Financiers and Sex Trafficking
By NICHOLAS D. KRISTOF, The New York Timeshttp://www.nytimes.com/2012/04/01/opinion/sunday/kristof-financers-and-sex-trafficking.html?_r=1&pagewanted=p
This emporium for girls and women — some under age or forced into
prostitution — is in turn owned by an opaque private company called
Village Voice Media. Until now it has been unclear who the ultimate
owners are.
That mystery is solved. The owners turn out to include private equity financiers, including Goldman Sachs with a 16 percent stake.
Goldman Sachs was mortified when I began inquiring last week about its
stake in America’s leading Web site for prostitution ads. It began
working frantically to unload its shares, and on Friday afternoon it
called to say that it had just signed an agreement to sell its stake to
management.
“We had no influence over operations,” Andrea Raphael, a Goldman Sachs spokeswoman, told me.
Let’s back up for a moment. There’s no doubt that many escort ads on
Backpage are placed by consenting adults. But it’s equally clear that
Backpage plays a major role in the trafficking of minors or women who
are coerced. In one recent case in New York City, prosecutors say that a
15-year-old girl was drugged, tied up, raped and sold to johns through Backpage and other sites.
Backpage has 70 percent of the market for prostitution ads, according to AIM Group, a trade organization.
Village Voice Media makes some effort to screen out ads placed by
traffickers and to alert authorities to abuses, but neither law
enforcement officials nor antitrafficking organizations are much
impressed. As a result, pressure is growing on the company to drop
escort ads.
After my last column on this issue, 19 U.S. senators wrote the company,
asking it to stop abetting traffickers. On Thursday, antitrafficking
campaigners protested outside the Village Voice newspaper (which is
owned by Village Voice Media). A petition on Change.org criticizing the company has gathered 220,000 signatures.
In Washington State, the governor signed a bill into law
on Thursday that could expose Backpage to criminal sanctions if it
advertises under-age girls for sex without verifying their ages.
(There’s some uncertainty about the constitutionality of the law.)
Village Voice Media has been able to resist pressure partly because, as a
private company, it doesn’t disclose its owners. But I’ve obtained
documents that, with some digging, shed light on who’s behind it.
The two biggest owners are Jim Larkin and Michael Lacey, the managers of
the company, and they seem to own about half of the shares. The best
known of the other owners is Goldman Sachs, which invested in the
company in 2000 (before Backpage became a part of Village Voice Media in
a 2006 merger).
A Goldman managing director, Scott L. Lebovitz, sat on the Village Voice
Media board for many years. Goldman says he stepped down in early 2010.
Let’s be clear: this is a tiny investment by a huge company, and I have
no reason to think that Goldman’s top executives knew of its connection
to sex trafficking.
Goldman prides itself on its work on gender: its 10,000 Women initiative does splendid work supporting women in business around the globe. Full disclosure:
Goldman’s foundation was one of about 15 funders of a public television documentary version of a book that my wife and I wrote about the world’s women.
Goldman prides itself on its work on gender: its 10,000 Women initiative does splendid work supporting women in business around the globe. Full disclosure:
Goldman’s foundation was one of about 15 funders of a public television documentary version of a book that my wife and I wrote about the world’s women.
That said, for more than six years Goldman has held a significant stake
in a company notorious for ties to sex trafficking, and it sat on the
company’s board for four of those years. There’s no indication that
Goldman or anyone else ever used its ownership to urge Village Voice
Media to drop escort ads or verify ages. Elizabeth L. McDougall, chief
counsel for Village Voice Media, told me Friday that she was “unaware of
any dissent” from owners.
Several lesser-known financial companies also hold significant stakes in
Village Voice Media, and one person close to the company says that
there are about a dozen owners in all. One is Trimaran, an investment
company in New York. It wouldn’t disclose the size of its stake but told
me that it had “no influence whatsoever” on management and is now
trying to sell its shares.
Two other companies, Alta Communications and Brynwood Partners,
did not respond to my repeated inquiries about ties to Village Voice
Media (Brynwood may be an asset manager rather than an owner). One
thought: If the minority shareholders, Goldman included, worked together
instead of rushing for the exits, they might be able to pressure
Village Voice Media to get out of escort ads.
There are no easy solutions to sex trafficking. I think the most
important single step is for prosecutors to focus more on pimps and
johns. Closing down the leading Web site used by traffickers would
complicate their lives, and after so many years of girls being
trafficked on this site, it’s time to hold owners accountable. The article is reproduced in accordance with Section 107 of title 17 of the Copyright Law of the United States relating to fair-use and is for the purposes of criticism, comment, news reporting, teaching, scholarship, and research.
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