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Backpage co-founders charged with promoting prostitution, money laundering

April 11, 2018  |  Posted by: Francesca Falzarano
Backpage co-founders charged with promoting prostitution, money laundering

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The founders of Backpage, the infamous web platform most known for running sex and prostitution-related ads, have been indicted along with five others on federal charges.

The 93-count indictment alleged that the site’s founders, 69-year-old Michael Lacey and 68-year-old James Larkin, facilitated prostitution and committed money laundering.

Executive vice president Scott Spear, 67, has also been charged with the facilitation of prostitution and money laundering, while the chief financial officer, 66-year-old John Brunst, has been charged with cash laundering.

Dan Hyer, the sales and marketing director; Andrew Padilla, the operations director, and Joye Vaught, the assistant operations manager, have also been charged with promoting prostitution. The indictment stated that Padilla threatened to terminate any staff member who reported in writing that the escorts represented in ads were, in fact, prostitutes.

The seven suspects charged in the indictment are accused of attempting to clean up ads by removing pictures and words that pointed to prostitution — before releasing revised versions of the classifieds. The company also reportedly laundered profits by wiring the money into foreign accounts.

Along with the indictments, the Justice Department verified on Friday that it had seized Backpage.com and its affiliated websites, Fox News reports.

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

Backpage operators: Carl Ferrer, James Larkin, and Michael Lacey

He continued, “But this illegality stops now.”

Backpage.com allowed its users to make posts to sell items, seek roommates, partake in forums, advertise upcoming events or post job opportunities. However, the site also had listings for adult escorts and other services, and authorities said advertising related to those services had become extremely profitable.

In 2017, the site’s chief executive Carl Ferrer, along with Lacey and Larkin, entered a not guilty plea to charges of money laundering in California, where prosecutors claimed that the operators had illegally transferred money through multiple companies and made various websites to get around banks that decline to process transactions.

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

However, a judge dropped the charges, stating that they related to the publishing of sex-related ads and could not be filed because of a federal law preserving free speech that allows immunity to websites that post content produced by others.

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

Officials have grappled with trying to figure out how to deal with the site without infringing on free speech protections.

Lacey and Larkin formerly owned the Village Voice and the Phoenix New Times. The indictment indicated Lacey and Larkin sold their interest in Backpage in 2015, though they had maintained control over the platform.

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