Entire Range of Backpage Charges, Revealed For First Time

Virtually every dollar which flowed into Backpage’s coffers represented the proceeds of illegal activity. In fact, by 2015, the major credit card companies stopped processing payments for Backpage and some banks closed Backpage’s accounts out of concern they were being used for illegal purposes.

In response, the Grand Jury documents we’ve been examining recently clearly show that James Larkin, Michael Lacey, and all the other backpage defendants named in the complaint pursued an array of money laundering strategies.

Court filings reveal these laundering strategies included:

  • Instructing customers to send checks and money orders to particular Post Office box, depositing those payments in bank accounts held in the name of entities with no apparent connection to Backpage, and then giving customers a corresponding “credit” on Backpage to purchase new ads.
  • Wiring the proceeds of Backpage’s business to bank accounts held in foreign countries and then redistributing the funds to certain Backpage defendants (as compensation) or redepositing the funds in bank accounts held in the United States (to conceal the nature of those funds and promote Backpage’s ongoing operations).
  • Converting customer payments, and the proceeds of Backpage’s business, into and out of cryptocurrency.

What is more, it is made clear by prosecutors that Lacey, Larkin et al also engaged in other financial transactions designed to conceal their misconduct and evade seizure by law enforcement.

For example, in November 2016, Lacey asked employees of an Arizona-based bank for advice on how to move his assets “offshore” to protect them from seizure by the government. Soon afterward, $16.5 million in Backpage-derived cash was wired from Lacey’s bank accounts in the United States to an overseas bank account in Hungary.

Maybe that’s why prosecutors chose to charge Backpage’s former chief leadership team in this indictment with the crimes of facilitating prostitution (18 U.S.C. § 1952), concealment, transactional, and international promotional money laundering (18 U.S.C. §§ 1956 and 1957), and/or conspiracy to commit these offenses (18 U.S.C § 371 and 1956). 

Quite the range of charges for an enterprise Tony Ortega once told us was doing nothing more than exercising its First Amendment rights.

Print Friendly, PDF & Email

Comments are closed.