Backpage CEO Arrested, HQ Raided on California Warrant

Backpage CEO Carl Ferrer was arrested by Texas authorities on a California warrant upon arrival at Houston’s Bush Intercontinental Airport on felony charges of pimping a minor, pimping, and conspiracy to commit pimping. Authorities also raised Backpage’s Dallas headquarters.

The complaint lists five instances of minors (four who were under 16) allegedly paying to advertise on Backpage in California. In a press release, Attorney General Kamala Harris explains:

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.

Attorney General Harris stated:

Raking in millions of dollars from the trafficking and exploitation of vulnerable victims is outrageous, despicable and illegal. 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.

In addition to Ferrer, California charged Backpage’s controlling shareholders Michael Lacey and James Larkin with conspiracy to commit pimping, a felony. The charges against Ferrer could bring him nearly 22 years in prison, while Larkin and Lacey face a maximum six years. Lawyers for Backpage have yet to comment on the arrest.

Backpage also has been the subject of recent Senate hearings into its classified ads. Last month, the Supreme Court refused to block a Senate subpoena seeking information on how Backpage screens ads for possible sex trafficking. (See Backpage Loses Battle with Senate Committee). Senators Rob Portman and Claire McCaskill the leaders of the Permanent Subcommittee on Investigations, issued a statement hailing the criminal charges

For the past 18 months, we have led a bipartisan investigation into the scourge of online sex trafficking. That investigation led us directly to Backpage, an online marketplace that has been involved in hundreds of reported cases of sex trafficking, including child exploitation. We certainly wish that Backpage had willingly cooperated with our investigation. Despite its refusal to do so, our investigation was the first to uncover Backpage’s practice of editing ads in manner that serves to conceal evidence of criminality. As law enforcement officials in Texas and California do their job, we will continue to press forward and complete our longstanding investigation.

California officials said their investigation was prompted in part by the National Center for Missing and Exploited Children, which reported 2,900 instances to California authorities since 2012 when suspected child sex trafficking occurred using Backpage. The investigation is detailed in the arrest warrant below.

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