Case Document 13 Filed 40611-8 Pagelof7:

 

 

FILED 1 063m
RECEIVED COPY
AP 0 6 2018 -.
ELIZABETH A. STRANGE CLERK 
First Assistant United States Attorney OF lzorgfm
of Arlzona WM DEPUTY

 

KEVIN M. RAPP (Ariz. Bar No. 14249, kevin.rapp@usdoi.gov)
DOMINIC LANZA (Cal. Bar No. 225989, dominic.E1nza@usdoi.gov)
MARGARET PERLMETER (Ariz. Bar No. 024805, margaretperimeter?lusdoi .gov)
Assistant US. Attorneys

40 N. Central Avenue, Suite 1800
Phoenix, Arizona 85004-4408
Telephone (602) 514-7500

JOHN P. CRONAN
Acting Assistant Attorne General
Criminal Division, US. epartment of Justice

REGINALD E. JONES (Miss. Bar No. 102806, reginald.iones4@usdoi.gov]
Senior Trial Attorney, US. Department of Justice
Child Exploitation and Obscenlty Section

950 Ave N.W., Room 2116
Washington, DC. 20530

Telephone (202 616?2807

Attorneys for aintiff

 

 

  
  

United States of America, (BSB)
Plaintiff, UNITED MO ION FOR
V. IMPOSITION OF KILEASE

1. Michael Lacey . (UNDER SEA 

Defendant.

 

 

 

  
 
  
  

The United States respectfully seeks the detention of defendant lichael Lacey
(?Lacey?) unless and until stringent release conditions are imposed.

As explained below, Lacey poses a signi?cant risk of ?ight based on the nature
of the charges, his massive ?nancial resources, his frequent internationl travels, his
current possession of a passport, and?perhaps most important?his recnt transfer of

over $16 million to foreign bank accounts in an apparent attempt to wart seizure

 



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Case Document ?13 Filed 04/06/18 Page 2 of 7:

IV

efforts by the government. These factors suggest that Lacey could easily ?ee the
country and use the wealth he has stashed overseas to live out the remainder of his life,
in lavish style, as a ?igitive.

The United States also harbors concerns that Lacey could, if released without
conditions, pose a danger to the community. As noted in the 93-count indictment, see
Exhibit A, Lacey is one of the masterminds behind Backpagecom, the internet?s most
notorious destination for prostitution advertisements, including advertisements
depicting the prostitution of children. In its 14-plus years of existence, the website has
helped facilitate the victimization of untold thousands of victims of sex traf?cking.
Paragraphs 122-138 of the indictment provide a power?il snapshot of such
Victimization, including instances in which women traf?cked Via Backpage were
murdered and had their corpses desecrated. Furthermore, although Lacey purported to
sell his interest in Backpage in 2015, he has continued receiving large Backpage-
related _distributions since then and also appears to have retained some vestiges of
operational control over the company.
On the other hand, the United States also recognizes that Lacey is a United
States citizen with no prior criminal convictions who has abided by the release

conditions that were previously imposed in a related proceeding in California state

 

court. Accordingly, the United States believes there are conditions that

would likely

be suf?cient to justify his release from pretrial custody. Speci?cally, to ameliorate the

risk of ?ight, Lacey should be required to relinquish his passport, submit

monitoring, post a sizeable bond, provide a complete accounting of

to electronic

his ?nancial

holdings, and be precluded from engaging in any ?nancial transactions without prior

Court and government approval. Additionally, to ameliorate any 

anger to the

community, Lacey should be precluded from taking any steps to exercise control over

Backpage. However, unless and until such conditions are imposed, Lacey should

remain in custody.

 

 






 

Case Document 13 Filed 04/06/18 Page 3 of 72

ARGUMENT

A. Legal Standard



As the Court is no doubt aware, ?[t]he Bail Reform Act . . . requires a district court

to order a defendant detained pending trial if ?no condition or combination
will reasonably assure the appearance of the person as required.? United Sta
455 F. Supp. 2d 1018, 1019-20 (D. Ariz. 2006) (quoting 18 U.S.C. 31
analysis involves a ?two?step inquiry.? Id. First, the Court must make a
whether the defendant presents a ?serious risk that such person will ?ee? if
Id. at 1020 (quoting 18 U.S.C. The government bears 
proving such risk of ?ight by a preponderance of the evidence. Id. Second, if

of conditions
rtes v. Gentry,
This
?nding as to
not detained.
he burden of
the defendant

is likely to ?ee, the Court next must determine whether some set of conditions would

suf?ciently Vitiate that risk. Id. (citing 18 U.S.C. 3142(g)). ?In making the determination

whether conditions exist that would reasonably assure a defendant?s appear

3142(g) requires the district court to- take into account four statutory factors:

ance, Section

(1) the nature

and circumstances of the offense charged; (2) the weight of the evidence against the person;

(3) the history and characteristics of the person, including his character,

physical and

mental condition, family ties, employment, ?nancial resources, length of residence in the

community, community ties, past conduct, history relating to drug or alcohol abuse,

criminal history, and record concerning appearance at court proceedings; and
and seriousness of the danger to any person or community that would be

person?s release.? Id.

(4) the nature

posed by the

In addition to seeking detention based on the risk of ?ight, the United States also

may seek detention on the ground that the defendant poses a risk of danger to the

community. The government bears the burden of proving such danger

by clear and

convincing evidence. United States v. ir, 517 F.3d 1081, 1086 (9th Cir. 2008) ?nding

that a defendant is a danger to any other person or the community must be

?clear and convincing evidence?) (quoting 18 U.S.C. 

supported by

 

 




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Case Document 13 Filed 04/06/18 Page 4 of 7:

B. Flight Risk

The Court should ?nd, for several reasons, that releasing Lacey without conditions
would create a signi?cant risk of ?ight.

Nature And Circumstances Of Charged Offense. Lacey is charged with a total of
79 felony crimes?speci?cally, one count of conspiracy, ?fty counts of facilitating
prostitution in violation of the Travel Act, one count of conspiracy to commit money
laundering, ten counts of concealment of money laundering, six counts of international
money laundering, and eleven counts of transactional money laundering. Many of
these counts, standing alone, carry a statutory maximum penalty of 20 years in prison.
The indictment also describes the extreme toll that Lacey?s conduct took on the many

victims who were sex-traf?cked via the Backpage website and, separately, details the

 

extensive efforts that Lacey and others took to launder hundreds of milli us of dollars

 

of Backpage?related revenues. If convicted of all (or even a portion of) ese charges,
Lacey??who is nearly 70 years old?faces the very real possibility of spe ding the rest
of his life in federal prison. Such exposure creates a powerful incentive ?ee. See,
e. United States v. Townsend, 897 F.2d 989, 995 (9th Cir. 1990) (?Faci the much
graver penalties possible under the present indictment, the defendants ave an even
greater incentive to consider ?ight?); United States v. Anderson, 384 F. upp. 2d 32,
35 (D.D.C. 2005) (ordering pretrial detention in white collar case, eve though the
defendant had no prior felony convictions and ?no history of violent crimi a1 activity,?
in part because ?[t]he combined statutory maximum penalties for the fe eral crimes
with which Mr. Anderson is charged is 23 years. . . . At 51 years old, r. Anderson
potentially could spend most of the remainder of his life in prison if conv 

Strength Of The Evidence. The strength of the evidence also supp a ?ight-

risk ?nding. As an initial matter, the fact the grand jury has returned an i dictment is

 






 

   
 
 
 
 
 

Case Document 13 Filed 04/06/18 Page 5 of 7

a de?nite weight of evidence against the Defendant?); United States . Bradshaw,
2000 WL 1371517, *4 (D. Kan. 2000) grand jury?s indictment, st nding alone,
establishes probable cause for purposes of the Bail Reform Act?).
In addition, the indictment in this case is a speaking indictment at sets forth,
in extensive detail, some of the evidence supporting the charges against Lacey, including
damning emails and internal company documents that Lacey wrote or recei ed. Finally,
the strength of the evidence is further bolstered by the fact that, in January 20 7, the Senate
Permanent Subcommittee on Investigations issued a 50-page port entitled
?Backpagecom?s Knowing Facilitation of Online Sex Trafficking.? This re ort included,
among other things, a ?nding that ?Backpage?s public defense is a ?ction. ackpage has
maintained a practice of altering ads before publication by deleting words, phrases, and
images indicative of criminality, including child sex traf?cking . . . . Those pr ctices served
to sanitize the content of innumerable advertisements for illegal transacti ns?even as
Backpage represented to the public and the courts that it merely hosted conte others had
created.?
Notwithstanding all of this, the United States anticipates Lacey may gue that the
trajectory of the criminal case against him in California state court (in wh ch pimping-
related charges were previously dismissed) somehow undermines the of the
evidence in this case. Any such argument should be rejected. In the Califomi case, Lacey
was able to secure dismissal of the pimping?related charges by invoking se tion 230 of
the Communication Decency Act which preempts state 1a in certain
circumstances. Because this is a federal case involving violations of fed ral criminal
law, the CDA has no application. See 47 U.S.C. 230(c)(1) (?Nothing i this section
shall be construed to impair the enforcement of . . . [any] Federal crimina statute?).
Defendant?s History And Characteristics. Lacey?s history and aracteristics
also support a ?ight?risk ?nding. On the one hand, the United States a knowledges

that aspects of Lacey?s background are favorable to him. He is a United tates citizen

with community and family ties who has never been convicted a crime.

 






 

Case Document 13 Filed 04/06/18 Page 6 of 72

Additionally, he has appeared for every required court appearance in t1
case, has been permitted to travel internationally by the court in that 
surrendered his passport to the California court following each such trip

appears he is currently in possession of the passport)



1e California
ase, and has

(although it

On the other hand, Lacey has access to signi?cant amounts of money, including

money in foreign bank accounts, and has made statements suggesting he is

prevent the government from seizing those funds. For example:

0 Paragraph 15 of the indictment explains that Lacey has ?engaged in

transactions designed to conceal [his] misconduct and evade seizure by law

attempting to

. . . ?nancial

enfOrcement.

For example, in November 2016, LACEY asked employees of an Arizona-based bank for

advice on how to move his assets ?offshore? to protect them from seizure by the

government. Soon afterward, $16.5 million in Backpage?derived cash wa

bank accounts in the United States to an overseas bank account in

wired from

Hungary.?

0 Paragraphs 26 and 139 of the indictment explain that Lacey once owned 45% of

Backpage and that Backpage has earned approximately $500 million in illicit revenue since

2004.

- Paragraph 154 of the indictment explains that, ?between January 2016 and January

2017, LACEY (and family members) received [Backpage?related]

totaling over $30.3 million.?

distributions

Counts 69-70, 81, 83?84, 86, and 88-92 of the indictment summarize eleven

instances in which massive quantities of Backpage-related funds were transferred to or

from ?nancial accounts held by Lacey, including instances in which Lacey

$13+ million property in San Francisco and a different property in Sedona.

purchased a

For all of the reasons, Lacey has both the ?nancial ability and access to foreign bank

accounts to allow him to successfully escape prosecution. See, e. g, Anderson, 384 F. Supp.

