Backpage.com’s business model is that of an online classified marketplace, similar in structure to Craigslist, where people who want to sell a couch or rent an apartment post an ad. But Backpage is better known as one of the biggest web platforms for sex ads and prostitution. Craigslist’s decision to shut down its “adult” section in 2010 drove a lot of business to Backpage, as well as lot of unwanted attention from law enforcement.
Five years later, that attention has blossomed into a felony prosecution.
On Thursday, Backpage Chief Executive Officer Carl Ferrer was arrested on California charges of conspiracy and pimping children for sex. Ferrer was taken into custody as he arrived in Houston on a flight from Amsterdam. Investigators also searched the company’s Dallas headquarters.
“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.”
In a statement late Friday afternoon, Backpage general counsel Liz McDougall called the raid and arrest "an election year stunt" and "flatly illegal," saying they "ignore the holdings of numerous federal courts that the First Amendment protects the ads on Backpage.com." She said the complaint made clear that the company had blocked ads that violated its policies and removed others when contacted by law enforcement.
Backpage has been shielded by the strong protections for free speech online, including the immunity from liability granted online platforms for so-called third-party content—in this case, ads posted for prostitutes. But state attorneys general, victims of human trafficking, and Congress have continued to dig for evidence that Backpage knowingly promotes and facilitates sex trafficking of minors.
The California charges stem from a three-year probe sparked by reports of more than 2,900 instances of suspected child trafficking in the state since 2012, according to prosecutors. Backpage earned more than $51 million in revenue there, almost all of it from adult ads, including ones that advertised children under 16 years old, between January 2013 and March 2015, Harris alleged. Ferrer also worked to expand Backpage’s market share by creating other prostitution-related sites, Evilempire.com and Bigcity.com, that drove traffic to Backpage escort ads, according to an affidavit filed with the arrest warrant.
Michael Lacey and James Larkin, described as Backpage’s controlling shareholders, were also charged with conspiracy to commit pimping. Although Ferrer ran the day-to-day operations, he was in regular correspondence with Lacey and Larkin, who also received significant payments from Backpage, according to the government. Each received a “bonus” of $10 million in September 2014, according to the affidavit.
Backpage was founded in 2004 by Larkin and Lacy, and Ferrer managed the site. In 2014, Ferrer bought Backpage through two holding companies and created a new parent company, Netherlands-based UGC Tech Group C.V.
Liz McDougall, Backpage’s general counsel, didn’t immediately respond to a call and e-mail seeking comment.