Rentboy CEO Jeffrey Hurant indicted -- promoting prostitution & money laundering

[+ quoththeraven]

If I were a juror, I'd have a hard time buying this. The employee who said that Asian escorts on RB look young presumably knew that Asians look young for their age. After all, RB approved ads one-by-one from escorts across the age spectrum.

 

As for the peculiarities of IDs and birth dates in each country: Porn production companies are responsible for understanding the vagaries of IDs and birth dates in each of the markets in which they operate or recruit talent. The same is likely true for RB.

 

The point is we know nothing more than what is quoted, which could have been taken out of context. We don't know if there was a reason or not and what that might be. I was throwing out possibilities.

 

Also, I would not necessarily assume knowledge of the ins and outs of the culture of every country where an advertiser was based. That two of the other defendants are Asian (not sure about Eli Lewis, but Soto-Decker is Filipino) may suggest some knowledge, but once again, it would be country or culture specific.

[+ stevenkesslar]

This point simply reinforces what I have already said, and it's what comes to mind when I read the thoughtful posts above.

 

I can't think of this as a battle between good and evil or right and wrong. I'm a Catholic Religion major who gave up Catholicism long ago because the Catholic church discriminates against Gays like me, even as many priests, including my priest clients and my priest fuck buddies, are practicing Gays. I'm a Wellstone disciple who is a male escort who is virulently anti-trafficking and has very ambiguous feelings about legalizing prostitution. Nothing and nobody is perfect, but there are laws, and if you break them, expect consequences. So maybe it's compartmentalization or rationalization, but I'm glad I don't have to be in the jury on this one. What I can get my mind around is defending a set of standards and freedoms that seem fair and reasonable and decent and humane, and I feel comfortable putting my money and mouth behind that. At the core of that is a defense of everything escorting has meant to me. I am ashamed of nothing. I am proud of who I am. Other than that, I'm comfortable letting the chips fall where they may in the hope that everybody - including me and us - learns something from this. That's what I feel me, and many of us, can add at this moment.

 

We're not alone. The fundraising is heating up again, and my guess is when this hits the media and landmark moments, it will heat up more.

[+ quoththeraven]

This Reason analysis of the indictment (with a clearer version) is helpful, as is this article comparing today's war on trafficking to the war on drugs.

[+ saminseattle]

I think it’s important to be clear about the difference between the facts that the government is alleging and the crimes it is seeking to prove. For example, it is alleging that RB did not strictly comply with its own policies concerning age-verification. That looks bad and is troubling if true, but that does not mean the failure to do so was a crime. It is also alleging that traffickers used the website to traffic their victims. Again, that is troubling, but that does not mean the website owners (as opposed to the traffickers) committed a crime. I’ve tried to read the indictment carefully and from what I can tell, the only crimes that are alleged are:

 

a) promoting prostitution in the 3rd degree in violation of NY Penal Code Section 230.25(2)

b) promoting prostitution in the 4th degree in violation of NY Penal Code Section 230.20

c) various derivative crimes—criminal facilitation in 4th degree (helping to commit the crime of prostitution), money laundering (because funds from prostitution are the “proceeds of unlawful activity”), money laundering conspiracy, and violation of the travel act (using a facility in interstate commerce to promote the crime of prostitution).

 

It is noteworthy that the crimes of compelling prostitution (Section 230.33) and sex trafficking (Section 230.34) are not alleged in the indictment, presumably because the government does not have evidence to prove Mr. Hurrant guilty of these crimes. So, while there are some new and disturbing factual allegations in this indictment, it still seems to be fundamentally an equation of prostitution with escorting and attack on the legality of the latter. My concern is that if this prosecution is successful, other website operators or even newspaper owners that provide an advertising platform for escorts would be at risk of arrest, asset seizure, and criminal liability.

[+ quoththeraven]

Something I forgot: What FreshFluff said about porn and IDs and birthdates is true, but it is not relevant to the charges. It would, however, be relevant to charges under the recordkeeping requirements of 18 USC Section 2257, which is the reason Daddy prohibits explicit photos on this site. For more on Section 2257, see:

 

https://en.wikipedia.org/wiki/Child_Protection_and_Obscenity_Enforcement_Act

[+ stevenkesslar]

So, while there are some new and disturbing factual allegations in this indictment, it still seems to be fundamentally an equation of prostitution with escorting and attack on the legality of the latter. My concern is that if this prosecution is successful, other website operators or even newspaper owners that provide an advertising platform for escorts would be at risk of arrest, asset seizure, and criminal liability.

