Backpage Founder Charged by Feds After Human-Trafficking Investigation
A founder of the New Times tabloid has been charged in Phoenix in the apparent culmination of a federal human-trafficking investigation.
Authorities had spent months probing whether Backpage, the online classified advertising website he co-founded, served as a willing participant in the online sale of sex, including with underage girls.
An attorney for Michael Lacey, Larry Kazan, told The Arizona Republic at the federal courthouse in Phoenix on Friday afternoon that his client had been charged. Kazan said he did not know how many counts Lacey faced because the 93-count indictment was sealed.
The courtroom was closed to the public, and it was not immediately clear what charges are included in the indictment.
On Friday evening, a spokesperson for the Department of Justice said in an email that a judge had ruled the case was still under seal. The Justice Department earlier had said, in a posting on seized Backpage websites, that more information would be released by 3 p.m. Arizona time on Friday.
FBI officials in Phoenix confirmed there had been "law-enforcement activity" at the Sedona-area home of Lacey, one of the co-founders of Backpage.com.
An Arizona Republic reporter also witnessed FBI activity at the Paradise Valley home of Jim Larkin, another Backpage co-founder.
Backpage website seizedBy noon Friday, users started posting on social media screenshots of what appeared to be a federal notice of the seizure of Backpage.
"Backpage.com and affiliated websites have been seized," the headline of the notice read.
The notice said the seizure was "part of an enforcement action by the Federal Bureau of Investigation, the U.S. Postal Inspection Service, and the Internal Revenue Service Criminal Investigation Division, with analytical assistance from the Joint Regional Intelligence Center."
The notice was no longer present on the United States version of Backpage.com, though an error message appeared. The Canadian version of Backpage still had the Justice Department notice.
Backpage had shut down its adult section in January 2017, the same day Lacey, Larkin and other Backpage executives testified at a U.S. Senate subcommittee hearing. The men refused to answer questions at that hearing.
The types of ads that had appeared in the adult section of Backpage — with their racy photos -- migrated to the singles section. In recent weeks, in response to a federal law that would have held websites accountable for knowingly facilitating human trafficking, the ads were restricted to a phone number, photos and links to other websites.
Cindy McCain: 'Good day'
Cindy McCain, wife of Sen. John McCain and an outspoken advocate against human trafficking, said she had heard that federal law enforcement officials had raided not only Lacey’s home in the Verde Valley, but every office of Backpage world-wide.
“They’ve confiscated everything and shut the website down,” she said.
McCain called it a “good day” in the fight against human trafficking.
Uber Accused of Espionage, Hacking and Bribery
'Uber used CIA-trained independent contractors to collect foreign intelligence'
Uber spied on and bribed foreign officials, infiltrated private chat groups, stole trade secrets, and abused secret messaging apps and attorney-client privilege to obstruct government investigations, according to a former employee.
Those are just some of the allegations laid out in a 37-page letter written by a lawyer for the former Uber security analyst, Richard Jacobs, on May 5, 2017. A partially redacted version of the letter was made public in a court filing on Friday afternoon as part of an ongoing lawsuit.
Uber is being sued by Waymo, Alphabet’s self-driving car unit that was formerly part of Google, for allegedly stealing trade secrets.
Waymo claims in their suit that a former employee downloaded confidential files from servers, just before going to work for Uber as part of the unit developing its own autonomous vehicle.
The ride-hailing company on Friday said it was aware of the allegations made in the letter.
“While we haven’t substantiated all the claims in this letter–and, importantly, any related to Waymo–our new leadership has made clear that going forward we will compete honestly and fairly, on the strength of our ideas and technology,” an Uber spokesperson said in a statement.
The letter was originally sent to Uber from Jacobs’ lawyer. He had worked as a security analyst for Uber until April of this year when he resigned after being demoted. He says he was demoted for “raising objections to and refusing to participate in unlawful activity.”
An Uber manager, however, testified that he was fired for “performance reasons.”
In a hearing this month, Uber’s deputy general counsel called Jacobs’ demands “extortionate.”
Uber testified the company paid Jacobs a settlement of $4.5 million to not reveal his accusations publicly.
In an unusual move, the Department of Justice alerted the judge overseeing the lawsuit, William Alsup, to the existence of the letter on Nov. 22. By sharing it with Judge Alsup, the DOJ revealed that Uber is the subject of at least one criminal investigation, a court document released this Wednesday confirmed. No details about the investigation have been made public. The Department of Justice didn’t reply to a request for comment.
The letter caused the judge to delay the Waymo trial, which was supposed to begin jury selection Nov. 29. Now jury selection is scheduled to start Jan. 31. A report filed by special master John Cooper on Friday says Uber erred by not sharing the letter earlier. That means it is possible a jury could be told Uber withheld evidence.
“Uber improperly withheld the Jacobs Letter, which exposes the extreme lengths it was willing to go both to get a leg up on competition and hide evidence of bad acts. Separate and apart from the letter, Waymo has accumulated significant evidence that Uber is using stolen Waymo trade secrets, including copying aspects of Waymo’s LiDAR designs down to the micron, and we look forward to trial,” said a Waymo spokesperson in a statement.
Here are some of the allegations detailed in the letter by Richard Jacobs, the former Uber security analyst:
Uber used CIA-trained independent contractors to collect foreign intelligence, Jacobs alleges. He says they conducted “foreign espionage against a sovereign nation” (the country’s name was redacted) and collected metadata from the mobile phones of “opposition figures, politicians and government regulators.” Uber also recruited undercover agents and infiltrated closed social media groups for taxi drivers and drivers working for competing companies, according to Jacobs.
Jacobs writes that his former company bribed foreign government officials, according to the letter. Jacobs claims Uber was targeting officials and gathering information that could ease enforcement activities or help Uber unblock markets.
Uber “implemented a sophisticated strategy to destroy, conceal, cover up, and falsify records or documents,” says the letter. The company allegedly used a combination of disappearing messaging apps, untraceable computers, and excessive use of attorney-client privilege to impede government investigations and avoid discovery obligations, says the letter.
Uber conducted surveillance of executives from a competing company, recording video and audio at private events in locations like hotels, according to the letter. In one example, Uber’s contractors recorded a private conversation between executives as they learned Uber was going to receive $3.4 billion in funding from the Saudi government. Jacobs says the human surveillance was directed by former chief security officer Joe Sullivan on behalf of then CEO Travis Kalanick. Sullivan and Kalanick did not immediately respond to a request for comment.
The letter says Jacobs was aware that the company stole trade secrets “from at least Waymo,” but he walked back that claim during a pre-trial hearing for the Waymo case on Nov. 28 saying, “I don’t stand by that statement.” Jacobs said during the hearing that he only had 20 minutes to review the letter before it was sent. He did not respond to a request for comment.
Uber has installed a new CEO who is attempting to change the company’s culture. On Nov. 29, Uber’s new general counsel Tony West sent an email to the security team saying there was no place at the company for surveillance practices.
“We don’t need to be following folks around in order to gain some competitive advantage. We’re better than that,” he wrote. “To be crystal clear, to the extent anyone is working on any kind of competitive intelligence project that involves the surveillance of individuals, stop it now.”
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