Executives Indicted For Facilitating Prostitution, Money Laundering

Crime, News | April 9, 2018 By:

Seven executives have been arrested and charged with facilitating prostitution and money laundering, as a 93-count grand jury indictment that was unsealed today revealed.

The arrests follow law enforcement officials led by the FBI seizing all of Backpage’s web sites April 6. The sites accepted cryptocurrency payments for its advertising services.

Those charged include the site founders, Michael Lacey and James Larkin. Surprisingly, Carl Ferrer, the site’s current owner, was not charged. The indictment said was financed by Lacey, Larkin and two other co-owners who retained operational control of Backpage.

The indictment accuses Backpage of facilitating prostitution committed by those posting ads on the site, specifically citing 17 victims trafficked on Backpage, some as young as 14.

The legal papers allege laundered some of the estimated $500 million in prostitution-related revenue the site had generated since its launch in 2004. “Virtually every dollar flowing into Backpage’s coffers represents the proceeds of illegal activity,” according to the indictment. A Senate report last year said that Backpage ran sites for 943 locations in 97 countries and 17 languages.

Also indicted were Backpage executive vice president Scott Spear, chief financial officer John “Jed” Brunst, sales and marketing director Dan Hyer, operations manager Andrew Padilla, and assistant operations manager Joye Vaught.

EARLIER: Cryptocurrency users who advertised on the controversial site may be out of luck on any recent purchases, as several federal law enforcement agencies have seized the online property.

The Federal Bureau of Investigation and other law enforcement agencies took over the site yesterday under the Allow States and Victims to Fight Online Sex Trafficking Act of 2017. has long been under fire because of allegations of sex trafficking and prostitution. It is the second-largest classified service after Craigslist and one of the first to allow transactions in bitcoin.

Federal authorities seized the site and raided the homes of two founders on April 6. There has been no word on how that will affect the site’s legitimate users, who used it for automobile trading and other services and paid for advertising in advance.

Backpage was started in 2004, offering online classifieds for a wide variety of services. But in 2011, it began to receive negative attention for its adult services subsection, as commentors, media and others claimed it was used to facilitate child trafficking and prostitution.

The company’s CEO and other officials were arrested and a series of court cases ensued. Early last year, Backpage did away with its adult services subsection from its US website.

The FBI confirmed that it has raided the home of Michael Lacey, a co-founder of and once the publisher of the New Times alternative newspaper network. Another report indicated another co-founder, Jim Larkin, also had his home visited by authorities.

An attorney for Lacey, Larry Kazan, told The Arizona Republic at the federal courthouse in Phoenix on Friday afternoon that his client had been charged. Kazan said he did not know how many counts Lacey faced because the 93-count indictment was sealed.