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Jury selection for Michael Lacey and four former Backpage employees is scheduled to begin Tuesday in federal court. Their first trial ended in a mistrial in September 2021 when a judge concluded prosecutors had too many references to child sex trafficking in a case where no one faced such a charge.
Lacey had founded the Phoenix New Times weekly newspaper with James Larkin, who was charged in the case and died by suicide in July. Lacey and Larkin held ownership interests in other weeklies such as The Village Voice and ultimately sold their newspapers in 2013. But they held onto Backpage, which authorities say generated $500 million in prostitution-related revenue from its inception in 2004 until 2018, when it was shut down by the government.
In all, five former Backpage operators have pleaded not guilty to charges of facilitating prostitution. Of the five, Lacey and two others have pleaded not guilty to money laundering charges.
The site’s marketing director has pleaded guilty to conspiring to facilitate prostitution and acknowledged he participated in a scheme to give free ads to prostitutes to win over their business. Additionally, the CEO of the company when the government shut the site down, Carl Ferrer, pleaded guilty to a separate federal conspiracy case in Arizona and to state money laundering charges in California.
Prosecutors say Backpage’s operators ignored warnings to stop running prostitution ads, some involving children. They are accused of giving free ads to prostitutes and cultivating arrangements with others who worked in the sex trade to get them to post ads with the company.
Authorities say Backpage employees would identify prostitutes through Google searches, then call and offer them a free ad. The site also is accused of having a business arrangement in which it would place ads on another site that lets customers post reviews of their experiences with prostitutes.
Backpage’s operators said they never allowed ads for sex and used people and automated tools to try to delete such ads and maintain the content on the site was protected by the First Amendment. Prosecutors said the moderation efforts by the site were aimed at concealing the true nature of the ads.
Lacey also is accused of using cryptocurrency and wiring money to foreign bank accounts to launder revenues earned from the site’s ad sales after authorities say banks raised concerns that they were being used for illegal purposes.
At trial, the Backpage defendants are barred from bringing up a 2013 memo by federal prosecutors who examined the site and said at the time that they hadn’t uncovered evidence of a pattern of recklessness toward minors or admissions from key participants that the site was used for prostitution.
In the memo, prosecutors had said witnesses testified Backpage made substantial efforts to prevent criminal conduct on its site and coordinated such efforts with law enforcement agencies. The document was written five years before Lacey, Larkin and the other former Backpage operators were charged in the Arizona case.
A Government Accountability Office report released in June 2021 said the FBI’s ability to identify victims and sex traffickers had decreased significantly after Backpage was seized by the government, because law enforcement was familiar with the site and Backpage was generally responsive to requests for information.
U.S. District Judge Susan Brnovich, who had declared a mistrial during the first attempt to try the Backpage defendants, had allowed evidence showing that people were trafficked using the site, but cautioned prosecutors not to linger on details of the abuse. “It seemed the government abused that leeway,” Brnovich said when declaring a mistrial.
In a pretrial ruling, U.S. District Judge Diane Humetewa, who is presiding over the second trial, repeated that warning to prosecutors.
Subscribe to the new Fortune CEO Weekly Europe newsletter to get corner office insights on the biggest business stories in Europe. Sign up for free.Latest in Retail0 minutes agoHealth - CancerPopular acne products from Proactiv, Clinique and Target contain cancer-linked chemical benzeneBYAnna Edney and Bloomberg0 minutes agoRetail - CaliforniaPanera franchise billionaire will comply with California minimum wage law—after unusual bread-baking exemption prompts ‘absurd’ outcry from Gavin Newsom’s officeBYMarco Quiroz-Gutierrez0 minutes agoRetail - TargetTarget just launched its own version of Amazon PrimeBYChris Morris0 minutes agoRetail - Jeff BezosOscar Mayer is partnering with a Jeff Bezos-backed startup to roll out a vegan hot dogBYDeena Shanker and Bloomberg0 minutes agoCommentary - HousingThe U.S. housing market is headed into a pivotal spring season as home sellers wait for their sweet spot, according to OpendoorBYNick Boniakowski0 minutes agoSuccess - delivery appsGig platforms are limiting workers’ hours and making it more difficult to tip them as New York City rolls out new rules to ensure they make at least $18 an hourBYCedar Attanasio and The Associated PressMost Popular0 minutes agoTechElon Musk’s German Tesla plant suffers close to $1 billion in damages after attack by the ‘dumbest ecoterrorists on earth’BYChristiaan Hetzner0 minutes agoFinanceChinese retailers like Shein have offered Americans deep bargains on clothes for years—but that could soon changeBYDidi Tang and The Associated Press0 minutes agoFinanceTop economist who called the 2008 housing crash pours cold water on soft landing, pointing to rate hikes and a softening labor marketBYPaolo Confino0 minutes agoTechInternet cables cut in the Red Sea in ‘exceptionally rare’ incident, disrupting much of Asia, Europe, and the Middle EastBYChris Morris0 minutes agoFinanceTop economist Gary Shilling predicts a ‘considerable revival’ in housing activity—but it’s going to take 3 or 4 years to unfreeze the housing marketBYSydney Lake0 minutes agoFinanceTaylor Swift reportedly got millions from Singapore to only perform there in Southeast Asia. Now Thai and Philippine politicians are hitting backBYPhilip J. Heijmans and BloombergRankings100 Best CompaniesFortune 500Global 500Fortune 500 EuropeMost Powerful WomenFuture 50World’s Most Admired CompaniesSee All RankingsSectionsFinanceLeadershipSuccessTechAsiaEuropeEnvironmentFortune CryptoHealthWellRetailLifestylePoliticsNewslettersMagazineFeaturesCommentaryMPWCEO InitiativeConferencesPersonal FinanceRecommendsCouponsCustomer SupportFrequently Asked QuestionsCustomer Service PortalPrivacy PolicyTerms of UseSingle Issues for PurchaseInternational PrintCommercial ServicesFortune Brand StudioFortune AnalyticsFortune ConferencesAdvertisingBusiness DevelopmentAbout UsAbout UsEditorial CalendarWork at FortuneDiversity and InclusionBehavioral Advertising NoticeTerms and ConditionsSite Map© 2024 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice | Do Not Sell/Share My Personal Information | Ad Choices
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Prosecutor Kevin Rapp told jurors on Thursday and Friday that Michael Lacey, who along with four former Backpage employees are accused of taking part in a scheme to knowingly sell sex ads, was aware of the content of ads that had text and images indicative of prostitution. Most of the site’s revenues came from adult ads, Rapp said.
“It’s not coming from (ads for) apartments, automotive or jobs,” Rapp said.
Paul Cambria, an attorney for Lacey, said his client was focused on running an alternative newspaper chain and wasn’t involved in day-to-day operations of Backpage and that there’s no evidence that Lacey saw the 50 ads at issue before his trial. Based on the site’s cooperation with law enforcement, Lacey had a good-faith belief that Backpage was being operated lawfully, Cambria said.
“Why would you think you were breaking the law if the police were asking you to work with them?” Cambria asked jurors on Friday.
It’s the second trial for Lacey and four former Backpage employees, whose first trial ended in a September 2021 mistrial when a judge concluded that prosecutors had too many references to child sex trafficking in a case where no one faced such a charge.
In all, Lacey and the group of former employees have pleaded not guilty to charges of facilitating prostitution. Of the five, Lacey and two others have pleaded not guilty to money laundering charges.
Lacey had founded the Phoenix New Times weekly newspaper with James Larkin, who was charged in the case and died by suicide in July. Lacey and Larkin held ownership interests in other weeklies such as The Village Voice and ultimately sold their newspapers in 2013. But they held onto Backpage, which authorities say generated $500 million in prostitution-related revenue from its inception in 2004 until 2018, when it was shut down by the government.
The site’s marketing director has pleaded guilty to conspiring to facilitate prostitution and acknowledged he participated in a scheme to give free ads to prostitutes to win over their business. Additionally, the CEO of the company when the government shut the site down , Carl Ferrer, pleaded guilty to a separate federal conspiracy case in Arizona and to state money laundering charges in California.
Prosecutors say Backpage’s operators ignored warnings to stop running prostitution ads, some involving children. They are accused of giving free ads to sex workers and cultivating arrangements with others who worked in the sex trade to get them to post ads with the company.
Authorities say Backpage employees would identify prostitutes through Google searches, then call and offer them a free ad. The site also is accused of having a business arrangement in which it would place ads on another site that lets customers post reviews of their experiences with sex workers.
Backpage’s operators said they never allowed ads for sex, and assigned employees and automated tools to try to delete such ads. Their legal team maintains the content on the site was protected by the First Amendment. Prosecutors said the moderation efforts by the site were aimed at concealing the true nature of the ads.
Rapp told jurors that Backpage was clearly on notice about the problems with its ads, saying news organizations and groups that advocated against sex trafficking had called out Backpage.
Rapp pointed to testimony from Ferrer about when the National Center for Missing and Exploited Children told Backpage that it had sex ads on its site. Lacey got upset and said the group’s mission focused on exploited children, not on adult prostitution, Rapp told jurors.
Cambria raised questions about the credibility of testimony by Ferrer and the other Backpage employee who pleaded guilty, saying they want the government to recommend a more lenient sentence for their cooperation.
