Author Lawrence G. Walters, Esq.
Part I – Setting the Stage
The recent guilty plea by Escorts.com has ignited interest in the legal issues surrounding the operation of an online escort site. In this two-part blog post, the author will examine real-world examples of the government’s recent resurgence in its crusade against escort advertising directories, followed by an overview of pertinent legal concerns applicable to this business model.
In recent decades, law enforcement has started focusing its attention on the common advertising venues for prostitution – escort agencies, massage parlors, etc. Some agencies have gone so far as to threaten local phone book publishers with racketeering charges for publishing ads for escort agencies in their yellow pages. Actual racketeering charges were filed against an alternative weekly newspaper in the Orlando, Florida, area based on its publication of escort ads, but the charges were later dismissed. Law enforcement continues its witch hunt-like pursuit of the escort industry under the flawed theory that forcing escorts “underground” will eventually lead to the cessation of prostitution, itself. Admittedly, law enforcement’s efforts had successfully hampered certain commercial outlets for the escort industry; that is until the advent of the Internet.
Like many things involving the so-called ‘business of sex,’ operating an adult-themed website is not exactly easy these days. Between maintaining compliance with relevant laws, less disposable income by consumers, and the impact of piracy, the adult website industry has suffered its share of challenges recently. But those challenges have been magnified for the online escort directory business model, given law enforcement’s renewed interest in finding a scapegoat to blame for so-called “human trafficking.” As a result, legitimate escort websites have their work cut out for them. Substantial concern has arisen in this arena given the recent forfeiture of Escorts.com to the Department of Justice, and the resulting plea deal whereby the operating companies agreed to forfeit millions of dollars in advertising proceeds, and admit to federal money laundering offenses premised on their online escort advertising activity.
Given that some escorts have been known to cross the line into illegal activity a time or two, operators of online escort websites must be well-versed in several areas of criminal law along with the important constitutional protections afforded to commercial speech. The line between prostitution-related offenses and protected speech can often be ‘dim and uncertain’ as is the case with many other legal issues that adult industry participants are forced to confront on a daily basis. Although prostitution related offenses are the purported basis for most criminal liability surrounding the escort business model, the proliferation of the Internet has caused both law enforcement and escort site operators to consider various ‘accomplice liability’ offenses like conspiracy, solicitation and “aiding and abetting,” when evaluating the legality of a given escort advertising business model. The same laws used to prosecute the person who answers the phone at an ‘out-call’ service may be used in the attempt to impose criminal liability on Internet-based escort directory providers. In the end, much depends on whether the alleged accomplice had knowledge (whether actual or constructive) of any illegal activity by the escort(s). An online classified ad space provider would have no traditional legal obligation to second guess the legality of any advertised services, so long as the services themselves were not inherently illegal. Thus, an ad for unlicensed, automatic weapons may be problematic, however escort activity is not inherently illegal, and is, instead, often recognized and even licensed by many local governments. Online escort directories, at least in theory, should have no reason to question whether a particular advertiser was running an illegal ‘side business’ in addition to her presumptively-legal escort companionship services. However, law enforcement tends to see it differently, and often assume that minors are being exploited through the targeted online escort site, in addition to traditional adult prostitution concerns
Thus, in recent years, in yet another misguided attempt to “save the children,” law enforcement has taken to attacking tangential associates of the escort service business model; the online advertising forums. The Internet enabled countless alternative venues for escort advertising, allowing escorts to take control of their businesses – often eliminating dangerous ‘middlemen.’ But this new business model generated new legal concerns – both for the escort and the advertising service provider. The scope of escort site operation can range from ‘hands on’ services such as scheduling meetings and taking payment, to more detached services such as date reviews, or the simple sale of advertising space to escorts or agencies. It is this last category, mere advertising, where the legal issues get complex. While the sale of advertising space for legal activities should remain protected by the First Amendment under the ‘commercial speech’ doctrine, concerns can develop when the advertising venue gains some level of knowledge of illegal activity – whether actual or intended – undertaken by the escort. This knowledge could come from a variety of sources, including arrest records, anonymous complaints, escort reviews, media reports, or even the escort herself, in the form of proposed or published advertisements. The difficult legal issues generated by these distinct sources of potential knowledge will be addressed in Part II of this post.
In recent years, state and federal authorities have relentlessly pursued a select few online escort venues, namely; Craigslist.org, Escorts.com and BackPage.com. In August of 2010, dozens of state Attorneys General publicly declared a quasi-war on escort advertising starting with a demand letter to Craigslist insisting that the site’s entire adult personals category be removed. For fear of criminal prosecution, Craigslist complied and implemented a new thorough screening process for the revised “adult” section of the site. Undeterred by the site’s attempt at compliance, South Carolina’s Attorney General, Henry McMaster, continued his public threats of criminal prosecution. After several months in and out of court, Craigslist shifted gears and completely abandoned its U.S. based erotic services category and ultimately withdrew its efforts to reinvigorate its censorship claims against the government.
