The CEO of Backpage.com agreed to immediate extradition to California after his arrest in Houston on money laundering and pimping charges. Carl Ferrer was taken into custody on Friday after he arrived at a Houston airport on a flight from Amsterdam. He is now in a California jail.
In 2014, Breitbart News reported that Backpage.com has been profiting from the exploitation of women and children for years. The Breitbart News article written two years ago in October states, “[W]hat is even more appalling is that, so far, the site has gone largely unpunished by law enforcement for their facilitation of this despicable criminal activity. The ‘adult’ section of the site has become a horrific hub for the sex trafficking industry as women and children are being illegally sold for sex through classified ads posted to their page.”
The bust by Texas Attorney General Ken Paxton was the largest human trafficking bust in the Lone Star State’s history, as reported by Breitbart Texas. 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. A search reveals that Ferrer is no longer in the Harris County, Texas jail. The Sacramento Bee reports that he is in a Sacramento jail and is being held without bail.
Backpage is considered the largest advertiser of adult escort services in the United States. Backpage.com has its principal place of business in Dallas but it is a Dutch-owned limited liability corporation (LLC).
The website operates a worldwide online classified advertising site. Among other ads, people can post or locate adult escort advertisement services. An affidavit for a search warrant obtained by Breitbart Texas 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.”
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.
Texas Attorney General Ken Paxton called the website a “deep-seated evil” and “modern-day slavery.” He explained that the victims that are sex trafficked include both voluntary and involuntary participants and minors.
The probable cause stated within the affidavit for a search warrant stated included that Backpage.com receives more than 90% of their revenues from adult escort ads. Just in California, those revenues for January 2013 to May 31, 2015 was $50 million, or between $1.5 to $2.5 million per month. It stated that Ferrer has been the CEO of the website since 2012 but has handled the day-to-day operations for the company for a much longer period. All business and financial records of shareholders Ferrer, Jim Larkin and Michael Lacey were targeted in the affidavit for search warrant.
It also said that “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.” Ferrer faces a sentence from between three to eight years of imprisonment under the California felony pimping statute.
In Texas, Ferrer also faces money laundering charges. 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 the websites’s adult escort section in 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.”
An offense in Texas for money laundering is a felony of the first degree if the value of the funds is $300,000 or more. Conviction would be punishable in prison time from five to 99 years up to life, and a fine of up to $10,000.