Lacey’s attorney also said Backpage cooperated with authorities by responding to subpoenas for records and that the assistance provided by the site led to charges against pimps and prostitutes.
Cambria showed jurors a May 2011 certificate of appreciation that was issued to Ferrer and signed by then-FBI Director Robert Mueller for Backpage’s assistance in an investigation.
A Government Accountability Office report released in June 2021 said the FBI’s ability to identify victims and sex traffickers had decreased significantly after Backpage was seized by the government, because law enforcement was familiar with the site and Backpage was generally responsive to requests for information.
The trial is scheduled to resume Tuesday, when lawyers for other defendants will making their closing arguments.Subscribe to the new Fortune CEO Weekly Europe newsletter to get corner office insights on the biggest business stories in Europe. Sign up for free.Latest in Politics0 minutes agoPolitics - CongressHouse passes $460bn spending package to fund the government through September and the Senate is expected to act before shutdown deadlineBYKevin Freking and The Associated Press0 minutes agoPolitics - ElectionsMusk rejects both Trump and Biden: ‘I am not donating money to either candidate for US President’BYJosh Wingrove and Bloomberg0 minutes agoPolitics - Republican PartyBillionaire mega-donors Ken Griffin and the Koch Network tried and failed to make Nikki Haley a presidential contenderBYPaolo Confino0 minutes agoEnvironment - Securities and Exchange CommissionSEC chair drags climate rule across the finish line despite objections from commissioners, who say it will ‘spam investors with the commission’s pet topic of the day’BYAmanda Gerut0 minutes agoPolitics - ElectionsTrump and Biden dominate Super Tuesday, shoving Nikki Haley out of the race and setting up a 2020 rematchBYWill Weissert, Bill Barrow, and others0 minutes agoPolitics - Elon MuskDonald Trump met with Elon Musk as Republican presidential frontrunner looks to woo donors to his cash-strapped political operationBYNancy Cook, Jennifer Jacobs, and othersMost Popular0 minutes agoTechElon Musk’s German Tesla plant suffers close to $1 billion in damages after attack by the ‘dumbest ecoterrorists on earth’BYChristiaan Hetzner0 minutes agoFinanceChinese retailers like Shein have offered Americans deep bargains on clothes for years—but that could soon changeBYDidi Tang and The Associated Press0 minutes agoFinanceTop economist who called the 2008 housing crash pours cold water on soft landing, pointing to rate hikes and a softening labor marketBYPaolo Confino0 minutes agoTechInternet cables cut in the Red Sea in ‘exceptionally rare’ incident, disrupting much of Asia, Europe, and the Middle EastBYChris Morris0 minutes agoFinanceTop economist Gary Shilling predicts a ‘considerable revival’ in housing activity—but it’s going to take 3 or 4 years to unfreeze the housing marketBYSydney Lake0 minutes agoFinanceTaylor Swift reportedly got millions from Singapore to only perform there in Southeast Asia. Now Thai and Philippine politicians are hitting backBYPhilip J. Heijmans and BloombergRankings100 Best CompaniesFortune 500Global 500Fortune 500 EuropeMost Powerful WomenFuture 50World’s Most Admired CompaniesSee All RankingsSectionsFinanceLeadershipSuccessTechAsiaEuropeEnvironmentFortune CryptoHealthWellRetailLifestylePoliticsNewslettersMagazineFeaturesCommentaryMPWCEO InitiativeConferencesPersonal FinanceRecommendsCouponsCustomer SupportFrequently Asked QuestionsCustomer Service PortalPrivacy PolicyTerms of UseSingle Issues for PurchaseInternational PrintCommercial ServicesFortune Brand StudioFortune AnalyticsFortune ConferencesAdvertisingBusiness DevelopmentAbout UsAbout UsEditorial CalendarWork at FortuneDiversity and InclusionBehavioral Advertising NoticeTerms and ConditionsSite Map© 2024 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice | Do Not Sell/Share My Personal Information | Ad Choices
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Backpage founder will face Arizona retrial on charges he participated in scheme to sell sex ads | AP News
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Backpage founder will face Arizona retrial on charges he participated in scheme to sell sex ads
FILE - Former Backpage.com owner Michael Lacey attends a Senate committee on Jan. 10, 2017, on Capitol Hill in Washington. Federal prosecutors in Arizona said Tuesday, Jan. 23, 2024, they will retry Lacey, a co-founder of the lucrative classified site Backpage.com, on dozens of prostitution facilitation and money laundering charges that alleged he participated in a scheme to sell sex ads. (AP Photo/Cliff Owen, File)
By JACQUES BILLEAUD
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PHOENIX (AP) — Federal prosecutors in Arizona said Tuesday they will retry a co-founder of the lucrative classified site Backpage.com on dozens of prostitution facilitation and money laundering charges that alleged he participated in a scheme to sell sex ads.A jury in mid-November 2023 convicted Michael Lacey of one count of international concealment money laundering, acquitted him on another money laundering count and deadlocked on 84 other charges.That marked the second trial for Lacey, whose first trial ended in a mistrial after a judge concluded in 2021 that prosecutors had too many references to child sex trafficking in a case where no one faced such a charge.On Tuesday, prosecutors filed a formal notice of retrial in federal court in Phoenix in compliance with a deadline U.S. Judge Diane Humetewa set in an order on Jan. 10.
“The United States files this notice of intent to retry Defendant Michael Lacy on the 84 counts for which the jury was unable to reach a verdict and requests that the court set the case for retrial,” U.S. Attorney Gary Restaino wrote in the five-page notice.Lacey’s lawyer, Paul Cambria, declined comment just after the notice was filed late Tuesday.
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“I have none at the moment,” he told The Associated Press.Lacey, 75, was previously tried on a total of 86 criminal counts in the case against him and four other Backpage employees.
John Brunst, Backpage’s chief financial officer, was convicted of one count of conspiracy to violate the Travel Act — a federal law barring the use of interstate commerce to facilitate prostitution in violation of state laws — and more than 30 money laundering counts.Scott Spear, executive vice president for the site, was convicted of one count of conspiracy to violate the Travel Act, more than a dozen counts of facilitation of prostitution and about 20 money laundering counts.
Two other former Backpage employees were acquitted of a conspiracy charge and dozens of counts of facilitation of prostitution.Before launching Backpage, Lacey founded the Phoenix New Times weekly newspaper with James Larkin, who was charged in the case and died by suicide in late July about a week before the second trial against Backpage’s operators was scheduled to begin.Lacey and Larkin held ownership interests in other weeklies such as The Village Voice and ultimately sold their newspapers in 2013. But they held onto Backpage, which authorities say generated $500 million in prostitution-related revenue from its inception in 2004 until 2018, when it was shut down by the government.Prosecutors had argued that Backpage’s operators ignored warnings to stop running prostitution ads, some involving children. The operators were accused of giving free ads to sex workers and cultivating arrangements with others who worked in the sex trade to get them to post ads with the company.Backpage’s operators said they never allowed ads for sex and assigned employees and automated tools to try to delete such ads. Their legal team maintained the content on the site was protected by the First Amendment.
Prosecutors also said Lacey used cryptocurrency and wired money to foreign bank accounts to launder revenues earned from the site’s ad sales after banks raised concerns that they were being used for illegal purposes.A U.S. Government Accountability Office report released in June 2021 said the FBI’s ability to identify victims and sex traffickers had decreased significantly after Backpage was seized by the government, because law enforcement was familiar with the site and Backpage was generally responsive to requests for information.In 2018, the site’s sales and marketing director, Dan Hyer, had pleaded guilty to conspiring to facilitate prostitution and acknowledged he participated in a scheme to give free ads to prostitutes to win over their business. Ferrer also pleaded guilty to a separate federal conspiracy case in Arizona and to state money laundering charges in California.____Associated Press writer Scott Sonner contributed to this report from Reno, Nevada.
JACQUES BILLEAUD
Billeaud is an Associated Press reporter who covers courts and law enforcement in Arizona. He previously covered immigration and the Arizona Legislature.
The Associated Press is an independent global news organization dedicated to factual reporting. Founded in 1846, AP today remains the most trusted source of fast, accurate, unbiased news in all formats and the essential provider of the technology and services vital to the news business. More than half the world’s population sees AP journalism every day.
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Backpage.com: Seven People Indicted For Conspiracy To Facilitate Prostitution : The Two-Way : NPR
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Backpage.com: Seven People Indicted For Conspiracy To Facilitate Prostitution : The Two-Way A federal grand jury indicted seven people behind the website. Known for adult services ads, Backpage has for years prevailed in lawsuits accusing it of facilitating sex trafficking of children.
The Two-Way
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Backpage Founders Indicted On Charges Of Facilitating Prostitution
April 9, 20185:49 PM ET
Alina Selyukh
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A screenshot of Backpage.com says federal law enforcement authorities seized the website as part of an enforcement action by the FBI and other agencies.
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A screenshot of Backpage.com says federal law enforcement authorities seized the website as part of an enforcement action by the FBI and other agencies.
