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Backpage Founders Charged With Money Laundering, Aiding Prostitution (theverge.com)

Federal authorities have charged the two founders of classified site Backpage.com, along with five other employees, with laundering money and facilitating prostitution. According to The Washington Post, the Justice Department claims Backpage took "consistent and concerted action" to knowingly allow ads for illegal sex work. The indictment alleges that "virtually every dollar flowing into Backpage's coffers represents the proceeds of illegal activity." The Verge reports: Law enforcement agencies seized Backpage's servers last week, and co-founder Michael Lacey was charged in a sealed 93-count indictment, which has now been revealed. Lacey, as well as his co-founder James Larkin, were already charged with violating California money laundering laws, although a judge threw out state-level pimping charges. Beyond Lacey and Larkin, the Backpage indictment includes charges against the site's chief financial officer, operations manager, assistant operations manager, and marketing director. It also charges the executive vice president of one of Backpage's parent companies. Backpage CEO Carl Ferrer, who was previously charged with pimping in California, was not charged in this indictment. The Justice Department claims Backpage's owners tried to cover up the fact that most of its "adult services" ads involved prostitution, and that Backpage allowed child sex traffickers to keep ads on the site as long as they deleted age-related keywords. The indictment also claims that Backpage disguised payments for illegal services by having customers funnel money to foreign bank accounts or apparently unrelated companies, or by transferring funds into cryptocurrency. These federal chargers are reportedly unrelated to the Stop Enabling Sex Traffickers Act, a bill that would make website operators liable for illegal content posted to their sites. The bill is currently awaiting Trump's signature.

33 of 256 comments (clear)

  1. Some bad by viperidaenz · · Score: 5, Insightful

    Money laundering: bad
    Child sex trafficking: bad
    Prostitution: not bad. Get with the times USA, It's legal elsewhere.

    1. Re:Some bad by Anonymous Coward · · Score: 5, Insightful

      The money laundering is probably because they were 'knowingly' accepting dirty money from the prostitutes for ads

      As far as child sex trafficking goes, that has become the rallying call of the new anti-prostitution racket because whenever we punish adults for doing adult things... it is 'for the children'

    2. Re:Some bad by ShanghaiBill · · Score: 4, Interesting

      Money laundering: bad

      Money laundering is "bad" only if the money came from harmful sources. Otherwise it is just another tool of government oppression.

      Child sex trafficking: bad

      "Child sex" and "trafficking" are very frequently appended as additional charges, even when there is no plausible justification. They carry severe penalties, so can be used to coerce plea deals when the government otherwise has a weak case, and they mean extra federal dollars targeted at these crimes, even when there are no convictions. So your tax dollars are paying for malicious prosecutions.

      Prostitution: not bad. Get with the times USA, It's legal elsewhere.

      It is also legal in some American jurisdictions, such as some counties in Nevada. So I am surprised that "facilitating prostitution" is a federal crime. I thought the feds stayed out of prostitution enforcement.

      Is Stormy Daniels on Backpage?

    3. Re:Some bad by SuricouRaven · · Score: 2, Informative

      Money laundering even of legal income is still an issue when used as part of a larger tax evasion scheme.

    4. Re:Some bad by MDMurphy · · Score: 2

      I am curious about the money laundering part. There have been issues in the past with porn sites and other "naughty" companies being able to accept credit cards or Paypal for payment. That spawned a set of companies to act as middlemen to "launder" the payments to keep the anti-porn companies from seeing who the money is going to.

      So I'm wondering whether BP was accepting payments for ads from companies that had their money with these alternative processors, or doing laundering in the traditional sense. It feels to me similar to someone who sold something on Ebay, accepted Paypal, then paid for something else from their Paypal balance.

  2. Mixed up bullsnot by Anonymous Coward · · Score: 5, Insightful

    The prosecutors want to claim that the Back Page people were enabling the exploitation of children, but it is regressive laws on prostitution that allow abuse of sex workers in the black market.

    When is our society going to crawl out of the dark ages and provide a safe workplace for sex workers? It is only when the trade is out in the open that people who exploit others can be removed through laws that protect sex workers instead of marginalizing them.

    Back Page was actually providing a way for sex workers to operate without criminals managing them.

    1. Re:Mixed up bullsnot by CRC'99 · · Score: 5, Insightful

      Up next, eBay gets charged for facilitating the sale of stolen goods...

      --
      Sendmail is like emacs: A nice operating system, but missing an editor and a MTA.
    2. Re: Mixed up bullsnot by Reverend+Green · · Score: 2

      In Soviet America, the law violates you!

