Monday we reported that the US Department of Justice had seized classified ads website Backpage. The official notice on the site stated that the Justice Department would have more information on the “enforcement action” on Friday.
However, USA Today was able to obtain unsealed indictment documents from the US Attorney’s Office listing 93 charges against seven individuals involved with running the website.
Michael Lacey and Jim Larkin, along with their co-indictees face charges ranging from facilitating prostitution to money laundering. The indictment lists 50 instances where ads on the website were used to solicit prostitution. More than 40 counts of money laundering are also detailed.
Other Backpage employees facing charges include:
- Scott Spear, a former executive vice president
- John “Jed” Brunst, former chief financial officer
- Dan Hyer, sales and marketing director
- Andrew Padilla, operations manager
- Joye Vaught, assistant operations manager
At least 17 witnesses have testified that they were “trafficked” through the website with some of them being as young as 14 at the time. It was even mentioned that a client answering to a Backpage ad killed one of the trafficking victims.
As to laundering, Backpage revenue was electronically transferred into and out of foreign nations. It was also converted into various cryptocurrencies including Bitcoin to disguise the origin of the money.
US Attorney’s spokesperson Cosme Lopez says that “virtually every dollar flowing into Backpage’s coffers represents the proceeds of illegal activity.”
According to the US Attorney's Office, Michael Lacey specifically asked an Arizona bank for advice about moving his funds to an offshore account as to not have them seized by the government. A short while later, he allegedly transferred $16.5 million to a Hungarian bank account.
Despite having sold all of their interest in Backpage in 2015, the indictment claims Lacey and Larkin continued receiving “tens of millions of dollars” from Backpage-related sources.
The US Attorney’s Office described the operation “as a thinly veiled and lucrative online brothel.”
Indeed, a US Senate report stated that the website generated $135 million in 2014 alone. An appraisal from 2015 listed the company’s worth at more than $600 million.
An internal memo identified in the indictment quotes Lacey referring to Backpage saying, “For the very first time, the oldest profession in the world has transparency, record keeping, and safeguards.”
It would seem that the US Attorney is not the only one that saw Backpage as a “lucrative online brothel.”