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Texas Attorney General Arrests Backpage.com CEO — ‘Largest’ Promoter of Online Sex Trafficking

HOUSTON, Texas — Texas Attorney General Ken Paxton made the highest-profile human trafficking bust in the Lone Star State’s history on Thursday afternoon. Backpage.com is set to be shutdown as a result. Paxton said that the victims that are sex trafficked include both voluntary and involuntary participants. The head of the organization, Carl Ferrer, has been arrested at a Houston airport.

Backpage is a multi-state and international online “advertising” website.

The Texas AG and a representative from the California Attorney General’s office gave a press conference around 4 p.m. local time to announce the bust and arrest.

Attorney General Paxton called the website a “deep-seated evil” “in our backyard” that provides for the trafficking of children and adults.

Ferrer, 55, was taken into custody this afternoon after he arrived in Houston on a flight from Amsterdam. The Texas and California attorneys general worked together on a lengthy investigation and found evidence that adult and child sex trafficking victims were forced into prostitution. Backpage.com allegedly did so thorough escort ads on its website.

“Making money off the backs of innocent human beings by allowing them to be exploited for modern-day slavery is not acceptable in Texas,” Attorney General Paxton said. “I intend to use every resource my office has to make sure those who profit from the exploitation and trafficking of persons are held accountable to the fullest extent of the law.”

Almost 35 members of the Texas AG’s Law Enforcement Unit participated in the arrest of Backpage’s CEO. They also executed a search warrant on the Dallas headquarters of the business at 2501 Oak Lawn Avenue, Dallas, Texas.

Backpage is considered the largest advertiser of adult escort services in North America. Backpage.com is a Dutch-owned limited liability corporation (LLC), incorporated in Delaware with its principal place of business in Dallas. It operates a worldwide online classified ad site on which people can post or locate an adult escort advertisement, among other things. An affidavit for a search warrant stated, “It is currently the single largest purveyor of Internet sex ads in the United States, and Backpage.com’s profits from this line of business register in the millions yearly.”

An affidavit for a search warrant obtained by Breitbart Texas asked for items that were believed to be implements or instruments used in the commission of a crime, namely money laundering and prostitution or pimping. All business and financial records pertaining to Backpage.com, its parent companies or companies that have an invested interest in Backpage.com were targeted, as well as all business and financial documents pertaining or related to Backpage.com shareholders, namely Carl Ferrer, Jim Larkin, and Michael Lacey.

The affidavit completed by a peace officer also asked for all identifying documents and images that related to Backpage or its parent companies. Cell phones, SIM cards and other memory cards or equipment related to cell phones in the care, custody, or control of Ferrer were also sought.

Any documents showing what person or persons exercise control over the business, and all computer hardware, and all digital storage device passwords and other data security devices designed to restrict access to or hide computer, were also laid out in the affidavit.

The affidavit included a request that “members of the California Department of Justice and California Attorney General’s Office be permitted to accompany Texas Attorney General’s Office agents in the execution of this search warrant and that any evidence seized, be shared with California Attorney General’s Office and any law enforcement personnel working at their direction.”

Sergeant Cora Gray, the affiant, is assigned to the Human Trafficking and Transnational/Organized Crime Section, Criminal Investigations Division at the Office of the Attorney General of Texas.

The Sergeant is specially-trained in the area of trafficking and has, over the last four years, conducted hundreds of searches on Backpage.com and followed tips to search for missing and exploited children.

The probable cause stated within the affidavit for a search warrant includes (among other things):

  1. The adult escort ads posted on Backpage.com are advertisements for prostitution, the exchange of sexual acts for a fee. People engaged in prostitution pay Backpage.com to post advertisements soliciting potential buyers for their sexual services.

  2. Backpage receives more than 90% of their revenues from the adult escort ad portion of their classified advertising. In California, that amounts to approximately $50 million in revenues for the period between January 2013 to May 31, 2015, or between $1.5 to $2.5 million per month.

