Carl Ferrer, CEO and co-founder of classified advertising site Backpage.com, has pleaded guilty to money laundering and facilitating prostitution. Ferrer’s plea deal requires him to take “all steps within his power” to permanently shut down Backpage, to forfeit all the company’s assets and property, to testify that Backpage laundered money and encouraged prostitution-related ads, and to plead guilty to state-level charges in Texas and California. This deal 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 charged and pleaded guilty on April 5th, the day before Backpage was seized and suspended by law enforcement. In the agreement, he states that he conspired with Lacey, Larkin, and others to knowingly create “a veneer of deniability” over ads for illegal sexual services, by removing certain keywords from ads without taking them down. He says they also routed money through unrelated-seeming bank accounts to fool credit card companies into processing illegal payments. The group used cryptocurrency exchanges like CoinBase and Kraken to launder money as well.
The Justice Department has alleged that Backpage was a hub for sex trafficking, including trafficking of children. In addition to removing standard prostitution-related keywords, it allegedly sanitized and republished ads for underage escorts. Ferrer’s statement doesn’t admit to trafficking-related offenses, but it still covers some of the primary charges against Ferrer’s former co-workers.
All these cases are unrelated to the recently signed Allow States and Victims to Fight Online Sex Trafficking Act (FOSTA). FOSTA strips liability protections from site owners that are supposedly facilitating illegal sex work, and it can be applied retroactively to sites like Backpage. Ferrer was charged under preexisting rules. Even so, the plea is part of a larger crackdown that’s ostensibly about preventing trafficking — but is also pushing consensual sex workers offline.