Undoubtedly witnessing the successful results of their Craigslist bullying, the AG’s then set their sights on Backpage.com, via another demand letter calling on the site to terminate its online advertising of “adult services” under the threat of criminal charges. Conceding to a degree, Backpage unveiled new security measures for its adult personal ads and subsequently called on “friends in the industry” (incidentally, directly naming over two dozen “fellow” websites involved in escort services) to form a “National Task Force” against misuse of online escort advertising. Within weeks of Backpage’s roguish actions, several of the identified sites were staring down the barrel of their own state or federal investigations; none more publicized than the unexpected FBI raid on the corporate offices of Escorts.com. After more than six months of industry speculation on the issue and virtual silence from the company, on June 21, 2011, Escorts.com quietly shut down its website. The explanation for the closure came recently with the filing of a corporate guilty plea and forfeiture of the domain name along with substantial amounts of cash.
While the campaign against Backpage.com had slowly faded from the headlines, a few months ago, in July of 2011, the case took on new life, as Seattle Mayor Mike McGinn, labeling Backpage as a “well-known accelerant of underage sex trafficking,” ordered all city departments to terminate any active advertising relationship with the Seattle Weekly (a subsidiary of Village Voice Media, the publisher of Backpage.com). Most likely a knee-jerk reaction to the letter issued by the National Organization of Women demanding his support in rallying against Village Voice Media, McGinn’s advertising boycott sent ripples through the online escort industry; the effects of which are still being felt today. Just a few weeks later, in an overly public display reminiscent of that waged against Craigslist, forty-six state AG’s, acting on behalf of the National Association of Attorneys General, sent a letter to Backpage.com accusing the site of knowingly profiting from ads related to prostitution and failing to take the security precautions it once promised to implement. Containing a myriad of demands, the letter’s inquiries into Backpage’s business practices range from “describing in detail” what the site understands to constitute “illegal activity” to requesting specific advertisement statistics and company policy documents. Responding to the letter, Village Voice Media emphatically reiterated that there is “no gap between our mutual goal of eradicating the scourge of child trafficking as quickly and effectively as possible.” Citing examples like constant cooperation with police investigators and the successful conclusion of an ad-based sting operation, Village Voice Media maintained that Backpage.com is continually doing everything in its power to prevent criminal activity on its site. Apparently, cooperating with law enforcement is no longer good enough.
The Backpage case was quickly overshadowed by the above-referenced guilty plea by the corporate operators of Escorts.com. National A-1 Advertising and R.S. Duffy, Inc., the parent companies of Escorts.com since 2007, plead guilty to money laundering and criminal forfeiture charges arising from actions that allegedly “facilitated interstate prostitution activities.” According to U.S. Attorney Peter Smith, prostitutes and escort agencies paid to advertise on the site, while customers were charged subscription fees to view such advertisements. The revenue generated by the advertisements and subscription fees constituted the alleged proceeds of “violations of federal laws prohibiting interstate travel in aid of racketeering enterprises, specifically prostitution, and aiding and abetting such travel.” Upon the U.S. District Court’s approval of the settlement agreement, the companies agreed to serve a probation term of 18 months, pay a $1.5 million in fines, and forfeit the domain name www.Escorts.com, along with $4.9 million in cash derived from the alleged unlawful activities. Notably, although the settlement bans the government from bringing additional criminal charges against the companies and their other related business ventures (e.g. – Hotmovies.com and PrimeTel Communications), the agreement does not prohibit the IRS from pursuing any tax-related criminal charges arising from the money laundering. And although prosecutors have reserved the right to criminally pursue individuals associated with both companies, there is no indication that the government intends to pursue such an option. Despite all the ambiguities surrounding the legal fate of online escort directories, one thing is for sure, the pressure from law enforcement not only remains on these online media outlets but is apparently increasing. Legal compliance has never been more important and preventative maintenance is the key. Part II of this blog post will provide an overview of the current issues facing escort websites in light of the current legal environment, and preemptive measures for escort directories that could make all the difference should future litigation arise.
 Escorts participate in a lawful business per local licensing laws specifically drafted to govern escorting activities, for example, various city and county ordinances across the United States enacted specifically for the escorting business model. See Los Angeles Cty. Code, Ch. 7.38 (Escort Bureaus); Las Vegas Code of Ordinances, Ch. 6.36 (Escort Bureaus & Personnel); Dallas Cty. Code of Ordinances, Sec. 10-111 (License for a Sexually Oriented Business); New Orleans Code of Ordinances, Ch. 30, Art. VII (Escort Services); Atlanta Code of Ordinances, Ch. 30, Art. VIII, Div. 2 (Escort Permit); Charlotte Code of Ordinances, Sec. 6-303 (Escort & Dating Service Permit).
 While escorts are referred to throughout this article in the feminine gender, the author recognizes that escort activity crosses gender lines, and is engaged in by males, females, and trans-gendered individuals.
 The author is not suggesting that the post directly caused these investigations, but the timing is at a minimum, suspicious.