Sex-oriented Backpage.com officials face August decision in fraud case

A Sacramento judge will decide in August whether dozens of pandering, money laundering and bank fraud charges can proceed against the team behind Backpage.com, the website alleged by state Attorney General’s prosecutors to be a lucrative haven for the global online sex trade.

Sacramento Superior Court Judge Lawrence Brown said Friday he will announce his ruling Aug. 23.

Attorney General’s prosecutors on Friday contended that Backpage CEO Carl Ferrer and partners Michael Lacey and James Larkin disguised vast sums in advertising proceeds the site received from pimps, prostitutes and their customers using so called “billing descriptors” to avoid detection from banks.

They also contend Backpage laundered the allegedly illicit funds through a network of affiliate websites, running a “fraudulent scheme” in the words of state Deputy Solicitor General Steven Oetting, to funnel money back into the site to continue its criminal activity.

Backpage’s attorney James Grant pushed back against the state’s argument, arguing prosecutors still have little evidence to support its allegations of money laundering and are unfairly prosecuting Backpage for publishing sexually oriented content.

“After three years (of investigation), there’s no suggestion of a money laundering charge and we’re back to the basic problem. This is the state going after a publisher,” Grant said. “We’re left with no greater clarity than before. If this is what the state has after three years, then all we have is another ruse to continue an investigation.”

A Sacramento judge in December threw out allegations of pimping, pandering and conspiracy against Backpage on free speech grounds.

But state Attorney General’s prosecutor Maggy Krell called Backpage’s First Amendment defense a “trick.” Krell argued Backpage executives knew the content in its adult services section solicited sex for cash and sought ways to get ill-gotten cash past Chase and other suspicious lenders. She quoted a Ferrer email that read in part, “undoubtedly, the banks know what we’re doing.”

“These are commercial sex proceeds,” Krell said. “This is not a First Amendment case.”

A day earlier on Thursday, Backpage figured prominently in another Sacramento case when a teenage runaway prosecutors say was forced into prostitution by a Sacramento-area pair testified that she posted photos and ads selling sex on the site’s adult services section and that one of her johns paid for the online posts.

The girl, now 16, and in a drug treatment center, testified under cloak of immunity against Keiyonte Dvaughn Davis and Kayla Gemini Randall at the pair’s preliminary hearing before Sacramento Superior Court Judge Michael Savage.

“Luna” was her working name on Backpage, she said, testifying that Randall talked with her about posting to Backpage and that the two took selfies that they then posted to the site. “Some trick,” the girl testified, paid for the ad. She was 15 at the time.

Citrus Heights police plucked her from the lobby of a Days Inn last September where she said she was staying with the older Randall and, occasionally Davis, whom she called a “boyfriend.”

Davis and Randall face pimping and pandering charges accused of unlawfully causing a minor to engage in commercial sex acts and encouraging a minor under 16 to become a prostitute.

This story was originally published July 15, 2017 at 3:00 PM with the headline "Sex-oriented Backpage.com officials face August decision in fraud case."