Monday, September 18, 2023
Courthouse News Service
Monday, September 18, 2023 | Back issues
Courthouse News Service Courthouse News Service

‘They were prostitution ads,’ CEO testifies in Backpage trial

Carl Ferrer, former CEO of the now-seized, could remain in the witness box for weeks.

PHOENIX (CN) — The former CEO of the now defunct wasted little time implicating his former colleagues in federal court.

“They were prostitution ads,” Carl Ferrer told 16 jurors Tuesday afternoon. “We wanted (customers) that would respond to prostitutes. The Johns.”

The jurors are tasked with delivering a verdict on five defendants facing a 100-count felony indictment charging them with facilitating prostitution, money laundering and conspiracy charges for their roles as owners and operators of the classified advertising website Backpage

The website, founded by Ferrer along with Michael Lacey and James Larkin, who also founded the alternative weekly Phoenix New Times, operated as a mirror to Craigslist from 2004 to 2018, when the FBI seized the site and the executives’ assets, accusing them of knowingly facilitating prostitution. 

Attorneys for the five defendants each took nearly an hour for opening statements over two trial days to draw distinctions between Backpage’s adult advertisements, which included escorts, body rubs and other sexual services, and prostitution ads. 

Ferrer, who served as sales and marketing director, vice president, president and eventually CEO when he bought the company in 2015, said there’s no distinction. He spent a chunk of his first day on the witness stand describing Backpage’s relationship with the Erotic Review, or “Yelp for prostitution,” as he called it. 

He said the two websites shared links between female escort ads on Backpage and review pages for those same providers, which contained reviews written by customers about the explicit sex acts they offered for money. 

“Did you ever see a review that wasn’t for prostitution?” prosecutor Kevin Rapp asked Ferrer.

“No,” he answered.

Each site also ran banner ads for the other. Backpage paid the Erotic Review $4,000 a month to maintain the relationship, Ferrer said. 

The site made nearly all of its money, which reached around $150 million per year, off of female escort ads — the only ads the website charged money to place, Ferrer testified. Advertisers paid only a few dollars per ad at first, but “as Backpage became more of a monopoly in the prostitution category, prices went up,” he said.

He also described doing business with a man known to him and the defendants as “Dollar Bill,” who frequently ran ads for his Asian massage parlor business on Backpage. 

“If you went to Dollar Bill’s blog, the Psycho Roundup, he talked about his business,” Ferrer said. “Very descriptive of sexual services.”

Defense attorneys anticipated Ferrer’s testimony and shifted the blame to him while maintaining doubt that the ads actually offered prostitution. Defendants constantly relied on Ferrer’s leadership and judgment while running the site, attorneys said, and ultimately followed directions as to what ads to allow. 

David Eisenberg, representing former operations manager Andrew Padilla, called Ferrer a “guiding light” at Backpage. 

Of the 50 ads listed in the indictment as evidence of facilitating prostitution, less than half of them ran before Ferrer took over the company in 2015, according to Bruce Feder, who is representing former executive vice president Scott Spear. Only one of the ads contains a direct offer of a sexual act, in that case, a blowjob, for money, he said.

“The government claims you can tell a prostitution ad just by looking at it,” Feder said. “Wrong!”

He read off past Backpage ads as examples:

“‘One night stand for $100,’ we all understand, could mean a one night stand to have sex,” Feder said. “It could also mean one nightstand next to your bed for $100.

“‘Put it in the hole for $100,’” he continued. “Pretty graphic. Or a billiards parlor is having a contest and the winner gets 100 bucks.”

Feder asked the jury to disregard Ferrer’s testimony, saying he’s only testifying to escape the potentially decades-long prison sentence the defendants are hoping to avoid. He took a plea deal in 2018 when the site was seized. 

“Quite an incentive to lie,” Feder said. “To try to incriminate people that you’ve been telling ‘you’re doing everything right’ for 18 years.”

The defendants are also charged with money laundering, which Ferrer explained stems from 2015, just three months after he bought the site, when major credit card companies stopped allowing their customers to use their cards on Backpage. 

Visa and Mastercard halted business with Backpage under political pressure from Cook County, Illinois, Sheriff Tom Dart.

Ferrer told the jury that Backpage, in response to the development, created shell companies in Europe to route payments through European banks. Doing so kept the credit card companies in the dark and allowed Backpage to stay in business. 

“We set up partners in Europe using five separate holding companies using different web domains to conceal the transactions,” he said. 

Ferrer is expected to remain in the witness box for at least the next few days, and potentially multiple weeks, according to counsel on both sides. He’ll return to the stand Wednesday.

Follow @@JournalistJoeAZ
Categories / Courts, Criminal, Trials

Read the Top 8

Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.