Damian Dovarganes/AP
A federal grand jury in Arizona has indicted seven people behind the classified-ads website Backpage.com on 93 counts, including charges of facilitating prostitution and money laundering. The defendants include founders Michael Lacey, 69, and James Larkin, 68, as well as other shareholders and employees. The indictment accuses the executives of presenting Backpage as a site to advertise escort services while knowing that "the overwhelming majority of the website's ads involve prostitution." The indictment says the site made over $500 million in "prostitution-related revenue." The website has long been known for its adult-services ads, some of which feature children.
"Many of the ads published on Backpage depicted children who were victims of sex trafficking," according to the indictment, which alleges that Backpage's "official policy, when presented with an ad featuring the prostitution of a child, was to delete the particular words in the ad denoting the child's age and then publish a revised version of the ad." Backpage servers had been seized and shut down Friday in a raid by the Department of Justice, FBI, other federal agencies and attorneys general from California and Texas. The charges against Lacey, Larkin and others were unsealed on Monday. Larkin's lawyer Larry Kazan did not immediately respond to NPR's request for comment. The indictment is the first case of federal criminal charges against the people behind Backpage after years of scrutiny and controversy. Several young women and their families have over the years lost lawsuits against the classifieds website, accusing it of facilitating child sex trafficking. As The Washington Post reports, "Backpage has argued that it assists law enforcement in tracking down victims and perpetrators of crimes, which some police officials have corroborated. ... Some in the sex worker industry say that removing Backpage from the internet takes away a safe mechanism for screening clients, and that the ads will simply move to sites outside the country, or to social media. "
Backpage has been in legal fights for years, but mostly in civil cases filed by young women and their families. In case after case against Backpage, the site's lawyers successfully argued the website was not responsible for its ads, citing a law that shields social media and other Internet platforms from liability for what users say or post online. The site had argued it simply hosted the ads. The law, however, allows for federal criminal investigations. Plus, a major Senate investigation and a cache of discovered documents eventually suggested that Backpage was actively involved in the creating and editing of the sex ads, making the site a publisher that could be liable for its content. The alleged involvement included stripping the ads of code words such as "Lolita" or "new to town," which could indicate an underage girl.
All Tech Considered
Section 230: A Key Legal Shield For Facebook, Google Is About To Change
Backpage.com had shut down its adult ad pages in January 2017. CEO Carl Ferrer and shareholders Lacey and Larkin had previously been charged with conspiracy to commit pimping, but a California judge rejected the charges. Lacey and Larkin are former executives of the New Times Media chain, which they sold off a few years ago. Ferrer was subpoenaed to testify before the Senate in 2015, but he did not show up. He, Lacey and Larkin did appear before the Senate Permanent Subcommittee on Investigations in 2017, but they declined to answer questions, citing the First and Fifth Amendments. The Supreme Court last year declined to hear an appeal against Backpage and its use of the Internet shield law, known as Section 230 of the Communications Decency Act. In March, prompted by the Backpage saga, Congress changed Section 230 to allow more state and civil lawsuits against websites related to online sex trafficking, for "knowingly assisting, supporting or facilitating" crimes. The legislation faced opposition from free-expression groups and some Internet companies that consider Section 230 the core pillar of the modern Internet and say the crimes will simply travel deeper into the dark Web. Sex workers also have argued that the bill would make people working in the industry less safe.
After the bill's passage, Craigslist shut down its personals section in the U.S. and Reddit announced policy changes. NPR's Vanessa Romo contributed to this report.
The Two-Way
Craigslist Shuts Down Personals Section After Congress Passes Bill On Trafficking
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Beth HolzerA few minutes before 9 am on April 6, 2018, a fleet of unmarked vehicles with government plates rolled up in front of Lacey’s multimillion-dollar compound in Paradise Valley, a few miles outside of Phoenix. These weren’t the guests he’d been expecting. The 69-year-old divorced father of two had recently gotten remarried, and he was preparing to host a lavish party to celebrate his vows. Tents were pitched on his lawn; retired journalists and overworked lawyers were winging their way into town. FBI agents informed the groom that he was being arrested on charges of money laundering and facilitating prostitution. They cuffed him, then subdued the home’s other occupants, including Lacey’s 76-year-old mother-in-law, whom they ordered out of the shower at gunpoint.For the next six hours, the lawmen tossed the compound looking for, among other things, “evidence of wealth.” They seized art, cash, computers, even the bride’s wedding ring. Meanwhile, at the Phoenix airport, federal marshals awaited a 747 inbound from London. When it touched down, the flight crew made an announcement: Police would be boarding, so passengers must stay put. “I wondered who they were there for,” recalls Larkin, then 68, who was seated beside his son in business class. “I quickly figured out it was me.” (The Department of Justice declined to comment on the arrests.)Partygoers soon received a cryptic text message. Owing to “unforeseen circumstances,” it said, the wedding celebration had been “postponed.” A notice went up on Backpage, explaining that the website had been seized “as part of an enforcement action.” More than a few guests completed the journey to Phoenix anyway; reporters can’t resist a story, and Lacey had already paid for a block of rooms at the Hotel Camby. They gathered at various local watering holes, offering what one attendee describes as “toasts to the accused,” and pieced together a gripping narrative—a tale of free-speech crusaders crossed over to the dark side, dedicated newshounds become digital pimps.Backpage, the domain that brought the federal government down on Lacey and Larkin’s heads, wasn’t much to look at—a bare-bones interface wrapped in Facebooky blue, similar to Craigslist in both form and function. Its name alluded to the old days of print publishing, when classified ads, especially ads for topless bars, escort services, and other sexually oriented businesses filled the final pages of alt-weeklies and provided much of their revenue. Visitors to the site were greeted with several columns of links, which directed them to listings for various metropolitan areas around the country. From there, they could reply to ads or write their own.Many of the ads—for auto parts, part-time gigs, vacation rentals, and so on—were free to publish. But the lewd stuff, listed under the adult section, cost money. For as little as $2 a day, users could post in such categories as “body rubs” and “dom & fetish.” The site’s terms of use prohibited any content that could be considered “unlawful,” “harmful,” or “obscene.” To gain access to the adult section, all users had to do was click a link confirming they were 18 or older. Once inside, they saw an endless scroll of titles, some laden with innuendo (“Cum lay your hotdog on my bun for memorial day”), others more explicit (“Three holes anything goes $90”).Related StoriesLaw EnforcementFeds Seize Backpage.com, Site Linked to Sex TraffickingNitasha TikuSection 230Lawmakers Don't Grasp the Sacred Tech Law They Want to GutIssie LapowskyIdeasWant Facebook to Censor Speech? Be Careful What You Wish ForAntonio García MartínezAs in the print days, these adult ads reigned supreme. In 2011 they accounted for 15 percent of Backpage’s listings but generated more than 90 percent of its revenue. By the time the Feds pulled the plug on the site, it was operating in 97 countries and was valued at more than half a billion dollars. People called it the Google of commercial sex ads, a platform that dominated its market as thoroughly as Facebook dominated social networking or Amazon did online retail.The government indictment that triggered Lacey and Larkin’s arrests, United States v. Lacey, et al., includes 17 “victim summaries”—stories of women who say they were sexually exploited through Backpage. Victim 5 first appeared in an ad on the platform when she was 14; her “customers” made her “perform sexual acts at gunpoint, choked her to the point of having seizures, and gang-raped her.” Victim 6 was stabbed to death. Victim 8’s uncle and his friends advertised her as “fetish friendly.” The indictment accuses Backpage of catering to sexual predators, of essentially helping pimps better reach their target audiences.Most PopularSecurityHackers Behind the Change Healthcare Ransomware Attack Just Received a $22 Million PaymentAndy GreenbergBusiness6 Months After New York Banned Airbnb, New Jersey Is Doing GreatAmanda HooverBusinessFor Bitcoin Mines in Texas, the Honeymoon Is OverJoel KhaliliScienceLess Sea Ice Means More Arctic Trees—Which Means TroubleMatt SimonIn the years before their arrest, Lacey and Larkin had successfully beat back charges like these in court. They took refuge not only in the First Amendment but also in Section 230 of the Communications Decency Act, Congress’ great gift to the internet. Passed in 1996, Section 230 largely immunized online platforms from liability for the user-generated content they hosted. They were free to police offending material as they saw fit, without undue fear of prosecution by state or local authorities—as long as they didn’t create it themselves. America’s tech behemoths, from Twitter to Facebook, have often invoked Section 230 in court. The internet we have today wouldn’t exist without it. After all, you can’t build or sustain a giant network if you’re getting sued every time a user says or does something objectionable.For a while, Lacey and Larkin’s strategy had worked: They’d won case after case, with the support of Big Tech and civil libertarians alike. But by the time the Feds descended on Paradise Valley that morning in the spring of 2018, the tide had turned. Many of their friends and allies had fled, spooked in part by too much bad press. The tech industry, which faced withering scrutiny over its role in the outcome of the 2016 presidential election, had thrown them under the bus. Their top lieutenant had flipped. And Congress had used them as an excuse to finally accomplish what it had been trying to do for more than 20 years—tear a hole in Section 230.Maybe they should have seen it coming: The betrayals. The asset seizures. The changing zeitgeist. They