[Senate Report 114-214]
[From the U.S. Government Publishing Office]


						Calendar No. 375

114th Congress }					{ Report
 2d Session    }                  SENATE                { 114-214         
_______________________________________________________________________
 
                          
                    RESOLUTION DIRECTING THE SENATE

                     LEGAL COUNSEL TO BRING A CIVIL

                  ACTION TO ENFORCE A SUBPOENA OF THE

                PERMANENT SUBCOMMITTEE ON INVESTIGATIONS

                               __________

                              R E P O R T

                                 OF THE

                   COMMITTEE ON HOMELAND SECURITY AND

                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                                   ON

                              S. Res. 377

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


               February 29, 2016.--Ordered to be printed
               
               
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                                                      Calendar No. 375


						
114th Congress }				  { Report
                                 SENATE
                                                              
 2d Session    }                                  { 114-214

======================================================================


 RESOLUTION DIRECTING THE SENATE LEGAL COUNSEL TO BRING A CIVIL ACTION 
 TO ENFORCE A SUBPOENA OF THE PERMANENT SUBCOMMITTEE ON INVESTIGATIONS

                                _______
                                

               February 29, 2016.--Ordered to be printed

                                _______
                                

 Mr. Johnson, from the Committee on Homeland Security and Governmental 
                    Affairs, submitted the following

                              R E P O R T

                       [To accompany S. Res. 377]

    The Committee on Homeland Security and Governmental 
Affairs, having considered an original resolution (S. Res. 377) 
directing the Senate Legal Counsel to bring a civil action to 
enforce a subpoena of the Permanent Subcommittee on 
Investigations, reports favorably thereon without amendment and 
recommends that the resolution do pass.



 COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                    RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona                 THOMAS R. CARPER, Delaware
ROB PORTMAN, Ohio                    CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky                  JON TESTER, Montana
JAMES LANKFORD, Oklahoma             TAMMY BALDWIN, Wisconsin
MICHAEL B. ENZI, Wyoming             HEIDI HEITKAMP, North Dakota
KELLY AYOTTE, New Hampshire          CORY A. BOOKER, New Jersey
JONI ERNST, Iowa                     GARY C. PETERS, Michigan
BEN SASSE, Nebraska

                    Keith B. Ashdown, Staff Director
                  Christopher R. Hixon, Chief Counsel
              David N. Brewer, Chief Investigative Counsel
Gabrielle D'Adamo Singer, Deputy Chief Counsel for Governmental Affairs
              Gabrielle A. Batkin, Minority Staff Director
           John P. Kilvington, Minority Deputy Staff Director
               Mary Beth Schultz, Minority Chief Counsel
                     Laura W. Kilbride, Chief Clerk
                                                    

                                CONTENTS

                                                                   Page
  I. Purpose..........................................................1
 II. Background.......................................................2
III. Discussion.......................................................6
 IV. Legislative History.............................................13

                               I. PURPOSE

    Backpage.com, LLC (Backpage) owns and operates the largest 
commercial sex services advertising platform in the United 
States, Backpage.com. Backpage officials have publicly 
acknowledged that criminals use the website for sex 
trafficking, including trafficking of minors.
    On October 1, 2015, as part of an investigation of 
businesses that directly or indirectly facilitate criminal sex 
trafficking, the Permanent Subcommittee on Investigations (the 
Subcommittee)\1\ issued a subpoena duces tecum to Carl Ferrer, 
Chief Executive Officer of Backpage. The subpoena required the 
production of documents concerning: Backpage's policies and 
practices with respect to reviewing, blocking, editing, and 
modifying advertisements; the extent to which Backpage 
cooperates with law enforcement investigations of sex 
trafficking; Backpage's removal of unlawful advertisements in 
its ``adult'' sections; the number of advertisements Backpage 
deletes or blocks; and revenue generated by Backpage's adult 
advertisements. Backpage has not complied with the subpoena. 
Fact-finding in this area will assist Congress in its 
consideration of potential legislation in a number of areas of 
legislative interest, including interstate and international 
human trafficking and the federal law-enforcement policies and 
resources devoted to combatting it.
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    \1\The Permanent Subcommittee on Investigations is a subcommittee 
of the Homeland Security and Governmental Affairs Committee (the 
Committee). Pursuant to 2 U.S.C. Sec. 288d, this report recommending 
adoption of a resolution authorizing the Senate Legal Counsel to bring 
a civil action compelling production must be made by the Homeland 
Security and Governmental Affairs Committee on behalf of the Permanent 
Subcommittee on Investigations.
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    The Senate possesses constitutional and statutory authority 
to require witnesses to provide evidence. A mechanism for 
enforcing those rights is supplied under section 705(c) of the 
Ethics in Government Act of 1978, 2 U.S.C. 288d(c), which 
requires that a proposed resolution to authorize the Senate 
Legal Counsel to bring a civil action to compel Mr. Ferrer to 
comply with certain of the document requests in the 
Subcommittee's subpoena, be accompanied by a report on the 
following subjects:
          (A) the procedure followed by the Subcommittee in 
        issuing the subpoena to Mr. Ferrer;
          (B) the extent to which Mr. Ferrer has complied with 
        the subpoena;
          (C) the objections raised by Mr. Ferrer; and
          (D) the comparative effectiveness of bringing a civil 
        action compared to other remedies.
    To place the Committee's request for civil enforcement of 
its subpoena in proper context, this report first provides the 
background to the Subcommittee's October 1, 2015, subpoena and 
its relevance to the Subcommittee's investigation.

