Unsealed court documents revealed Friday that Backpage.com's CEO Carl Ferrer recently pleaded guilty to charges of money laundering and conspiracy to facilitate prostitution.
The guilty plea, which follows the Justice Department's seizure of the website that has been linked with illegal sex trafficking, also suggests that Ferrer will testify against his fellow Backpage co-founders. Seven employees, including co-founders Michael Lacey and James Larkin, were also arrested last week on federal charges of facilitating prostitution.
In his admission of guilt, the Washington Post reports, Ferrer outlined how the company helped advertisers reword ads to avoid prostitution charges and how Backpage created shell corporations and used crypto-currency to hide revenue from authorities.
"I conspired with other Backpage principals…to find ways to knowingly facilitate the state-law prostitution crimes being committed by Backpage's customers," Ferrer admitted, adding of the company's rewording of ads, "Such editing did not, of course, change the essential nature of the illegal service being offered in the ad – it was merely intended to create a veneer of deniability for Backpage."
Ferrer's involvement in the investigation comes a day after President Trump officially signed the anti-sex trafficking bill FOSTA-SESTA – the Fight Online Sex Trafficking Act and Stop Enabling Sex Trafficking Act – into law following its passage through Congress last week.
Lacey and Larkin – who first founded the Phoenix New Times in 1970 and led an empire of alt-weeklies, including the Village Voice, before focusing their efforts on Backpage – remain behind bars following the Backpage raid last week. Five other Backpage officials who were arrested have already been released.
As part of Ferrer's plea deal, the CEO helped authorities take down Backpage as well as seize over 35 residencies and 25 bank accounts.
"I have long been aware that the great majority of these advertisements are, in fact, advertisements for prostitution services (which are not protected by the First Amendment and which are illegal in 49 states and in much of Nevada)," Ferrer said.
In March, Craigslist removed personal ads from its site in anticipation of FOSTA's passage. "Any tool or service can be misused. We can't take such risk without jeopardizing all our other services, so we are regretfully taking craigslist personals offline. Hopefully we can bring them back some day," the site wrote. "To the millions of spouses, partners, and couples who met through craigslist, we wish you every happiness."