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April 13, 2018

Backpage CEO Flips, Takes Plea Deal To Testify Against Founders

PHOENIX—Newly unsealed court federal court documents show Backpage.com Chief Executive Officer Carl Ferrer has been cooperating with the FBI investigation into the site at least since April 5, the day before the feds shuttered the online classified ad marketplace widely used by sex workers—but now is charged by the government with facilitating prostitution and money laundering. According to documents dated April 5 and filed in the United States District Court for Arizona (viewable as a PDF at this link), Ferrer reached a deal and pleaded guilty to one felony conspiracy charge. Ferrer has also entered guilty pleas in California to conspiracy and money laundering charges. Ferrer admitted to prosecutors that he knew Backpage ads for “escort” and “adult” services were, in reality, outlawed advertisements for prostitution—and he also copped to editing ads to conceal the fact illegal sex services were being offered for sale, according to the plea deal. Backpage had a “company-wide culture and policy of concealing and refusing to officially acknowledge the true nature of the services,” Ferrer told prosecutors, according to the documents.  Backpage as a corporate entity also entered a guilty plea in Texas, to a charge of human trafficking, according to a BuzzFeed report.  The 57-year-old Ferrer’s deal also means that he agreed to cooperate with the federal investigation into the site, the documents said. Ferrer, who faces up to five years in prison, was required “to take all steps within his power to immediately shut down the Backpage website, including providing technical assistance to the United States to effectuate the shutdown,” according to a U.S. Justice Department statement.  Federal authorities seized the Backpage.com domain the next day, taking the site’s content offline and posting a notice—seen above on this page—across the site’s home page. A few days later, the feds unsealed a 93-count indictment against seven individuals at the top levels of the company behind the site, including founders and chief shareholders Michael Lacey, 69, and James Larkin, 68.  Larkin had a hearing on Thursday to seek his release from custody, but he must remain behind bars until at least Monday when the hearing resumes. Lacey—who at one time was the country’s top weekly newspaper mogul, owning dozens of "alternative" weekly papers throughout the United States including in Los Angeles and New York City—remains jailed. Ferrer has agreed to provide evidence against Lacey and Larkin, as well as five other employees of the site who have entered not guilty pleas. Only Lacey and Larkin remain in jail as of Friday.

 
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