                             II. BACKGROUND

A. Sex Trafficking on the Internet

    Human trafficking is a crime generating billions of dollars 
each year in illegal proceeds, making it more profitable than 
any transnational crime except drug trafficking.\2\ Under 
United States law, human trafficking includes, among other 
things, the unlawful practice of selling, soliciting, or 
advertising the sexual services of minors or of adults who have 
been coerced into participating in commercial sex.\3\ Precise 
empirical data concerning this black-market trade are scarce. 
But, in 2013, social scientists estimated that there were as 
many as 27 million victims of human trafficking worldwide,\4\ 
including 4.5 million people trapped in sexual exploitation.\5\ 
In the United States, over eight in ten suspected incidents of 
human trafficking involve sex trafficking.\6\
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    \2\U.S. Dep't of Homeland Security, Blue Campaign: What is Human 
Trafficking? (Sept. 14, 2015), http://www.dhs.gov/blue-campaign/what-
human-trafficking.
    \3\See 18 U.S.C. Sec. 1591(a); 27 U.S.C. Sec. 7102(10).
    \4\U.S. Dep't of State, Trafficking in Persons Report 2013, at 7 
(June 2013), http://www.state.gov/documents/organization/210737.pdf. 
    \5\Polaris Project, Sex Trafficking, http://www.polarisproject.org/
sex-trafficking. 
    \6\U.S. Dep't of Justice, Bureau of Justice Statistics, 
Characteristics of Suspected Human Trafficking Incidents, 2008-2010, at 
1 (Apr. 2011), http://bjs.ojp.usdoj.gov/content/pub/pdf/cshti0810.pdf.
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    Too often, the victims of sex trafficking are minors. The 
Department of Justice has reported that more than half of sex-
trafficking victims are 17 years old or younger.\7\ In the last 
five years, the National Center for Missing and Exploited 
Children (NCMEC) reported an 846 percent increase in reports of 
suspected child sex--trafficking--an increase the organization 
found to be ``directly correlated to the increased use of the 
Internet to sell children for sex.''\8\ Children who run away 
from home are particularly vulnerable to this crime; ``[i]n 
2014, one in six endangered runaways reported to NCMEC was 
likely a child sex-trafficking victim.''\9\
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    \7\U.S. Dep't of Justice, Office of Juvenile Justice & Delinquency 
Prevention, Literature Review: Commercial Sexual Exploitation of 
Children/Sex Trafficking, at 3 (2014) (citing Bureau of Justice 
Statistics data), http://www.ojjdp.gov/mpg/litreviews/
CSECSexTrafficking.pdf. 
    \8\Testimony of Yiota G. Souras, Senior Vice President & General 
Counsel, National Center for Missing & Exploited Children, before 
Permanent Subcommittee on Investigations, at 2 (Nov. 19, 2015); Br. of 
National Center for Missing & Exploited Children, J.S. v. Village Voice 
Media Holdings, LLC, No. 4492-02-II, at 3 (Wash. Sup. Ct. Sept. 15, 
2014). Congress designated NCMEC to be the ``official national resource 
center and information clearinghouse for missing and exploited 
children.'' 42 U.S.C. Sec. 5773(b)(1)(B). Among its 22 statutorily 
authorized duties, NCMEC assists law enforcement in identifying and 
locating victims of sex trafficking and operates a ``cyber tipline,'' 
which collects reports of Internet-related child sexual exploitation, 
including suspected child sex trafficking. Id. 
Sec. Sec. 5773(b)(1)(P)(3), (b)(1)(V).
    \9\Testimony of Yiota G. Souras, Senior Vice President & General 
Counsel, National Center for Missing & Exploited Children, before 
Permanent Subcommittee on Investigations, at 3 (Nov. 19, 2015).
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    Online advertising has transformed the commercial sex trade 
and in the process has contributed to the explosion of domestic 
sex trafficking.\10\ Sex trafficking previously took place ``on 
the streets, at casinos and truck stops, and in other physical 
locations.''\11\ Now it appears that ``most child sex 
trafficking currently occurs online.''\12\ Sex trafficking has 
thrived on the Internet in part because of the high 
profitability and relatively low risk associated with 
advertising trafficking victims' services online in multiple 
locations.\13\ With the aid of online advertising, traffickers 
can maximize profits, evade law-enforcement detection, and 
maintain control of victims by transporting them quickly within 
and between states.
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    \10\Urban Institute, Estimating the Size and Structure of the 
Underground Commercial Sex Economy in Eight Major US Cities, at 234 
(March 2014) (``The overall sex market has expanded . . . and law 
enforcement detection has been reduced.''), http://www.urban.org/
uploadedpdf/413047-underground-commercialsex-economy.pdf; id. at 237-38 
(``The results presented here corroborate [previous] findings that the 
use of the Internet is not necessarily displacing street-based sex 
work, but is likely helping to expand the underground commercial sex 
market by providing a new venue to solicit sex work.'').
    \11\Backpage.com, LLC v. Dart, No. 15-cv-6340, Doc. 88-4, at 3 
(N.D. Ill. Oct. 6, 2015), rev'd., Backpage.com, LLC v. Dart, No 15-3047 
(7th Cir. Nov. 30, 2015).
    \12\Id. 
    \13\Urban Institute, supra n.15, at 218 (reporting on multiple 
studies concluding Internet-facilitated commercial sex transactions are 
``not as easily detected by law enforcement''); U.S. Dep't of Justice, 
National Strategy for Child Exploitation Prevention and Interdiction: A 
Report to Congress, at 33 (Aug. 2010) (noting the increase in 
profitability of trafficking children with the aid of the Internet and 
explaining how the movement of sex trafficking victims from city to 
city, with the help of online advertisements, makes building criminal 
cases more difficult), http://www.justice.gov/psc/docs/
natstrategyreport.pdf; Michael Latonero, Human Trafficking Online: The 
Role of Social Networking Sites and Online Classifieds, at 13 (Sept. 
2011) (quoting former NCMEC president and CEO Ernie Allen as stating, 
``[o]nline classified ads make it possible to pimp these kids to 
prospective customers with little risk''), https://
technologyandtrafficking.usc.edu/files/2011/09/
HumanTrafficking_FINAL.pdf. 
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B. Commercial Sex Advertising and Backpage.com