 

Thanks for such a great analysis.

 

One other point it also reminded me of. Not only does the indictment not allege sex trafficking; it also begs the question of how sex traffickers get caught. The scant information in the indictment at least suggests, based on one Rentboy employee email, that Rentboy knew nothing about the trafficking of Hungarian men until after the arrests.

 

Here's 2 more articles about busts of sex traffickers and how websites were involved in them:

 

http://abclocal.go.com/story?section=news/national_world&id=9189157

 

http://www.dailydot.com/crime/myredbook-fbi-prostitution-sting/

 

Both articles make clear that law enforcement can and does use these websites as a tool to identify and stop trafficking. In the case of Redbook, 6 underage teenagers were "rescued" and 13 "pimps" were arrested due to exposure on My Redbook, which was also shut down. In the other article, 105 "young people" were rescued and 150 alleged "pimps" were arrested due to FBI monitoring of Backpage and other websites. The question this raises is how law enforcement could have "saved" the victims and arrested the "pimps" if the websites it used to identify them did not exist?

 

It sounds self serving to say these websites provide a public service by allowing "pimps" to traffick "victims" so law enforcement can then bust them. But the abolitionist view - that if we just abolish the websites, the trafficking will go away - is equally self-serving and totally unrealistic.

[rvwnsd]

On the money laundering aspect of the case: Would any gay publication in Miami that accepted an advertisement from the Hungarian group that trafficked underage boys be in the same trouble from a technical point of view (if they deposited the advertising money in a bank)?

One does not have to deposit money in a bank to constitute money laundering. One can buy gift cards, pay down a credit card and take an advance, send the funds offshore via a money transfer service such as Western Union, buy an asset such as a car or boat and then sell said asset, and myriad other things in an attempt to conceal the origin of funds. The key to money laundering is an attempt to conceal the illegal origin of funds by making them appear to be legitimate.

[+ quoththeraven]

One does not have to deposit money in a bank to constitute money laundering. One can buy gift cards, pay down a credit card and take an advance, send the funds offshore via a money transfer service such as Western Union, buy an asset such as a car or boat and then sell said asset, and myriad other things in an attempt to conceal the origin of funds. The key to money laundering is an attempt to conceal the illegal origin of funds by making them appear to be legitimate.

 

In this case, if the money can be characterized as originating from prostitution (we could have another discussion of whether time=money is enough to insulate escorting from that, but I will refrain, as I think a full discussion of that in public is unwise), what could such a business do with the money that wouldn't be considered money laundering? Even if the owner (who if he is sensible has set it up as an S corp or some other passthrough entity) takes all the profits as dividends rather than reinvesting them, that will be attacked as hiding the source through spending, asset acquisition and bank accounts in the owner's name. It seems to me to be a no-win situation.

[+ saminseattle]

In this case, if the money can be characterized as originating from prostitution...what could such a business do with the money that wouldn't be considered money laundering? Even if the owner (who if he is sensible has set it up as an S corp or some other passthrough entity) takes all the profits as dividends rather than reinvesting them, that will be attacked as hiding the source through spending, asset acquisition and bank accounts in the owner's name. It seems to me to be a no-win situation.

 

A no-win situation…I think that accurately sums it up.

 

Correct me if I’m wrong rvwnsd, but my understanding is that the crime of money laundering includes pretty much any interaction between the financial system and illegal activities. So, for example, if I had a few left over prescription pain killers from an injury and decided to sell them on the street for some cash (not that I would do this of course), and then I deposited the cash into my checking account, I would be engaging in the crime of “money laundering.” And in the process of course, the penalties I would face would be massively increased. (While this is an extreme hypothetical, I know that marijuana-related businesses are very concerned about this kind of thing, even though they are legal under my state’s laws: https://www.washingtonpost.com/blogs/govbeat/wp/2015/04/27/rising-marijuana-sales-leave-pot-shops-flush-with-cash-they-cant-deposit/. )

 

If this is correct, and to the extent that the government is able to say (falsely in my view) that escorting = prostitution, wouldn’t an escort be guilty of money laundering simply for depositing some cash from his business into a bank account?

 

It is interesting how much consternation there is over the problem of the “unbanked” in our society, yet the government insists on criminalizing so much human behavior and then ramping up the penalties for it. It is no wonder we have some of the highest incarceration rates in the world.

