Beyond Child Sex Trafficking: Backpage And Its Money Laundering Scheme

Tony Ortega Backpage Apologist

Over the course of this week we’ve seen first hand how Backpage systematically abused its victims and squeezed them for every dollar they could. While we shared with our readers a number of true life stories of a select few of these children and young women, it is worth remembering that this was but a small glimpse into the vast number of girls whose lives were ruined by Backpage.

Many of the victims we read about were averaging ten customers a day during this time and turning over all or most of their sex trafficking earnings (upwards of $1,500 per day) to their pimps.

In light of this, some have asked us how Backpage was able to launder the great volumes of cash accumulated in their sex-for-profit scheme. Today we turn our attention to unpacking exactly how they did that.

By now it is clear that Backpage’s customers were overwhelmingly using the proceeds of criminal activity (i.e., money earned from pimping and child sex trafficking) when purchasing ads on Backpage. In addition, because Backpage’s publication of such ads is viewed as an independent crime (e.g., violation of 18 U.S.C. § 1952), the fees it collects from customers posting prostitution ads-estimated at more than $500 million since 2004 constitute the proceeds of unlawful activity.

For these and other reasons, banks and financial institutions repeatedly began refusing to do business with Backpage. In response, the Backpage defendants decided to pursue a variety of money laundering strategies.

For example, on August 27, 2013, Carl Ferrer was forwarded an array of emails from Backpage customers who were complaining that their credit card companies had refused to process Backpage-related transactions. One customer wrote: “ Have you resolved the issue of Chase Bank not honoring payment for you for ethical reasons?“

Carl Ferrer forwarded these complaint emails to James Larkin, Scott Spear, and Jed Burnst and proposed, as a “ solution” to the problem, that Backpage explicitly reconfigure its website to fool credit card companies into believing the charges were being incurred on a different website.

In fact, during a November 2013 presentation by Ferrer to Larkin, Spear, and Burnst, Ferrer again discussed strategies for fooling credit card companies into believing that Backpage-associated charges were being incurred on different websites, including a proposal to set up shell companies without any apparent connection to Backpage (“ create new companies with new principals“) and use their bank accounts to accept payment. Another so-called “solution” was to “ allow users to fund an account thru several other sites” that “have no adult or images.”

As we shall see in next week’s posts Backpage was about to drop all pretense of “being unaware” of the lawlessness taking place on their website. Now they were poised to cross yet another line — the willful and intentional obfuscation of their criminal activity through outright fraud.