Vice fraud: California criminal prosecution against Backpage represents latest flashpoint in century-old prostitution debate

Dressed in matching orange jumpsuits and anxious expressions, three graying entrepreneurs squeezed into a holding cage inside of a Sacramento County courtroom last week to hear a list of charges befitting the most successful prostitution wholesalers in recorded history.

Carl Ferrer, 55; Michael Gerard Lacey, 68; and James Anthony Larkin, 67, each share a felony count of conspiring to commit the crime of pimping for operating the online classified portal Backpage.com, which the California attorney general’s office claims is a poorly disguised virtual brothel that turns a blind eye to sexual exploitation. Ferrer, the company’s CEO, received nine additional charges—four apiece for pimping and pimping of a minor. Six of Ferrer’s charges are alleged to have occurred in Sacramento County.

Like The Review Board, Rentboy and myRedBook before it, authorities say Backpage and its operators knowingly profited from coded prostitution ads posted by its customers, including ones featuring underage victims. (Disclosure: Backpage provides classified ad services to SN&R.)

“Raking in millions of dollars from the trafficking and exploitation of vulnerable victims is outrageous, despicable and illegal,” Attorney General Kamala Harris said in a release announcing the arrest of Ferrer and criminal charges against his business partners.

The Texas-based company dismissed the incarceration of its senior corporate officers as an “election year stunt,” perpetrated by an attorney general running for higher office against a fellow Democrat who has accused her of being soft on human trafficking.

Meanwhile, the sex workers whose interests are ostensibly represented by the state say raiding the websites they use to book and screen clients does little to change their circumstances or catch violent predators.

“The CEO or shareholders of Backpage are not the ones who [exploit sex workers]. Plain and simple,” said Kristen DiAngelo, a former escort who leads the Sacramento branch of the Sex Workers Outreach Project. “The predators are the ones who violated them and the ones who did it. And this takes the focus off them.”

It’s a debate almost as old as the profession it surrounds.

Well before the internet, there was the “bawdy house.”

In 1913, former California Gov. Hiram Johnson signed the California Red-Light Abatement Act, outlawing bordellos and other houses of prostitution.

Voters in the state were given the opportunity to bless or reject the new law in the form of a veto referendum the following year. Advocates promised the law would stymie the “scattering of the evil throughout the residence district,” while opponents predicted it would only blemish the poor property owner, while the “prostitute will go merrily on, plying her trade as she has plied it from the beginning,” according to the official ballot arguments.

Voters approved the measure by a 53.3 percent majority.

Neglected by each campaign were the interests of the sex workers themselves, whose jobs became more treacherous, harm-reduction activists say.

That’s because the Abatement Act didn’t create any public health or social services program to uplift these workers out of a life of prostitution. It just made it so they could no longer operate indoors without breaking the law. And, as bad as some bordellos were before the act passed, the streets only magnified their perils.

A century later, it’s a different era but a similar strategy: cut off workers’ access to the marketplaces where they ply their trade. The combined effect pushes the most vulnerable workers to the streets, activists say, where the rates of violence, homelessness and disease threaten to overtake them.

“What happens is you see a huge escalation of rapes, of murders, of girls talking about, ’Yeah, my friend got in this car and we haven’t seen her since,’” DiAngelo said.

And yet, federal and state authorities have shown an increased appetite for raiding escort-friendly websites on the grounds that they enable human trafficking.

Earlier this year, Seattle authorities and the FBI seized The Review Board website on the grounds that it promoted prostitution. Last summer, the Department of Homeland Security targeted the male escort website Rentboy.com, a move criticized by the New York Times editorial board. In 2014, the FBI and IRS successfully closed myRedBook.com. In all instances, law enforcement trumpeted their investigations as crippling blows to those who profited from sexual exploitation, even as myRedBook and Rentboy operators pleaded to lesser charges months later.

Meanwhile, groups calling for the decriminalization of prostitution, including Amnesty International, have questioned both law enforcement’s motives and results.

“I really think Kamala Harris has better things to do than prosecute Backpage,” Danny Cruz, a member of the Los Angeles branch of SWOP, said in a release. “Like prosecute the cops in Celeste Guap’s ongoing case.”

Cruz’s statement refers to the Oakland sex worker who was allegedly trafficked last year by numerous police officers employed in the Bay Area, starting when she was a minor. While the Alameda County District Attorney’s Office has filed charges against seven officers from three different agencies, Guap’s attorneys want Harris to take over the investigation into the widening scandal.

Though her office hasn’t taken action in that matter, it has marshaled significant resources against Backpage.

The October 12 arraignment of the defendants followed a three-year investigation into Backpage’s business operations by California and Texas authorities.

