Wednesday , 19 September 2018
Breaking News

Feds Seize, Website Owners Face Charges

Seven executives at the classified advertising site have been indicted on 93 counts, including promoting prostitution and money laundering.

The Backpage officials were arrested Friday, the same day federal authorities seized all of the company’s websites around the globe and raided the Arizona home of one of its founders, Michael Lacey.

A federal judge in Phoenix unsealed the indictment late Monday. Mr. Lacey and James Larkin, who also helped launch the internet site, are among those charged. Federal authorities said the indictment was issued in Arizona because that was where Backpage was founded and where it stores its servers and has bank accounts.

The indictment claims Backpage operated as the internet’s leading source of prostitution advertisements, earning more than $500 million in sex trade revenue since its inception in 2004. Backpage earned about $135 million in 2014, up from $5.3 million in 2008, according to a 2017 Senate report.

“Virtually every dollar flowing into Backpage’s coffers represents the proceeds of illegal activity,” prosecutors said in the indictment.

The defendants are charged with conspiracy to knowingly facilitate prostitution through interstate commerce, facilitating prostitution through interstate commerce and conspiracy to commit money laundering. Each count carries as much as 20 years in prison.

In addition to Mr. Lacey and Mr. Larkin, defendants include Scott Spear, who held a 4 percent interest in the company; John “Jed” Brunst, chief financial officer and a 6 percent owner of Backpage; Dan Hyer, director of sales and marketing; Operations Manager Andrew Padilla and Assistant Operations Manager Joye Vaught.

Elizabeth McDougall, an attorney for Backpage, did not immediately respond to a request for comment.

In the past, Mr. Lacey and Mr. Larkin have said that they notify law enforcement when they are aware of illegal activity. They also have asserted that their site is protected by the Communications Decency Act, which protects internet companies…


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