The federal government is attempting to seize a St. Helena property in connection with the government’s takedown of Backpage.com, a classified ads site that was operated by seven people who are accused of facilitating prostitution and money laundering.
James Larkin, one of the site’s two founders, was formally charged by the feds in April. He and his spouse, Margaret Larkin, purchased the St. Helena property as trustees of the Ocotillo Family Trust, according to a county document and a lawsuit filed recently in the U.S. District Court’s Central District of California Western Division.
An attorney for James Larkin did not respond to requests for a comment.
County records show that the St. Helena property mentioned in the lawsuit is located at 493 Zinfandel Lane. It sits on three acres and is worth about $2.8 million, according to county data.
More than $10,000 spent on the St. Helena home in 2016 was tied to multiple violations of federal law related to sex trafficking of children, money laundering, and spending money earned from a crime and conspiracy, according to the lawsuit. The funds were also found to have violated a federal law created in 1952 to break up organized crime by making it illegal to plan to commit crimes via mail, and across state or country lines.
The lawsuit claims the $10,000 spent in 2016 was to buy or maintain the property, which the Larkins had owned since at least 2011, county records show.
“Numerous Backpage ads were used to sell minors for sex and forcibly traffic adult women for sex,” prosecutors wrote in the lawsuit. “Among the pimps and sex traffickers who used Backpage to advertise their victims were many who were later convicted of sex trafficking offenses.”
The feds are attempting to seize millions of dollars Larkin holds in assets and tens of millions of dollars held in his bank accounts. They’re also looking to seize an Arizona property held in his name and a Chicago property held by the Larkins.
Margaret Larkin became the sole trustee of the Ocotillo Family Trust in November and the sole owner of the St. Helena property.
She agreed in April to forfeit the property to the feds if her husband, who was let out on $1 million bail, failed to appear for every court date or comply with the terms of his release, county documents show.
If he shows up at all the hearings and follows all other court orders, Margaret Larkin will get to keep the house, according to county records.
Larkin, who founded Backpage with Michael Lacey, was in charge of the site’s policies and strategic direction. He wielded a lot of control over the site, according to the lawsuit, and received tens of millions of dollars, even after claiming to sell his interest in Backpage in 2015.
Co-founders Larkin and Lacey also started an alternative weekly called the Phoenix New Times. They bought several other papers that were operated through Village Voice Media Holdings, according to the lawsuit. Village Voice Media Holdings publications routinely included prostitution ads dating to the 1980s.
They created Backpage to compete with Craigslist in 2004, according to the lawsuit. The site’s popularity saw a boost after Craigslist banned adult service ads.
The government shut Backpage down in April, but it was previously visited by 75 million to 100 million people per month, according to the lawsuit.
The site raked in tens of millions of dollars annually from adult advertisements between 2004 and 2018, the lawsuit said. Less than 10 percent of all ads on the site were related to adult services, but those ads generated more than 90 percent of Backpage’s earnings.
The site had always earned most of its revenue from illegal activities, and by 2015 major credit card companies refused to process payments to or for Backpage. That’s when operators began pursuing money laundering schemes, according to the lawsuit.
Internal emails obtained by the federal government indicate that Backpage operators were aware that site ads were used to facilitate prostitution, but indicate site officials did not take issue with them, so long as a sex act was not depicted in photos. Deleting adult ads would mean Backpage would no longer be competitive with Craigslist, according to a letter written by a site official included in the lawsuit.
To read the complaint in full, click the PDF link in the sidebar.