A website regarded as the Internet’s top space for selling sex concealed evidence of criminality, including underage prostitution, a 20-month Senate investigation unveiled on Monday reveals.
Backpage.com has been under investigation by the Senate Permanent Subcommittee on Investigations, led by Ohio Republican Sen. Rob Portman and Missouri Democrat Sen. Claire McCaskill, for more than a year and a half. That investigation culminated in a hearing Tuesday morning where the company’s top executives testified.
The report showed three major findings: Backpage knowingly concealed evidence of criminality by editing advertisements; Backpage was aware it was facilitating prostitution and child sex trafficking; and Backpage was sold to an unknown foreign entity but the former owners of the site are still making millions from it.
Speaking on MSNBC Tuesday, Portman said the website shut down its adult section Monday after the report was released. He said the website is a hub of criminality.
“Sex trafficking has kind of moved from the street corner to the smartphone and Backpage has been a big part of that,” he said.
Backpage is estimated to be worth more than $500 million and operates in more than 97 countries, according to the report.
Backpage is involved in 73 percent of all child trafficking reports received by the National Center for Missing and Exploited Children, the report said. The company doesn’t try to hide that involvement but argues it’s immune from criminal wrongdoing.
“Backpage does not deny that its site is used for criminal activity, including the sale of children for sex,” the report states. “Instead the company has long claimed that it is a mere host of content created by others and therefore immune from liability under the Communications Decency Act (CDA).”
However, internal documents obtained under subpoena show that the company was well aware of what was taking place in its advertisements and worked to conceal criminality on its site.
The report states Backpage edited advertisements on its site in order to remove any phrases that might indicate a crime was being committed or child sex trafficking was taking place.
“Backpage had good reason to conceal its editing practices: Those practices served to sanitize the content of innumerable advertisements for illegal transactions — even as Backpage represented to the public and the courts that it merely hosted content others had created,” the report stated.
The report also stated: “As early as 2006, Backpage executives began instructing staff responsible for screening ads (known as ‘moderators’) to edit the text of adult ads to conceal the true nature of the underlying transaction,” the report stated. “By October 2010, Backpage executives formalized a process of both manual and automated deletion of incriminating words and phrases, primarily through a feature called the ‘Strip Term From Ad Filter.'”
Among the terms stripped out of ads by the site were “lolita,” “teenage,” “rape,” “young,” “amber alert,” “little girl,” “teen,” “fresh,” “innocent” and “school girl,” the report stated. Internal documents from the company showed some 70 percent to 80 percent of advertisements were edited in some way.
The filter was used in some way until 2014, but after that the company began instructing its customers on how to post an ad without violating its policies. The report stated the company would set up automatic alerts when an inappropriate word or an age below 18 was posted, but would then allow the user to go back and edit the post to remove the offending term or change the age of the individual to 18 or above.
According to the report, the company was sold in 2014 to an “undisclosed foreign entity” but that was just a scheme in order to enrich a top executive and the former owners.
The report stated former owners James Larkin and Michael Lacey set up a complex chain of shell companies overseas in order to loan Carl Ferrer, the current CEO of the company, $600 million to purchase the company from them.
“As a result of this deal, Lacey and Larkin retain significant financial and operational control, hold almost complete debt equity in the company, and still receive large distributions of company profits,” the report stated.
“According to the consultant that structured the deal, moreover, this transaction appears to provide no tax benefits. Instead, it serves only to obscure Ferrer’s U.S.-based ownership and conceal Lacey and Larkin’s continued beneficial ownership.”
McCaskill said Lacey, Larkin and Ferrer would likely exercise their Fifth Amendment rights against self-incrimination during the committee hearing on Tuesday. She said it’s shameful that people who have “made millions and millions of dollars, who have sold underage children for sex, are going to take the Fifth today.”
But, the report is a sign of what Congress can do when it works together
“The moral of this story is if you have a bipartisan working relationship, and you can actually go after it and you don’t give up, you can uncover evidence that is more powerful than a piece of legislation,” she said.