2d at 36 (?Anderson appears to have the ability not only to ?ee the District

of Columbia

and the United States without detection, but also to live comfortably and evade capture in

foreign jurisdictions. Mr. Anderson has traveled extensively, . . . has numerous



 

 






 

   
 
 
 
 
 

Case Document 13 Filed 04/06/18 Page 7 of 7

international personal and business contacts, . . . [and] appears to have access to substantial
assets overseas?).

Lacey also engages in frequent foreign travel. He visited Cabo San cas, Mexico
as recently as February 2018. He was also scheduled to travel to Franc Spain, and
Portugal beginning on April 9, 2018. Foreign connections, coupled with acc ss to foreign
funds, suggest an ability ?to live comfortably? abroad, a consideration th supports a
?ight-risk ?nding. See, United States 12. Hong V0, 978 F.Supp.2d 4 45 (D.D.C.
2013) (?Vo?s access to substantial assets overseas, combined with her experi nce living in
Vietnam for the past two years, . . . demonstrate her ability not only to ?ee . . . the United
States . . . but also to live comfortably and evade capture in foreign jurisdictio (internal
quotation marks omitted); United States v. Saam', 557 F. Supp. 2d 97, 98-99( DC. 2008)
(?Defendant?s alleged access to funds in foreign bank accounts, and Defen ant?s'alleged
purposeful and illegal concealment of that access, is directly relevant to Defe dant?s ?ight


Danger To Community If Released. The United States also harb rs concerns
that Lacey could, if released without conditions, pose a danger to the com unity. The
indictment expresses the grand jury?s conclusion that Lacey was one of the
masterminds behind a website that has contributed to the victimizati of untold
thousands of victims of sex traf?cking. Any future effort by Lacey to xert control
over Backpage would result in further victimization?and, thus, pose a anger to the
community.

Conclusion. In sum, Lacey poses as serious risk of ?ight due to th severity the
charges (and penalties) he faces, his extensive foreign connections and finan ial resources,
and his expressed desire to conceal assets from the government. Althou Lacey will
presumably argue that this risk is minimal given that he did not ?ee despite eing exposed
to charges in California and knowing he was under investigation in this ase, ?a pre-
indictment investigation and a post-indictment trial are two very diff ent things.?

Anderson, 384 F. Supp. 2d at 40 (?The defense has emphasized . . . that Mr. nderson has

-7-

 






the appearance of [Lacey] as required.? 18 U.S.C. 3142(t). The United St

 

Case Document 13 Filed 04/06/18 Page 8 of 72

left the country and returned many times during the pendency of the

investigation into his business and investment activities. His willingness to 1'

IV

government's

emairi in and

repeatedly return to the United States despite the risk of indictment, the defense argues,

indicates that Mr. Anderson wishes to remain here to defend his good name and reputation

against attack in the criminal proceeding, even if it means, ultimately, risking
The Court does not ?nd this argument convincing. . . . pre-indictment
and a post-indictment trial are two very different things?).

C. Danger To The Community

his freedom.

investigation 

In addition to seeking detention (at least temporarily) based on the risk of ?ight,

the United States also seeks detention on the ground that the Lacey could, if released

without conditions, pose a danger to the community. On this point, the United States

simply re-incorporates the argument set forthabove. Any post-indictment effort by

Lacey to exert control over Backpage should be forbidden?the website poses a danger

to the community.

D. Potential Release Conditions
Because Lacey poses a serious risk of ?ight, the remaining question is 

condition or combination of conditions? authorized under the Act ?will reasc

that a package of suitable conditions could be crafted here. Those condi

include (1) relinquishing his passport, (2) travel restrictions, (3) electronic

(4) a sizeable seven? or eight-?gure bond, (5) providing a complete acco

?nancial holdings, and (6) being precluded from engaging in any ?nancial

?whether any

)nably assure

ates believes
ltiOl?lS should
monitoring,
unting of all

transactions

(except routine, day-to?day expenditures and mortgage payments on a primary

residence) without prior Court and government approval.

Courts have recognized that ?there is much subjectivity in determining

what amount

of bail will assure a defendant's appearance, and much of necessity must be left to the

discretion of the judicial of?cer who makes the initial determination.? See Wright, Lez?pold,

et al., Fed. Practice Proc. Crim. 776 (4th ed. 2017 update). Congress has also provided



 

 






 

Case Document 13 Filed 04/06/18 Page 9 of 7

 

signi?cant guidance. Under 18 U.S.C. 3142(c)(1)(B), some of the statutori y-authorized
conditions are third?party custody, restrictions on a defendant?s associatio and travel
(including association with potential witnesses), periodic reporting, curfews a bond with
solvent sureties, and ?any other condition that is reasonably necessary 0 assure the
appearance of the person as required and to assure the safety of any other rson and the
community.? The Act also contemplates a focus on the defendant?s ?nances as a relevant
consideration. 18 U.S.C. 3142(g)(3)(A) (person?s history and character stics include
??nancial resources?); id. 3142(c)(1)(B)(xi) and (xii) (authorizing relea subject to
?nancial conditions). For those reasons, courts have routinely determine that release
conditions in white collar cases should require the posting of substantial ash or other
assets, to be accompanied by a range of other restrictions (such as the surrende of passports
and travel limitations). See, United States v. Brooks, 872 F.3d 78, 83-84( (1 Cir. 2017)

(?The district court held a hearing and determined that Brooks was a ?ight ris on the basis

of his considerable wealth and the potential for access to foreign accounts he ?ed the

country. . . . The district court issued a Bail Release Order . . . granting Bro ks?s motion
for pre-trial release. The Order included such restrictions as home detention onitored by
a private security ?rm, monitored conversations, independent auditing of accounts
and assets, and a prohibition on liquid assets being held overseas without th approval of
the US Attorney's of?ce. Brooks and his family sureties also provided 8 million in
cash as security for the $400 million bond the court ordered?); United Sta es v. Dreier,
596 F. Supp. 2d 831, 833 (S.D.N.Y. 2009) (release conditions included $10 million
personal recognizance bond that, while not secured by cash, will be o~signed by
defendant's son, Spencer Dreier, and his mother, Mildred Dreier; (2) home de ention, 24/7,
in his East Side apartment, secured not only by electronic monitoring but by on?premises
armed security guards, supplied by a company acceptable to the Governmen but paid for
by the defendant?s relatives; (3) elimination of computer access, surrender of all travel

documents, and screening and searching of pre-approved visitors; (4) strict pervision by

Pre?Trial Services; and (5) ongoing cooperation with the court-appointed Receiver in

 

y?A

Case Document 13 Filed 04/06/18 Page 10 of 72

identifying and preserving all assets held directly or indirectly by defendant?).

Finally, to reduce the risk that Lacey may be endangering the community, the Court
should impose the following conditions: (1) Lacey shall not engage directly or indirectly
in the control or Operation of Backpage or a similar website, and (2) Lacey shall not
participate in, consult with, or otherwise support any business venture that offers or
publishes adult content similar to that available on Backpage.

Respectfully submitted this 6th day of April 2018.






 

ELIZABETH A. STRANGE

First Assistant United States Attorney

District of Arizona

JOHN P. CRONAN
Acting Assistant Attorne Genera

 

f: 4M Lama, 
KEVIN M. 
DOMINIC LANZA
MARGARET PERLMETER
Assistant US. Attorneys

REGINALD E. JONES
Senior Trial Attorne

US. Department of ustice, Crimi
Child Exploitation and Obscenity

-10-

1
Criminal Division, US. epartme

nt of JustiCe

nal Division

Section

 

 

Case Document 13 Filed 04/06/18 Page 11 of 7

Exhibit A

 

 






 

Case Document 13 Filed 04/06/18 Page 12 of 72

 

FILED LODGED
RECEIVED COPY

MAR 2 8 2018

CLERK 8 COURT
BY DISTRICT OF ARIZONA

 

 

 

 

IN THE UNITED STATES. DISTRICT COURT
FOR THE DISTRICT OF ARIZONA

United States of America,

Plaintiff,

1. Michael Lacey
. Counts 1?70, 81, 83-84, 86, 88-92

 

Defendants,

 

 

THE GRAND IURY CHARGES:
A. Introduction I

-. 1

INDICTMEN

V10: 18 U.S.C. 371

EConspiracy)
ount 1

18 U.S.C. 1952(a)(3) A)
Travel Act?Faclhtat Prostitution)
ounts 2-51

18 1956(h) .

{Ions iracy to Commrn Money
aun ermg)

Count 52

18 U.S.C. 1956(a)(1IB)(i)
(gConcealment Money aundering)
ounts 53-62

18 U.S.C. 

Entemational Promotm a1 Money
aundenng

Counts 63- 8

18 1957(a)
gransactlonal Money aundering)
ounts 69-93

18 U.S.C. 981, 982
21 U.S.C. 853, 28 U.
(Forfeiture Allegations)

.C. ?'2461

1. The website (?Backpage?) is notorious f0 being the

 

 






 

 

Case Document 13 Filed 04/06/18 Page 13 of 2

internet?s leading source of prostitution advertisements. Backpage derives the
overwhelming majority of its revenue from such ads. These practices ve enabled
Backpage to earn over $500 million in prostitution?related revenue since its i ception.

2. Backpage was created in 2004 by defendant MICH LACEY

 

8. The defendants identi?ed above are referred to at times in this i dictment as

the DEFENDAN 

9. As explained in detail below, the BACKPAGE DEFENDANTS ave utilized
a variety of strategies to make it appear that the prostitution ads appearing Backpage
are actually ads for ?escort? services, ?adult? companionship, dating, or other lawful

activities. For example, Backpage purports to bar customers from offering illegal services

-2-

 

 

 





 

Case Document 13 Filed 04/06/18 Page 14 of 2

and has periodically used computerized ?lters and human ?moderators? to edil the wording
of (or block) ads that explicitly offer sexual services in return for money.

10. These strategies are a ?ction designed to conceal the nature of
Backpage?s ads and customers. Indeed, the BACKPAGE DEFEND NTS have
admitted?in internal company documents and during private meetings~?tht they know
the overwhelming majority of the website?s ads involve prostitution. In one internal
document, LACEY actually bragged about the company?s contributions to th prostitution
industry: ?Backpage is part of the solution. Eliminating adult advertising 11 in no way
eliminate or even reduce the incidence of prostitution in this country; . . . For he very ?rst
time, the oldest profession in the world has transparency, record keeping and afeguards.?

11. Notwithstanding these private admissions, the :1 ACKPAGE
DEFENDANTS have taken pains to mislead the public, regulators, and law -nforcement

officials concerning the supposed sincerity of Backpage?s efforts to prevent publication

of prostitution-related ads. For example,

    

And in one internal document, Backpage?s media trategy was
described simply as ?Do not acknowledge the prostitution.? 

12. Many of the ads published on Backpage depicted children who . ere victims
of sex traf?cking. Once again, although Backpage has sought to create the pe ception that
it diligently attempts to prevent the publication of such ads, the reality is that Backpage has
allowed such ads to be published while declining?for ?nancial reasons?to ta necessary
steps to address the problem. For example, for several years, Backpage?s of 1cia1 policy,

when presented with an ad featuring the prostitution of a child, was to delete particular



 

 

 






 

Case Document 13 Filed 04/06/18 Page 15 of 72

words in the ad denoting the child?s age and then publish a revised version of the ad. Such
editing, of course, did nothing to change the fact the ad featured the prostitution of a child?
it only created a veneer of deniability and helped Backpage?s customers pimps
trafficking- children) evade detection.

