The state Department of Justice is planning to ask Chancery Court, under new legislation, to dissolve the Delaware registration of Backpage.com–once considered the "world's top online brothel."
The News Journal learned of the plan from a Department of Justice letter sent on Friday to the Delaware Coalition for Open Government, a group that believes the state is irresponsible when it allows companies likeBackpage.com to remain in "good standing."
"When you have a company that is facilitating online sex trafficking registered in Delaware, that's an issue,"NickWasileski, Delaware Coalition for Open Government president, told the newspaper earlier this month.
The state justice department confirmed its plan Friday afternoon and said it would act with caution on its approach.
"Because this first filing under the new statute may impact how the courts handle future filings, and because the federal government has already frozen the actual operations, DOJ attorneys will be acting deliberately in preparing and filing the dissolution petition,"said Julia Lawes, a spokeswoman with the justice department.
Backpage.com, which was involved in nearly three-quarters of the 10,000 child-trafficking reports received annually by the National Center for Missing and Exploited Children, was seized by federal law enforcement in April.
Yet, theDelaware-registered limited liability company remained in "good standing."
State officials had said their hands were tied because the online company was meeting all requirements for a business entity outlined in Delaware law. But last month, when Delaware Gov. John Carneysigned legislation that amended the state's code concerning limited liability companies, authorities were given the green light to go after bad actors.
"Fantastic," said Sen. Bryan Townsend, D-Newark, who sponsored the legislation.
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Contained in his legislation was a section that allowed Chancery Court– upon petition from thestate Department of Justice– to cancel the certificate of formation of any domestic limited liability companies for abuse or misuse of its limited liability company powers, privileges or existence.
The former CEO of Backpage.com pleaded guilty in April to a conspiracy charge involving facilitating prostitution and money laundering. Carl Ferrer's plea camenearly a week afterthe U.S. Department of Justice seizedthe controversial classified site.
Ferrer, 57, of Frisco, Texas, who is also a co-founder of the website, could spend up to five years in prison or pay a maximum fine of $250,000 at his sentencing hearing scheduled for early next year, according to the plea agreement, which requires him to cooperate with the government in shutting down the site.
The announcement of Ferrer's plea came three days after the government unsealed a sweepingfederal indictmentagainst Ferrer's former co-workers, the Arizona Republic reported. In that indictment, Backpage co-founders Michael Lacey and James Larkin, as well as five other executives, faced 93 charges involving facilitating prostitution through the Backpage site and money laundering.
"In terms of Backpage, I don't think anyone should believe that that kind of activity should be lawful or permitted," Townsend said. "So I'm very happy to hear that the Delaware Department of Justice is taking every stepthey can to participate in putting a stop to that activity."
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In January, a multi-agency law enforcement operation in Delaware namedBackpageas the primary mode of communication for initiating and arranging sexual encounters during a two-day crackdown on prostitution across New Castle County that produced more than 40 arrests.
Eight of the 11 men charged with patronizing a prostitute were from Delaware.
Last fall, a New Castle County resident, who advertised on the transsexual escort section ofBackpage, was indicted on charges of attempted extortion and stalking.
In May 2017, Delaware State Police, FBI Wilmington office and the Delaware Department of Justice arrested five people in Dover and Smyrna in connection with prostituting two youth, ages 16 and 17, onBackpage.
And in the summer of 2013, two Delaware men charged with operating prostitution rings out of multiple motels in Sussex Countyposted ads onBackpageto negotiate prices with potential clients, police said at the time.
YolandaSchlabach, who as founder of Greenwood-based nonprofit Zoë Ministrieshas spent nearly a decade trying to bring attention to the stigma of prostitution and sex trafficking of minors in Delaware, called the move by the state Department of Justice good news.
"I'm encouraged by the intention of the dissolvingof Backpage as an LLC in the state of Delaware,"Schlabach said in a statement. "It sends a message that traffickingis not welcomed in Delaware and it is a great step in the right direction."
Contact Esteban Parra at (302) 324-2299, eparra@delawareonline.com or Twitter @eparra3.