[+ quoththeraven]

To follow up on saminseattle's thought, when it comes to laws, particularly criminal law, we definitely prefer sledgehammers over more delicate (and efficacious) tools. We also follow emotions and "conventional wisdom" (which often is wrong and can empirically be proved wrong) rather than the data. And that's assuming there even is data.

 

It may be heresy to say it, but part of the reason is that we live in a democracy where nearly anyone can vote on any basis whatsoever and uninformed opinions often drown out the informed ones. Our cultural bias in favor of anti-elitism and anti-intellectualism serves us badly in that regard.

[rvwnsd]

A no-win situation…I think that accurately sums it up.

 

Correct me if I’m wrong rvwnsd, but my understanding is that the crime of money laundering includes pretty much any interaction between the financial system and illegal activities. So, for example, if I had a few left over prescription pain killers from an injury and decided to sell them on the street for some cash (not that I would do this of course), and then I deposited the cash into my checking account, I would be engaging in the crime of “money laundering.” ...

 

Technically, that is correct. However, you would not need to deposit the funds into your checking account to launder money. If you engaged in a transaction that attempted to conceal the illicit nature of the original transaction (the illegal sale of prescription drugs) you would be laundering money. That could include using the funds to purchase a financial instrument such as: a prepaid Visa/MasterCard/American Express card; a money order; a Western Union transfer; or an asset that could be converted into cash. That said, a transaction amounting to a small dollar amount will not trigger any institution's anti-money laundering controls. Were you to be charged with anything it would be the illegal sale of prescription drugs.

 

Here's another example where a money laundering statute would apply. Let's say a pharmacist owns their own pharmacy and sells prescription drugs to people who present prescriptions. Realizing they can make more profit from selling prescription painkillers to abusers who do not have a prescription, the pharmacist starts selling them that way and records the sales as having occurred as part of their legitimate pharmacy business. They would be guilty of laundering money, as they attempted to conceal the illegally-obtained funds by recording the illegal sales as if they were legal.

 

...

And in the process of course, the penalties I would face would be massively increased. (While this is an extreme hypothetical, I know that marijuana-related businesses are very concerned about this kind of thing, even though they are legal under my state’s laws: https://www.washingtonpost.com/blogs/govbeat/wp/2015/04/27/rising-marijuana-sales-leave-pot-shops-flush-with-cash-they-cant-deposit/. )

...

 

Here's the problem facing marijuana businesses where selling and using has been made legal by state or local law: Federal law still prohibits the sale and use of marijuana. Financial institutions are prohibited from banking marijuana businesses because the proceeds of the sale of marijuana are derived by means that are illegal. Repeal the laws against marijuana and the problem goes away.

 

...If this is correct, and to the extent that the government is able to say (falsely in my view) that escorting = prostitution, wouldn’t an escort be guilty of money laundering simply for depositing some cash from his business into a bank account?...

 

Leaving the bank account out of it, if the escort is not selling sex and is instead selling time he or she is doing nothing illegal. Therefore, taking the proceeds of the transaction and depositing it into the financial system is not money laundering.

 

...

It is interesting how much consternation there is over the problem of the “unbanked” in our society...

 

You are probably sick of hearing me talk about how money laundering and using the services of a financial institution are not necessarily related, but the point you raised, albeit a good one, is not related to anti-money laundering laws. Many "unbanked" people do not have bank accounts because they cannot get them due to a history of overdrafts, debit card abuse, check kiting, and other abuses of bank accounts. Some of the transactions classified as being abusive, such as repeatedly overdrawing a bank account, occur because a person is living paycheck to paycheck. One extra bill or a reduction in hours at a job can lead to a financial disaster. Other "unbanked" people do not have bank accounts out of choice. Some of those folks choose not to use banks out of distrust or due to transaction fees. Still others are "unbanked" because they lack the identification required to open a bank account. I won't open up that particular can of worms.

 

In this case, if the money can be characterized as originating from prostitution (we could have another discussion of whether time=money is enough to insulate escorting from that, but I will refrain, as I think a full discussion of that in public is unwise), what could such a business do with the money that wouldn't be considered money laundering? Even if the owner (who if he is sensible has set it up as an S corp or some other passthrough entity) takes all the profits as dividends rather than reinvesting them, that will be attacked as hiding the source through spending, asset acquisition and bank accounts in the owner's name. It seems to me to be a no-win situation.

 

I won't opine on whether it is a no-win situation, but I will state you hit the nail on the head.

