Indictment levels new charges against Backpage.com officials

PHOENIX >> A new indictment in Arizona against operators of Backpage.com alleges the classified ad site gave free ads to prostitutes and cultivated arrangements with others who worked in the sex trade to get them to post ads with the company.

The indictment filed Wednesday repeats allegations in an initial round of charges and adds six new money laundering charges against founder Mike Lacey and 50 charges of facilitating prostitution against chief financial officer John Brunst.

A total of seven people were charged in an indictment in late March alleging the site ignored warnings to stop running prostitution ads, sometimes involving children, after the site brought in $500 million of prostitution-related revenue since its inception in 2004.

The new indictment said Backpage.com employees would identify prostitutes through Google searches then call and offer them a free ad. It says the company used the strategy in Nashville and other cities and planned to expand such efforts in Los Angeles and New York.

The document also said the classified site had a business arrangement in which it would place ads on another site that lets customers post reviews of their experiences with prostitutes.

Backpage.com is a Dutch-owned limited liability corporation. Its principal place of business is in Dallas and federal officials say it keeps its bank accounts and servers in Arizona.

Prosecutors say Backpage.com was warned by an internet safety firm in April 2011 about the phrase “New In Town.” a code term used by pimps who shuttle children to locations where they don’t know anyone and can’t get help.

“Nevertheless, Backpage continued for the next seven years to permit ads using the phrase ‘New In Town’ to be published on its website,” the indictment said.

All seven defendants have previously pleaded not guilty to the charges.

Paul Cambria, an attorney representing Lacey, said his client will plead not guilty to the new charges.

Lacey “is confident that he violated no laws — federal, state or otherwise — and intends to vigorously defend himself,” Cambria said.

Gary Lincenberg, an attorney for Brunst, said in an email that his client is innocent, and that the federal charges have unjustifiably damaged his client’s good reputation.

“We hope the community will withhold judgment until he has an opportunity to prove his innocence,” Lincenberg wrote.

Another employee of the site, CEO Carl Ferrer, has pleaded guilty to a separate federal conspiracy case in Arizona and state money laundering charges in California.

In addition, the company pleaded guilty to human trafficking in Texas and in a money laundering conspiracy case in Arizona. Ferrer has agreed to testify against others.