The Child Sex Slavery Sellout Part 3

How an online hub of sex trafficking weaves a web of lies to keep profits flowing, at untold cost to children’s lives.

This is the third of a seven-part exposé of the exploitation of children for sex by the classified ads portal Click here to see the previous installment.

James Larkin and Michael Lacey may have shut down their U.S. operations, but under indictment their strategy remained the same.

As in previous judicial encounters, Backpage invoked the First Amendment to deflect questions and, like other internet intermediaries that host user-generated content, the company’s attorneys pointed to the U.S. Communications Decency Act (CDA).

Passed by Congress to regulate the distribution of obscene material to children while simultaneously promoting freedom and innovation online, the CDA was designed to protect the First Amendment right of free speech and to nurture the internet during its infancy. Hidden deep within the law is a provision, Section 230, which offers website operators broad immunities from state law liabilities for hosting illegal content created or posted by users. Such immunity is—and has been—the crux of Backpage’s legal defense.

But lately, some fast-moving bipartisan legislation aimed at amending Section 230 for the first time could shatter Backpage’s longstanding legal rationale. On March 21, the U.S. Senate voted 97-2 for a bill that would sharply curtail the broad protections that websites enjoy from legal liability for content posted by their users.

The legislation, which has been sent to President Trump’s desk, is called the “Allow States and Victims to Fight Online Sex Trafficking Act” (FOSTA). It is also referred to as “Stop Enabling Sex Trafficking Act” (SESTA), the original Senate bill. The vote follows a historic February 27 move by the U.S. House of Representatives, when it overwhelmingly passed HR 1865, a bill aimed at allowing states and victims to not only fight online sex trafficking but to also amend the criminal code by imposing penalties, including a prison term of up to 10 years, on both users and operators of facilities that promote prostitution.

In December 2016, citing CDA Section 230, the Sacramento County Superior Court dismissed the criminal charges brought by the California Department of Justice against Lacey, Larkin and Ferrer. Deliverance, however, was short-lived. Just two weeks later, then California Attorney General (now U.S. Senator) Kamala Harris filed fresh felony charges—13 counts of pimping and conspiracy to commit pimping—against the three men, based on new evidence. Harris referred to Backpage as “the world’s top online brothel” and noted that the victims in seven of the pimping counts were children. 

(Left to right in orange) Carl Ferrer, Michael Lacey and James Larkin in a Sacramento, California court appearance.
(Screenshot of video at

Harris also newly charged the men with 27 counts of money laundering. The charges claim the trio created multiple corporate entities that allowed them to successfully circumvent a decision by financial institutions in 2014 to stop processing Backpage transactions because of the site’s obvious role in facilitating prostitution. The charges allege that the men disguised vast advertising income obtained from pimps, prostitutes and their customers by using a front company to process charges on credit and debit cards so that “Backpage” would not show up in billing descriptions. In this way, Backpage laundered money through a network of affiliate websites, prosecutors contend. The original charging documents had also revealed that Lacey and Larkin each received $10 million in bonuses in 2014.

The three Backpage operators were arraigned on January 24, 2017, and the bail amounts ordered in October were reinstated. The court impounded the executives’ passports and barred them from leaving the country. On August 23, Sacramento County Superior Court Judge Larry Brown green-lighted prosecution to proceed against the men on 25 felony counts of money laundering. 

Exactly a year later, on this past January 24, the Backpage defendants appeared again in Judge Brown’s court. Brown released to state prosecutors subpoenaed materials from several financial institutions and payment processors that had dealings with Backpage. The judge granted a motion by the defense to quash a request by prosecutors to subpoena the records of Backpage and certain related entities. The next hearing in the case is scheduled for May 14. 

 The defendants are currently charged with 24 counts of money laundering and one felony count of conspiracy. They remain accused of laundering money by using a complex web of shell companies and fraudulent billing descriptors aimed at hiding their true identity from financial institutions that had earlier refused to do business with them. 

If convicted, they face up to 23 years in state prison.

To be continued.