13. Backpage has also contributed to the proliferation of ads featuring the

 

prostitution of children in other ways. For example,

 

?In another training document, moderators we instructed

 

DEFENDANTS have pursued an array of money laundering strategies. The 6 strategies
have included instructing customers to send checks and money orders to icular Post

Of?ce box, depositing those payments in bank accounts held in the name of entities with



 

 

 

Case Document 13 Filed 04/06/18 Page 16 of 72 

no apparent connection to Backpage, and then giving customers a corresponding ?credit?
on Backpage to purchase new ads, wiring the proceeds of Backpage?s business to bank
accounts held in foreign countries and then redistributing the funds to certain BACKPAGE
DEFENDANTS (as compensation) or redepositing the funds in bank accounts held in the

United States (to conceal the nature of those funds and promote Backpage?s ongoing



Ix) t?t 3?l i? i?nr?A I?l b?l h?lI?k i?k


operations), and converting customer payments, and the proceeds of

 

business, into and out of 
1 5.

transactions designed to conceal their misconduct and evade seizure by law 6

Backpage?s

The BACKPAGE DEFENDANTS have also engaged in other ?nancial

nforcement.

For example, in November 2016, LACEY asked employees of an Arizona-based bank for

advice on how to move his assets ?offshore? to protect them from Seizure by the

government. Soon afterward, $16.5 million in Backpage-derived cash was
bank accounts in the United States to an overseas bank account in I

16. For all of these reasons, the BACKPAGE DEFENDANT8 are 
indictment with the crimes of facilitating prostitution 18 U.S.C. 1952), 

 

transactional, and international promotional money laundering (18 U.S.C.

B. Backpage?s Origins, Ownership. and Control

18.

illegal prostitution ads. In fact, more than 30 years ago, a federal court

The publications within the VVMH newspaper chain routin

conviction of the operator of a prostitution business (which masqueraded a

parlor) for publishing ads in the classi?ed section of the Village Voice. See

wired from

inngary.
arged in this

ncealment,

1956 and

1957), and/or conspiracy to commit these offenses (18 U.S.C 371 and 1956 .

 

1y featured
f?rmed the

a massage

nited States

 

 





 

Case Document 13 Filed 04/06/18 Page 17 of 7

v. Sigalow, 812 F.2d 783 (2d Cir. 1987). The conviction was for violating 18 U.S.C.

1952, one of the same crimes charged in this indictment.

19.

By 2000, the rise of the internet?and, in particular, the website

(?Craigslist?), which offered free classi?ed ads?began to

signi?cantly disrupt business model, which depended on classi?ed advertising

revenue for survival.

threat by creating Backpage. Their decision to create Backpage was later des

address this

cribed in an

internal company document as follows: ?In 2004, in response to the Craigslist threat that

was decimating daily. newspapers, VVM launched its own online classi?ed site,

Backpage.com, named after the back page of print publication.?

21. During its ?rst few years of operation, Backpage accounted

for only a

fraction of overall revenue. In January 2006, for example, WMH estimated that

Baokpage supplied only 1% of its overall advertising revenue but also noted that Backpage

had ?tremendous upside potential.?

22.

This prediction proved prophetic. By 2008, Backpage was generating over

$5 million in annual pro?t. This annual pro?t ?gure increased to over $10 million in 2009.

23. In 2010, Craiglist chose to shut down its ?adult? section due to the
of ads for prostitution and other illegal services. The BACKPAGE DEF:
sensing an opportunity, made an aggressive push for Backpage to capture Crai

of this market. ?Craigslistl

  

a prevalence
ENDANTS,
glist?s share

[as folded . .

. . It is possible that this will mean a deluge of adult content ads for backpage.com . . . .

We have with the Village Voice probably the longest run of adult content advertising in

the US and it is, like it or not, in our 
24.

This push was successful. In internal documents, Backpage stated that it

experienced ?explosive growth? by ?capitali2ing on displaced Craigslist ad volume.?

Backpage?s annual pro?ts grew to over $26 million in 2010, over $52 million in 2011, and

-5-

 

 

 






 

 

Case Document 13 Filed 04/06/18 Page 18 of 7

over $78 million in 2012.

25. These ?gures dwarfed the profits that print publications were
generating. In fact, Backpage became so pro?table that the BACKPAGE DEFENDAN TS

decided to get rid of publishing business so they could focus on

Backpage?s

further development and expansion. Accordingly, in or around November 2012, the

BACKPAGE DEFENDANT spun off print publications and be;
several new corporate entities, including Medalist Holdings, Inc. (?Medalist?
Holdings LLC (?Dartmoor?), and Camarillo Holdings, LLC (?Camarillo?),

Backpage?s parent companies.

gan 

Dartmoor

to serve as

in Medalist

 

26. Following these transactions, LACEY held an ownership interes
(and, therefore, in Backpage) of approximately 45%, i

27. Backpage?s annual pro?ts continued to skyrocket during an

 

after these

changes. They grew to over $112 million in 2013 and over $134 million in 2ll14.

 

 

 

 




mumm-thh?Iocooqoxm?hmwi?io

 

Case Document 13 Filed 04/06/18 Page 19 of 7

C.

the overwhelming majority of the website?s ?adult? ads involved
Nevertheless, the BACKPAGE DEFENDANTS made a ?nancial decision
displaying those ads.

them?that is, by removing terms and pictures that were particularly i1
prostitution and then publishing a revised version of the ad. This process wa

referred to as ?moderation.?

 

Backpage?s Knowledge And Facilitation Of Prostitution Ads

2

 

31. By 2008, if not earlier, the BACKPAGE DEFENDANTS were aware that

32. The BACKPAGE DEF ENDANTS also sought to sanitize the at

prostitution.

to continue

is by editing
ndicative of

sometimes

 

 

 

 

 

Case Document 13 Filed 04/06/18 Page 20 of 2






39. On September 21, 2010, a group of state attorneys general wro a letter to



Backpage. This letter observed that ?ads for prostitutionmincluding ad a traf?cking


00

-9-

 






 

Case Document 13 Filed 04/06/18 Page 21 of 2

children?are rampant on the site? and argued that ?[b]ecause Backpage ca 0t, or will
not, adequately screen these ads, it should stop accepting them altogether. The letter
acknowledged that this step would cause Backpage to ?lose the consider ble revenue
generated by the adult services ads? but stated that ?no amount of money 11 justify the

scourge of illegal prostitution, and the misery of the women and children who ill continue

to be victimized, in the marketplace provided by backpage.?

 

provided guidance on how to ?moderate? ads. The ?rst was a Powerp oint presentation that
displayed a series of 38 nude and partially?nude photographs, some of which depicted

graphic sex acts. Next to each picture was an instruction as to Whether it should be

-10-

 

 

 








 

Case Document 13 Filed 04/06/18 Page 22 of 2

. approved or disapproved by a Backpage moderator. These instructions includv ?Approve.
Nude rear shots are okay as long the model is not exposing her anus or gnitalia.? and

?Approve. Rear shot okay. TranSparent wet panties okay.? The second as an Excel

 

spreadsheet identifying 50 terms (all of which were indicative of prostitutio that should

   

be ?stripped? from ads before publication. 
the language in ads that?s really killing us with the Attorneys General Images are
almost an afterthought to them.?

 



 

 

 

Case Document 13 Filed 04/06/18 Page 23 of 2






 

Case Document 13 FiledO4/O6/18 Page 24 of 2

During this meeting, LACEY asked which types of sex ads would b- acceptable

from perspective. When the NCMEC representative declined to ay that any



such ads would be acceptable, LACEY made a statement to the effect of ?adul prostitution

h?t


is none of your business.?




 






 

Case Document 13 Filed 04/06/18 Page 25 of 2

?[The term] implies some exchange of bodily ?uids 

?companionship? argument, but i don?t think we?ve ever really gotten in troub

indicative of prostitution, including an array of terms that are suggestr

prostitution ?lolita,? ?fresh,? ?high school,? ?tight,? ?young?). The

-14-

'ch kills our

6 for it.?

 

- The enclosed spreadsheet identified over 660 words or phrases that are

ve of child

spreadsheet

 

 

 




Case 13 Filed 04/06/18 Page 26 of 2

 

63. In March 2011, LACEY, Backpage

representatives met with representatives from NCMEC. During this meeting, Backpage
representatives were again advised that a large portion of the ads on Backpage were blatant
prostitution ads. The Backpage representatives also were advised they could a criminally

prosecuted under federal law for their conduct.

 

Case Dochent 13 Filed 04/06/18 Page 27 of 2



h?lb?ll?ll?l


 

add


.15

 

3 Cf.

?amber alert? to Backpage strip out? list. In other words

5-4
U1

did not require all future ads involving this particular coded term for the pro 1 titution of a

p?a
0\

child to be blocked from Backpage?they merely required such ads to be dited before

HH
OO-J

publication.




 






   
   

 

Case Document 13 Filed 04/06/18 Page 28 of 2

veri?cation software. In this email, might are bene?cial

identical email t- LACEY, concerning the possibility of using age?

  

(?This might be our solution?) but recommended against its wholesale adopti because it?
would cost ?79 to 99 cents per query? and would thus cut into Backpage?s pr?ts.

70. On July 28, 201 1, draft editorial entitle ?BackPage
understood.? In this document, LACEY bragged about Backpage?s contrib tions to the
prostitution industry: ?Backpage is part of the solution. Eliminating our adul advertising
will in no way eliminate or even reduce the incidence of prostitution in this ountry. . . .
For the very ?rst time, the oldest profession in the world has transparency, re ord keeping
and safeguards.? LACEY also acknowledged that Backpage used an autom tic ?lter to

remove particular phrases from ads that were indicative of prostitution but st 11 published

the ads after editing them.

    

72. On August 5, 2011, Backpage received a letter from the mayo of Seattle.
This letter warned that ?Seattle Police have identi?ed an alarming number of juvenile
prostitutes advertised on Backpagecom since January 2010? and explained th::t Backpage
was dissimilar from other companies Whose products and services are ?occ?sionally or
incidentally? utilized by criminals because ?[y]our company is in the busines of selling
sex ads? and ?your services are a direct vehicle for prostitution.? Th- letter also
recommended that Backpage require age veri?cation for all of tl ?escorts?

depicted in-its ads. Afterward, Backpage declined to adopt these recommendtions.

version of Backpage?s moderation guidelines. This six-page document provided the

-17-

 

 

 

 

 00 x] a t?A




Case Document 13 Filed 04/06/18 Page 29 of 72

following instructions cencerning photographs: ?Nude rear shots are okay as long the
model is not exposing her anus or genitalia,? ?Transparent wet panties okay should not be
able to see personal private part,? and ?cherry, Ice?cream keeping in mouth [is okay] The
document also explained that ?Bikini, lingerie, g-string, thong, and hands covering nipples
are all allowed,? ?Hourly rates are and ?Sessions are okay. E. $50 session.?
74. On August 31, 2011, Backpage received a letter from the National
Association of Attorneys General. This letter characterized Backpage as ?a hu for
human traf?cking,lidenti?ed ?more than 50 instances, in 22 states over three years, of
charges ?led against those traf?cking or attempting to traf?c minors on Backpage.com,?
and noted that ?[n]ear1y naked persons in provocative positions are pictured in nearly every
adult services advertisement on Backpage.com and the site requires advertisements for

escorts, and other similar ?services,? to include hourly rates. It does not require forensic

 

 

training to understand that these advertisements are for prostitution.?

