Carl Ferrer, CEO and co-founder of the classified advertising site Backpage.com, pleaded guilty to money laundering and facilitating prostitution. Ferrer's agreement requires him to take "all steps within his reach" to permanently close Backpage, lose all assets and property of the company, attest that Backpage laundered money and encouraged advertisements related to prostitution, and plead guilty at the level state charges in Texas and California. This settlement is separate from the case against Backpage co-founders Michael Lacey and James Larkin, who, along with five other employees, were arrested last week and charged with similar crimes.
Ferrer was indicted and pleaded guilty on April 5, the day before Backpage was confiscated and suspended by police. In the agreement, he says he conspired with Lacey, Larkin and others to knowingly create "a veneer of denial" about ads for illegal sexual services, by removing certain keywords from ads without eliminating them. He says they also routed the money through seemingly unrelated bank accounts to trick credit card companies into processing the illegal payments. The group used cryptocurrency exchanges such as CoinBase and Kraken to launder money as well.
The Department of Justice has alleged that Backpage was a center for sex trafficking, including trafficking in children. In addition to removing the keywords related to prostitution, allegedly disinfected and reissued notices for minors. Ferrer's statement does not admit crimes related to trafficking, but still covers some of the main charges against Ferrer's former colleagues.
All these cases are not related to the Sex Trafficking Victims Act (FOSTA) allowed by States and Victims. FOSTA removes liability protections from site owners that allegedly facilitate illegal sex work, and can be applied retroactively to sites such as Backpage. Ferrer was charged under pre-existing rules. Even so, the statement is part of a larger crackdown that apparently prevents human trafficking, but it is also driving consensual sex workers away.