were, to be sure, brazenly cashing in on the sex trade. But here’s the thing: Silicon Valley had better hope they win. United States v. Lacey is a dangerous case, with potential consequences far beyond the freedom of two aging antiauthoritarians.A view from Paradise Valley, looking out onto Camelback Mountain.Jesse RieserIt’s a mid-November afternoon in 2018, and Mike Lacey and Jim Larkin are seated on either side of the 20-foot-long glass table that dominates Lacey’s living room. They’re clad in jeans, polos, and ankle monitors. A black charging cord snakes from a wall outlet to Lacey’s left foot, which emits an occasional beep.Both men are out on million-dollar bonds, secured by real estate the government eventually hopes to own. The bulk of the charges against them fall under the Travel Act, a law designed by Robert F. Kennedy’s Justice Department to target organized crime. According to the indictment, Lacey, Larkin, and their underlings not only turned a blind eye to prostitution and child sexual abuse but, driven by greed, actively worked to abet it. Their case is set for January 2020. “El Chapo got to trial quicker,” Lacey quips.I’ve worked for both sides in this showdown. In the late 1990s, I was a staff writer for the Dallas Observer, a weekly owned by Lacey and Larkin. Then, in 2001, I went to work for the Department of Justice as an assistant US attorney in Plano, Texas.Most PopularSecurityHackers Behind the Change Healthcare Ransomware Attack Just Received a $22 Million PaymentAndy GreenbergBusiness6 Months After New York Banned Airbnb, New Jersey Is Doing GreatAmanda HooverBusinessFor Bitcoin Mines in Texas, the Honeymoon Is OverJoel KhaliliScienceLess Sea Ice Means More Arctic Trees—Which Means TroubleMatt SimonThe two men have lived large, and it shows. Larkin is a burly former football player, 6 ' 2 " and easily 250 pounds, with cornflower eyes, chubby cheeks, and a ruddy complexion. Lacey’s mug reveals decades of sun and single-malt Scotch—the hooded lids, the sagging chin, the lines running like canyons down his face and into his neck. His spiky hair has thinned and grayed, but he still has the prominent schnoz, the ice-blue eyes, and the knuckles famously tattooed with "HOLD FAST." (His father, who served in the Navy during World War II, had the same slogan inked across his fists.)Their situation looks bleak. The government has seized all of Lacey’s financial accounts and most or all of Larkin’s. Prosecutors have already produced more than 10 million documents and have promised, or threatened, more to come. It will cost the defendants several million dollars just to buy the software they need to search the government’s files. For the time being, though, they’re still drinking well. When I arrive, Larkin has uncorked a bottle of Jack Quinn, a cabernet produced at his 3-acre vineyard in Napa. (Although Larkin has owned the place since before Backpage existed, the government has given notice that it intends to seize the vineyard, alleging that he used Backpage-derived funds for its maintenance.) Lacey, meanwhile, is still knocking back Macallan 21—although nowadays he stops to ask the price. At the Blue Hound bar in Phoenix, where we repaired for a later interview, it’s $120 per shot.Lacey got his start in journalism in 1970, in the wake of the Kent State shootings, when he and a group of antiwar comrades at Arizona State University founded what would become the Phoenix New Times. In the beginning, he claims, he sold his blood to pay the bills. He met Larkin two years later—not long after Lacey’s father, the union enforcer, and his mother, an opera singer and registered nurse, were found frozen to death in a rented trailer in Oswego, New York. (“It was a murder-suicide,” Lacey says. “They were drunk, and she turned on the gas.”)The men connected immediately. Both were college dropouts, and both had suffered through difficult childhoods. Larkin’s mother died when he was 2, and he spent most of his youth in what he describes as a “Catholic ghetto.” In high school, he cofounded a student newspaper, The Big Press, then promptly got himself suspended for criticizing administrators. “I wanted to be in that business,” he says. Lacey brought him on as publisher.In 1977, Lacey and Larkin staged a putsch. They wrested control of the New Times from Lacey’s cofounders and set about turning the fledgling broadsheet into an empire. Larkin worked out a lucrative revenue model, emphasizing classifieds and personals. (While a page of big retail ads might net $1,000, a page of classifieds, 100 ads at $25 a pop, could bring in $2,500.) Six years later, they began to expand. They bought up struggling weeklies in cities across the country—Denver, Houston, Miami—and transformed them into serious news organizations, hiring experienced, high-profile reporters and giving them resources to do the job.“I didn’t get into this racket to be told what to publish,” Lacey growls. “By anybody.”They believed there was an audience for in-depth, long-form investigative reporting. A month after 9/11, for instance, The New Times Broward-Palm Beach published an exposé on how lapses in federal immigration policy had allowed the hijackers to enter the country. In 2003, Westword got the scoop on a sexual assault scandal at the US Air Force Academy. In 2013, The Miami New Times ran a story on the steroid scandal in Major League Baseball, which ultimately resulted in the suspension of 14 players. Lacey once told an interviewer, “As a journalist, if you don’t get up in the morning and say ‘Fuck you’ to someone, why even do it?”They tangled with shareholders, authorities, competitors, printers, and municipalities that tried to restrict their distribution. Lacey, who wrote numerous stories himself, was known to clock reporters and pummel press aides, usually when spirits were involved. (He estimates that he’s been arrested “10 or 11 times,” but “only three for writing.” The one criminal conviction on his record is for a misdemeanor DUI.) When violence didn’t settle things, Lacey and Larkin often moved matters to the courtroom. Litigation was their idea of fun, the continuation of hell-raising by other means. “I didn’t get into this racket to be told what to publish,” Lacey growls. “By anybody. If you don’t like it, don’t read it.”Most PopularSecurityHackers Behind the Change Healthcare Ransomware Attack Just Received a $22 Million PaymentAndy GreenbergBusiness6 Months After New York Banned Airbnb, New Jersey Is Doing GreatAmanda HooverBusinessFor Bitcoin Mines in Texas, the Honeymoon Is OverJoel KhaliliScienceLess Sea Ice Means More Arctic Trees—Which Means TroubleMatt SimonSteve Suskin, their former in-house counsel, says they and their companies were sued 56 times between 1997 and 2012 alone. “We won them all,” Suskin recalls. They were successful in part because they recognized that litigation is a war of attrition, and they were willing to go the distance. Says Lacey: “You want to sue us, bring your lunch pail, ’cause we gonna be awhile.” In their most famous legal set-to, they successfully sued Joe Arpaio, Maricopa County’s notoriously anti-immigrant sheriff, for false arrest, winning a $3.75 million settlement. In a final flip of the bird to Arpaio, they used the money to set up a nonprofit to defend the rights of undocumented immigrants and Latinx Americans.Through it all, Larkin kept the money coming in, embracing each new fad in classified advertising. In 1989, for example, the New Times group launched its first adult section, appropriately dubbed Wildside. (The ads were moderated by sales staff to ensure no blatant sex-for-money propositions made it into print.) Racy ads fueled the company’s explosive growth; by 2001, Lacey and Larkin owned 11 papers, which raked in more than $100 million a year. But the good times didn’t last. Craigslist had begun expanding into cities outside the Bay Area, offering free ads in all categories except jobs and erotic services. Classified revenue tanked.In 2003, Larkin was approached by Carl Ferrer, an ad salesman he’d hired away from a small paper in Louisiana and installed as classified ad director at the Dallas Observer. Ferrer, a short, slight man with a goatee and a perpetually worried look, proposed that they create an in-house version of Craigslist. Larkin put him in charge of building and running the website, which launched in 2004.The following year, Lacey and Larkin won the prize they’d chased for years—The Village Voice, the grande dame of alt-weeklies. When the New Times group merged with Village Voice Media, the two companies formed a 17-paper megachain valued at about $400 million, with an estimated $180 million in annual revenue. Lacey and Larkin’s timing could not have been worse. Between 2006 and 2012, according to the Pew Research Center, American newspapers lost half their advertising revenue. Backpage, however, grew steadily, even if it wasn’t nearly enough to offset the papers’ declining receipts.Lacey and Larkin say they were advised by counsel that what Backpage was doing was 100 percent legal. They saw no distinction between advertising and editorial; it was all protected speech, all mission-critical. In 2008, they were honored by the Arizona chapter of the ACLU as Civil Libertarians of the Year. In his acceptance speech, Lacey decried “the gentrified instincts of soccer moms,” which led demagogues like Joe Arpaio to crack down on press freedom. He vowed that both he and Larkin would continue to oppose the “forces of offended decency” wherever they found them.Today, they remain defiant. “I didn’t do anything wrong,” Lacey declares. “I didn’t do what they say. And if they think they’re gonna punk me, they got the wrong fucking guy.”Most PopularSecurityHackers Behind the Change Healthcare Ransomware Attack Just Received a $22 Million PaymentAndy GreenbergBusiness6 Months After New York Banned Airbnb, New Jersey Is Doing GreatAmanda HooverBusinessFor Bitcoin Mines in Texas, the Honeymoon Is OverJoel KhaliliScienceLess Sea Ice Means More Arctic Trees—Which Means TroubleMatt SimonOne of the great ironies of internet history is that the Communications Decency Act—a law conceived, as its name suggests, to rid the web of vice—actually ended up doing the opposite. It was proposed in 1995 by Senator J. James Exon, a Nebraska Democrat who’d watched with increasing alarm as “the worst, most vile, most perverse pornography” spread online. He was particularly concerned about what all this obscenity might do to the minds of America’s children, and went so far as to compile a “blue book” packed with X-rated screenshots. “This is a sample of what is available today free of charge,” he told his colleagues on the Senate floor when the CDA came up for debate. “Click, click, click on the computer, on the information superhighway.”Although Exon repeatedly described the legislation as “narrow” and “streamlined,” the Department of Justice warned that its indecency provisions were unconstitutionally broad. Within a year and a half of the CDA’s passage, the Supreme Court agreed and struck those provisions down. Section 230, however, survived, offering a safe harbor to some of the same sites that Exon had hoped to bring down. The information