 

presentation. Later, some of the BACKPAGE DEFENDANTS attended a meeting at
which the presentation was discussed in more detail. The presentation warned that
Backpage?s business practices would inevitably result in legal trouble (?One day the
proverbial is going to hit the fan?) and characterized Backpage?s ?media strategy? as ?Do
not acknowledge the prostitution.? The presentation also noted that the ?ads on the
backpage.com site? generally fallinto three categories, one of which is ?Pimps and Men

Looking for Kids.?

-13-

 

 

 

 

Case DOCUfrient 13 Filed 04/06/18 Page 30 of 2



h?iv?ll-db??i?th?I-r?l


Backpage should limit the number of child-exploitation referrals it was making to

b?I


?If we don?t want to blow past 500 this month, we shouldn?t be doi more than

r?av?A
\000

16 a day.?


oouoxm-ths?IQ

 



hCase Document 13 Filed 04/06/18 Page 31 of 72

 

 

83. On April 7, 2012, contacted

Backpage to report that one of the ?escorts? depicted on the site was only 17 years old. 
The woman provided the juvenile?s full name and birth year and further stated that the
juvenile had been attempting to recruit the complaining party?s daughter (who was 15). In

response?refuse to remove the ad because ?she?s isn?t

claiming her own daughter is in the ad.?

84. On April 8, 2012, LACEY sent an email?

.I believe in legalized prostitution? and stating that Backpage?s efforts to prevent the

 

prostitution of children on the site were ?not perfeCt, by any means.?

85. On April 25, 2012, a Backpage representative spoke at a meeting of the New
York City Council?s Women?s Issues Committee. During this meeting, the representative
stated it was better to have ads for sex work appear on Backpage than have them move to
other places on the internet. The representative further stated: don?t deny that Backpage
is part of the problem, but the problem is the internet.? 7

86. On April 27, 2012, a woman wrote an email to Backpage?s support
department stating that her underage daughter had been kidnapped, drugged, and was being

advertised as a prostitute against her will. The email identi?ed the speci?c phone number

-20,

 

 

 






remove.? This email

-pplauded Backpage?s ?good solid response? to the woman and re arked: ?this

 

Case Document 13 Filed 04/0618 Page 32 of 2

associated with the ads stated that the adsappeared on a ebsite called
BackpagePics.com, and asked that the ads be removed immediately: ?This is a drugged
and held against her will child who had photos taken under threat and duress . . . . Please

ho aked ?should

 
   

   
   

because he website

we respond??
BackpagePics.com wasn?t owned by Backpage, there was no need to repond to the
mother.

87; On April 30, 2012 (three days later), the same woman wrote another email
to Backpage? 3 support department. In this email, the woman stated that contacted
backpage on several. occassions [sic] to remove these pictures which were sted against
her will and while she was drugged and held captive. I have yet to receive a eply.? This
time, the woman provided a link to her daughter?s ad on Backpage (not
BackpagePics.com), which included the same phone number II at had been
included in the other ad.

88. On May 1, 2012 (the next day), the same woman wrote a ird email to

Backpage?s support department. In this email, the woman included a link to .1 other ad on .

Backpage depicting her underage daughter and stated: also found a pix of daughter
within this url both girls are in protective custody.? Later that day, the woma received an

email from Backpage?s support department stating: ?The post is con?rmed moved.?

  
 

89. Some of these emails were forwarded to LACE

whole rigamarole seems a little odd to me.?
90. On May 10, 2012, the television news station CNN ran a expose on
Backpage that emphasized ?how young some of these girls look? and deemeo the website

?a hub for the sex trade.?

 

employees entitled ?forbidden planet.? Enclosed with the email was an Excel spreadsheet

-21-

 

 

 






 

 

Case Document 13 Filed'O4/O6/18 Page 33 of 72

that identi?ed over 600 words and phrases that are indicative of prostitution. The
spreadsheet also speci?ed, for each word and phrase, whether an ad containing the

offending language should be banned or whether Backpage should simply ?strip term "from

 

ad? and then publish it after the revision.

    

93. In or around November 2012, a researcher at Arizona Stat University
published a study concluding that most of the ads on Backpage?s Phoenix ge involved
prostitution and that many of the ads depicted juvenile traf?cking victims. 0 11 December
19, 2012, LACEY was forwarded a copy of the study?s results. The researchel responsible
for the study also met with a Backpage representative to propose various me hanisms for
reducing or eliminating the prostitution of children on the website. Backpage- declined to

adopt these proposals.

 

-22-

 

 

 

Case Document 13 Filed 04/06/18 "Page 34 of? 2

 






 

Case Document 13 Filed 04/06/18 Page 35 of 72

 

 

- Following these exchanges, between October 2012 and Novem- er 2015, the
same customer was allowed to post over a dozen new ads on Backpage, ma of which

utilized the same identifying information, coded prostitution terms, and contact phone

 

number as before.

 

96. On June 6, 2013, Backpage received a letter from NCMEC recommending

the adoption of several speci?c security measures to prevent the traf?cking of children.
The recommended security measures included verifying the age and identity of users
who submitted adult ads, verifying the age and identity of individuals depicted in

photographs within adult ads, prohibiting the use of anonymous payment sources such

-24-

 

 

 

 






 

Case Document 13 Filed 04/06/18 Page 36 of 72

as prepaid credit cards, and requiring users to utilize veri?ed email addresses and

telephone numbers. Afterward, Backpage declined to follow any of these

recommendations.

 

   
     

98. On September 11, 2013, a Backpage representative made a prsentation to
the Arizona Governor?s Task Force on Human Traf?cking. Following this presentation
(which took place in Phoenix), the representative was asked whether there ould be any
?cons? to requiring veri?able identi?cation of all escorts being advertised on Backpage?s
Website. In response, the representative did not identify any ?nancial or logis ical hurdles
to the adoption of such a requirement. Instead, the representative stated that such a
requirement would simply cause Backpage to lose business to other prostitut on websites

like myRedBook.co1n or to overseas prostitution websites. During this meeti g, members

of the task force also provided the representative with evidence showing that Backpage?s

moderation efforts were ineffective at preventing the publication of pr'ostituti 11 ads.

    

stated that have multiple user accounts that are paying for your servic-s for what I
understand to be prostitution advertisements? and sought information about 0W you are

processing these transactions.?

 
 
 

 

 

This email stated that Backpage had been the

bene?ciary of ?[m]igration of content from other . . . marketplaces to the internet? and

-25-

 

 

 






 

Case Document 13 Filed 04/06/18 Page 37 of 2

identi?ed one particular marketplace as a key source of Backpage?s customer: et loss
for brick and mortar marketplaces: Strip clubs, hotels, and gathering spots dis a laced by the

internet.? In other words, the email acknowledged that the supposed ?escorts advertising

on Backpage were actually prostitutes (lawful escorts did not congregate a strip clubs,

hotels, and other brick-and-mortar ?gathering spots? during the pre-interne age). This
email also attributed?Backpage?s success in part to its adoption of policies hat allowed
customers to post ads without leaving any meaningful identifying information in a list of

Backpage?s advantageous policies, it identi?ed ?Anonymous,? ?Prepaid ca (1 friendly,?

?User can post paid ads without a valid email address,? and ?bitcoin.?

    

102. On September 4, 2014, Backpage was served with a brief that h: been ?led
by NCMEC in a lawsuit in Washington state court. In this brief, NCMEC riticized the
sincerity of Backpage?s efforts to prevent child sex traf?cking: ?Backpage repeatedly
claimed in public statements and court ?lings that it is working to redu child sex
trafficking on its website. The unpleasant reality is that Backpage publici 1 es carefully
selected operational processes as a subterfuge to avoid increased scrutiny, wh 1e providing
traf?ckers with easy access to an online- venue to sell children for sex. In practice,
Backpage?s stated interest in doing something meaningful to stop child sex tr 1 f?cking ads
on its; site is apparently overridden by the enormous revenue it generates from its escort
ads, including ads selling children for sex.?

103. On March 17, 2015, a law enforcement officer with th California
Department of Justice spoke with a Backpage representative concerning the crevalence of
blatant prostitution ads on Backpage. In response, the representative did no dispute the

of?cer?s characterization and said the intemet and prostitution were not goin 5 away.

-26-

 

 

 



[0 i?l i?t-i?A i?L i?t r?t i?A i?L i--t I?t


 

ICase Document 13 Filed 04/06/18 Page 38?of 72

104. On July 30, 2015, a document entitled ?trainingJ u1y201 5? was distributed to

Backpage?s moderators. This training manual speci?cally told moderators that, if they saw

 

a photograph depicting ?a person [who] looks young/minor,? they should pprove dont

delete the ad unless it has a banned term.? The training manual also identi? (1, under the
heading ARE ALL a long list of terms that are indicative prostitution,
such as ?99% CUM BACK FOR ?car service,? and ?lollipop speci 

105. In or around August 2015, as part of a lawsuit in Illinois, ckpage was
served with an af?davit from a detective employed by the Seattle Police De artment. In
this af?davit, the detective avowed that date, no Detective within the cattle Police
Department?s Vice/High Risk Victims Unit has ever found a legitimate ?es ort? (person
who charges simply for companionship with no offer of sex) or ?masseuse? (pe son offering
legitimate and licensed massage therapy rather than sex) while responding to ds placed in
these categories on Backpage.com? and that ?every time the Seattle Police epartment?s
Vice/High Risk Victims Unit has responded to an ad in the adult section of Ba kpage.com,
we have found that the ad was a posting for illegal activity.?

106. In or around August 2015, during the same lawsuit in Illinois, ckpage was
served with a different af?davit from a detective employed by the ston Police
Department. In this af?davit, the detective avowed ackpage.com is th number one
site in Boston for prostitution and sex trafficking,? that his unit had ?[s]in 2010 . . .
arrested over 100 buyers of sex of both adults and minors through Backpage.c 111 ads,? and

that ?nearly all the cases we ?nd associated with it [Backpage] involve pi controlled

prostitution.?

 

108. On December 9, 2015, Backpage received an email from a reporter stating

that the 359 sex traf?cking incidents Toronto Police have been involved in since

-27-

 

 

 




- 2013, every single girl that was rescued was advertised on Backpage.

 

00 *4 DJ F?l .

 

Case Document 13 Filed 04/06/18 'Page 39 of 2

99

email also

 

asked: ?Why hasn?t Backpage. closed down the adult escort ads portion 0 its site like

Craigslist when it?s known that underage girls are being exploited via Backp ge??

