Backpage CEO Arrested in Midst of Court Battles

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The chief executive officer of LLC, the online classified ads site linked to suspected sex trafficking, has been arrested and charged with pimping a minor.

Texas and California investigators found evidence that many advertisements appearing in Backpage’s “escorts” section involved adult and child sex trafficking victims, California Attorney General Kamala D. Harris announced Oct. 6.

“Backpage and its executives purposefully and unlawfully designed Backpage to be the world’s top online brothel,” Harris said in a statement.

Backpage has prevailed in two federal appellate court battles since last year and faces possible Supreme Court review in one of them.  It’s unclear whether CEO Carl Ferrer’s arrest will have implications for the case going forward.

In addition, the arrest came just days before Ferrer was due to submit information to a Senate Homeland Security subcommittee, under subpoena, on how Backpage screens ads for sex trafficking. 

The U.S. District Court for the District of Columbia ordered Ferrer to comply with the subpoena by Oct. 10, following the Supreme Court’s refusal to stay its enforcement. However, on Oct. 7, the U.S. Court of Appeals for the District of Columbia Circuit temporarily stayed that order in response to an emergency request filed by Ferrer before the arrest.

Backpage’s general counsel didn’t immediately respond to a request for comment.

Ferrer was also criminally charged, along with Backpage’s owners Michael Lacey and James Larkin, with conspiracy to commit pimping, or receiving earnings from a person’s prostitution.  Pimping is a felony punishable by imprisonment for up to six years if the person engaged in prostitution is 16 years of age or older, and up to eight years if the person is under 16.

The state-level investigation found that Backpage’s adult ads directly attributed to 99 percent of Backpage’s gross revenue from January 2013 to March 2015.  That percentage dropped to 90 percent in May 2015, likely due to credit card companies that stopped processing payments to the site, California Department of Justice Special Agent Brian Fichtner said in a declaration in support of the arrest warrant.

In November 2015, the U.S. Court of Appeals for the Seventh Circuit—in the case Backpage v. Dart—banned a public official from coercing credit card companies to take such action against Backpage. 

Meanwhile, the Supreme Court will decide whether it will review a decision by the U.S. Court of Appeals for the First Circuit—in Doe v. Backpage—that Section 230 of the federal Communications Decency Act protected Backpage from claims that it facilitated sex trafficking. 

What impact will Ferrer’s arrest have on the Doe case or the subpoena’s enforcement? Impossible to say. But from Backpage’s position, the timing is inopportune, at least.