  3. CARL FERRER has been the CEO of Backpage.com since 2012, but has handled the day-to-day operations for the company for much longer. Carl Ferrer has been told directly by law enforcement about prostitution on Backpage.com, and is regularly copied on the hundreds of law enforcement subpoenas and requests that Backpage.com receives each year related to prostitution and sex trafficking of both adults and minors on the website. Ferrer’s communications and emails obtained by search warrant, his interactions with law enforcement, and even the public statements of his high level executives, such as his General Counsel, reflect personal knowledge that Backpage.com derives support or maintenance from the earnings of people engaged in prostitution.

California’s Pimping statute provides that it is a criminal offense “knowing another person is a prostitute,” to “live, derive support or maintenance from the earnings or proceeds of a person’s prostitution,” or to “solicit or receive compensation for soliciting for the person.” California’s crime of pimping is a felony punishable between three to eight years of imprisonment.

Pimping qualifies as a “criminal activity” under the Texas Penal Code section for Money Laundering because it is an offense “punishable by confinement for more than one year under the laws of another state.” The credit cards, gift cards, debit cards, Bitcoin, and cash used to purchase ads for prostitution on Backpage.com all qualify as “funds” under the Texas Penal Code.

Under the Texas Money Laundering statute, the court can consider all $50 million generated by Backpage.com’s adult escort section in the state of California when classifying this offense because it constitutes an ongoing business model and a continuing course of conduct, says the affidavit. “If proceeds of criminal activity are related to one scheme or continuing course of conduct, whether from the same or several sources, the conduct may be considered as one offense and the value of the proceeds aggregated in determining the classification of the offense.”

Under the Texas Money Laundering statute, an offense under this section is:

1. a state jail felony if the value of the funds is $2,500 or more but less than $30,000;

2. a felony of the third degree if the value of the funds is $30,000 or more but less than $150,000;

3. a felony of the second degree if the value of the funds is $150,000 or more but less than $300,000; or

4. a felony of the first degree if the value of the funds is $300,000 or more.

The investigation began after there were reports from law enforcement agencies, the National Center for Missing and Exploited Children (NCMEC), and news stories about children who were repeatedly exploited for commercial sex on Backpage.com.

The affidavit also says that “Since 2012, NCMEC has worked on more than 400 cases involving children sold for commercial sex on Backpage.com. During this same time period, NCMEC has reported 2,900 instances to California law enforcement where suspected child sex trafficking occurred via Backpage.com.

Law enforcement officials state that Backpage.com describes itself in public presentations and internal documents as the second largest online classified advertising service in the country.

Last January, Attorney General Paxton launched a Human Trafficking and Transnational/Organized Crime (HTTOC) unit. The division works closely with prosecutors around the state to bring human traffickers to arrest and trial.

Most recently, HTTOC worked with the Nueces County District Attorney’s Office to secure a 40-year sentence for the trafficker of a 15-year-old victim.

In July 2015, Breitbart Texas reported that a former Galveston County judge had been charged with posting online ads indicating an ex-girlfriend, and a woman who had spurned his advances, were available for sexual services for pay. The controversial ex-judge was arrested on two counts of felony online impersonation.

In early September, Attorney General Paxton met with a group of truckers who are committed to help spot and report human trafficking on the highways, reported Breitbart Texas. Law enforcement professionals and truck drivers working together has proven to be an effective tool to stop the trafficking and abuse of many young girls in this country. Paxton’s office has conducted more than 50 training sessions statewide since the beginning of 2016. More than 4,000 truck drivers and other Texans have been trained on what to look for when encountering potentially trafficked victims.

The Office of Attorney General (OAG) website lists the four types of trafficking under Texas law:

  1. Trafficking of adults for forced labor, for instance in agriculture, food service, factory work or sales;
  2. Trafficking of adults for sex, in strip clubs, brothels, massage parlors, street or internet prostitution;
  3. Trafficking of children under the age of 18 for forced labor; and
  4. Trafficking of children under the age of 18 for sex. An individual can be trafficked into any industry or type of work. Legally, someone is trafficked if force, fraud or coercion is applied to make the trafficked person work or if a child under the age of 18 is trafficked for sex by any means, regardless of whether the trafficker has to use force, fraud or coercion.

Lana Shadwick is a contributing writer and legal analyst for Breitbart Texas. She has served as a prosecutor and associate judge in Texas. Follow her on Twitter @LanaShadwick2.

This article has been updated to reflect additional information.

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