  
   
 
   

110. Beginning in or around January 2016, Backpage?s mod-rators were
instructed to stop removing ads that contained the phrase For exampla- on January
28, 2016,?Backpage moderator explaining_ that ?As far
as I am aware we are no longer removing ads for Similarly, on Marh 9, 2016, a
Backpage moderator sent an email to his coworkers explaining than
and I talked about the GFE thing, going forward we will not be removing as for GF 
and clarifyng ?this includes even gfe with price.? And again, on March 25, 2  16, an email

was sent to Backpage?s moderation staff stating that ?We are no longer removing ads for

or 

  
  

111. In fact, the BACKPAGE DEFENDAN TS repeatedly acknowledged that the
term (girlfriend experience) is a coded term for prostitution. For exa plei
On October 26, 2010, 
?No coded sex act for money: GFE, PSE, TY, etc.?
On May 4, 2011, identifying
GFE as a ?code word? that should be forbidden.

discussed a list of 100 ?solid sex for money terms.? The list included girlfriend

 

 

experience.?

co?worker identifying GFE in a list of ?sex phrases and coded terms? that are ?not

?28-

 

 

 






 

Case Document 13 Filed 04/06/18 Page 40 of 72

allowed.?
112. DEFENDANTS periodically
received a ?Google alert? when articles discussing Backpage appeared in the news. Many
of the news articles identi?ed in these alerts discuss instances in which prostitutes who had
been advertised on Backpage were kidnapped, raped, or murdered.
113. In .January 2017, after conducting a investigation, the Senate
Subcommittee on Permanent Investigations (?Subcommittee?) issued a 50-page report
entitled ?Backpage.com?s Knowing Facilitation of Online Sex Traf?cking.? This report
concluded, among other things, that virtually all of Backpage?s ?adult? ads are actually
solicitations for illegal prostitution services and that ?Backpage has maintained a practice
of altering ads before publication by deleting words, phrases, and images indicative of 
criminality, including child sex traf?cking . . . . Those practices served to sanitize the
content of innumerable advertisements for illegal transactionsweven as Backpage
represented to the public and the courts that it merely hosted content others had created.?
114. In response to the Subcommittee?s report, Backpage purported to shut down
the ?adult? section of its website. However, the prostitution ads simply migrated to other
sections of the website, where they remain to this day. i
D. International Operations
115. In addition to facilitating prostitutionthrough its US. website, Backpage has
also facilitated prostitution through its websites in foreign countries. In this context,
Backpage often af?rmatively creates the "content of the illegal prostitution ads being
published. 
116. Around 2013 or 2014, ,Backpage hired a Philippines-based company
(Company B) in an attempt to increase the pro?tability of Backpage?s international
operations. Company ?s employees were instructed to (1),visit rival prostitution websites
in other countries, (2) obtain the email addresses of prostitutes who were posting ads on

those websites (often by falsely posing as prospective customers), (3) use the information

-29-

 

 

 



 

Case Document 13 Filed 04/06/18? Page 41 of 2

from the other website to create a competing prostitution ad on Backpag
referred to internally as ?preboarding?), and then (4) transmit the new ad to 
often using the previously-harvested email account information, in an attemp
the prostitute to become a Backpage customer. Company B?s employee
bonuses based on the amount of ad revenue they generated for Backpage
techniques.

117. Backpage?s executives were fully aware of the plan to use 

create prostitution ads outside the United States. For example, on or around I

One of the plans was to use the Philippines as a ?test? market and

(a process
prostitute,
to persuade

were paid

using these

mpany to

ovember 6,

hire Filipino

 

contractors to ?contact by email leads, secure email address, add ad and ema

[Computer system] and assign to American staff. American staff makes contact.

il address in

5?

ef?cient and cost effective way for us to bring new users to backpage.? This email also

contained the following summary of how Company would operate: ?Process after hiring

company offering BPO services: 1. Backpage provides BPO with sites, categories 

countries to target. Backpage also provides sample ?scripts? and examples of phone

calls. 2. BPO contacts users Via phone from sites backpage provided, obtains user email

address permission to preboard ad. 3. BPO preboards ad as public user. 4.

After ad is

preboarded, users receive veri?cation link to verify the ad.? This email also stated that

Backpage would offer a ?bonus per veri?ed authenticated ad.?

 

119. On April 10, 2015, al??ve?year business plan?

-)ne of the goals for 2015 was ?Off shore mark

the Philippines to grow to 166 and main task is international market content

 
 

-30..

  

ting staff in

cquisition.?

  

 

 

 






 

Case Document13' Filed 04/06/18 Page 42 of 72

 

120. On May 15, 2015, a Company employee posing as a Backpagelemplyee

    

sent an email to an apparent prostitute. The subject line was ?Offering Free A vertisement
from Backpagecom? and the text of the email sought to persuade the prostitute to ?upgrade
your ad with sponsor placement or automatic repost.? In response, the protitute wrote
back that she had ?managed to activate my ad and could buy credits as We] . thanks for
your help. I?m traveling today to [London] how can I change my location.? This email

for [Company agent user activates ad, user purchases credi 

  
 

ad that had an IP address associated with Company B. This email containedt 6 following
description of Company ?3 process for creating and selling prostitution ads 0 Backpage:
(1) ?Staff found lead in assigned area.? (2) ?Staff entered all relevant int [database]
(3) ?Staff called lead to discuss creation of free ad? (4) taff created
free ad for lead (veri?cation email sent). (5), Staff followed under with an em il reminding
lead of phone conversation and detailing verification of ad.?
E. Select Victim Summaries

122. Between in or around 2009 and 2013, Victim 1 was sold for sex through the
use of Backpage ads, in Ohio, Indiana, and Georgia. Victim 1?s Backpage ads often
included words and phrases that were indicative of prostitution, such as ?ross? (money).
On at least one occasion, Victim 1 contacted Backpage after a proposed . (1 had been
rejected because it contained banned words and phrases. In response, Backpage
representative coached Victim on how to re-write the ad using different we ds. Victim
1?s traf?cker took all of the money that was earned through her acts of prostitution.

123. Between in or around 2009 and 2011, Victim 2 was sold for sex, through the

,31_

 

 

 

 -J 4} U) l?l




 

 
 
 
 
  

Case Document 13 Filed 04/06/18 Page 43 of 2

use of Backpage ads, in Arizona, Georgia, North Carolina, Texas, New York New Jersey,
and Louisiana. Victim 2?s trafficker drafted her Backpage ads and Victim initially did
not know she was being offered on Backpage. The ads contained words a phrases to
make customers believe Victim 2 was ?barely legal? and also contained word and phrases
indicative of prostitution, such as ?roses? (money).
124. Between in or around 2009 and 2012, Victim 3 was sold for se through the
use of Backpage ads, in Colorado and North Dakota. Victim 3?s pimp ins
review existing prostitution ads on Backpage to learn how to draft her own a 3. During a
portion of this period, Victim 3 was required by her pimp to make week?long ?ps to North
Dakota to work as a prostitute. During these trips, which would generate as ch as $2,000
in prostitution-derived revenue each day, Victim 3 was forced to leave her chil en at home
in the care of her pimp. 
125. In or around 2010, Victim 4 was sold for sex, through the use Backpage
ads, in Washington. During this period, Victim 4 was a juvenile (15 years 1d). Victim
4?s pimp drafted the ads that were placed on Backpage. The. wording of ese ads was 1
edited by Backpage before publication. The ads contained words and ses such as
and WONT TAKE LON AT 
and included pictures of Victim 4 in provocative positions showing her breasts and
buttocks. I
126. Between in or around 2011 and 2016, Victim 5 was sold for sex through the
use of Backpage ads, in Massachusetts and Rhode Island. During much 0 this period,

Victim 5 was a juvenile (14-19 years old). Victim 5?s female pimp instruct Victim 5

that Backpage was the safest place to advertise because it did not require age eri?cation.
On one occasion, Backpage declined to accept a proposed ad that indicated ictim 5 was
only 17 years old. In response, the ad was simply resubmitted with a new alse) age of
19. On other occasions, Backpage removed provocative pictures of Victim 5 cm ads and

then allowed edited versions of the ads to be published. Victim 5?s Backpage ds included

-32-

 

 






 

Case Document 13 Filed 04/06/18 Page 44 of 72

words and phrases that were indicative of prostitution, such as ?roses? (money) and ?back
door? (anal sex). Some of the customers who responded Victim 5?s Backpage ads forced
Victim 5 to perform sexual acts at gun point, choked her to the point of having seizures,
and gang-?raped her. 7

127. In or around June 2012, Victim 6 was sold for sex, through the use of

Backpage ads, in Arizona. Her traf?ckers utilized Backpage ads that did not offer a

speci?c person but instead generally offered a woman with a particular type of hair color
and build. On June 22, 2012, Victim 6 was dispatched to a customer who had responded
to a Backpagead featuring ?Nadia,? who was described as a slender brunette woman.
Upon her arrival at the location, Victim 6 was stabbed to death.

128. Between in or around 2012 and 2015, Victim 7 was sold for sex, through the
use of Backpage ads, in Washington and Oregon. Victim 7?s pimp drafted the ads that
were placed on Backpage. The wording of these ads was edited by Backpage before
publication. The ads contained provocative nude pictures of Victim 7.

129. Between in or around 2013 and 2014, Victim 8 was sold for sex, through the
use of Backpage ads, in Maine, Connecticut, and Massachusetts. During this period,
Victim 8 was ajuveni1e(15 years old). Victim 8?s uncle, as well as his friends, placed the
ads on Backpage, which included words and phrases that were indicative of prostitution,
such as ?roses? (money), ?fetish friendly,? and 150 for 1/2 hour, 200 for full hour.
Through these ads, Victim 8 was forced to do ?in-calls? (where she was raped in hotels) as
well as ?out-calls? (where she (was raped at other locations chosen by the men paying for
her).

130. In or around 2013, Victim 9 was for sex, through the use of Backpage
ads, in Florida. Victim 9?s pimp taught her how to usecode words in her Backpage ads to
indicate how much she was charging for certain sex acts. Victim 9 was brutally attacked
by her traf?cker, causing bruises and a fractured cheek bone. 

131. Between in or around 2014 and 2015, Victim 10 was sold for sex, through

-33-

 

 

 






 

  
 

Case Document 13 Filed 04/06/18 Page Backpage ads, in California and Arizona. During some of this riod, Victim
10 was a juvenile (17 years old). An associate of Victim 10?s pimp took pi tures of her
and drafted the ads that were placed on Backpage. The Backpage ads contain words and
phrases such as IN ?sexy sweet,? and ?sweet like honey but uper hot like
?re? and included pictures of Victim 10 in provOcative positions showi her legs,
stomach, shoulder, and buttocks.

132. Between in or around 2014 and 2015, Victim 11 was sold for sex, through
the use of Backpage ads, in Arizona, Colorado, Minnesota, Oregon, Californ'a, Montana,
Nevada, New Mexico, and Utah. The Backpage ads contained words and phrases
indicative of prostitution and included pictures of Victim 11 in provocative sitions. On
some occasions, Backpage would remove certain explicit photos from the ad but publish
the remaining text and other photos. Victim 11?s traf?cker gave her dru 3, took her
identi?cation documents, sexually assaulted her with a ?rearm, and forced her 0 work full-
time as a prostitute. 

133. In or around 2015, Victim 12 was sold for sex, through the use Backpage
ads, in California and Arizona. Victim 12 was ?rst advertised on Bac age in San
Bernardino, California, but moved to the Phoenix metro area because the Sup 1? Bowl was
being held there. Victim 12?s advertisements on Backpage contained words and phrases
such as ?New In Town? and ?Sexy Dark Asian Bombshell with a Nice Ti ht {Booty}?
and included pictures showing Victim 12?s legs, stomach, shoulders and butt cks.