superhighway began to look more perilous than ever.In 2001 two academics at the University of Pennsylvania published a widely cited study in which they estimated that some 326,000 children were “at risk of commercial sexual exploitation.” Although the authors didn’t formally address what role the internet played, they asserted that “online sexual victimization of American children appears to have reached epidemic proportions.” By 2008, a new coalition of would-be regulators had emerged, led by the National Association of Attorneys General and the National Center for Missing and Exploited Children, a nonprofit partly funded by the US government. Together, both behind the scenes and in the press, the two groups began pushing some of the internet’s major players to strengthen their safety protocols.In response, Myspace, the web’s largest social media platform at the time, gave the boot to some 90,000 convicted sex offenders. Facebook, meanwhile, took steps to prevent underage users from sharing personal information with strangers. Craigslist started requiring that anyone who posted an ad in its Erotic Services section provide a verified phone number and pay a fee by credit card. It also hired attorneys to moderate ads.For some officials, though, these changes weren’t enough. In early 2009, Thomas Dart, the sheriff of Cook County, Illinois, sued Craigslist for facilitating prostitution. “Missing children, runaways, abused women, and women trafficked in from foreign countries are routinely forced to have sex with strangers because they’re being pimped on Craigslist,” he said. “I could make arrests off Craigslist 24 hours a day, but to what end? I’m trying to go up the ladder.” That same spring, tabloids across the country were awash in headlines about the “Craigslist killer,” a young man in Boston who’d responded to a massage ad on the site, then murdered the woman who posted it.A federal judge in Chicago quickly tossed Dart’s case, citing Section 230. But Craigslist eventually surrendered anyway. On the night of September 3, 2010, it quietly covered its Adult Services section with the word censored. Two weeks later, in testimony before Congress, Craigslist execs explained that they’d done their best to address their critics’ complaints; now, it seemed, they just wanted out of the headlines. They also warned that law enforcement was losing a valuable partner in the fight against trafficking. Yet Ernie Allen, the lanky Kentuckian who ran the National Center for Missing and Exploited Children, saw this as a necessary step. “Some of this problem will migrate to other areas,” he said, “but frankly that’s progress.”Most PopularSecurityHackers Behind the Change Healthcare Ransomware Attack Just Received a $22 Million PaymentAndy GreenbergBusiness6 Months After New York Banned Airbnb, New Jersey Is Doing GreatAmanda HooverBusinessFor Bitcoin Mines in Texas, the Honeymoon Is OverJoel KhaliliScienceLess Sea Ice Means More Arctic Trees—Which Means TroubleMatt SimonAllen’s prediction was right. In the wake of Craigslist’s capitulation, the sex trade did indeed shift to other sites. There were many to choose from—myRedBook, Naughty Reviews, Cityvibe, Rentboy—but Backpage was the chief beneficiary. Larkin sent around an email advising his employees to expect “a deluge” of adult ads and reminding them that, “like it or not,” such ads “are in our DNA.” Lacey says he remained focused, as always, on the editorial side—though he had “no problem” seeing the ads “take off like they did.” Ferrer, meanwhile, seemed only too happy to inherit Craigslist’s share of the adult market, even if that meant assuming its place in the crosshairs. “It is an opportunity for us,” he wrote in an email. “Also a time when we need to make sure our content is not illegal.”Backpage was already getting into hot water. A girl in Missouri had sued the site in mid-September, alleging that she’d been pimped out at the age of 14 and that Backpage had willfully “failed to investigate for fear of what it would learn.” She claimed, without clear evidence, that the site’s operators “had a strong suspicion” she was underage. Ultimately, a federal magistrate dismissed her case. The situation was tragic, he said, but Backpage was protected under Section 230. The girl needed to sue her pimp.On October 18, Backpage announced on its blog that it had retained Hemanshu Nigam, a former federal prosecutor who specialized in sex crimes and child abuse, to develop a “holistic” safety program. Nigam sat on the board of the National Center for Missing and Exploited Children and had done similar work for Myspace. In the months that followed, Nigam and his new clients met repeatedly with representatives from anti-trafficking organizations. They discussed changes to Backpage’s site architecture, moderation practices, and content policies. The organizations suggested, for instance, that users should be prevented from employing search terms such as “incest” or “Lolita,” since these might “indicate illegal activity.” Backpage moderators, meanwhile, should be on the lookout for “ads written from masculine perspective,” particularly if they employed the euphemism “new in town,” which “is often used by pimps who shuttle children to locations where they do not know anyone and cannot get help.”“You want to sue us, bring your lunch pail, ’cause we gonna be awhile.”By late January 2011, Backpage had implemented many of the recommendations: It had banned photographs with nudity, drawn up a list of “inappropriate terms,” beefed up its vetting process, and begun referring “ads containing possible minors” directly to Allen’s staff. Ferrer also worked closely with the authorities. According to a Justice Department memo from 2012, “unlike virtually every other website that is used for prostitution and sex trafficking, Backpage is remarkably responsive to law enforcement requests and often takes proactive steps to assist in investigations.” A later memo noted that “even Ernie Allen believed that Backpage was genuinely trying to rid its site of juvenile sex trafficking.”Lacey and Larkin say they were more than willing to help crack down on child abuse. But the demands being made of them seemed increasingly unreasonable. Sex trafficking, defined as commercial sex involving coerced adults or anyone under 18, was one thing. Consensual sex work was quite another—and it wasn’t even illegal under federal law.Most PopularSecurityHackers Behind the Change Healthcare Ransomware Attack Just Received a $22 Million PaymentAndy GreenbergBusiness6 Months After New York Banned Airbnb, New Jersey Is Doing GreatAmanda HooverBusinessFor Bitcoin Mines in Texas, the Honeymoon Is OverJoel KhaliliScienceLess Sea Ice Means More Arctic Trees—Which Means TroubleMatt SimonIn March 2011, Lacey and Larkin flew to Virginia to meet with Allen. “To say that the meeting did not go well is an understatement,” Allen wrote later that day. After a full hour, he and Lacey “were still screaming at each other.” Allen demanded that Backpage do more to combat prostitution. Larkin said the site would enforce a “newspaper standard,” but Lacey added, “We are not Craigslist, and we aren’t going to succumb to pressure.” A Justice Department memo continues the story: “Allen responded that ‘At least you know what business you are in.’ ”Lacey’s memories are no rosier. “Allen pulls out this shoddy U. Penn report”—the one from 2001—and “thumps the table with it,” he recalls. The report sent Lacey into orbit. “They love to inflate the numbers by talking about children ‘at risk’ of exploitation,” he says. Owing to the shadowy nature of sex trafficking, such numbers are notoriously hard to pin down: Experts at the Crimes Against Children Research Center have noted that “scientifically credible estimates do not exist,” and one of the Penn report’s authors told The Washington Post in 2015, “Clearly, a new, more current study is needed.”Lacey thought he knew what business Allen was in too—fearmongering in the interest of fund-raising. He took the meeting as a finger in the chest. Within a few weeks, The Village Voice began to run articles examining the fishy data on child sex trafficking.In April, Nigam suggested that, as a gesture of goodwill, Backpage should join the Demi and Ashton Foundation, a nonprofit created by actors Ashton Kutcher and Demi Moore. The foundation had recently run a series of PSAs under the slogan “Real men don’t buy girls,” featuring various Hollywood bigwigs. Lacey ignored Nigam’s suggestion. Instead, he instructed The Village Voice to publish an article titled “Real Men Get Their Facts Straight.”Larkin, for his part, tried to make nice with the authorities—at least until he and Lacey could cash out. Backpage was causing too many headaches, and the papers were growing deader by the day. “Selling print sooner than later was the winning move,” Larkin explains. “The longer you waited, the dumber you were.” Initially it seemed that Backpage would be the easier business to unload. By September 2011, a private-equity firm focused on “out-of-favor industries” had agreed to buy it for $150 million. But the deal fell apart after the National Association of Attorneys General announced an investigation of Backpage. Larkin and Lacey were incensed. Section 230 provided that websites could be prosecuted only under federal criminal law, so they considered a state-level investigation extralegal. From that point on, both men were ready to go to the mattresses.The following fall, Lacey and Larkin sold their beloved alt-weeklies to a group of their own editors for just over $32 million, about 8 percent of what the chain had been valued at in 2005. (Even this amount was later negotiated down, after the buyers defaulted.) In a farewell letter, Lacey wrote that they were leaving to carry on their jihad “over the First Amendment, free speech on the internet and Backpage.” Cynics pointed to the money; by 2011, Backpage was raking in more than $50 million a year, nearly as much as the newspapers that spawned it.Most PopularSecurityHackers Behind the Change Healthcare Ransomware Attack Just Received a $22 Million PaymentAndy GreenbergBusiness6 Months After New York Banned Airbnb, New Jersey Is Doing GreatAmanda HooverBusinessFor Bitcoin Mines in Texas, the Honeymoon Is OverJoel KhaliliScienceLess Sea Ice Means More Arctic Trees—Which Means TroubleMatt SimonWhatever their mix of motives, Lacey and Larkin moved their cause to the courtroom. With Section 230 as their weapon, they won a series of civil suits and successfully challenged anti-Backpage laws in New Jersey, Tennessee, and Washington state. Many of the court opinions noted the First Amendment problems inherent in regulating internet content. “When freedom of speech hangs in the balance,” wrote the Tennessee judge, “the state may not use a butcher knife on a problem that requires a scalpel to fix.”By this point, the nation’s attorneys general had had enough. As they saw it, Backpage and other internet platforms were using Section 230 as an excuse to duck their responsibilities to users. In July 2013, 49 of them signed a letter to Congress saying that the law needed an overhaul.Lacey shows off his ankle monitor and knuckle tattoos.
