Owners and Operators of Backpage.com Indicted on Pimping Charges - KTVN Channel 2 - Reno Tahoe Sparks News, Weather, Video

Owners and Operators of Backpage.com Indicted on Pimping Charges

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Two majority shareholders and the CEO of Backpage.com have been arrested and charged with pimping.

Carl Ferrer, the 55-year-old CEO, is charged with pimping a minor, pimping, and conspiracy to commit pimping, while 68-year-old Michael Lacey and 67-year-old James Larkin are charged with conspiracy to commit pimping. Attorneys for the three men told reporters Wednesday that the CEO and shareholders will challenge the charges next month.

California Attorney General Kamala Harris says Lacey and Larkin are the website's controlling shareholders.

The Reno News and Review uses Backpage for its Classified section, as do the Sacramento and Chico versions of the paper. President Jeff VonKaenel released the following statement:

"Eleven years ago, when print classifieds first went online to services like Craigslist, the News & Review and many other alternative weeklies around the country signed up with Backpage as their online classified vendor.

The News & Review has no day-to-day involvement with the operations of Backpage."

The California Attorney General's Office released the following statement about the case:

"Attorney General Kamala D. Harris today announced the arrest of Carl Ferrer, the Chief Executive Officer of online advertising website Backpage.com, on felony charges of pimping a minor, pimping, and conspiracy to commit pimping.  Michael Lacey and James Larkin, controlling shareholders of Backpage, have also been criminally charged with conspiracy to commit pimping, a felony. Backpage hosts ads for “escort services”, essentially operating as an online brothel and generating millions of dollars off the illegal sex trade.  

“Raking in millions of dollars from the trafficking and exploitation of vulnerable victims is outrageous, despicable and illegal,” said Attorney General Harris.  “Backpage and its executives purposefully and unlawfully designed Backpage to be the world’s top online brothel. Thank you to the California Department of Justice Special Agents, investigators, attorneys, and our partners in law enforcement who have worked tirelessly to bring the operators of this online brothel to justice and protect thousands of victims of trafficking.”

While Backpage hosts ads for sales of a range of items and services, the arrest warrant alleges that the vast majority of Backpage’s revenue is generated through prostitution-related ads in its “adult services” section.  Backpage collects fees from users who post “escort” ads, offering sex for money using coded language and nearly nude photos. The California Department of Justice’s investigation found that many of the ads for prostitution services involved victims of sex trafficking, including children under the age of 18. 

Since 2010, Backpage has been expanding operations, creating sites in hundreds of cities throughout the world, including over 30 cities in California.  Backpage’s internal revenue reports show that from January 2013 to March 2015, 99% of Backpage’s worldwide income was directly attributable to the “adult” section. During this 29-month period, Backpage’s self-reporting demonstrates that gross monthly income from California rose to $2.5 million per month, with over $51 million in revenue derived from California in that period.

In addition to making millions of dollars off the sale of “adult” ads on Backpage, the arrest warrant alleges that Ferrer devised a way to promote Backpage by creating other prostitution-related sites that essentially serve as an escort directory comprised entirely of Backpage users.  Ferrer took data from Backpage users and created content for Backpage-affiliated sites like EvilEmpire.com and BigCity.com. The investigation found that Evilempire.com featured photos and contact information from Backpage and offered no apparent way for users to submit content directly.  These schemes enabled Ferrer and his co-conspirators to expand Backpage’s share of the online sex advertising market. 

The California Department of Justice conducted a three-year investigation, including undercover operations posting “escort” ads and arranging meetings with people who had advertised in the “escort” section, confirming that commercial sex was the only purpose for both buyers and sellers. The investigation was sparked by reports from media, law enforcement agencies, and the National Center for Missing and Exploited Children (NCMEC). In the last five years, NCMEC has reported an over 800% increase in reports of suspected child sex trafficking, much of it the result of online child sex trafficking. Since 2012, the NCMEC has reported 2,900 instances to California law enforcement where suspected child sex trafficking occurred via Backpage.

In addition to NCMEC, other agencies assisting in the investigation include the Texas Attorney General’s office, the Los Angeles District Attorney’s Office, the Contra Costa District Attorney’s Office, the Los Angeles Sheriff’s Human Trafficking Taskforce, the Long Beach Police Department, the Mesa Police Department, the Rocklin Police Department, the Napa Police Department, the U.S. Department of Homeland Security, and the U.S. Department of Justice. The CEO and founder of Runaway Girl, Carissa Phelps, also collaborated with the California Department of Justice to reach out to and support victims.  

Anyone who was a victim of trafficking via Backpage is encouraged to file a report with the California Department of Justice by emailing backpage@doj.ca.gov.

Attorney General Harris has made fighting human trafficking a priority for the California Department of Justice, and has advocated for increased collaboration among federal, state and local law enforcement agencies during the investigation and prosecution of human trafficking crimes.  

The Office of the Attorney General is actively investigating and prosecuting human trafficking cases across California.  Most recently, the office secured a felony conviction against Andrew Jordan, 37, of Long Beach, on charges of human trafficking, pimping, pandering, domestic violence, and assault. Jordan forced women to commit commercial sex acts and kept the proceeds, severely punishing the victims if they violated his strict rules.

Last year, the Office of the Attorney General released a resource guide to help companies comply with the California Transparency in Supply Chains Act. The law requires large retailers and manufacturers doing business in California to disclose on their websites their “efforts to eradicate slavery and human trafficking from [their] direct supply chain for tangible goods offered for sale.”

In 2012, Attorney General Harris created a Human Trafficking Work Group and released a report, The State of Human Trafficking in California, which discussed the growth of human trafficking crimes statewide and the challenges with combatting them effectively.

Please note that an arrest warrant contains only allegations against a person and, as with all defendants, Carl Ferrer, Michael Lacey, and James Larkin must be presumed innocent unless and until proven guilty."

The Associated Press contributed to this story.

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