 

What I was attempting to explain in relation to the Rentboy case and probably did not do very well is this: Based on my read of the linked articles earlier in this thread, Rentboy has been accused of accepting money to run ads from human traffickers and people who are underage. They have also been accused of knowingly doing so, despite having a policy against it, and are accused of not having adequate controls in place to prevent themselves from doing so. THAT is how they could be accused of laundering money. Money received in exchange for accepting ads from people who traffic in human beings is money that has been illegally received. Taking that money and depositing it into a bank account, buying a corporate boat, donating it to a charity, or converting it to gift cards is illegal.

 

When I read Steven's quotation of Rentboy's guidelines regarding what to and not to say in ads made me spit out my tea. Those guidelines were stupidly written. They should have stopped at "Rentboy does not accept advertisements that describe the exchange of money for sex because that type of activity is illegal." However, as I stated in the fundraising thread, we shouldn't arrest people because they do stupid things.

[+ saminseattle]

What I was attempting to explain in relation to the Rentboy case and probably did not do very well is this: Based on my read of the linked articles earlier in this thread, Rentboy has been accused of accepting money to run ads from human traffickers and people who are underage. They have also been accused of knowingly doing so, despite having a policy against it, and are accused of not having adequate controls in place to prevent themselves from doing so. THAT is how they could be accused of laundering money.

 

Thank you rvwsd. I appreciate your insights into both the meaning and application of money laundering rules.

 

But regarding your summary of the charges against RB and Mr. Hurant, I have to respectfully disagree. This prosecution is not about minors. It is not about trafficking. These are crimes in the New York Penal Code (Section 230.30 for minors, Section 230.34 for trafficking), but these are not the crimes that the government is alleging Mr. Hurant committed. If you look at the actual counts charged (pages 9-11) in the indictment, you will see that they are only alleging that he violated Sections 230.20 and 230.25, that is, promoting prostitution in the third and fourth degree. (If he knew minors were involved, that would be second degree). Thus, despite some new factual allegations about some questionable comments that were made and age-verification policies that were not strictly enforced, those are not crimes and that is not what this prosecution is about.

 

Incidentally, it appears that all the charges against one of the seven (Mr. Van Sant) have now been dropped. http://www.sdgln.com/news/2016/01/29/one-rentboycom-employee-cleared-all-charges-others-waiting#sthash.AA3QNJJy.dpbs

 

I remain hopeful that with a vigorous defense, this entire ill-conceived prosecution will fall apart. It has happened before:

 

http://www.nytimes.com/2015/09/12/us/politics/us-drops-charges-that-professor-shared-technology-with-china.html

 

http://www.nytimes.com/2015/10/11/world/asia/spying-case-against-us-envoy-is-unraveling-and-following-a-pattern.html?_r=0

 

http://www.nytimes.com/2012/02/24/business/fbi-bribery-case-falls-apart-and-raises-questions.html

[rvwnsd]

Thank you rvwsd. I appreciate your insights into both the meaning and application of money laundering rules.

 

But regarding your summary of the charges against RB and Mr. Hurant, I have to respectfully disagree. This prosecution is not about minors. It is not about trafficking. These are crimes in the New York Penal Code (Section 230.30 for minors, Section 230.34 for trafficking), but these are not the crimes that the government is alleging Mr. Hurant committed. If you look at the actual counts charged (pages 9-11) in the indictment, you will see that they are only alleging that he violated Sections 230.20 and 230.25, that is, promoting prostitution in the third and fourth degree. (If he knew minors were involved, that would be second degree). Thus, despite some new factual allegations about some questionable comments that were made and age-verification policies that were not strictly enforced, those are not crimes and that is not what this prosecution is about.

 

Incidentally, it appears that all the charges against one of the seven (Mr. Van Sant) have now been dropped. http://www.sdgln.com/news/2016/01/29/one-rentboycom-employee-cleared-all-charges-others-waiting#sthash.AA3QNJJy.dpbs

 

I remain hopeful that with a vigorous defense, this entire ill-conceived prosecution will fall apart. It has happened before:

 

http://www.nytimes.com/2015/09/12/us/politics/us-drops-charges-that-professor-shared-technology-with-china.html

 

http://www.nytimes.com/2015/10/11/world/asia/spying-case-against-us-envoy-is-unraveling-and-following-a-pattern.html?_r=0

 

http://www.nytimes.com/2012/02/24/business/fbi-bribery-case-falls-apart-and-raises-questions.html

I was referring to the allegations of not validating the age of advertisers, not the charges that were filed.

