Backpage.com pleaded guilty to human trafficking in Texas late Thursday, one week after the Department of Justice shut down the controversial classified advertising site and charged seven of its executives.
In addition, Backpage.com co-founder and CEO, Carl Ferrer, 57, of Frisco, Texas, pleaded guilty to money laundering prostitution-related charges, the Justice Department announced Thursday night. He was not one of the seven Backpage officials who was charged in a 93-count indictment unsealed on Monday.
Ferrer will corporate with the government, which “could lead to other criminal charges against individuals associated with the company,” according to a statement by Texas Attorney General Ken Paxton. He faces as much as 10 years in prison, but could ultimately receive less.
The Justice Department said Ferrer will take all steps to shut down Backpage and provide technical assistance to the federal law enforcement to close the website.
Ferrer admitted that he had long been aware that the majority of Backpage’s escort and adult advertisements are for prostitution services, which are illegal throughout the country and in most areas of Nevada, according to court documents. He also said he conspired with other Backpage officials to facilitate prostitution crimes on behalf of Backpage’s customers. For example, people associated with Backpage created a moderation process to remove terms and picture that indicated that ad was for prostitution and then published a revised version of the ad, court papers said. The editing practice was only one part of a “company-wide culture” of concealing prostitution, the Justice Department said.
Court papers say that Ferrer also conspired with other Backpage officials to engage in money laundering. As many banks and credit cards and other financial institutions stopped doing business with Backpage because of the prostitution ads, Backpage executives sought to defraud credit card companies into believing Backpage associated charges were being incurred on different websites and the being routed back Backpage, the Justice Department said. Backpage also engaged in cryptocurrency because it was harder to trace, according to court papers.
Federal prosecutors alleged Backpage earned $500 million in prostitution-related revenues since launching in 2004.
“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,” said Attorney General Jeff Sessions. “But this illegality stops right now. Last Friday, the Department of Justice seized Backpage, and it can no longer be used by criminals to promote and facilitate human trafficking.
All seven of the defendants charged Monday, including co-founders Michael Lacey and James Larkin, have pleaded not guilty. They also face prostitution-related and money laundering charges.
Backpage is accused of facilitating prostitution by pimps and others who advertised on the site, according to the indictment. Prosecutors say Mr. Lacey bragged that Backpage had contributed to the prostitution industry, writing in an internal memo that for the first time that “the oldest profession in the world has transparency, record keeping and safeguards.”
Many of those ads depicted children, according to the indictment, although the defendants are not facing any charges that they knowingly advertised children for sex. Prosecutors cited 17 instances in which children as young as 14 were trafficked for sex through the site.
The National Association of Attorneys General said in a 2011 letter that it had tracked more than 50 instances in 22 states over three years of charges filed against those who have trafficked or attempted to traffic minors on Backpage.