Ex-Backpage owner/CEO Carl Ferrer sang for the prosecution on Tuesday in Phoenix's federal court, but his version of events was undercut earlier that day by defense attorney Bruce Feder and others.
On Tuesday, Sept. 12 in Phoenix’s federal court, Carl Ferrer, the government’s lead witness in the Backpage trial, followed the prosecution’s playbook to a T, testifying that nearly everything the classified listings site did in its 14-year history knowingly facilitated prostitution.
According to Ferrer, quotidian practices such as content moderation, aggregation, and reciprocal links — which are common to most internet service providers — were employed to compete with Craigslist.org and give Backpage.com a “monopoly in the prostitution category.”
For three and half hours, Ferrer painted the site he conceived of and ran from 2004 till 2018 (when the government seized and destroyed it) as an illegal enterprise, which derived most of its revenue from the subcategory of “female escorts.” These were all “prostitution ads,” according to Ferrer.
How did he know, asked prosecutor Kevin Rapp?
From the photos, the numerous sex terms in the ads, and from Backpage’s relationship with The Erotic Review (TER), a “prostitution review site,” he said. That relationship increased traffic to Backpage and became the “secret sauce” to Backpage’s growth and eventual success.
An unremarkable middle-aged man of 62 with glasses and a high-pitched voice, Ferrer has reason to tow the government’s line. He turned state’s evidence before the indictments dropped in 2018, pleading guilty to one count of conspiracy, for which he is likely to spend zero time in prison. He also will get to keep his home and a portion of his assets.
Meanwhile, nearly all of veteran newspaperman Michael Lacey’s assets have been seized by the feds, including funds set aside to pay attorneys’ fees. He and four others faced allegations of “facilitating” prostitution under the U.S. Travel Act, as well as a conspiracy charge. Some of the defendants face additional money laundering and conspiracy charges.
Lacey’s longtime business partner Jim Larkin was also one of the defendants. He died just before the trial was to get under way, delaying its start for three weeks.
During his testimony Ferrer also described Backpage’s relationship with so-called “super posters,” which he characterized as brokers who brought thousands of “prostitution ads” to the site.
Ferrer said he knew these super posters’ ads were prostitution ads because he once visited the New York City offices of one super poster, and he could tell the women present in the office were prostitutes.
How? Because, he said, they were dressed in a “provocative” manner.
The idea that you can tell a woman is a sex worker because of what she wears has to be one of the most debunked canards on the planet.
Ferrer also said he knew all “Asian massage” parlors were for prostitution because he read a blog on the subject.
Very scientific, Carl.
Thing is, escorts are legal, and licensed in Phoenix and many municipalities and states. In the first Backpage trial in 2021, which ended in a mistrial due to egregious prosecutorial misconduct, a high-ranking California law enforcement officer testifying for the prosecution admitted on cross-examination that escorting is lawful and regulated.
That same law enforcement official said the ads that appeared in the escort section of Backpage were lawful on their face. He could not make a prostitution arrest based on such ads, nor did he know of anyone who had. He even conceded that sex workers have First Amendment rights.
Along the same lines, cops can’t just close down a massage parlor because they read a blog about what goes on there.
The defense is sure to grill Ferrer on these points and other testimony where he strained credulity.
For instance, Ferrer said he was the “project manager” of Backpage.com from the entirety of its existence until the federal government took it down in 2018. Only toward the end of the day did he acknowledge that the site’s co-owners, Michael Lacey and the late Jim Larkin, sold the site to him in 2015, thereby making him the owner.
Ferrer said he was only the owner “on paper” and the deal was a sham, in which Lacey and Larkin loaned him more than $600 million to buy them out, after which he made monthly payments to the sellers.
However, he admitted that after the sale, he ran the website. He did have meetings with Larkin and others, but Ferrer was in the catbird seat.
FYI: Seller-financed business deals are common and legal. Just Google “seller financed deal” and you’ll see how common. In August, for instance, Forbes magazine offered it as one way to sell your business, calling it a “win-win” scenario.
From the Forbes piece:
Seller financing is a method where the selling partner provides a loan to the buying partner for the purchase of their share in the business. This arrangement allows you, the buying partner, to make payments over time, usually with interest.
‘Sins of Omission’
Ferrer testified that Mastercard and Visa stopped doing business with Backpage in 2015, and this caused major problems for the company. But neither he nor prosecutor Rapp explained the reason why the credit card companies stopped doing business with Backpage.
The credit card companies stopped doing business with Backpage because they were threatened by Cook County, Illinois Sheriff Tom Dart, who wrote a letter to Visa and Mastercard, informing them that by processing payments for Backpage they were likely breaking the law.
Spooked, both companies ceased doing business with Backpage for good. Backpage sued Dart in federal court, and it went all the way to the Seventh Circuit Court of Appeals, with federal Judge Richard Posner ruling that Dart had violated the First Amendment by threatening the credit card companies. Like it or not, Backpage was a publisher, and as such, the site had rights.
Posner made clear that Dart could not assume that the ads on Backpage were illegal. The judge also recognized that some forms of sex work — stripping, fetishes, dominatrixes, phone sex — were not illegal.
“It’s not obvious that such conduct endangers women or children or violates any laws, including laws against prostitution,” wrote Posner.
No wonder Ferrer and Rapp committed this “sin of omission.” The prosecution wants to keep any mention of the Posner decision out of the trial, but they’ve effectively opened the door to letting it in. Actually, it was alluded to in the Aug. 31 opening of defense attorney Gary Lincenberg.