 

I've said from the beginning that this is a waste of scarce government resources. It is interesting that the acting US Attorney who brought about these charges did not become the actual US Attorney. Who knows what the new guy will do.

[rvwnsd]

When I read Steven's quotation of Rentboy's guidelines regarding what to and not to say in ads made me spit out my tea. Those guidelines were stupidly written. They should have stopped at "Rentboy does not accept advertisements that describe the exchange of money for sex because that type of activity is illegal." However, as I stated in the fundraising thread, we shouldn't arrest people because they do stupid things.

 

In a different thread, http://www.companyofmen.org/threads/rentmen-com-reviews-no-longer-allowing-text.111330/, the topic of Rentmen rejecting text reviews is being discussed. Someone raised the question about their Terms and Conditions. After reading them ( http://rentmen.com/about/terms/ ) In my opinion, had Rentboy adopted the same type of Ts&Cs as Rentmen and did not run around promoting themselves as "cyberpimp" they probably would have avoided their situation. The US Attorney's descriptions of specific sex acts found in Rentboy ads was less "gay sex, eew" than it was "they accept ads that describe sex acts and quote rates for the performance of said acts."

[+ quoththeraven]

Incidentally, it appears that all the charges against one of the seven (Mr. Van Sant) have now been dropped. http://www.sdgln.com/news/2016/01/29/one-rentboycom-employee-cleared-all-charges-others-waiting#sthash.AA3QNJJy.dpbs

 

I remain hopeful that with a vigorous defense, this entire ill-conceived prosecution will fall apart.

 

This tends to confirm my previous thinking that the other defendants will see the charges dismissed, possibly (most likely?) with an agreement that would clear the way to testifying at trial, whether that takes the form of an immunity deal or an agreement that they didn't commit any prosecutable crime and therefore can't refuse to testify on 5th amendment grounds. (Not sure of the viability of the latter, but hey, it's a possibility.)

 

Just to be clear, the issue is not an agreement to testify or not testify; anyone who is subpoenaed at trial must show up and testify or be subject to warrant, arrest, and jail for contempt of court. (Not that those are especially scary things, but they exist.) The issue is whether the prosecution, or whoever calls them, will be able to elicit any useful testimony over potential invocation of the Fifth Amendment right against self-incrimination. Since it's a constitutional right, courts tend not to challenge such invocations unless they're clearly frivolous.

 

Here, such an invocation would not be frivolous unless there is some type of deal between those arrested and freed and the US Attorney's office and, I would argue if I were their lawyer, the DA as well regarding potential state charges. You can't be forced to incriminate yourself on state charges by testifying in federal court. The right against self-incrimination is one that covers all court proceedings in the US irrespective of where they take place. Thank you, Warren Court, Justice Brennan, and the incorporation of most if not all of the Bill of Rights as applicable to the states via the 14th Amendment!

 

ETA: Also, as for the change in leadership at the US Attorney's office in the EDNY, it was clear (to me, at least) that the acting US Attorney who announced the charges was an interim placeholder. If this ran true to form, she was probably the career employee highest up in management at the time Loretta Lynch left. The new person is someone the Senate has confirmed. What place this prosecution has in his plans is probably not entirely clear to him, either.

 

While I never worked in a US Attorney's office, in my first job I sometimes worked closely with the US Attorney's offices in both the NDNY and SDNY. While of course there are political agendas going on, you'd be surprised at how apolitical most prosecutions are. It's more a matter of overall emphasis.

 

The EDNY clearly has an emphasis on white collar crime, possibly in part left over from the bad old days of Mafia influence. Trafficking/prostitution (often conflated) is also a hot issue these days, not just as the federal level but at the state level in some places. See posts elsewhere on the site about Cook County, Illinois Sheriff Tom Dart's campaign against johns and his equation of sex work with trafficking and the MyRedbook prosecution against a reasonably, though not totally, similar website advertising female escorts that resulted in plea agreements. Before this case, everyone else targeted rolled over.

 

The government is not used to resistance on this point. If anything, I think the thought was that targeting a site that appealed to gay and bisexual men showed that the government was being evenhanded, not discriminatory. On its face, shutting down websites aimed at heterosexual men while not acting on information received on a website aimed at gay and bisexual men looks like favoritism.

[+ quoththeraven]

Not directly related, but rather than try to find the posts about Cook County Sheriff Dart's moral crusade against sex work and his equation of sex work with trafficking, I'm dropping this link to an scholarly article about the phoniness and voyeurism of the anti-trafficking rescue movement here:

 

https://t.co/f5IoTn5Zvy