept its bank accounts and servers in Arizona.

Lacey and Larkin were former owners of the Village Voice and the Phoenix New Times. The indictment said Lacey and Larkin purportedly sold their interest in Backpage.com in 2015, though they had retained control over the site.