Backpage founders charged with money laundering and aiding prostitution

Federal authorities have accused the two founders of the classified site, along with five other employees, of laundering money and facilitating prostitution. According to The Washington Post the Department of Justice states that Backpage took "consistent and concerted action" to knowingly allow advertisements of illegal sex work. The indictment alleges that "virtually every dollar that flows into the Backpage coffers represents the proceeds of illegal activities."

Police agencies confiscated Backpage's servers last week, and co-founder Michael Lacey was indicted in a 93-count indictment, which has now been revealed. Lacey, as well as her co-founder James Larkin, had already been accused of violating California's money laundering laws, although a judge dismissed the charges of procuring statewide.

These federal charges are not related to the Sex Trafficking Act, a controversial bill that would make website operators responsible for illegal content posted on their sites. That bill is still waiting for Trump's signature, although it had an effect on other classified sites, which led Craigslist to withdraw its personal ads section.

Beyond Lacey and Larkin, the Backpage indictment includes charges against the chief financial officer, operations manager, assistant operations manager and marketing director. It also charges the executive vice president of one of the parent companies of Backpage. Backpage's executive director, Carl Ferrer, previously accused of procuring in California, was not charged in this indictment.

The Department of Justice states that the owners of Backpage tried to hide the fact that most of their advertisements for adult services involved prostitution, and Backpage allowed child sex traffickers to keep ads on the site as long as they eliminated the Keywords related to age. The indictment also alleges that Backpage disguised payments for illegal services by having customers channel money into foreign bank accounts or seemingly unrelated companies, or transferring funds to cryptocurrencies.

Attorney General Jeff Sessions characterized the accusations as a blow against human trafficking, saying the application of the law had "put an end to the violence, abuse and anguish that has been perpetrated using this site." As journalist Melissa Gira Grant pointed out on Twitter, the indictment overwhelmingly accuses Backpage of deliberately allowing related ads. to prostitution in general, not to children or to victims of human trafficking. She states that Backpage did not remove ads that included coded words for underage sex workers, and chose simply to add the words to a general language filter.

Backpage's adult ad pages made it a legal target for years, and critics say it facilitated sex trafficking. Site owners said they were exercising their right to freedom of expression, and sex workers argued that Backpage allowed them to work more safely by examining clients. Some anti-trafficking investigators also said that having a popular and centralized site facilitated the search and capture of sex traffickers. The site finally closed the section for adults last year, but reportedly continued to publish advertisements for prostitution among its "dating" notices prior to its closure last week.

Update 6:20 PM ET: Additional details of the prosecution and the Department of Justice press release.

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