    3. Re:Mixed up bullsnot by XxtraLarGe · · Score: 2

      Because sex outside marriage is bad and a horrible sin, unless of course you are a political or religious figure, in which case it is a simple human failing worthy of forgiveness. Heaven forbid (see what I did there?) we realize and embrace the fact that humans are sexual creatures. Oh well, at least we can have all the guns we want! Just work out all that sexual frustration the American way, at your local shooting range.

      Do you realize you're simultaneously arguing for and against self determination?

      --
      Taking guns away from the 99% gives the 1% 100% of the power.
    4. Re:Mixed up bullsnot by jeff4747 · · Score: 2

      You realize, of course, that only one "side" is claiming to increase freedom.

      The left is fully aware that their policies limit libertarian version of "freedom" in order to accomplish a policy goal.

  3. Brilliant job morons by Anonymous Coward · · Score: 5, Informative

    They also forced down Preferred411, the site that reviewed sex workers and verified the johns. The site kept things safer for everyone - the customers got to avoid scams and muggings, while the girls could verify their clients weren't psychopaths or serial killers.

    Now it's much worse for everybody, don't be surprised if violent crime goes up. Thanks for saving us politicians.

  4. Due Process by Teppy · · Score: 4, Insightful

    So they've charged them with various crimes, and a jury may or may not convict them. But the trial hasn't happened yet - what right does the government have to take down their website and business just in case they get a conviction? Isn't the whole point of "innocent until proven guilty" that you get your day in court before any punishment happens?

    1. Re:Due Process by omnichad · · Score: 4, Informative

      It's called a preliminary injunction.

    2. Re:Due Process by Srin+Tuar · · Score: 2

      > So, you're saying if the Feds with probable cause and warrants raid some organized crime's money-laundering front company, that company should be allowed to keep on operating until the case has gone to trial and the responsible individuals are found guilty?

      Yes. Why should they get to destroy a legitimate business based on a hunch?

      Do we issue the electric chair to murderers before they are found guilty?

    3. Re: Due Process by Reverend+Green · · Score: 3, Insightful

      Alas my bother, you're daydreaming. That "innocent until proven guilty" trope is a pure fairy tale. A story, like Santa Claus and the Easter Bunny, that we tell to little kids.

      Unless you've been living under a rock, you know we have by far the largest Gulag in the world. Some people claim it's second only to Stalin's Gulag as the largest prison population in all history - but I have not verified that claim. And by Uncle Sam's own statistics, well over 90% of the souls interred in our prison and torture camps were coerced into giving false confessions ("plea bargaining").

      In Soviet America, accusation is guilt. The accused may well be smarmy hacks. But unless they have a LOT of money, you can be damned sure they won't get a fair trial.

    4. Re:Due Process by ShanghaiBill · · Score: 4, Insightful

      the government would need to make restitution

      Upon failure to convict, the government returns the physical property, but is under no obligation to "make restitution". They can return the computers with their drives wiped, or even disassembled. The do not pay for, or repair, anything damaged in seizure or storage. Plenty of innocent people have their businesses and lives destroyed in spite of acquittals.

    5. Re: Due Process by cascadingstylesheet · · Score: 2

      In Soviet America, accusation is guilt.

      I thought that was a good thing?

      #metoo !!

  5. Re:93 counts by b0s0z0ku · · Score: 2

    The American "justice" system for you -- punishes you for daring to seek a jury trial.

  6. Re: Iâ(TM)ve got a boner by K.+S.+Kyosuke · · Score: 3, Funny

    Only if it persists for more than four hours, or if you already have an affair with the doctor.

    --
    Ezekiel 23:20
  7. Re:Not sure how to feel by Troy+Roberts · · Score: 4, Insightful

    One of my favorite quotes seems appropriate here:

    “Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”

      C.S. Lewis

  8. Re: Prison society by PopeRatzo · · Score: 3, Funny

    The fact is, these people are individually human scum. They don't keep their word. They don't respect others. They connive, cheat, and otherwise mess up lives.

    He won the electoral college vote fairly. You need to get over it, snowflake.

    Wait, who are we talking about?

    --
    You are welcome on my lawn.
  9. Big fuck you to the first amendment by rahvin112 · · Score: 2, Interesting

    This case is a big fuck you to the first amendment. Yea their business model involved allowing a site where prostitutes could advertise their services. But that's called free speech, either we have it or don't. To try to force on them the charges for people posting on the site is a broad overreach and attempt to punish a website owner for the actions and speech of others.

    I hope to god these guys can afford good lawyers and get this case thrown out for the broad overreach that it is. Talk about a political prosecution, congress punched a hole in the law to target these guys, a hole that's going to be used to go after a hell of a lot more site operators.

