Backpage Classified Ads Website's Use Of Bitcoin Might Be The Final Nail In The Coffin For Its Lawyers

    The Backpage Saga Continues

    A recent article by Breaker Mag discussed the Backpage Saga and identified that it may result in sanctions against the website’s attorneys. Here is a summary of the interesting read.

    Village Voice Media, which was then called New Times Media, originally launched Backpage in 2004 as a digitized classified section. The adult services section was suspended in 2017 when it was suspected that sex traffickers used the site to sell nonconsenting adults and minors. There are entire reports on the issue.

    Once the adult section was shut down, a debate arose. Advocates for the section argued that without the section, sex workers would be in peril because they would be forced to meet clients on the street, rather than from behind a computer. Maxine Doogan of the Erotic Service Provider Legal, Educational and Research Project shared with the Guardian in 2017 “There’s no research that says removing advertising sites reduces trafficking.”

    Tom Dart of the Cook County Sheriff’s Department takes the opposite position. Several years ago, he requested that credit card companies such as Mastercard, Visa, and American Express stop allowing cardholders to use their services for posting in the adult advertisement section on Backpage. According to a Huffington Post article, the new payment limitations were implemented and they were successful. Further, the article stated that with credit card companies ceasing to process payments for Backpage, anyone who wants to use the adult services section will need to use cryptocurrency bitcoin to pay.

    It seems that this did not put an end to the issues. In April 2019, James Larkin and Michael Lacy and a number of the site’s former employees were indicted for money laundering and facilitating prostitution. The indictment alleges that they wired funds to foreign accounts and traded the funds in for various cryptocurrencies. Carl Ferrer, the company’s CEO pleaded guilty last year.

    Backpage then sued Dart and the Cook County Sheriff’s office for their request to credit card companies, alleging that it was an infringement of their first amendment rights. A court dismissed the lawsuit last year. According to an article by the Cook County Record, Dart had filed a request to order Backpage to pay the sheriff’s office $250,000, “as a partial offset of fees and costs incurred by the Sheriff in responding to Backpage’s misrepresentations.”

    The court granted Dart’s motion. Dart had also requested that Backpage’s lawyer’s be sanctioned, asserting that they had either knew or should have known that Backpage misled the court about the case. The court declined to sanction the lawyers, finding, in part:

    “The premise of the Sheriff’s motion for sanctions against Backpage’s counsel is essentially that counsel failed to discover the transgressions that Backpage and Ferrer admitted to when they pled guilty.”

    Even accepting arguendo that there was a reason to doubt representations that Ferrer and other Backpage officials made to them, the Sheriff’s motion falls short in documenting any instance in which counsel (as distinguished from Backpage) made or facilitated a specific representation of the fact that was known to be untrue when it was made.

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