California Judge Rules Execs Can Be Charged With Money Laundering

newsweek fraud

A judge has ruled that money laundering charges can be brought against the creators of a website that California prosecutors label an online brothel.

The Associated Press reported that the ruling came months after another judge threw out the case as violating free speech and federal protections.

Prosecutors filed new and expanded charges against Chief Executive Carl Ferrer and website founders Michael Lacey and James Larkin this spring. The three pleaded not guilty after the judge ruled that 25 of the original 27 money laundering charges alleging illegal bank fraud can proceed.

Sacramento County Superior Court Judge Larry Brown also dismissed 15 pimping conspiracy and other charges, ruling that they cannot be filed because of a federal law protecting free speech that grants immunity to websites that post content created by others.

Prosecutors allege that gets more than 90 percent of its revenue — millions of dollars each month — from thinly disguised ads for prostitution. Prosecutors have also said that the site's operators illegally funneled money through multiple companies and created various websites to get around banks that refused to process transactions.

While the website shut down its adult services section in January, officials said much of the same advertising has moved to the site’s dating and massage sections. In fact, California prosecutors and U.S. Senate investigators allege that Backpage leads the market in commercial sex advertising and has been linked to hundreds of reported cases of sex trafficking, even involving children.

But federal and state officials have had difficulty bringing charges without violating free speech protections. The U.S. Supreme Court has left in place a different lower-court ruling that said Backpage’s ads are protected by the federal Communications Decency Act. Congress is considering amending the act to omit sites that aid sex trafficking and to specifically allow states to file criminal charges.

The site and its operators also face civil lawsuits in several states filed on behalf of victims, many of whom allege they were under age 18 when they were sold for sex using the site’s classified ads.



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