New Indictment: Backpage Bosses Schemed to Corner Sex Ad Market

The day after the United States attorney in Manhattan announced that the online “escort” advertising site Flawless Escorts had been seized and its founders charged with running a nationwide prostitution ring through the site, federal prosecutors in Arizona hit the founders of the now-shuttered Backpage classified advertising site with a new indictment charging them with plotting to corner the United States market in online sex work ads.

The Backpage indictment also alleges, in a new charge, that site co-founder Michael Lacey attempted to launder millions of dollars through a Hungarian bank account.

In April, Lacey and fellow co-founder James Larkin were hit with a massive, 93-count indictment charging the pair and five other Backpage employees with facilitating prostitution and money laundering.

According to a report in the Arizona Republic on Wednesday, the new indictment contains new evidence and elaborates on the original charges, detailing what the prosecutors call a two-pronged scheme to corner the national market in online advertising for illegal prostitution.

In one aspect of the scheme, the indictment charges, the Backpage founders created an employee incentive program dubbed “The Dallas Plan” that paid bonuses to Backpage ad reps who poached prostitution ads from other sites, even offering free advertising to pull clients away from their competitors in the sex work advertising business.

The other aspect of Lacey and Larkin’s plan to knowingly corner the prostitution market, prosecutors now charge, involved a quid-pro-quo deal with the site Erotic Review, on which customers posted consumer reviews of prostitutes and prostitution services. Under the deal, each site placed ads on the other, creating what Backpage executives called “huge brand awareness.” Backpage garnered more than 1 million additional page views as a result of the deal, according to internal documents cited in the indictment.

On the money-laundering charges, the indictment says that on January 3, 2017, Lacey transferred $16.5 million to a bank in Hungary. That massive money transfer came just five days after Lacey made five separate bank transfers of $3.3 million each, according to the new charges.

The indictment also details the site’s relationship with a middleman identified only as “Dollar Bill,” who placed thousands of ads on Backpage, taking a commission for each prostitution ad he placed.

The new indictment came the day after an announcement by the U.S. Justice Department that it had shut down the site Flawless Escorts, calling the organization behind the site “a nationwide business offering prostitution services,” and arrested the site’s Brandon Martin, 42, and Tameko Lindo, 38, of Parkland, Florida, charging them both with money laundering.

Photos by Maricopa County Sheriff’s Office, Sacramento County Sheriff’s Office

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