The sales and marketing director of Backpage.com pleaded guilty Friday to conspiring to facilitate prostitution, acknowledging that he participated in a scheme to give free ads to prostitutes in a bid to draw them away from competitors and win over their future business.
Dan Hyer is the second Backpage.com employee to plead guilty in cases in Arizona in which the site has been accused of ignoring warnings to stop running prostitution ads, some of which involved children. Authorities say the site has brought in $500 million in prostitution-related revenue since its inception in 2004.
Some of the site's operators also are accused of laundering money earned from ad sales after banks raised concerns that they were being used for illegal purposes. In all, six others affiliated with Backpage.com, including founders Michael Lacey and Jim Larkin, still face charges in the case.
Hyer, 49, faces a maximum fine of $250,000 and up to five years in prison for his conviction. As part of the plea, prosecutors will dismiss 50 charges of facilitating prostitution and 17 money laundering charges against Hyer. It's unclear whether the plea deal calls for Hyer to testify against others in the case.
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Hyer said about 10 or 11 years ago his company would copy ads from the adult section of Craigslist and other sites, repost them on Backpage.com and then offer client a free ad, which prosecutors say was offered for a trial period. Hyer also said the ads were sometimes illegal because they contained links to another site that lets customers post reviews of their experiences with prostitutes.
The object of the strategy was to compete with Craigslist and increase Backpage.com's revenues, Hyer said. An indictment filed in the case alleged Backpage.com used the strategy in Nashville and other cities and planned to expand such efforts in Los Angeles and New York.
Asked by U.S. District Judge Steven Logan whether he was agreeing to the plea deal because he believed he was guilty of the conspiracy charge, Hyer responded, "Yes, your honor." Moments before pleading guilty, an emotional Hyer lifted his glasses to wipe his eyes with a tissue.
Backpage.com is a Dutch-owned limited liability corporation. Its principal place of business is in Dallas, and federal officials say it kept its bank accounts and servers in Arizona.
Another employee of the site, CEO Carl Ferrer, has previously pleaded guilty to a separate federal conspiracy case in Arizona and state money laundering charges in California.
In addition, the company pleaded guilty to human trafficking in Texas and in a money laundering conspiracy case in Arizona. Ferrer has agreed to testify against others.
The six remaining defendants in the Arizona case are scheduled for trial in January 2020. They have pleaded not guilty to the charges.
Sentencing for Hyer is scheduled for Nov. 19.