California Attorney General Kamala Harris said in a statement that state prosecutors allege that nearly all of Backpage’s worldwide income derived from its adult entertainment sections.
Backpage.com’s revenue generated from California accounted for about 15 percent of the company’s global income, Kamala’s office said. During a 29-month period starting in January 2013, Backpage had gross income of about $51 million in the state.
Kamala’s office said that the ads typically feature nearly nude photos and offer a menu of sex explained in coded language.
Backpage CEO Carl Ferrer was taken into custody in Houston after arriving on a flight from Amsterdam, according to a statement from Texas Attorney General Ken Paxton, whose office joined in the criminal prosecution.
Ferrer now stands charges of multiple counts of pimping and pimping minors in California.
Michael Lacey and James Larkin, who founded the Dallas company in 2004 and remain its owners, were charged along with Ferrer in a criminal complaint filed Sept. 26 in Sacramento County Superior Court.
The trio are accused of conspiracy to commit pimping — a felony.
Authorities on Thursday also raided the company’s Dallas office.
“Raking in millions of dollars from the trafficking and exploitation of vulnerable victims is outrageous, despicable and illegal,” Harris said. “Backpage and its executives purposefully and unlawfully designed Backpage to be the world’s top online brothel.”
Harris’ office said they found numerous instances in which Backpage received fees from ads for escorts under the age of 18. Those minors lived in Los Angeles, Sacramento and Santa Clara counties, the complaint said.
Harris said that undercover agents responded to ads and met women and girls who described how they used the website to find Johns.
Adult industry attorney Lawrence Walters told XBIZ late Thursday that “while it is very early in this particular prosecution, this effort appears to be an aggressive move by law enforcement to hold the owner of an online service provider responsible for state level 'pimping' offenses despite the traditional preemption of state law in this area by federal law."
Walters said that that federal law is Section 230 of the Communications Decency Act, which provides immunity from liability for providers and users of interactive computer services who publish information provided by others.
“Backpage has been targeted by state and federal authorities for years, however the 7th U.S. Circuit Court of Appeals recently held that Backpage cannot be not be held liable for the allegedly illegal nature its advertisers' posts,” Walters said. “It will be interesting to see how involved the defendants actually were in the alleged pimping activities, aside from merely providing an online advertising venue.
“This will certainly be an important case to watch for those involved in the online advertising sector,” Walters said.