Backpage.com CEO will fight sex trafficking charges: lawyer

Texas Office of the Attorney General photo of Carl Ferrer. (Texas Office of the Attorney General via AP)

HOUSTON -- Handcuffed and dressed in an orange jail jumpsuit, the chief executive of an internet site authorities accuse of being "a hub for the illegal sex trade" waived extradition to California on Friday, and his attorney vowed to fight the "trumped up" sex trafficking and money laundering charges he faces.

Backpage.com Chief Executive Officer Carl Ferrer was arrested Thursday and his Dallas headquarters was raided after officials in California accused him of felony pimping a minor, pimping, and conspiracy to commit pimping. Under California law, felony pimping is defined as making money off prostitutes or soliciting customers for prostitution. Texas' state attorney general's office added money-laundering to the list of alleged crimes.

Ferrer, 55, was arrested after arriving in Houston on a flight from Amsterdam. Backpage.com is a Dutch-owned limited liability corporation. Ferrer was expected to be flown to California later Friday.

Ferrer, wearing glasses, said very little during his brief court hearing, acknowledging he was waiving extradition.

"Mr. Ferrer looks forward to vigorously fighting these charges that we believe are trumped up," Ferrer's attorney, Philip Hilder, said after Friday's extradition hearing. Hilder declined to comment on further questions related to the charges.

Authorities also issued arrest warrants for Backpage's controlling shareholders: Michael Lacey, 68, and James Larkin, 67. It wasn't immediately clear Friday whether the men, who live in Arizona, had been taken into custody.

Lacey and Larkin are former owners of the Village Voice and the Phoenix New Times. It wasn't clear if they had attorneys. An attorney who previously represented the two men, Michael Manning, said he was not representing them in this case.

Cindy McCain, the wife of Arizona U.S. Sen. John McCain and who has been leading efforts for several years to fight human trafficking, called Ferrer's arrest a "huge game-changer" in the efforts to crack down on the trafficking of young girls and boys for sex.

Texas state agents raided Backpage's Dallas offices following allegations that adult and child sex-trafficking victims were forced into prostitution through escort ads posted on the site.

Backpage.com advertises a wide range of services, but California officials said the site collects fees from users who use coded language and nearly nude photos to offer sex for money. A California court affidavit says that Ferrer expanded Backpage.com's share of online sex marketing by creating affiliated sites including EvilEmpire.com and BigCity.com with related content.

The ad portal received more than 90 per cent of its revenue from the adult escort ad portion of its classified advertising business, according to a search warrant affidavit filed by the Texas Attorney General's office. In California, that amounted to about $50 million between January 2013 and May 2015, or between $1.5 million and $2.5 million a month, it said.

Ferrer was told directly by law enforcement officials about prostitution on the site "and is regularly copied on the hundreds of law enforcement subpoenas and requests that Backpage.com receives each year related to prostitution and sex trafficking of both adults and minors on the website," according to the affidavit.

The California complaint alleges that rather than merely being a conduit for the ads, Ferrer "developed and oversaw a process to screen escort ads on Backpage.com." By charging for the ads, the state charges that he and his co-defendants violated the state's law against pimping, defined as making money off prostitutes or soliciting customers for prostitution.

California authorities said the state's three-year investigation found many of the ads involve victims of sex trafficking including children under the age of 18.

One of the advertisers, identified only as 15-year-old "E.S.," "was forced into prostitution at the age of 13 by her pimp," according to an affidavit filed with the complaint. She used other online advertising services until they were shut down, the court filing says, when she turned to Backpage.com.

The criminal charges, like a lawsuit pending in Washington state, skirt free-speech and federal internet immunity protections by alleging that Backpage profited by directly participating in sex trafficking, including of minors.

In a statement Friday, Liz McDougall, Backpage.com general counsel, called the raid and Ferrer's arrest "an election-year stunt, not a good-faith action by law enforcement."

She said prostitution ads violate Backpage.com's policies against illegal content, that the company blocked the posting of ads using terms that violated those policies and also removed ads when contacted by law enforcement

"The actions of the California and Texas Attorneys General are flatly illegal. They ignore the holdings of numerous federal courts that the First Amendment protects the ads on Backpage.com," McDougall said. She also contended that they also violate the U.S. Communications Decency Act "pre-empting state actions such as this one and immunizing web hosts of third-party created content."

However, the criminal complaint and affidavit, like the Washington lawsuit filed on behalf of three underage girls, contend that Backstage actively coached advertisers in how to write advertisements in ways that would stay within legal limits while still encouraging commercial sex.

Backpage has argued that it merely publishes advertisements that are created and provided by others, but the Washington Supreme Court ruled last year that the company didn't just host the ads, but helped develop the content.

The girls' civil attorney, Erik Bauer, said at the time that the three were in the seventh and ninth grades when adult professional sex traffickers sold them as prostitutes on Backpage.

Kristin Ford, a spokeswoman for the California attorney general, declined comment on the company's statement. A message to a spokeswoman for the Texas attorney general drew no response.

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.com.

The charges against Ferrer could bring him nearly 22 years in prison, while Larkin and Lacey face a maximum six years.

A U.S. Senate subcommittee that has investigated the company estimated its annual revenue at more than $150 million.

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Associated Press writers David Warren in Dallas, Don Thompson in Sacramento, California, and Bob Christie in Phoenix contributed to this report.