    Everyone should be shocked by what the Trump administration and Congress is doing here.

    1. Re:Big fuck you to the first amendment by Anonymous Coward · · Score: 2, Informative

      It has nothing to do with the first amendment. You have never had freedom of speech when it pertains to aiding and abetting illegal activity. This is not to say I agree that this should be a crime or that prostitution in general should be criminal, but it is and hence this falls squarely under those laws, freedom of speech does not apply.

  10. Re:Much as I hate to say it by fafalone · · Score: 4, Insightful

    Like SESTA being passed 97-2 in the Senate, this is a massively bipartisan attack on liberty. The campaign against Backpage in particular was predominantly led by Kamala Harris, the (D) CA AG (now Senator), who is a hero to the progressive left, who fully supports this nonsense just as strongly as the religious right (for different reasons, but the outcome is the same: women are not permitted to make this choice). There's a laundry list of things to pin on the right, but like the surveillance state and war on drugs, this massive violation of liberty is brought to you by bipartisan consensus because both (D) and (R) are branches of the Authoritarian Party.

  11. If anyone wants to know how Iran got to be.. by nightfire-unique · · Score: 2

    .. the way it is today, this is it. This is what a theocracy looks like in its infancy. Be afraid, my fellow humans, and fight while you have the opportunity.

    30 years passes in the blink of an eye.

    --
    A government is a body of people notably ungoverned - AC
    1. Re:If anyone wants to know how Iran got to be.. by jythie · · Score: 3, Interesting

      Sad thing is, the theocratic elements of the US are actually pretty new, part of an anti-communist revivalism only dating back to the mid 20th century. The original colonies were mostly theocracies, but each colony had problems with oppression of their people when living in other colonies and thus the problems of theocracies were very recent in their minds. I would say today we are mostly in the toddler phase of theocracy, about a half century in with the power of the theocrats waxing and waning.

    2. Re:If anyone wants to know how Iran got to be.. by cascadingstylesheet · · Score: 2

      I would say today we are mostly in the toddler phase of theocracy, about a half century in with the power of the theocrats waxing and waning.

      We're importing lots of theocrats, quite mature ones. And the people who claim to be most worried about theocracy are the ones enthusiastically doing and supporting this importing.

  12. Re:Not sure how to feel by ShanghaiBill · · Score: 2

    ... but with 93-counts ...

    93 counts for things that should have never been illegal in the first place.

  13. Re: Prison society by PopeRatzo · · Score: 3, Funny

    Good work, Billy! Another $0.50 has been deposited in your Shareblue account.

    Excuse me, but I'm management. I get $0.75, plus an extra $0.25 whenever I can trigger an Anonymous Coward.

    And that's not counting quarterly bonuses or benefits.

    --
    You are welcome on my lawn.
  14. Prior charges dismissed by Anonymous Coward · · Score: 3, Informative

    From wikipedia:

    On October 6, 2016, Harris announced the arrest of Backpage CEO Carl Ferrer on felony charges of pimping a minor, pimping, and conspiracy to commit pimping. The arrest warrant alleged that 99% of Backpage's revenue was directly attributable to prostitution-related ads, many of which involved victims of sex trafficking, including children under the age of 18.[107]

    On December 9, 2016, a superior court judge dismissed all charges in the complaint.[108] On December 23, 2016, Harris filed new charges against Ferrer and former Backpage owners Mike Lacey and Jim Larkin for pimping and money laundering.[109] In January 2017, Backpage announced that it was removing its adult section from all of its sites in the United States due to many years of harassment and extralegal tactics.[110][111] ... I wonder if they've learnt from the takedown and prosecution of sfredbook about how to "get these guys"?

  15. Re: 93 counts by Anonymous Coward · · Score: 2, Informative

    He's right, though. If you're on the hook for something that might send you to prison for decades, taking a plea for a few years starts to look very attractive no matter how certain you are of you innocence. Our criminal justice system has issues.

  16. Re:Hello boys! by tehcyder · · Score: 2

    I work as a high class escort in the UK.

    This comes straight in at Number One on my "sentences I never expected to read on slashdot" chart.

    --
    To have a right to do a thing is not at all the same as to be right in doing it
  17. Re: Prison society by datavirtue · · Score: 2

    The world has always been 'freedom for those with the most power to restrict the freedom of lesser people.

    Fixed that for you.
    No matter the failings, American freedom is unique. I know that disgusts you but it is a fact that can be easily proven. I wonder why people in forums get so worked up in their hate of American principles and values that, despite the interference from the people who ignore and complain about them, continue to live on. So pessimistic, and it is really getting old. To people like you there is nothing good in the world.

    --
    I object to power without constructive purpose. --Spock