Scranton, Pa

Delaware’s Attorney General Sues Under New Law to Shut Down LLCs Associated with

Posted: December 5, 2018

On November 19, 2018, the Attorney General of Delaware, Matt Denn, filed a complaint with the Court of Chancery to shut down several limited liability companies (“LLCs”) associated with (“Backpage”), an online advertising website notorious for facilitating sex trafficking. Denn is suing under Senate Bill 183, a new provision of the state’s Limited Liability Company Act, which allows the attorney general to seek judicial action to dissolve LLCs that have abused their “powers, privileges or existence.” This lawsuit, Denn v., is the first to utilize this newly created avenue for ensuring that LLCs do not abuse their LLC status in Delaware by acting criminally.

According to the complaint, Denn alleges that Backpage had “abused the powers, privileges, and existence granted to it as a Delaware [LLC]” by actively facilitating sex trafficking on its website. Backpage – and its associated LLCs including Website Technologies, Posting Solutions, and Amstel River Holdings – made hundreds of millions of dollars, 99% of which was from its “adult services” section that advertised women and girls for sex. Additionally, it has been proven that the company was involved in the screening and editing of advertisements selling sexual services posted on their website, in order to suppress the criminal nature of the advertisements.

In April of 2018, however, the federal government seized Backpage and all of its assets and indicted its chief officers with various charges of trafficking, commercial sexual exploitation, and money laundering. Carl Ferrer, the company’s CEO, has plead guilty to several charges, as have the other associated LLCs. Now, Denn asserts that Backpage and its related LLCs should be shut down under this new amendment of Delaware’s LLC Act, which would cancel Backpage and associated LLCs’ certificates of formation and stop them from benefiting from the state’s laws and protections.



All views expressed herein are personal to the author and do not necessarily reflect the views of the Villanova University Charles Widger School of Law or Villanova University.

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