Jesse RieserState attorneys general weren’t the only prosecutors itching to get in on the action. The Feds were too, but they had a problem: They couldn’t identify a viable crime. Prostitution wasn’t a federal offense, and they didn’t seem to think they could make sex-trafficking charges stick. Back in 2011, the Justice Department had quietly opened a grand jury investigation into Backpage in Washington state; according to an internal memo, prosecutors interviewed more than a dozen witnesses and subpoenaed more than 100,000 documents but ultimately decided that “a successful criminal prosecution of Backpage is unlikely.” They thought about trying to make a case under the Travel Act but, as they noted, that theory “had never been litigated in a similar context.” So they formulated another potential plan of attack. “Moving forward,” they wrote, the Justice Department should “take a hard look at bringing this case as a civil forfeiture case,” with its “lower standard of proof.” In this scenario, the government would seize a website operator’s assets and property, then force them to prove they weren’t implicated in criminal activity.In June 2014 the Justice Department put this plan into action. It seized myRedBook and demanded that the site’s owner, Eric “Red” Omuro, forfeit $5 million in cash and property. The following summer, the Department of Homeland Security launched a similar raid against “the nation’s largest online male-escort service,” Rentboy, and its owner, Jeffrey Hurant. Both men pleaded guilty to violations of the Travel Act in exchange for lighter sentences and lesser fines. The forfeiture approach seemed to be working.Meanwhile, Backpage opponents were finding sympathetic ears on Capitol Hill. In April 2015, Senator Rob Portman, a Republican from Ohio and the chair of the Permanent Subcommittee on Investigations, fired off the following tweet: “backpage essentially sells human beings. It’s horrible, and I’m going after them.”That same month, Lacey and Larkin finally located a serious buyer for Backpage: Carl Ferrer. He agreed to pay just under $603 million for the platform—four times what they’d been offered in 2011.Portman’s subcommittee soon issued a series of subpoenas, seeking internal documents that would reveal Backpage’s moderation practices. The site fought back, but in September 2016 the US Supreme Court ruled that it had to fork over more than 1 million internal emails and other records. Every dubious decision, every bit of chatter and commentary, every lame joke between Backpage employees and managers, was about to come spilling out.Most PopularSecurityHackers Behind the Change Healthcare Ransomware Attack Just Received a $22 Million PaymentAndy GreenbergBusiness6 Months After New York Banned Airbnb, New Jersey Is Doing GreatAmanda HooverBusinessFor Bitcoin Mines in Texas, the Honeymoon Is OverJoel KhaliliScienceLess Sea Ice Means More Arctic Trees—Which Means TroubleMatt SimonOn January 8, 2017, the Senate subcommittee released its final report, titled “Backpage.com’s Knowing Facilitation of Online Sex Trafficking.” It pushed the theory that Lacey, Larkin, Ferrer, and their employees had invalidated their liability protections under Section 230: Rather than removing illegal and obscene content, the Senate said, Backpage had helped develop it, using clever moderation practices to “sanitize the content” and conceal it from the eyes of the law—all in the name of earning a few extra dollars. This, the subcommittee implied, put Backpage in the position of a content creator, not a mere content host.Most courts had been rejecting the same argument for six years, but now Portman and his colleagues had what they considered incontrovertible evidence. Much of it was contained in the report’s 840-page appendix, which included highlights from the emails and other documents that the site had been ordered to produce.SIGN UP TODAYSign up for the Backchannel newsletter and never miss the best of WIRED.The report outlined three major steps in Backpage’s road to perdition. In the early days of the site, most ads for commercial sex were deleted outright. By early 2009, however, Ferrer had begun to instruct his employees to manually remove any obscene photos and “forbidden words,” then post the ad anyway. In an email, he wrote that he considered this the more “consumer friendly” approach, because it would avoid “pissing off a lot of users who will migrate elsewhere.” But the true goal, according to the Senate, was to give those ads “a veneer of lawfulness.” One former Backpage moderator, identified in the report as Employee C, testified that she saw her role as “putting lipstick on a pig, because when it came down to it, it was what the business was about.”By late 2010, Backpage had developed an automated filter called Strip Term From Ad. It was tuned to remove problematic words (“lolita,” “rape,” “fresh,” “little girl”) before any human moderator had seen the ad. Because the original language wasn’t saved on Backpage’s servers, the Senate complained, there would be no real record of the offending content—nothing to send to law enforcement. “Of course,” the subcommittee wrote, “the Strip Term From Ad filter changed nothing about the real age of the person being sold for sex or the real nature of the advertised transaction.”Perhaps that’s why, in mid-2012, Backpage instituted a kind of hybrid process, automatically editing some ads while automatically banning others, depending on the terms used. But the Senate saw chicanery here, too. Ferrer complained that the auto-bans were causing confusion among users; if they submitted an ad that contained a banned term, they had no way of knowing why it had been rejected. And so Backpage rolled out an alert feature, which informed users which specific term was to blame. In the Senate’s eyes, it was “coaching its customers on how to post ‘clean’ ads for illegal transactions.”The appendix was full of what appeared to be smoking guns. In late 2010, for instance, Backpage’s operations manager, Andrew Padilla, castigated one of his employees for putting a note on a user’s account suggesting she was a prostitute. “Leaving notes on our site that imply that we’re aware of prostitution, or in any position to define it, is enough to lose your job over,” Padilla wrote. “If you need a definition of ‘prostitution,’ get a dictionary.” The following summer, four months after the ill-fated meeting with Ernie Allen, Larkin cautioned Ferrer against publicizing Backpage’s moderation practices. “We need to stay away from the very idea of ‘editing’ the posts, as you know,” he wrote in an email.Most PopularSecurityHackers Behind the Change Healthcare Ransomware Attack Just Received a $22 Million PaymentAndy GreenbergBusiness6 Months After New York Banned Airbnb, New Jersey Is Doing GreatAmanda HooverBusinessFor Bitcoin Mines in Texas, the Honeymoon Is OverJoel KhaliliScienceLess Sea Ice Means More Arctic Trees—Which Means TroubleMatt SimonOn the night the Senate report was released, Backpage finally shut down its adult section. It was, of course, far too late to stave off what was coming. The next morning, Lacey, Larkin, Ferrer, and two other Backpage executives appeared in Room 342 of the Senate’s Dirksen Building for a grilling by Portman and his colleagues. It was a carefully choreographed bit of political theater. The Backpage witnesses took the Fifth, as senators knew they must; thanks to a pending case in California, they had no choice. Portman denounced them for refusing to “come clean.”Within six months of the hearing, at least eight new civil lawsuits were filed against Backpage. The Section 230 defense now worked only intermittently, as courts increasingly read in exceptions. The site’s operators began preparing for a rumble with the Feds. Backpage handed out fat legal retainers, as key employees lawyered up. Lacey and Larkin started segregating cash; funds from the sale of Backpage went into one set of accounts, while proceeds from the newspaper sale went into another. Ferrer bought a brand-new Texas McMansion, put it in his wife’s name, and poured hundreds of thousands of dollars into renovations.Still, Lacey and Larkin largely shrugged off the Senate’s report. “We didn’t go out and try to disprove it,” recalls an attorney who worked on the matter. “It’s not like there isn’t plenty to say. But to try to rebut 50 pages of allegations in the press? That’s fighting a losing battle.” The lawyer added: “It was a hit piece. It was intended to be a hit piece. What are you going to do?”In August 2017, Portman launched another attack against Backpage. With a bipartisan group of 20 senators, including Connecticut’s Richard Blumenthal, he introduced the Stop Enabling Sex Traffickers Act, or Sesta. Later, in an op-ed for WIRED, Portman laid out the bill’s key features: It would remove Section 230’s “unintended liability protections for websites that knowingly facilitate online sex trafficking” and “allow state and local law enforcement to prosecute” those sites. Just as J. James Exon, the sponsor of the Communications Decency Act, had done two decades earlier, the senators deflected concerns about constitutional overreach. Portman described Sesta as “narrowly crafted”; Blumenthal called it “narrowly tailored.”Silicon Valley disagreed. On the day Sesta was introduced, the Internet Association—an industry consortium that represents Airbnb, Facebook, Google, Twitter, and more than three dozen other tech companies—released a statement calling the bill “overly broad.” While it was important to pursue “rogue operators like Backpage.com,” the association said, Sesta was more butcher knife than scalpel; it would create “a new wave of frivolous and unpredictable actions against legitimate companies.” In a letter to the Senate, a coalition of human rights and civil liberties organizations warned that the result of all this litigation would be “increased censorship across the web.” Platforms that had once sought to encourage free speech through light moderation would now take an iron-fisted approach. According to the Electronic Frontier Foundation, the chilling effect would be particularly damaging to sites like Wikipedia, which “don’t have the massive budgets to defend themselves that Facebook and Twitter do.”Most PopularSecurityHackers Behind the Change Healthcare Ransomware Attack Just Received a $22 Million PaymentAndy GreenbergBusiness6 Months