- Associated Press
Friday, October 7, 2016

DALLAS (AP) - A day after his arrest in Texas, the chief executive of Backpage.com agreed Friday to waive extradition to California to face charges that allege sex-trafficking victims were forced into prostitution through escort ads posted on the website.

Carl Ferrer, 55, was arrested on a warrant that alleges his company - which investigators say takes in more than $150 million in annual revenue - is making nearly all of its money from advertising illegal adult services. Authorities also searched his company’s Dallas headquarters and filed arrest warrants for two of his associates.

Here’s a look at how Backpage.com operates and the scrutiny it has faced:



The website is similar to sites like Craigslist.com where users can create posts to sell items, seek a roommate, participate in forums, list upcoming events or post job openings. But Backpage.com also has listings for adult escorts, body rubs and other sexual services, and authorities say advertising related to those services has been extremely lucrative.

Worldwide revenue from sex ads on Backpage.com topped $3.1 million in just one week last year, according to a California court affidavit in Ferrer’s case. A warrant used to search the company’s Dallas headquarters says those ads amounted to about $50 million between January 2013 and May 2015 in California alone.

The affidavit also alleges that Ferrer expanded Backpage.com’s share of online sex marketing by creating affiliated sites with related content.

Backpage.com is a Dutch-owned limited liability corporation incorporated in Delaware, but its principal place of business is Dallas.



Backpage.com has been in Congress’ crosshairs for much of the last year. The Senate unanimously voted in March to hold the company in contempt for failing to comply with a congressional subpoena into how it screens ads for possible sex trafficking. The vote marked the first time in two decades the Senate voted to hold someone in contempt.

Ferrer argued that the company’s process for reviewing ads on its adult section was a “core editorial function” protected under the First Amendment. But the U.S. Supreme Court told the company last month to turn over records sought as part of a congressional investigation into human trafficking over the internet. Senate investigators say Backpage.com has been linked to hundreds of reported cases of sex trafficking.



California officials allege that Ferrer’s site collects fees from users who use coded language and nearly nude photos to offer sex for money. Ferrer is facing several felony pimping charges in California, including pimping a minor. Under state law, felony pimping is defined as making money off prostitutes or soliciting customers for prostitution.

Ferrer is also facing a money laundering charge in Texas, according to Texas Attorney General’s Office spokeswoman Kayleigh Lovvorn.

Ferrer’s attorney, Philip Hilder, said his client believes the charges are “trumped up.”

“He’s looking forward to his day in court, where he gets to battle back on these charges,” Hilder said Friday.

Ferrer, who lives in the Dallas area, waived extradition to California during a court hearing Friday morning in Houston. He was arrested in Houston on Thursday after arriving on a flight from Amsterdam. The local prosecutor said he was expected to be flown to California later Friday.



Arrest warrants have also been issued for Backpage.com’s controlling shareholders: Michael Lacey, 68, and James Larkin, 67. The men founded the website in 2004, and Ferrer was brought on to manage the site’s operation, according to California court records. Larkin and Lacey each received $10 million bonuses from the website in September 2014, according to court documents.

The California arrest warrants allege that the men have known for at least the last five years that their site is a hub for the illegal sex trade, “and that many of the people who advertised for commercial sex on Backpage.com are victims of sex trafficking, including children.”

It wasn’t immediately clear Friday whether either man had been arrested or whether they had attorneys. The two men are former owners of the Village Voice and the Phoenix New Times.

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