Two weeks after a Sacramento judge issued a final dismissal of pimping allegations against the current and former owners of the online classifieds giant Backpage.com, California Attorney General and U.S. Senator-elect Kamala Harris on Friday filed a slew of new pimping and money laundering charges against Backpage CEO Carl Ferrer, and against Michael Lacey and Jim Larkin, whom Harris refers to as the "controlling shareholders" in the company, despite the two men saying they sold their interest in Backpage two years ago.
Harris hit all three men with 27 charges of money laundering, alleging that Backpage routed millions of dollars in transactions through companies created by Backpage for that purpose. The new criminal complaint insists Backpage was trying to get around credit card processors that were refusing to take the website's transactions because of its "overtly sexual content," a reference to Backpage's adult section, where advertisers pay to list escort services, body rubs, phone sex, and the like.
California's money-laundering statute specifies that an alleged perpetrator must have attempted financial transactions knowing that the money involved "derived directly or indirectly from the proceeds of criminal activity," in this case, prostitution. Harris also charged each defendant with conspiracy to pimp, and with 12 additional felonies involving pimping adults, teenagers and minors.
If the pimping charges sound familiar, that's because in October Harris originally charged all three men with conspiracy to pimp, slapping Ferrer with nine counts of pimping in addition to his conspiracy charge.
In the new criminal complaint, seven of the 12 pimping charges involve the same dates and the same initials of the alleged victims involved. Just as she did in the case's first charging document, Harris alleges that the three men have derived income from prostitution, which in California is the statutory definition of pimping.
But there's a problem with Harris's latest legal foray against the Backpage Three: Sacramento Superior Court Judge Michael Bowman has already rejected her theory of the crime. In response to a defense motion to dismiss (referred to as a "demurrer" in California), Bowman granted the motion — not once, but twice — first issuing a preliminary decision on November 16, declaring that the three men were shielded from prosecution by Section 230 of the federal Communications and Decency Act, which states that the owners of interactive websites cannot be held criminally or civilly liable for content created by a third party.
After giving the prosecution a chance to submit additional evidence and arguments to bolster its case, Bowman shot down the AG's office again on December 9, writing that, in Section 230, Congress had precluded online publishers from being prosecuted for publishing third-party speech.
"Congress has spoken on this matter," writes Bowman in both decisions, emphasizing these words in bold, "and it is for Congress, not this Court, to revisit."
The AG's office told Bowman in its original and subsequent filings that because Backpage had re-posted some of its content to other sites, it was creating new content, and Section 230's grant of immunity did not apply. But Bowman rejected this assertion, as well as the notion that the three men were deriving income from the world's oldest profession.
In his December 9 order, Bowman observed that re-posting content was protected by Section 230, and providing a forum for online publishing, as Backpage does, is "a recognized legal purpose," which is "generally provided immunity" under Section 230.
"In short, the victimization resulted from the third party’s placement of the ad, not because Backpage is profiting from the ad placement," Bowman concludes.
Notwithstanding the severe spanking she got from Bowman, Harris seems not to have learned her lesson. In a press release announcing the new charges — issued the Friday before a holiday weekend — Harris again labels Backpage as an "online brothel," and describes her pursuit of Ferrer, Lacey and Larkin as part of a moral crusade.
"My office will not turn a blind eye to this criminal behavior simply because the defendants are exploiting and pimping victims on the Internet rather than on a street corner," Harris says in the release.
The release further states that the re-charging of the three men resulted from her office's discovery of "new evidence" against Backpage. But noted legal scholar Eric Goldman, a professor at Santa Clara University School of Law and co-director of the school's High Tech Law Institute, is skeptical of Harris's claims.
"The AG's office had been investigating Backpage for three years before bringing the first complaint," Goldman tells New Times via e-mail. "So it's amazing they found new evidence in the two weeks since they lost the last case."
Goldman, whose Technology and Marketing Law blog is the go-to source for news and analysis of the myriad legal battles over Section 230, writes that the AG's office seems to be peddling the same legal theories that it did previously in the case. The professor also had questions about the money laundering charges.
He writes:
"Is the AG taking the position that every dollar of ad revenue for escort ads was illegally tainted — even though we know some of those ads were, in fact, legal — or is the AG going to prove for each of the 27 counts of money laundering counts that the executives *knew* the specific dollars in question were derived from illegal prostitution?"
Ferrer, Larkin, and Lacey are scheduled to be arraigned on the new charges on January 11 in Sacramento County Superior Court. Lacey did not immediately respond to a request for comment.
(Note: Lacey and Larkin are the co-founders of New Times and were once the owners of the alt-weekly chain that includes this paper — formerly Village Voice Media, now Voice Media Group. They sold the chain to company executives in 2012.)
Read the California attorney general's new complaint against the Backpage Three:
New Criminal Complaint Against the Backpage Three