Larkin and Lacey founded the online classified website in 2004 with Ferrer as the site’s operator. Eight years later, Ferrer was the company’s CEO with Lacey and Larkin as controlling shareholders. That was around the same time that Craigslist removed its “Adult Services” category due to pressure from law enforcement. The DOJ asserts that Backpage capitalized on the migration of sex workers to its site by raising fees, expanding operations and creating sites in hundreds of cities around the world, including 30 in California.

And business was good.

In September 2014, Lacey and Larkin each received a $10 million bonus, according to an arrest warrant affidavit that cited internal emails and financial records.

The state alleges that Backpage generated at least $16 million in adult-section advertisements during an eight-month period ending May 2015, including from escort ads posted in Sacramento County during this time. Several allegedly featured a 16-year-old girl the state identified as “A.C.,” who reportedly told Special Agent Brian Fichtner of the California Department of Justice that she was forced into prostitution at the age of 12 or 13 years old.

According to Fichtner’s affidavit, A.C. says she knew she was restricted from posting adult ads on the website because she was a minor, but was able to do so anyway, telling the agent, “[H]ow are they supposed to know I’m underage?”

Fichtner wrote that he successfully posted an ad to Backpage’s escort section in March of last year, for a $10 minimum, but was blocked months later from posting an ad featuring explicit sexual language. Fichtner also wrote the first ad was taken down after he brought it to Ferrer’s attention. When Fichtner tried posting another undercover ad using the same user information, his affidavit says the site wouldn’t let it go through.

The affidavit says the National Center for Missing and Exploited Children has reported 2,900 instances of suspected child trafficking on Backpage to statewide law enforcement.

Critics of the Backpage operation acknowledge that exploitation can occur on its website, but say that prosecuting the company would be like prosecuting Blackberry because pimps and traffickers use cellphones.

“You don’t see anything in that declaration about going after anyone who forced them into prostitution,” said Jerald Mosley, a retired supervising deputy attorney general who used to work civil cases in Harris’ office. “Why aren’t these resources spent on going after the person who forced a child into prostitution? We don’t know.”

Last year, SWOP Sacramento surveyed 44 local sex workers, shortly after the FBI and IRS raided myRedBook and its related imprints.

The sites had allowed willing escorts and those compelled by their circumstances to post ads and screen potential customers against a “bad-client” database free of charge. Its collapse, SWOP argued, removed a critical safety tool, especially for the most vulnerable sex workers.

Eight of those surveyed said they had been displaced to the streets after authorities shuttered myRedBook.

SWOP Sacramento was born in the aftermath of that operation, and DiAngelo believes those numbers have quickly escalated since the group’s inaugural survey.

Today, she and her partners are juggling numerous clients in varying states of crisis. Many are homeless, some are scraping by enough to keep a motel room, others are trying to get clean but encountering one obstacle after another.

“It’s a problem without a real solution, because we’re not really trying to solve it,” DiAngelo said. “There’s lots of agencies, but no solutions.”

SN&R asked Harris’ office what services, if any, it or other partner organizations provided to the nine victims the state cited in its criminal complaint against Backpage.

A DOJ spokeswoman declined comment.

Meanwhile, Backpage’s attorneys expressed confidence that they’ll fend off the latest legal barrage, as they’ve done in three other cases.

In March, the First Circuit Court of Appeals upheld a lower court ruling dismissing a lawsuit filed by several women who say they were trafficked through the website. The ruling said that while the appellants made “a persuasive case” that Backpage “tailored its website to make sex trafficking easier,” the company was protected by the federal Communications Decency Act.

“If the evils that the appellants have identified are deemed to outweigh the First Amendment values that drive the CDA, the remedy is through legislation, not through litigation,” the ruling stated.

At the tail end of last week’s arraignment, defense attorney Cristina Arguedas indicated her team’s intent to dismiss the state’s criminal charges on similar grounds, through a demurrer motion.

“It’s essentially a motion to dismiss the complaint,” defense attorney Jim Grant explained after the hearing. “Federal law stops them from bringing this complaint.”

Calling the CDA a “very important legal doctrine,” Mosely says the law insulates publishers of user-generated information—like YouTube, Facebook and Twitter—from being held legally liable for what their users post.

“That’s not some little technicality that Backpage is trying to hide behind,” Mosely said. “That is one of the fundamental issues in this case.”

He said the fact that Harris filed charges in spite of the act “gives rise to the deep suspicion that this about her Senate race.”

Grant, whose firm represents all three defendants, acknowledged the criminal prosecution represented an escalation in tactics, however.

“A criminal case is something new in the sense that they’ve actually arrested and now incarcerated the publisher of an online website,” Grant told SN&R one day before his clients posted bail. “The legal principles are the same.”

Sacramento Superior Court Judge Michael G. Brown set a November 16 hearing to consider the demurrer motion. That’s eight days after the election.