Ferrer went through some of the steps taken to ameliorate the situation: first making the ads free, then allowing people to pay with money orders, gift cards, and “vanilla Visa cards,” i.e., prepaid Visa cards. He also found a European credit card processor and created European companies to deal with the processor because, he said, European companies prefer to deal with European entities.
None of this is unlawful, though the government alleges it’s all “money laundering.” In reality, it’s a situation created by Dart’s unconstitutional letter.
Fortunately, much of Ferrer’s testimony had been undercut earlier in the day, when three defense attorneys for Lacey’s codefendants made their opening arguments: counsels Bruce Feder, Joy Bertrand, and David Eisenberg.
In his testimony, Ferrer portrayed content moderation as a way of “sanitizing” the ads and making them “less” about prostitution by removing or blocking thousands of keywords, phrases, URLs, etc. He used “BBBJ” as an example, which some online sources define as, “Barebacked Blow Job.”
Feder was able to briefly mention Section 230 of the Communications Decency Act, which Judge Diane Humetewa has largely precluded from coming into the case. Section 230 generally offers interactive websites immunity for posts made by a site’s users. But that immunity does not cover federal criminal law. Because this is a federal criminal case, Humetewa ruled Section 230 could not be mentioned.
But Humetewa allowed Feder to refer to Section 230 briefly because a prior judge ruled that Congress passed Section 230 in part “to incentivize” sites like Backpage to moderate, and Feder repeated this ruling to the jury.
“Why would prosecutors demonize moderation when there’s a federal law incentivizing it?” Feder asked.
Defense attorney Bruce Feder gave an example of an ad for a billiards contest, which read, ‘Put it in the hole for $100.’ Words are often open to interpretation, and if they are not proposing an illegal act, they are presumed to be protected by the First Amendment.
Feder observed that Backpage didn’t have to moderate at all, if it didn’t want to, but, Backpage “wanted to moderate so people couldn’t put illegal things” on the site, like sex-for-money language.
Backpage also chose to moderate as a matter of taste to meet what Feder called a “Playboy standard,” in which Backpage modeled itself more after Playboy magazine, which just had photos of nude women as opposed to Hustler magazine’s sometimes X-rated content.
As time went on, Backpage went from the “wild and wooly” days of the internet in 2004 to stricter and stricter moderation. The reciprocal links to TER that the government makes so much of were eventually done away with, and the dreaded term “Girlfriend Experience” (GFE) also went away.
Neither of these is illegal, btw. According to sex workers consulted by Front Page Confidential, “GFE” connotes kissing, hugging, etc., which is not equivalent to prostitution under the law.
What about Ferrer’s assumptions about TER’s reviews of purported sex workers?
Well, if you’re old enough to remember magazines, you will recall Penthouse Forum letters, in which anonymous individuals described various sex acts they said they participated in.
Were these letters the Gospel truth? How would anyone know if they were fantasy, reality, or some mix of both?
The same can be said of the TER reviews. How would you know an illegal act transpired unless you were in the room with the parties committing the act?
Sure, you can make an assumption, but we all know what happens when you assume.
Elementary, My Dear Watson
All three attorneys who gave openings on Sept. 12 told the jury how their clients cooperated with law enforcement over and above what other social media sites do: responding to subpoenas within 24 hours; answering middle-of-the-night calls from cops or the FBI seeking information; earning countless attaboys, challenge coins and other recognition from police agencies, including the FBI; training law enforcement on how to use Backpage as a tool to rescue children and endangered women; testifying against actual traffickers in criminal courts across the nation.
Each attorney read emails and letters from law enforcement praising Backpage’s help.
Fancy seeing you here!
Not so long ago, Robert Mueller was FBI Director and praising #Backpage for its help with sex trafficking stings. (Tucked inside a motion from a recently charged Backpage founder Michael Lacey.) pic.twitter.com/orWBigpMAJ
— Megan Cassidy (@meganrcassidy) April 10, 2018
But all of this is now being used against the defendants as evidence of wrongdoing.
In his opening, Feder read a quote that he attributed to fictional detective Sherlock Holmes, in which the character says, “The police dog’s nose is long and straight, but it points in only one direction.”
That is, to guilt.
How true. Take Ferrer’s testimony on content aggregation, backing up the prosecution’s view on the practice.
Ferrer said in the early days of Backpage, the site “stole” escort ads from Craiglist’s erotic services section by copying the ads verbatim, putting them on Backpage, and then contacting the advertisers, telling them Backpage was giving them a free ad and please come advertise with Backpage.
But earlier that day, Feder told the jury that the practice was “common and legal” and, indicating the prosecution, “Nothing these people say is going to make it illegal.”
In fact, businesses have been trying to lure away their rivals’ customers since the start of this thing called capitalism. You can be sure that The New York Times’ ad sales staff pays close attention to who advertises in the Washington Post and offers them incentives to switch companies.
Feder called the Backpage trial an “experimental prosecution,” and stated that Backpage sold ad space, trying to keep anything illicit off the site. Did questionable content sometimes get through despite Backpage’s best efforts? Sure, but, Feder added, “That is a problem with social media sites, sometimes they have to control the uncontrollable.”
How about the government’s contention that the ads on Backpage were obviously prostitution?
Suggestive language is not enough, Feder said. He gave an example of an ad for a billiards contest, which read, “Put it in the hole for $100.” Words are often open to interpretation, and if they are not proposing an illegal act, they are presumed to be protected by the First Amendment.
“Sex permeates our society, all societies,” Feder explained. “Well, maybe not Iran and Afghanistan,” he said, otherwise, “every single thing people can buy in our society can have a suggestive tinge to it.”
Because, he added, “Sex sells.”
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- Feds Will Retry Lacey, Humetewa Seals Trial Exhibits - January 23, 2024