Backpage CEO arrested in sex trafficking probe

Texas Attorney General Ken Paxton announced Thursday his office arrested Carl Ferrer, CEO of the embattled online ad website Backpage, on California felony pimping charges, including pimping a minor. Ferrer is being held in lieu of a $500,000 bond and will face an extradition hearing before he can be returned to California. In Texas, he will face additonal charges of money laundering related to human trafficking. Michael Lacey and James Larkin, controlling shareholders of Backpage, have also been criminally charged with conspiracy to commit pimping, a felony in California.

“Backpage.com seems to have knowingly and willingly allowed women and children to be exploited in return for its own financial gain,” Paxton said in a press conference. His office also raided the Dallas headquarters of Backpage based on a warrant for suspected money laundering. Paxton stated Ferrer was repeatedly alerted to ads involving minors on his website, but his company took no action to correct the issue.

A three-year investigation by the offices of the Texas and California attorneys general revealed adult and child sex-trafficking victims were forced into prostitution through escort ads that appeared on Backpage. In California, it is a felony to solicit on behalf of a prostitute or derive income from the earnings of a prostitute. State laws also includes additonal penalties for trafficking a minor.

“Raking in millions of dollars from the trafficking and exploitation of vulnerable victims is outrageous, despicable and illegal,” California Attorney General Kamala Harris said. “Backpage and its executives purposefully and unlawfully designed Backpage to be the world’s top online brothel.”

The National Center for Missing & Exploited Children (NCMEC) reported an 800 percent increase since 2012 in reports of suspected child sex trafficking, much of it the result of online ads, including more than 2,900 instances of suspicious Backpage ads involving children. One of the minors mentioned in the indictment was sold for sex beginning at 12 years of age.

Despite those glaring allegations, laws similar to California’s in other states did not prevail against Backpage in court. In its defense, Backpage cites a small section in the Communications Decency Act, which says online intermediaries that host or republish speech aren’t responsible for what their customers say and do. Most state judges have sided with Backpage. But the California indictment adds additonal allegations that much of Backpage’s income came from prostitution and its executives profited from the exploitation of victims.

The California indictment, posted on the media website Patch, recorded numerous incidents between 2012 and 2015 in which Backpage postings involved sex trafficking. During that same period, Backpage’s income grew from $1.5 million to $2.5 million per month in California alone. The indictment also stated Backpage reported worldwide revenue for the week of June 22, 2015, of more than $3 million, 17 percent of which came from California. The “adult section” accounted for 99 percent of Backpage’s worldwide income.

Also according to the indictment, many victims were forced into sex with customers more than 10 times a night. One victim, now 29, stated she had two children during the time she was being trafficked but “never learned to change a diaper or care for her children because she was continually forced to engage in commercial sex.”

In March, the U.S. Senate voted unanimously to hold Backpage executives in contempt after the company refused to comply with a subpoena to appear before a congressional committee. Backpage launched a series of appeals, ending with the Supreme Court’s ruling that Backpage must comply with the subpoena and produce information about how it screens ads for sex trafficking.

U.S. Sens. Rob Portman, R-Ohio, and Claire McCaskill, D-Mo., co-chairpeople of the Senate committee investigating online sex trafficking, released a statement on Ferrer’s arrest: “For the past 18 months, we have led a bipartisan investigation into the scourge of online sex trafficking. That investigation led us directly to Backpage. … We will continue to press forward and complete our longstanding investigation.”

Texas Attorney General Paxton vowed the same. Emphasizing his investigation was still ongoing, he said, “We’re not stopping here.”