Backpage sex website CEO pleads guilty to money laundering in Sacramento

Backpage CEO Carl Ferrer pleaded guilty Thursday to laundering tens of millions of dollars earned from the now-shuttered sex site in Sacramento Superior Court.

Ferrer pleaded guilty to a single count of conspiracy to commit money laundering and three counts of money laundering. The pleas were tied to $45 million siphoned through shell corporations prosecutors say were used to hide earnings from pimps, sex workers and johns who used the site’s adult services section.

The $45 million cited by prosecutors Thursday were dollars originated in California, said former Backpage prosecutor Maggy Krell, who was at the Sacramento hearing.

“While there is no silver bullet to end sex trafficking, to stop its largest beneficiary is a huge step in the right direction,” Krell said following the hearing.

Ferrer’s guilty plea is the latest domino to fall in a rush of developments against the site. Federal agents raided Backpage’s Phoenix offices last week, a 96-count federal indictment followed and new legislation signed into law Wednesday that would make it easier for states to go after sex traffickers and the websites that harbor them.

"There were victims all over. This was truly a global company. For us in California, this started more than four years ago as an investigation - it took years to develop, many all-nighters," Krell said. "The law's now being fixed to no longer have a loophole for those who knowingly use the internet for sex trafficking."

Ferrer stood with attorney Nanci Clarence for the brief hearing before Sacramento Superior Court Judge Lawrence Brown. He returns to the Sacramento courtroom in October. Ferrer and Clarence walked hurriedly from downtown Sacramento’s county courthouse and took no questions from a reporter.

Absent were Ferrer’s partners, former New Times and Village Voice owners James Larkin and Michael Lacey, who with Ferrer were briefly jailed at the outset of the case on pimping charges.

The state Attorney General's Office said Thursday that Ferrer will cooperate with prosecutors in the case against Larkin and Lacey, which will continue in Sacramento Superior Court.

“Human trafficking is modern-day slavery, and it is happening in our own backyard,” Becerra said in a statement. “The shutdown of Backpage.com is a tremendous victory for the survivors and their families. And the conviction of CEO Ferrer is a game-changer in combating human trafficking in California, indeed worldwide.”

Former state Attorney General, now Sen. Kamala Harris, dubbed the site the “world’s largest online brothel” for its adult section, which prosecutors argued was a multibillion-dollar front for prostitution and sex trafficking, including the selling of children for sex.

California prosecutors alleged that nearly all of the money taken in by the site came from its adult services section – including some $51 million in California alone from 2013 to 2015.

A federal subcommittee in 2017 went further in a scathing report alleging Backpage concealed its criminal conduct by sanitizing its adult ads and stripping words and terms such as “lolita,” “rape,” “amber alert” and “school girl” that could tip authorities to sex trafficking and child sex trafficking - all under Ferrer’s direction.

Defense attorneys had argued from the beginning that federal legislation protecting publishers of third-party content shielded the site from prosecution and that the criminal case against Ferrer and his partners violated their First Amendment rights.

Two Sacramento Superior Court judges – Michael Bowman and, later, Brown – held that federal law was a shield and said it was up to Congress to change the statute.

State prosecutors changed tack last year, filing nearly 40 new money laundering charges against Ferrer, Larkin and Lacey.