134. In or around 2015, Victim 13 was sold for sex, through the use Backpage
ads, in California. During this period, Victim 13 was a juvenile (15 years old . Victim 13
and her traf?cker both posted the Backpage ads, which falsely represented th Victim 13
was 19 years old and showed pictures of her face and body. On at least on occasion, a
Backpage representative contacted Victim 13 with instructions it.
could be published. 

135. In or around June 2015, Victim 14 was sold for sex, through he use of a

-34-

 

 



MN MN I-M r?Ii?Al?A r?A h?llCase Document 13 Filed 04106/18 Page 46 of 2

Backpage ad, in Texas. This ad contained words and phrases such as ?fun, yo ng, exotic,?

?Ready to be your fantasy girl,? CALLS and BLAC and
included pictures of Victim 14?s stomach, breasts, shoulders, and buttocks.
June 20, 2015, Victim 14 was murdered by a customer. Afterward, the 'custo . or attempted
to destroy Victim 14?s corpse by lighting it on ?re. Victim 14?s father la er contacted
Backpage to request that the ads showing his deceased daughter be remove . Backpage
did not immediately comply with this request.

.136. In or around June 2015, Victim 15 was sold for sex, throng the use of
Backpage ads, in'Texas and Louisiana. These ads contained words and ases such as
?Thick Glass of Chocolate Milk Looking for a and ?sexy ce ifred frea 
and contained pictures showing Victim 15?s legs, shoulders and buttocks. June 10,
2015 Victim 15 was forced into a vehicle with her traf?cker, who was attem ting to take .
her to Texas against her will. In an attempt to escape, Victim 15 jumped out the vehicle
onto Interstate 10 and was killed after being hit by several vehicles at high sp eds.

137. In or around July and August 2015, Victim 16 was sold for sex through the
use of Backpage ads, in Michigan. These ads contained words and ses such as
?Juicy Caramel Lady On Duty,? ?Sexy, Erotic Cara e1 Dream,?
and ?No Thugs, Pimps Or Weirdos? and contained pictures showing Victim 16?s breasts,
legs, lips, buttocks, and face. On August 15, 2015, Victim 16 was murdered by a customer.
Afterward, the customer dumped her corpse in a park. .

138. ?Between inlor around 2015 and 2016, Victim 17 was sold for sex, through
the use of Backpage ads, in Arizona and California. Victim 17'averaged ten customers a
day during this time and turned over all of her prostitution earnings (approximately $1,500
per day) to her pimp. An associate of Victim 17?s pimp took pictures of her and drafted

the ads that were placed on Backpage. The Backpage ads contained words and phrases

such as ?I?m here to make your wildest fantasies come true!? and

?Sorry, but NO BLACK ME and included pictures of Victim 17?s buttocks and face.

-35-

 

 

 






 

Case Document 13 Filed 04/06/18 Page 47 of 72

F. Money Laundering Activities

139. Backpage?s customers have overwhelmingly used the proceeds of criminal
activity (116., money earned from pimping and prostitution) when purchasing ads on
Backpage. In addition, because Backpage?s publication of such ads is an independent
crime violation of 18 U.S.C. 1952), the fees it collects from customers posting
prostitution ads?estimated at more than $500 million since 2004?constitute the proceeds
of unlawful activity.

140. For these and other reasons, banks and ?nancial institutions have repeatedly

refused to do business with Backpage. In response, the BACKPAGE DEFENDANTS have

 

pursued a variety of money laundering strategies. For example

  
 
  

 

 

proposed, as a ?solution? to the problem, that Backpage re on?gure its
website to fool credit card companies into believing the charges were being i curred?on a

different website.

iscussed strategies for fooling credit card companies i to believing
that Backpage-associated charges were being incurred on different websites including a
proposal to set up shell companies without any apparent connection to Bac age (?create
new companies With new principals?) and use their bank accounts to acc apt payment.
Another ?solution? was to ?allow users to fund an account thru several othr sites? that

?have no adult or images.?

 
 

an email
entitled ?Options for the future of Backpage.? This email discussed various strategies for

creating new entities to process Backpage-related payments ?without ever disclosing ties

~36-

 

 

 






 

Case Document 13 Filed 04/06/18 Page 48 of 72

 

to Backpage.?

 

144. Notwithstanding these strategies, the three major credit car companies

stopped doing business with Backpage. On or about April 30, 2015, Backpag learned that
American Express would no longer allow its cards to be used for any u-urchases in
Backpage?s adult section. In or around July 2015, Backpage learned that Mast rcard would
no longer allow its cards to be used for Backpage-related transactions. Whe discussing
this decision, MasterCard stated that it ?has rules that prohibit our cards fro being used
for illegal activities.? Around the same time, Backpage learned that Visa wo 1d no longer
allow its cards to be used for Backpage-related transactions. When dis ussing this
decision, Visa stated that its ?rules prohibit our network from being use a for illegal
activity.?

145. Similarly, some banks closed accounts that were held by ckpage (or

Backpage?related entities) out of concern the accounts were being used for ille g, a1 purposes.

    

146. Backpage responded to these developments in several ways. One was to
encourage customers to send checks and money orders to a Post Of?ce box. held in the

name of a seemingly-unrelated entity called Posting Solutions LLC (?Posting Solutions?)

. and give such customers a corresponding credit on Backpage. For example, on July 31,

-37-

 

 

 






 

   

Case Document 13 Filed 04/06/18 Page 49 of

payment process worked. On October 16, 2015, Backpage received an
customer complaining about her inability to pay for ads using a credit card. I
Backpage representative explaine
that you would like to pay for upgrades or buy credits, we suggest 1
alternative payment methods such as Bitcoin. If you are in the United States,
pay by check or money order. Please make payable to ?Posting Solutions.
ONLY ACCEPT CHECKS OR MONEY ORDERS MADE OUT TO
Posting Solutions. Attn: Accounts. 192307. Dallas

147. The following episode provides an example of how the Posti

2

  
      
 

Solutions

response, a

nosting with

you can also
WE CAN

TX 75219.

Please send through the United States Postal Service. FedEx, UPS, or other mail delivery

alternatives cannot deliver to a PO. Box. When sending your payment please be sure to

include your email address. Please do not make your payments out to backpage.com as we

will no longer be able to accept them.?

148. Between around September 2015 and June 2016, over $7.1 milli

on of checks

and money orders sent by Backpage customers were deposited in bank accounts held by

Posting Solutions.

149. Backpage also utilized a different entity, called Website Technologies, LLC

(?Website Technologies?), to process Backpage?related funds and took step

3 to make it

 

appear that Backpage and Website Technologies were independent entities. For example,

-38-

 

 

 

 






 

Case Document 13 Filed 04/06/18 Page 50 of 72

 

 

150. In many instances, Backpage-related money that was initially dposited into

accounts held by Posting Solutions was later transmitted to accounts held by Website

Technologies. For example:

 

151. In addition to receiving millions of dollars from Posting lutions, the
Website Technologies accounts also served as the repository for millions of do lars of wires
from international bank accounts controlled by Backpage?associated entities. or example,
between January 2015 and December 2016, Website Technologies accounts - ceived over
$45.4 million in wire transfers from Backpage-assoeiated bank accounts in iechtenstein,

over $30.1 million in wire transfers from Backpage?associated bank accouns in Iceland,

-39-

 

 

 

 






 

 
 
 
  
 
 

Case Document 13 Filed 04/06/18 Page 51 of 2

and over $3.9 million in wire transfers from Backpage?associated bank ac ounts in the
Netherlands.

152. In many instances, the next stage of the money?laundering pr cess was for
money to be wired from Website Technologies accounts to bank accoun held by a
different entity called Cereus Properties LLC (?Cereus Properties?). Th authorized

signers on the Cereus Properties accounts included Between
around December 2015 and October 2016, Website Technologies accou ts sent wire
transfers totaling over $47 million to accounts held by Cereus Properties. 

153. Accounts held by Cereus Properties also received money
international bank accounts controlled by Backpage?associated entities.
between around August 2016 and November 2016, Cereus Properties acco received
over $11.3 million in deposits and wire transfers from Backpage?associatcd ac ounts in the
Netherlands. .

154. After money reached Cereus Properties, large portions of it re funneled
back to Backpage or to certain BACKPAGE DEFENDANTS. For exam 1e, between
January 2016 and January 2017, LACEY (and family memb rs) received
distributions totaling over $30.3 million



155. Backpage also ?lrthered its money laundering efforts through the use of
bitcoin processing companies. Over time, Backpage utilized companies such as CoinBase,
GoCoin, Paxful, Kraken, and Capital to receive payments from customers and] or
route money thrOugh the accounts of related companies. 

156. Backpage also furthered its money laundering efforts by developing ways for
customers to purchase ads using gift cards issued by third?party vendors. This process was
described in a July 23, 2015, email exchange between various Backpage employees on

_This exchange included the following: ?[W]hat if

we used a customers [sic] payment method, say visa prepaid card, to buy [bitcoin] from

-40-

 

 

 






 

Case Document 13 Filed 04/06/18 Page 52 of 2

our seller account . . . giving said bitcoin to our catch-all wallet elsewhere (nstead of to
user), simultaneously adding credits/purchasing paid ad or upsells? Fro the user?s
perspective they just input their prepaid card and get their credits or purchase

(Conspiracy)
157. The factual allegations in Paragraphs 1-156 are incorporated reference
and re-alleged as though fully set forth herein.

158. Beginning in or around 2004, and continuing through the pr sent, in the

 
 

District of Arizona and elsewhere,

and others known and unknown to the grand jury, knowingly

and intentionally agreed, confederated, and conspired with each other, and with others 

known and unknown to the grand jury, to commit the following offenses again st the United

States:
a. 18 U.S.C. 1952(a)(3)(A) (Travel Act?Facilitate Prostitution).

OBJECT OF THE CONSPIRACY

159. The object of the conspiracy was to obtain money.
MANNER AND MEANS OF THE CONSPIRACY .
160. The manner and means of the conspiracy are described in paragraphs 1?156
above, incorporated by reference. and re?alleged as though fully set forth herein. -
OVERT ACTS
161. Overt acts were committed in. furtherance of the conspiracy, including but
not limited to those described in paragraphs 1-156 above, incorporated by reference and
re-alleged as though fully Set forth herein.

In Violation of 18 U.S.C. 371.

-41-

 

 

 






 

Case Document 13 Filed 04/06/18 Page 53 of 72

COUNTS 2-51
(Travel Act?Facilitate Prostitution)

162. The factual allegations in Paragraphs 1-161 are incorporated by reference

and re-alleged as though fully set forth herein.

163. On or about the dates set forth below, each instance constituting a separate

count of this Indictment, in the District of Arizona and elsewhere,?
and unknown to

the grand jury, used the mail and any facility in interstate and foreign commerce with intent -

to otherwise promote, manage, establish, carry on, and facilitate the

management, establishment, and carrying on of an unlawful activity, to wit:

promotion,

prostitution

offenses in violation of the laws of the State in which they are committed and of the United

States, including but not limited to Title 13, Arizona Revised Statutes, Section l3-3214,

and thereafter performed and attempted to perform an act that did promote, manage,

establish, carry on, and facilitatelthe promotion, management, establishment,

on of the unlawful activity, as follows:

and carrying

 

 

?Doin incalls and outcalls?

