FBI Testimony Damns Backpage

A few days ago, Steven M. D’Antuono, Acting Deputy Assistant Director for the Criminal Investigative Division of the Federal Bureau of Investigation testified before before the Senate Banking, Housing, and Urban Affairs Committee in Washington, D.C. on combating illicit financing by anonymous shell companies.

While statements before the Urban Affairs committee is generally beyond the scope of our humble blog, one subject discussed at Tuesday’s hearing certainly caught our eye. The Deputy Director’s statement began this way:

“I am pleased to appear before you today to discuss the usefulness of beneficial ownership information to our nation’s law enforcement. This hearing is an important step forward towards developing the laws needed to effectively combat illicit financing through the use of anonymous vehicles, such as shell companies…”

Mr. D’Antuono went on to detail a number of areas in which the use of shell companies hindered key FBI investigations by obscuring beneficial ownership information.  The categories included Kleptocracy, Drug Trafficking, Political Corruption, and perhaps most importantly to readers of this blog The Human Trafficking of Children.

We are including here the full text of FBI Assistant Director’s testimony as entered into the official record during Tuesday’s explosive hearing.

He went on to say:

“In April 2018, the Department of Justice announced the seizure of Backpage.com, the Internet’s leading forum for prostitution ads, including ads depicting the prostitution of children. In 2018, seven defendants were charged with 93 counts of prostitution related charges, money laundering, and transactional money laundering. Eventually, the government seized over $140 million worth of USD and bitcoin.”

Mr. D’Antuono’s damning conclusions stands as strong an indictment as we have yet heard from Federal Authorities on the topic of Backpage’s many attempts to disguise its illicit operations

By cutting off Backpage’s access to its hydra-headed shell companies the evil it brought in the form countless victimized children could have been stopped years earlier.

Perhaps it was Backpage’s ability to obscure its paper trail for so long, thwarting attempts by authorities to unwind their plots, that had Tony Ortega beaming with pride that the men he worked for and with were in his words “smart enough to start Backpage.com.

Unwinding these shell companies and their bank accounts took many months due to the lack of readily available beneficial ownership information. Additionally, had the banks known who the beneficial owners of the shell companies were, they likely would not have provided banking services and the revenue platform would have been eliminated. Thus, the criminal activity could have been starved of income and the abuse of children and human trafficking victims could have been halted years earlier than it was.

Approximately 97 percent of Backpage’s revenue came from selling ads related to prostitution, which included children and victims of human trafficking. In approximately 2015, major credit card providers stopped allowing transactions with the site and almost no banks would provide banking serves for Backpage. The owners and operators of the website turned to opening shell companies in the United States, Europe, Asia, and South America in order to continue to operate as a company. Eventually, Backpage’s entire revenue stream was predicated on concealing the receipt of money from people purchasing advertisements. The owners opened shell companies in order to obtain bank and merchant accounts. Backpage also accepted prepaid gift cards and digital currency, which it then sold and exchanged for cash, then moved into bank accounts of the shell companies in order to fund its operation.

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