Harris' office now claims to have new evidence that co-founders Carl Ferrer, Michael Lacey, and James Larkin created a network of "multiple corporate entities" to circumvent financial institutions that were wary of Backpage.com's "overtly sexual material." Harris' office also claims the three executives built other websites to help drive "prostitution-related revenue" on Backpage itself.
"By creating an online brothel — a hotbed of illicit and exploitative activity — Carl Ferrer, Michael Lacey, and James Larkin preyed on vulnerable victims, including children, and profited from their exploitation," Harris said in a statement.
As Santa Clara University School of Law professor Eric Goldman told the San Jose Mercury News, the money laundering charges could threaten the entire tech sector because "virtually every online service gets money from illegal activity." Google, for example, paid out a $500 million settlement in 2011 after the Department of Justice accused the company of accepting ads for illegal and counterfeit drugs. While that case didn't involve money laundering charges specifically, it is a good example of how shady ad practices aren't far from actual illegal activity.
On the other hand, the new money laundering charges may not hold any water. In 2013, Attorney General Harris and 47 other state attorneys general acknowledged that the Communications Decency Act left them powerless to prosecute companies like Backpage.com. And, according to Goldman, it is odd that the new charges were only laid out after the years-long case concluded earlier this month. "[Harris] cannot avoid First Amendment protections, federal law or her obligations to follow the law," the defendants' lawyer Jim Grant told the AP, "although her new complaint is a transparent effort to do exactly that."
Ferrer, Lacey, and Larkin are due back in Sacramento County Superior Court on January 11th, while Attorney General Harris will resign her post to take her new position as US Senator for California later that month.