Carl Ferrer, CEO of Backpage, was arrested on felony charges of pimping a minor, pimping and conspiracy to commit pimping.
State agents raided the Dallas headquarters of adult classifieds site Backpage and arrested CEO Carl Ferrer on Thursday following allegations that adult and child sex-trafficking victims had been forced into prostitution through escort ads posted on the site.
Ferrer, 55, was arrested on a California warrant after arriving at Houston's Bush Intercontinental airport on a flight from Amsterdam, Texas attorney general Ken Paxton said. In a statement, Paxton said agents from his law enforcement unit participated in a search of Backpage's headquarters and Ferrer's arrest.
"Making money off the backs of innocent human beings by allowing them to be exploited for modern-day slavery is not acceptable in Texas," Paxton, a Republican, said in a statement. "I intend to use every resource my office has to make sure those who profit from the exploitation and trafficking of persons are held accountable to the fullest extent of the law."
California attorney general Kamala Harris said Ferrer was arrested on felony charges of pimping a minor, pimping and conspiracy to commit pimping. He is being held in lieu of $500,000 bond and will face an extradition hearing before he can be returned to California.
The site's controlling shareholders, Michael Lacey and James Larkin, have been charged with conspiracy to commit pimping, Harris said, and warrants have been issued for their arrest. Under California law, felony pimping is defined as making money from prostitutes or soliciting customers for prostitution.
Harris said in a statement that the site's ads for "escort services" essentially make it an online brothel that generates millions of dollars from the illegal sex trade.
"Raking in millions of dollars from the trafficking and exploitation of vulnerable victims is outrageous, despicable and illegal," said Harris, a Democrat who is running for US Senate in next month's election. "Backpage and its executives purposefully and unlawfully designed Backpage to be the world's top online brothel."
Liz McDougall, an attorney representing Backpage, did not respond to a request for comment.
Backpage advertises a wide range of services, but the California arrest warrant alleges that internal business records show that 99% of its revenue came from its adult services section between January 2013 and March 2015. California officials said the site collects fees from users who use coded language and nearly nude photos to offer sex for money.
The site operates in hundreds of cities worldwide, authorities said, including more than 30 in California. It collected $2.5m per month just from California, or more than $51m during the 29 months covered by the internal revenue reports.
Authorities said the state's three-year investigation found many of the ads include victims of sex trafficking, including people younger than 18.
The department said the investigation was prompted in part by the National Center for Missing and Exploited Children, which reported 2,900 instances to California authorities since 2012 when suspected child sex trafficking occurred via Backpage.
State agents posted escort ads online and met with those who posted to confirm that the communications were to arrange for commercial sex.
Backpage has been the subject of recent Senate hearings into its classified ads, which often promote escort services. Last month, the supreme court refused to block a Senate subpoena seeking information on how Backpage screens ads for possible sex trafficking.