Count Date Description 
2. Sept. 10, 2013 Publish ad depicting Victim 5 entitled ?Get freaky Tuesday .

. Come spend ur day with us 19,? with accompanying text

 

- DONT MISS 

3. Jan. 27, 2014 Publish ad involving P.R. entitled ?50 Red 

 

the originally-submitted ad

4. Jan. 29, 2014 Publish ad depicting Victim 8 entitled ?Puerto Rican mami in
walpole area INCALLS 49? after deleting one picture from

 

 

 

 

portland area, ready to play, INCALLS, 30 min 3}

5. Jan. 31, 2014 Publish ad depicting Victim 8 entitled ?Exotic latina, south

 

)ecials! 

 

-42-

 

 

 






Case Document 13 Filed 04/06/18 Page 54 of 7

 

19? after deleting one picture from the originally
ad

?submitted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6. Feb. 6, 2014 Publish ad involving P.R. entitled ?75 Red 
- DONT MISS OUTlilil?

7. Apr. 20, 2014 Publish ad involving P.R. entitled ?50 Red 
DONT MISS 

8. May 7, 2014 Publish ad involving P.R. entitled ?50 Red 
DONT MISS 

9. May 31,2014 Publish ad involving P.R. entitled ?50 Red 
DONT MISS oormn?

10. July 1, 2014 Publish ad involving P.R. entitled ?50 Red 
- DONT MISS 7

11. Aug. 19, 2014 Publish ad involving P.R. entitled ?50 Red 
DONT MISS 

12. Nov. 23, 2014 Publish ad depicting Victim 10 entitled ?New in Town Super
Hot Skinny Mixed Cuban Girl With Long Black Hair 18?
after deleting picture from originally-submitted ad

13. Jan. 29, 2015 Publish ad depicting Victim 12 entitled ?New in Town Sexy

- Dark Asain Bombshell with a Nice Tight {Booty} 23?
after deleting one picture from the originally-submitted ad

14. I an. 31, 2015 Publish ad depicting Victim 10 entitled IN TOWN
sexy sweet European mixed Cuban California girl 21?

15. an. 31, 2015 Publish ad depicting Victim 12 entitled ?New in Town Sexy
Dark Asian mixed Bombshell - 23?. after deleting one picture

from the originally?submitted ad 1 i i
16. Feb. 4, 2015 Publish ad depicting Victim 1 1 entitled ?Upscale Independent

26,? after

 

 

BRUNETTE BOMBSHELL 5?Star Fantasy 

-43-

 

 

 

 




ooqoxm-waI?iowooqoxm-hmwr?to

Case Document 13 Filed 04/06/18 Page 55 of 7

 

deleting pictures from originally?submitted ad

 

17.

Feb. 18, 2015

Publish ad depicting Victim 11 entitled ?Alexis
HOTTEST in town! 26,? after deleting six pit
the originally?submitted ad

Foxx the

stures from

 

18.

Feb. 26,2015

Publish ad involving P.R. entitled ?50 Red 
- DONT MISS 



 

19.

May 18, 2015

Publish ad depicting Victim 15 entitled ebony

PLAYMATE Perfect Curves. . . Skills to make
CURL 19,? after removing one picture of
submitted ad, with accompanying text ?you agree
not af?liated with any law enforcement agency? a

Outcall! l?

ur TOES
originally?Incalls

 

20.

May 19, 2015 

Publish ad depicting Victim 15 entitled ?Hot

Driping

Submissive Ebony Playmates 20,? after removing one

picture of originally-submitted ad, with accompanying text

?you agree . . . you are not af?liated with any law enforcement

agency? and ?We?re ready to please and accommodate all of

your needs and wants!! With a mouth that?ll ROCK your 

and a [picture of cat] .that?ll leave you purring for more?

 

21.

July 1,2015

Publish ad depicting Victim 17 entitled ?AbSoLuTeLy

PlAymate 20,? with accompanying

AmAziNg CoMe WiTh Me #1 MOST WaNtEd 

text ?By

contacting me you agree that you are not af?liated With any

form of law enforcement,? PERFECT Will 5
every need,? and 

atisfy your

 

 

22.

 

July 2, 2015

 

Publish ad depicting Victim 17 entitled ?SeXy!! Exotic

playmate Call me! the girl you NEED to See! 20,? with

 

 

144-

 

 

 

 






Case Document?i? Filed 04/06/18 Page 56 of 7

 

accompanying text DO NOT OFFER 40$,
and 

50$, 60$

 

23.

Aug. 13, 2015

Publish ad depicting Victim 13 entitled ?Young SEXY

PUERTO RICAN 19,? which accompanying tex

do half

hour sessions that vary in donation prices, 80 for head, 120

for hooking up without head and 150 for hooking up with

head?

 

24.

Aug. 15, 2015

Publish ad depicting Victim 16 entitled ?Outcalls Now
Freaky Curvy Caramel Lady OUTCALLS NOW 23?

 

25.

Sept. 13, 2015

Publish ad involving P.R. entitled ?50 Red 

DONT MISS 

 

26.

Nov. 28, 2015

Publish ad involving P.R. entitled ?50 Red 

- DONT MISS 

 

27.

Apr. 21, 2016

Publish ad entitled ?Finally? PSE GFE Kimb
MIA Marie Together BOOK 

er Rae and

 

28.

Nov. 3, 2016

Publish ad entitled New 18?

 

29.

Nov. 11,2016

Publish ad entitled ?Mind blowing Tiffany. Incall in Taunton

- 37,? with accompanying text ?Soft GFE . . . I'm real and

reviewed?

 

30.

Nov. 14, 2016

Publish ad entitled ?Top Model 2016 Special ?Be

st Looking

Young Asian? . . . 22,? with accompanying text ?Sexy Asian

Girl Incall Service? and 

 

31.

Nov. 14, 2016

 

Publish ad entitled ?Sometimes It?s All About The Journey,

And The Dysfunctional 

Provider 44,? with accompanying test ?You can find a few

current reviews at T3R and have been EROS

authenticated?

 

 

 

 

-45-

 

 

 

 






Case Document 13 Filed 04/06/18 Page 57 of 72

 

32.

Nov. 19, 2016

Publish ad entitled ?The True (G)irl (F)riend (E)xperience. ..
Visiting November 27th Sunday PRE-BOOKING
SPECIAL 100,? with accompanying text ?Let?s blur
restrictions between ?nancial transaction Romantic

Connection?

 

33.

Nov. 24,2016

Publish ad entitled ?Top Asian Grand Opening 100% Young .
100% Sexy . . . 23,? with accompanying text 
INCALL IN and 

 

34.

Nov. 26, 2016

Publish ad entitled LOVE I?m a GFE. OutCall and



Incall with exception on the Incall!! 4

 

35.

Dec. 20, 2016

Publish ad entitled Sexy Sensual 
Stacked College Coed With The Best Mouth Ever! BOOK
with accompanying text do ALL the things
YOU Wish Your Wife Did! and 30 min/$180?

 

36.

Jan. 15, 2017

Publish ad entitled ?Real Reviewed Girlfriend
Theonesweet.weeb1y.com 30,? with accompanying text

?250 

 

37.

Apr. 4, 2017

Publish ad entitled GFE KOREAN GIRLS 
20?

 

38.

Apr. 11,2017

Publish ad entitled ?Pettit Sexy #Corey# 4407239339 A 39,?

33

with accompanying text ?complete GFE experience

 

39.

July 3, 2017

Publish ad entitled HANG OUT NOW UpScale
New In Town! Call ME now for an unforgettable visit 20,?

with accompanying text ?100% GFE with 100% no Pimps?

 

 

40.

 

July 15, 2017

 

Publish ad entitled ?Ready for some fun daddy? This is your
chance too have a amazing time - 21,? with accompanying

text ?Slim body, nice tits, freaky, 

 

 

~46?

 

 

 

 






Case Document 13 Filed 04/06/18 Page 58 of 7

 

 

 

 

 

 

 

 

 

 

 

 

41. July 15, 2017 Publish ad entitled ?New in town BiGBublble Booty-
HOT BODY 24,? with in
accompanying text 

42. July 21, 2017 Publish ad entitled ?Pettit Sexy #Corey# 4407239339 30,?
with accompanying text ?complete GFE experience?

43. July 23, 2017 Publish ad entitled GODDESS young 20,? with
accompanying text ?100% Discreet service? and 

44. Jan. 26, 2018 Publish ad entitled Service Available! Private
Encounters w/ Pampering Beauty?

45. Jan. 30, 2018 Publish ad entitled ?241 White plans area Carfun Perfect
Treat Available No Rush,? with ?Sweet Sexy in
accompanying text

46. Jan. 30, 2018 Publish ad entitled REAL HOT Sweet DREAM
AMAZING BEST 

47. Jan. 30, 201.8 Publish ad entitled ?Tall, Slim Sexy Luxe Goddess 
NARCISA Sensual Body Rub Fetish Sessions,? with
accompanying text ?gfe Hh: $160 H: $220?

48. Jan. 31, 2018 Publish ad entitled ?Exotic Asian Beauty,? with

I I accompanying text am an independent GFE with excellent
massage skills?

49. Feb. 1, 2018 Publish ad entitled ?Nuru (Best GFE ever) incall only? i

50. Feb. 6, 2018 Publish ad entitled ?Tuesday with Ashleigh. Available now,?
with in accompanying text

51. Feb. 6, 2018 Publish ad entitled Kisskisspop 100% Real Photo.

 

 

Choice 9Asian girl Nurunude?

 

 

In violation of 18 U.S.C. 1952(a)(3)(A) and 

-47..

 

 

 

 






 

Case Document 13 Filed 04/06/18 Page 59 of 72

COUNT 52
(Conspiracy To Commit Money Laundering)
164. The factual allegations in Paragraphs 1-?163 are incorporated by reference

and re-alleged as though fully set forth herein.

 

165. Beginning in or around 2004, and continuing through the present, in'the

   
 
 
 
     
 
 

District of Arizona and elsewhere,

_and others known and unknown to the grand jury, knowingly and ntentionally

agreed, confederated, and conspired with each other, and with others known a unknown

 

to the grand jury, to commit the following offenses against the United States:
18 U.S.C. 1956(a)(1)(A)(i) (Promotional Money Laun ering)
b. 18 U.S.C. 1956(a)(1)(B)(i) (ConcealmentMoney Laun ering)
c. 18 U.S.C. 1956(a)(2)(A) (Int?l Promotional Money La
d. 18 U.S.C. 1956(a)(2)(B)(i) (Int?l Concealment Money aundering)
e. 18 U.S.C. 1597 (Transactional Money Laundering)
In Violation of 18 U.S.C. 1956(h).