After New York Banned Airbnb, New Jersey Is Doing GreatAmanda HooverBusinessFor Bitcoin Mines in Texas, the Honeymoon Is OverJoel KhaliliScienceLess Sea Ice Means More Arctic Trees—Which Means TroubleMatt SimonBut Big Tech and its allies were no longer really in a position to complain. On Halloween, Congress hauled in executives from Facebook, Google, and Twitter. Legislators wanted to know why the platforms had failed to stem the tide of fake news and misinformation in the run-up to the 2016 presidential election, why they’d sold political ad space to Russian nationals, why they were supposedly muzzling conservative voices. Pundits opined that the web was all grown up now; many questioned why platforms still needed Section 230’s protection.Several days after the Capitol Hill perp walk, the Internet Association suddenly reversed course. It came out in favor of a lightly modified version of Sesta, which by now had been combined with an equally clumsily named House bill, the Allow States and Victims to Fight Online Sex Trafficking Act, or Fosta. It was hard not to see the association’s move as a cynical act of political pandering. As Winston Churchill once said, “Each one hopes that if he feeds the crocodile enough, the crocodile will eat him last.”The Fosta-Sesta law is already panning out as its detractors feared. Once Trump signed it into law, platforms rushed to self-censor; nobody wanted to be Backpaged.By the spring of 2018, things had gotten even worse for Big Tech. That March, news of the Cambridge Analytica scandal broke, seeming to confirm the public’s worst suspicions. Four days later, Congress passed Fosta-Sesta. The law amends Section 230 to allow states and civil plaintiffs to go after websites that “promote and facilitate prostitution” or “knowingly benefit from participation in a venture that engages in sex trafficking.” Senator Ron Wyden of Oregon, one of the original authors of Section 230 and a longtime tech industry ally, warned that further measures could be in the offing if “technology companies do not wake up to their responsibilities … to better protect the public.”In spite of the protests of free speech advocates, more than 100 organizations had come out in favor of the law—Truckers Against Trafficking, Girls With Grit, the Christian Action League of Minnesota. Seth Meyers and Ivanka Trump touted it too. But sex workers and their allies were bitterly opposed. The American Association of Sexuality Educators, Counselors, and Therapists noted that Fosta-Sesta contained “a sweeping and unproductive conflation of sex trafficking and consensual sex work.” The association further argued—just as Craigslist had when it shuttered its adult section in 2010—that, in forcing sites like Backpage to remove or censor their content, the law would merely drive predators into even darker corners of the internet. Their crimes would be harder to spot and investigate, and many sex workers would be forced “to pursue far riskier and more exploitative forms of labor” on the streets.Two weeks after Fosta-Sesta passed, Carl Ferrer appeared in a closed federal courtroom in Phoenix. He pleaded guilty to conspiracy to facilitate prostitution and launder money, surrendered Backpage and its assets, and promised to cooperate with federal authorities. (Ferrer’s plea forbids him to talk to the press. “I’m not trying to avoid you,” he told me at a recent court appearance. “I just have to say no comment.”) A day later, the Feds nailed Lacey and Larkin in Phoenix, charging them and five other Backpagers under long-existing criminal statutes. As many legal experts pointed out, the move suggested that the government never needed Fosta-Sesta to prosecute the pair; President Donald Trump had yet to even sign it into law. Lacey and Larkin never seemed to seriously consider that Ferrer might flip. Other insiders certainly did. “I think he just chickened out,” offers an attorney who worked with Ferrer for almost 20 years and spoke to me on condition of anonymity. The lawyer points out that Ferrer never shared Lacey’s and Larkin’s disdain for cops. “That’s an awful lot of pressure to put on a skinny white guy,” he continues. “And Jim was never all that nice to him.”Most PopularSecurityHackers Behind the Change Healthcare Ransomware Attack Just Received a $22 Million PaymentAndy GreenbergBusiness6 Months After New York Banned Airbnb, New Jersey Is Doing GreatAmanda HooverBusinessFor Bitcoin Mines in Texas, the Honeymoon Is OverJoel KhaliliScienceLess Sea Ice Means More Arctic Trees—Which Means TroubleMatt SimonThough it is still relatively early, the broad outlines of each side’s strategy are clear. If this case reaches a jury, the government will likely argue that the end justifies the means—that sex trafficking and prostitution generally are so abhorrent that the government had to do away with Backpage, protected speech and all. They will employ what trial lawyers call “reptile theory,” tapping into the jury’s primitive instincts, arguing that Backpage constituted a public danger and that convicting the defendants will make the community safer. They will tell the grisly tales set forth in the indictment’s 17 victim summaries. They will depict Lacey and Larkin as calculating profiteers, outlaws who refused to honor the reasonable requests of law enforcement because they might make a few mil less. They will hope the defendants’ seeming indifference to the plight of trafficking victims inspires the jury to overlook holes in the prosecution’s case.The defense strategy is equally clear. Lacey and Larkin will offer high-minded arguments in defense of what the public regards as low-value speech. They will challenge government experts who claim they can look at a sample of Backpage ads and know beyond doubt that they proposed illegal transactions. It’s unclear how effective a witness Ferrer will be; over the past decade, he has given numerous sworn statements in Backpage litigation that contradict assertions in his plea. To the extent that Ferrer has anything damaging to offer, the defense will likely argue he was acting on his own. “We had lawyers telling us how to do this,” Lacey says. “The only way this was going to blow up was if Carl was doing something he shouldn’t have.”Backpage cofounder James Larkin.Jesse RieserBackpage cofounder Michael Lacey.Jesse RieserFosta-Sesta is already panning out as its detractors feared. Once Trump signed it into law, platforms rushed to self-censor; nobody wanted to be Backpaged. Cityvibe shut down altogether. Reddit banned numerous communities, including r/escorts and r/SugarDaddy. Google reportedly began purging its users’ cloud accounts of sexually explicit material. Cloudflare, one of the largest cybersecurity and website performance companies in the world, terminated service to Switter, a social media platform on which sex workers connected with each other and vetted their clients. Cloudflare is known for its commitment to free speech, but it was compelled to enforce what its general counsel called, in an interview with Vice, “a very bad law and a very dangerous precedent.”The endless game of whack-a-mole continues. A month after Fosta-Sesta passed, ads for commercial sex had plummeted 82 percent, according to TellFinder, a data analytics tool originally built by the Defense Department. Within another four months, though, the numbers had rebounded to 75 percent of their previous daily volume. New sites popped up, seeking to fill the void left by Backpage, just as Backpage had done with Craigslist. One of them was called Bedpage.Still, the Justice Department remains committed to taking the Backpage defendants down. Its plan seems to be to force them to plead, à la Rentboy and myRedBook. Since March 2018, federal prosecutors have seized more than $100 million in cash, real estate, and other assets from Lacey and Larkin. The strategy is simple: No money? No lawyers. QED.Most PopularSecurityHackers Behind the Change Healthcare Ransomware Attack Just Received a $22 Million PaymentAndy GreenbergBusiness6 Months After New York Banned Airbnb, New Jersey Is Doing GreatAmanda HooverBusinessFor Bitcoin Mines in Texas, the Honeymoon Is OverJoel KhaliliScienceLess Sea Ice Means More Arctic Trees—Which Means TroubleMatt SimonThe asset freezes raise all kinds of thorny constitutional questions. Generally speaking, federal prosecutors are permitted to freeze a defendant’s assets based on probable cause alone, even before the defendant has a chance to challenge the government’s case in court. But regular forfeiture rules do not apply in cases involving forums for speech—newspapers, films, books, magazines, websites. The US Supreme Court has decreed that when the government seizes these expressive materials, or the proceeds derived from them, it must immediately hold an evidentiary hearing to determine whether the seizure is valid.But the Backpage defendants have a problem: So far, they can’t get a court to hear their claims. Since last summer, the Justice Department appears to have been playing a clever shell game. They’ve brought cases against the Backpage defendants in two federal districts—civil seizures in Los Angeles, criminal matters in Phoenix—and they’re making the defendants spend what money they have left chasing Uncle Sam from place to place. So far, judges in both districts have agreed with the government’s suggestion that they should defer to each other, effectively denying the defendants a forum to challenge the asset freezes. The US Court of Appeals for the Ninth Circuit will hear arguments in the case in July.