- Seven executives of the popular classified advertising website Backpage.com, including its co-founders, have been charged in a 93-count federal indictment, according to a press release from the US Department of Justice.
- On Friday, the site was seized by federal authorities, per a notice posted on the website, but the exact reasons were unknown at the time.
- The DOJ said the site has earned hundreds of millions of dollars from facilitating prostitution and sex trafficking.
The cofounders of Backpage.com, along with five other executives of the online classified advertising site, were charged with 93 counts of federal crimes on Monday for practices that the Department of Justice alleged “enabled Backpage to earn over $500 million in prostitution-related revenue since its inception.”
The indictment released on Monday alleges that the executives used “a variety of strategies” to make prostitution ads look like ads for legal services like adult companionship and escort services.
The controversial classified advertising website was seized by federal authorities on Friday “as part of an enforcement action by the Federal Bureau of Investigation” and other federal agencies, per a notice posted on backpage.com.
On Monday, the DOJ indicted Backpage cofounders Michael Lacey and James Larking, as well as the company’s head of finance, the head of sales and marketing and several other executives for charges including facilitating prostitution and conspiracy to commit money laundering.
The DOJ announcement states that the charges are "merely accusations" at this point. The indictment also says that the defendants "have admitted - in internal company documents and during private meetings - that they know the overwhelming majority of the website's ads involve prostitution."
"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," US Attorney General Jeff Sessions said in the announcement. "But this illegality stops right now.
Liz McDougall, an attorney that a Washington Post report referred to as Backpage's General Counsel, did not immediately return a request for comment.
Here's the full text of the DOJ press release:
WASHINGTON - The Justice Department today announced the seizure of Backpage.com, the Internet's leading forum for prostitution ads, including ads depicting the prostitution of children. Additionally, seven individuals have been charged in a 93-count federal indictment with the crimes of conspiracy to facilitate prostitution using a facility in interstate or foreign commerce, facilitating prostitution using a facility in interstate or foreign commerce, conspiracy to commit money laundering, concealment money laundering, international promotional money laundering, and transactional money laundering.
The seven defendants charged in the indictment are Michael Lacey, 69, of Paradise Valley, Arizona; James Larkin, 68, of Paradise Valley, Arizona; Scott Spear, 67, of Scottsdale, Arizona; John E. "Jed" Brunst, 66, of Phoenix, Arizona; Daniel Hyer, 49, of Dallas, Texas; Andrew Padilla, 45, of Plano, Texas and Jaala Joye Vaught, 37, of Addison, Texas.
Attorney General Jeff Sessions, Deputy Attorney General Rod Rosenstein, Acting Assistant Attorney General John P. Cronan of the Justice Department's Criminal Division, First Assistant U.S. Attorney Elizabeth A. Strange for the District of Arizona, U.S. Attorney Nicola T. Hanna of the Central District of California, FBI Director Christopher A. Wray, U.S. Postal Inspection Service Chief Postal Inspector Guy Cottrell and Chief Don Fort of Internal Revenue Service Criminal Investigation (IRS-CI) made the announcement.
"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 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. I want to thank everyone who made this important seizure possible: all of our dedicated and committed professionals in the Child Exploitation and Obscenity Section and our U.S. Attorney's Office in the District of Arizona, the FBI, our partners with the IRS Criminal Investigation, our Postal Inspectors, and the Texas and California Attorney Generals' offices. With their help, we have put an end to the violence, abuse, and heartache that has been perpetrated using this site, and we have taken a major step toward keeping women and children across America safe."
"Backpage has earned hundreds of millions of dollars from facilitating prostitution and sex trafficking, placing profits over the well-being and safety of the many thousands of women and children who were victimized by its practices," said First Assistant U.S. Attorney Elizabeth A. Strange. "It is appropriate that Backpage is now facing criminal charges in Arizona, where the company was founded, and I applaud the tremendous efforts of the agents who contributed to last Friday's enforcement action and who assisted in obtaining the indictment in this case. Some of the internal emails and company documents described in the indictment are shocking in their callousness."
"This website will no longer serve as a platform for human traffickers to thrive, and those who were complicit in its use to exploit human beings for monetary gain will be held accountable for their heinous actions," said FBI Director Wray. "Whether on the street or on the Internet, sex trafficking will not be tolerated. Together with our law enforcement partners, the FBI will continue to vigorously combat this activity and protect those who are victimized."
"The events of last Friday and today are a big win, not only for the agents who investigated these crimes, but more importantly for the victims, including children, who were harmed as a consequence of the alleged actions of Backpage.com," said Chief Postal Inspector Cottrell. "By laundering the illegal gains of an enterprise, Backpage perpetuated the exploitation of victims and continued to finance their business. The U.S. Postal Inspection Service is committed to protecting our customers by stopping the money laundering to ensure the cycle of victimization ends."
"An indictment of this magnitude is particularly troubling when you look at the various layers of corruption and exploitation that are alleged to have occurred," said IRS-CI Chief Fort. "The masterminds behind Backpage are not only alleged to have committed egregious amounts of financial crimes such as money laundering, they did so at the expense of innocent women and children. While these types of investigations can be made more challenging with the use of virtual currency, offshore banking, and the anonymity of the Internet, it should serve as an example to all criminals that there is not a place they can hide where we will not find them."
The charges and allegations contained in an indictment are merely accusations. The defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The effort to seize Backpage was led by the Justice Department's Child Exploitation and Obscenity Section and the U.S. Attorney's Office for the District of Arizona, with significant support from the U.S. Attorney's Office for the Central District of California, the office of the California Attorney General, and the office of the Texas Attorney General. The law enforcement agencies conducting the investigation and seizure include the FBI Phoenix Field Office, the U.S. Postal Inspection Service and IRS-CI. The criminal case is being prosecuted by Assistant U.S. Attorneys Kevin Rapp, Dominic Lanza, and Margaret Perlmeter of the District of Arizona and Senior Trial Attorney Reginald E. Jones of the Criminal Division's Child Exploitation and Obscenity Section. Assistant U.S. Attorney John Kucera of the Central District of California is handling the asset forfeiture aspects of the case