(Concealment Money Laundering)

dering)

166. The factual allegations in Paragraphs 1~165 are incorporated reference

and re-alleged as though fully set forth herein.
167. On or about the dates set forth below, each instance constituti a separate
count-of this Indictment, in the District of Arizona and elsewhere
_and others known and unknOW? the grand
jury, knowing that the property involved in a ?nancial transaction represented he proceeds
of some form of unlawful activity, conducted and attempted to conduct sue a ?nancial
transaction which in fact involved the proceeds of specified unlawful activity
the transaction was designed in whole and in part to conceal and disguise th nature, the

location, the source, the ownership, and the control of the proceeds of speci?ed

~48-

 

 

h?l




Case Document 13 Filed 04/06/18 Page'60 of7

unlawful activity, as follows:

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

Properties (X621 1)

gm 1% Description
53. May 18,2016 $1,476,505.00 Website Technologies (X2008) to Cereus
Properties (X6211)
54. May 18, 2016 $264,438.00 Website Technologies (X2008) to Cereus
Properties (X621 1)
55. May 31, 2016 $3,171,675.80 Website Technologies (X2008) to Cereus
Properties (X6211)
56. May 31, 2016 $432,961.87 Website Technologies (X2008) to Cereus
Properties (X6211)
57. June 20, 2016 $842,878.00 Website Technologies (X2008) to Cereus
Properties (X6211) 
58. June 30, 2016 $3,076,147.75 Website Technologies (X2008) to Cereus
Properties (X6211)
59. July 27, 2016 $3,252,681.62 Website Technologies (X2008) to Cereus
Properties (X6211)
60. July 27, 2016 $438,818.86 Website Technologies (X2008) to Cereus
I Properties (X6211)
61. Aug. 16, 2016 $804,250.00 Website Technologies (X2008) to Cereus
Properties (X6211)
62. Aug. 31, 2016 $3,171,264.42 Website Technologies (X2008) to Cereus

 

 

In Violation of 18 U.S.C. 

-49-

 

 

 

 






  
 

 

Case Document 13 Filed 04/06/18 Page 61 of 7

COUNTS 63-68

(International Promotional Money Laundering)

168. The factual allegations in Paragraphs 1-167 are incorporated by reference -

and re?alleged as though fully set forth herein.

169. On or about the dates set forth below, each instance constituting a separate

count of this Indictment, in the District of Arizona and elsewhere,-

 

and others known and unknown to the grand

jury, transported, transmitted, and transferred, and attempted to transport, transmit, and

transfer, a monetary instrument and funds from a place in the United States to

and through--

a place outside the United States, and to a place in the United States from and through a

place outside the United States, with the intent to promote the carrying on

unlawful activity, as follows:

of speci?ed

 

 

 

 

 

 

 

 

 

 

 

QM Amount Description
63-. Mar. 4, 2014 $6,450.00 US. Bank (X1165) to SE. (web developer
in India)
64. Aug. 5, 2016 $5,005,732.86 Ad Tech B.V. (Netherlands) to Cereus
7 Properties (x6211)
65. Sept, 22, 2016 $2,916,955.00 Ad Tech B.V. (Netherlands) to Cereus
Properties (x6211)
66. Oct. 3,2016 $354,050.84 Ad Tech B.V. (Netherlands) to Cereus
Properties (x6211) I
67. Nov. 2, 2016 $2,726,170.00 Ad Tech B.V. (Netherlands) to Cereus
Properties (x6211)
68. Nov. 15,2016 $351,403.54 Ad Tech B.V. (Netherlands) to Cereus
I Properties (X621 1)

 

 

In violation'of 18 U.S.C. 1956(a)(2)(A).

-50-

 

 

 

 00 ~41 43 




Case Document 13 Filed 04/06/18 Page 62 of 72

(Transactional Money Laundering)



170. The factual allegations in Paragraphs 1?169 are incorporated lby reference

and re~alleged as though fully set forth herein.

171.

On or about the dates set forth below, each instance constituting a separate

count of this Indictment, in the United States and in the District of Arizona and elsewhere,

the speci?ed defendant, and others known and unknown to the grand jury, knowingly

engaged and attempted to engage in a monetary transaction in criminally derived property

of a value greater than $10,000 and is derived from speci?ed unlawful activity, as follows:

 

 

 

 

Defendant Amount Description I
69. LACEY, Aug. 21, $30,000.00 Bank of America (x1793) to
2013 Stewart Title (partial payment
for Sedona property)
70. LACEY, Sept. 13, $62,491.47 BMO Harris to Stewart Title
- 72013 (partial payment for Sedona

property)

 

 

 

 

 

 

$3 00,000.00

$200,000.00
$1,000,000.00

$250,000.00
$50,000.00

-51-

 

 

 

 

 

 

 

p?L



IV




 

Document 13 Filed 04/06/18 Page 63 of 2

$300,000.00

 

$200,000.00

$133,045.00

$101,974.00

$1,507.944.00

 

x6211) to

Mar. 1,2016 - $1,692,020.00 Cereus Properties

Bank of America (x 554)

  

      
  
   

 

 
  
 

 
    

83. LACEY, June 27,2016 $397,9500.00 Arizona Bank Trust (x1793)

t0 Fidelity Title (partial payment

 

for San Francisco property)

 

84. LACEY, July 20, 2016 $12,859,152.57 Arizona Bank Trust (X1793)
to Fidelity Title (partial payment

 

 

 

 

 

 

 

for San Francisco property)

 

86. LACEY, Aug. 2, 2016 $16,243.00 Cereus Properties [x6211) to
Wells Fargo (x0495)

 

-52-

 

 

 

 ix) Ixb-d 

Case Document 13 Filed 04/06/18 Page 64 of 2

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

In Violation of 18 U.S.C. 1957.



 

 

88. LACEY, I Oct. 6, 2016 $268,016.00 Cereus Properties (x6211) to
. Arizona Bank Trust (X1967)

89. LACEY, Oct. 6, 2016 $268,016.00 Cereus Properties (x6211) to
Arizona Bank Trust (x1972)

90. LACEY, Oct. 6, 2016 $268,016.00 Cerens Properties (x6211) to
- Arizona Bank Trust (x1986)

91. LACEY, Oct. 6, 2016 $268,016.00 Cereus Properties (X6211) to
Arizona Bank Trust (X1991)

92. LACEY, Oct. 6, 2016 $268,016.00 Cereus Properties (x6211) to
Arizona Bank Trust (x2014)

 

 

 

 

 



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Case Document 13 Filed 04/06/18 Page 65 of 7

FORFEITURE ALLEGATION ONE
[18 U.S.C. 98l(a)(1)(C) and 28 U.S.C. 2461(0)]

2

1. Pursuant to Rule 32.2 of the Federal Rules of Criminal Procedure, notice is

hereby given that the United States will seek forfeiture as part of any sentence

pursuant to

Title 18, United States Code, Section 981(a)(1)(C) and Title 28, United States Code,

Section 2461(0), in the event of any defendant?s conviction under Counts 1 through 51 of

this Indictment. Each defendant so convicted shall forfeit to the United States the

following:
a. - All right, title, and interest in any and all property, real
constituting, or derived from, any proceeds obtained, directly or indirectly, a

the offense. Such property includes, but is not limited to, the real property 1:

 

following addresses:

or personal,
LS a result of

)cated at the

 

Such property also includes, but is not limited to, funds held in the fell

accounts:

 

-54_

owing bank

 

 

 






 

Case Document 13 Filed 04/06/18 Page 66 of 2

Such property further includes, but is not limited to, the following domain 1131

i.
ii.


iv.

 

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1168 I

 

 

 

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Case Document 13 Filed 04/06/18 Page 67 of7

vi.
vii.


ix.

xi.
xii.

xiv.
xv.
xvi.
xvii.

xix.
xx.
xxi.
xxii.

xxiv. .
xxv.
xxvi.
xxvii.

xxix.




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backpagaes

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backpagehu'
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backpage.pt
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backpage.sk
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bigcity.com
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denverbackpage.com

newyorkbackpage.com

-56?

 

 

 

 





 

Case Document 13 Filed 04/06/18 Page 68 of 72
phoenixbackpagecom
sandiegobackpage.com
seattlebackpagecom
tampabackpage.com
I b. To the extent such property is not available for forfeiture, a sum of

money equal to the total value of the preperty described in subparagraph 

2. Pursuant to Title 21, United States Code, Section 853 as incorporated by

Title 28, United States Code, Section 2461(0), the defendant shall forfeit substitute

property, up to the total value of the property described in the preceding par

agraph if, as

the result of any act or omission of the defendant, the property described in the preceding

paragraph, or any portion thereof: cannot be located upon the exercise of due diligence;

has been transferred, sold to or deposited with a third party; has been p1
the jurisdiction of the court; has been substantially diminished in value; or
commingled with other property that cannot be divided Without dif?culty.
FORFEITURE ALLEGATION TWO
[18 U.S.C. 982(a)(1)]

1. Pursuant to Rule 32.2 of the Federal Rules of Criminal Procedt
hereby given that the United States will seek forfeiture as part of any senten
Title 18, United States Code, Section 982(a)(1), in the event of any defendant=
under Counts 52 through 93 of this Indictment. Each defendant so convicted
to the United States the following: I

a. All right, title, and interest in any and?all property, real

involved in or traceable to any transaction set forth in Counts 52 throng]

aced beyond
has been

1113, notice is
LCC, pursuant
conviction

shall forfeit

or personal,

93 of this

Indictment. Such property includes, but is not limited to, the real property located at the

following addresses:

 

 

 

 

Case Document 13 Filed 04/06/18 Page 69 of 2



Such pro?erty also includes, but is not limited to, funds held in the fol owing bank

l-l
0

accounts:




 






 

i.

ii.

iv.

v.

vi.
Vii.


ix.

xi.
xii.

xiv.
xv.

xvi.

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-59-

Case Document 13 Filed 04/06/18 Page 70 of 2

 

Such property further includes, but is not limited to, the following domain names:

 

 

 




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Case Document 13 Filed 04/06/18

xvii.

xix.
Xx.
xxi.

I xxii.

xxiv.
XXV.
xxvi.
xxvii.

xxix.
m.





.

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backpagens
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bestofbigcity.com
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'newyorkbackpage.com
phoenixbackpage.com
sandiegobackpage.coin
seattlebackpage.com

tampabackpage.com

Page 71 of 72

b. To the extent such property is not available for forfeiture, a sum of

money equal to the total value of such property.

Pursuant to Title 21, United States Code, Section 853 as incorporated by

Title 18, United States Code, Section 982(b), eaCh defendant convicted under Counts 52

through 93 of this Indictment shall forfeit substitute property, if, by any act or omission of

that defendant, the property described in the preceding paragraph, or any portion thereof,

cannot be located upon the exercise of due diligence; has been transferred, sold to, or 

?60?

 

 

 








 

Case Document 13 Filed 04/06/18 Page 72 of 72

deposited with a third party; has been placed beyond the jurisdiction of the court; has been
substantially diminished in value; or has been commingled with other property that cannot

be divided without dif?culty.

 

 

Date: March 28, 2018

ELIZABETH A. STRANGE
First Assistant United States Attorney
District of Arizona

JOHN P. CRONAN
Acting Assistant Attorne General .
Criminal Division, U.S. epartment of Justice

    

 

. 
DOMINIC LANZA
MARGARET PERLMETER
JOHN J. KUCERA
Assistant U.S. Attorneys

REGINALD E. JONES

Senior Trial Attorne

U.S. Department of Ustice, Criminal Division
Child Exploitation and Obscenity Section

 

-51-