“The abuse on these platforms does not stop at sex trafficking,” the Association of Attorneys General wrote.Paul Watler, a media law specialist at Jackson Walker LLP in Dallas, is troubled by the seizure tactic. “It’s an end run around the First Amendment,” he says. The big question remaining, according to Eric Goldman, a professor at Santa Clara University School of Law, is whether federal prosecutors will use this strategy to crack down on other platforms in the future. “Is this the leading edge or a one-off?” he asks. “I still don’t know the answer to that. But they’re coming for us, one way or another.” Even if Fosta-Sesta is one day ruled unconstitutional, as many legal scholars expect, government officials have shown that they’re willing to subvert Section 230 in other ways. If Lacey and Larkin lose—if the asset seizures stand and the Travel Act charges stick—prosecutors will have a valuable new weapon to wield against Silicon Valley. Personal wealth will be no deterrent.Meanwhile, the National Association of Attorneys General is on the warpath once again. On May 23, 2019, the group sent a letter to a handful of congressional leaders urging further cutbacks to Section 230. “The abuse on these platforms does not stop at sex trafficking,” they wrote. “Stories of online black market opioid sales, ID theft, deep fakes, election meddling, and foreign intrusion are now ubiquitous.” They recommended that Section 230 be amended to allow a wide variety of state-level criminal prosecutions.Lacey and Larkin remain convinced that the furor over sex ads is a moral panic, irrational and hysterical, cynically stoked by politicians and law enforcement. And they’re not about to surrender. They know they’re not the world’s most sympathetic defendants—rich (or formerly rich) white men accused of, at the very least, morally questionable business decisions, fighting for their right to hire the best lawyers money can buy.Yet they can still seem oddly tone-deaf, even a touch naive. In April, a federal judge shot down Lacey’s request to have his ankle monitor removed in order to swim during a Hawaiian vacation. (In pleadings, Lacey’s lawyers explained he had use-’em-or-lose-’em flyer miles.) Prosecutors called Lacey a flight risk, and the resulting headlines were predictably brutal. Lacey responds with incredulity: “The idea that I would run—are you kidding? I’m taking the first flight to confront you.”Christine Biederman is a lawyer and investigative reporter based in Dallas. She is working on a book about Backpage.com.This article appears in the July/August issue. Subscribe now.Let us know what you think about this article. 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Backpage founder faces 2nd trial over what prosecutors say was a scheme to sell sex through ad sales | AP News
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Backpage founder faces 2nd trial over what prosecutors say was a scheme to sell sex through ad sales
FILE - Former Backpage.com owner Michael Lacey sits on Capitol Hill in Washington at a Senate committee. On Tuesday, Aug. 29, 2023, jury selection is scheduled to start in Lacey’s federal trial on charges of facilitating prostitution and laundering money in what authorities say was a scheme to knowingly sell ads for sex on the classified site. Lacey, whose first trial on those charges ended in a mistrial, has pleaded not guilty to the charges. (AP Photo/Cliff Owen, File)
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PHOENIX (AP) — A founder of the lucrative classified site Backpage.com will face his second trial on charges of facilitating prostitution and laundering money in what authorities say was a scheme to knowingly sell ads for sex on the site.Jury selection for Michael Lacey and four former Backpage employees will resume for a second day Wednesday in federal court. Their first trial ended in a mistrial in September 2021 when a judge concluded prosecutors had too many references to child sex trafficking in a case where no one faced such a charge.Lacey had founded the Phoenix New Times weekly newspaper with James Larkin, who was charged in the case and died by suicide in July. Lacey and Larkin held ownership interests in other weeklies such as The Village Voice and ultimately sold their newspapers in 2013. But they held onto Backpage, which authorities say generated $500 million in prostitution-related revenue from its inception in 2004 until 2018, when it was shut down by the government.
In all, five former Backpage operators have pleaded not guilty to charges of facilitating prostitution. Of the five, Lacey and two others have pleaded not guilty to money laundering charges.
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The site’s marketing director has pleaded guilty to conspiring to facilitate prostitution and acknowledged he participated in a scheme to give free ads to prostitutes to win over their business. Additionally, the CEO of the company when the government shut the site down, Carl Ferrer, pleaded guilty to a separate federal conspiracy case in Arizona and to state money laundering charges in California.
Prosecutors say Backpage’s operators ignored warnings to stop running prostitution ads, some involving children. They are accused of giving free ads to prostitutes and cultivating arrangements with others who worked in the sex trade to get them to post ads with the company.
Authorities say Backpage employees would identify prostitutes through Google searches, then call and offer them a free ad. The site also is accused of having a business arrangement in which it would place ads on another site that lets customers post reviews of their experiences with prostitutes.Backpage’s operators said they never allowed ads for sex and used people and automated tools to try to delete such ads and maintain the content on the site was protected by the First Amendment. Prosecutors said the moderation efforts by the site were aimed at concealing the true nature of the ads.Lacey also is accused of using cryptocurrency and wiring money to foreign bank accounts to launder revenues earned from the site’s ad sales after authorities say banks raised concerns that they were being used for illegal purposes.At trial, the Backpage defendants are barred from bringing up a 2013 memo by federal prosecutors who examined the site and said at the time that they hadn’t uncovered evidence of a pattern of recklessness toward minors or admissions from key participants that the site was used for prostitution. In the memo, prosecutors had said witnesses testified Backpage made substantial efforts to prevent criminal conduct on its site and coordinated such efforts with law enforcement agencies. The document was written five years before Lacey, Larkin and the other former Backpage operators were charged in the Arizona case.
A Government Accountability Office report released in June 2021 said the FBI’s ability to identify victims and sex traffickers had decreased significantly after Backpage was seized by the government, because law enforcement was familiar with the site and Backpage was generally responsive to requests for information.U.S. District Judge Susan Brnovich, who had declared a mistrial during the first attempt to try the Backpage defendants, had allowed evidence showing that people were trafficked using the site, but cautioned prosecutors not to linger on details of the abuse. “It seemed the government abused that leeway,” Brnovich said when declaring a mistrial.In a pretrial ruling, U.S. District Judge Diane Humetewa, who is presiding over the second trial, repeated that warning to prosecutors.
The Associated Press is an independent global news organization dedicated to factual reporting. Founded in 1846, AP today remains the most trusted source of fast, accurate, unbiased news in all formats and the essential provider of the technology and services vital to the news business. More than half the world’s population sees AP journalism every day.
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Feds take down sites that replaced prostitution and child sex trafficking portal Backpage.com - CBS News
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Feds take down sites that replaced prostitution and child sex trafficking portal Backpage.com
By Clare Hymes
June 19, 2020 / 3:11 PM EDT
/ CBS News
Prosecutors in Texas announced Friday that they have taken down one of the largest websites to replace Backpage.com, the defunct classified website that allowed advertisements for prostitution and child sex trafficking.On Thursday, Wilhan Martono, 46, the owner and operator of several illicit websites that advertised prostitution around the world, was arrested on sex trafficking, money laundering and other related charges. His sites — CityXGuide.com and its affiliated websites, including 1Backpage.com — advertised prostitution, child sex trafficking and other illicit services. The online platforms he created contained hundreds of thousands of posts for "intimate activities" that users could filter by their location and interests. During the investigation, law enforcement officers discovered correspondence between Martono and an advertiser who said the website was "taking over from where Backpage left off." In fact, court documents say that Martono registered the domain name for 1Backpage.com, CityXGuide.com and a half a dozen others the day after the FBI seized Backpage.com in April 2018.
"As soon as DOJ shut down one despicable site, another popped up to take its place," said U.S. Attorney Erin Nealy Cox in a statement. "Like the owners of Backpage, this defendant made millions facilitating the online exploitation of women and children. The Justice Department will not rest until these sites are eliminated and their owners held accountable for their crimes."Posts on Martono's websites included the trafficking of "numerous" minor victims, including a 13-year-old Jane Doe whom law enforcement recovered in North Texas in November 2019. She was advertised on CityXGuide.
Shortly after Martono's arrest, the Department of Homeland Security took down the website, replacing it with a page that said it had "been seized by the Department of Homeland Security," prosecutors said. CityXGuide listed 14 "Favorite Cities," including Dallas, Los Angeles, San Francisco, Las Vegas, Chicago, Atlanta, Miami, and Boston. All 14 cities ban prostitution, so Martono would try to cover up the money trail by using bitcoin or a third-party gift card reseller called CardCash. Advertisers would pay in gift cards from places like BestBuy, Walmart, Amazon, Lowes and others, and he then exchanged them, funneling the money into personal bank accounts. While working on the transactions, Martono took steps to hide his IP address by using a VPN. In total, prosecutors estimate Martono's enterprise earned him more than $21 million since 2018. Martono was indicted on 28 counts by a federal grand jury earlier this month, and was arrested Thursday in California by Homeland Security Investigations and the Secret Service. If convicted he could be sentenced to up to 25 years in prison.
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First published on June 19, 2020 / 3:11 PM EDT
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