    Sex traffickers have made extensive use of websites that 
serve as marketplaces for ordinary commercial sex and escort 
services. These sites may facilitate the sex trade by providing 
an easily accessible forum that matches buyers of sex with 
anonymous traffickers selling minors and adults.
    One such site, Backpage.com, is similar in look and layout 
to the online marketplace Craiglist.com. It displays 
advertisements in sections such as ``community,'' ``buy/sell/
trade,'' ``jobs,'' as well as ``adult.'' Advertisements in the 
``adult'' section typically consist of a headline, a photo or 
photos, video, and a brief description of the services being 
offered. Backpage's classified listings are localized by city 
or region; as of November 2015, Backpage had sites in 431 
cities in the United States and 444 other cities around the 
world.\14\
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    \14\Backpage's predecessor company was an alternative news weekly, 
The New Times, founded in 1970 in Phoenix by James Larkin and Michael 
Lacey. In 2005, New Times Media acquired The Village Voice, based in 
New York, and the new entity, still owned by Mr. Larkin and Mr. Lacey, 
renamed itself Village Voice Media. Richard Siklos, The Village Voice, 
Pushing 50, Prepares to Be Sold to a Chain of Weeklies, The New York 
Times (Oct. 24, 2005), available at http://www.nytimes.com/2005/10/24/
business/the-village-voice-pushing-50-prepares-to-be-sold-to-a-chain-
of-weeklies.html?_r=0. In response to public pressure regarding its 
adult advertisements and the alleged connection to sex trafficking, 
Village Voice Media is reported to have spun off its media holdings 
into Voice Media Group. In the wake of that spinoff, Village Voice 
Media, and its owners Mr. Larkin and Mr. Lacey, retained ownership of 
Backpage. Mallory Russell, Village Voice Management Buyout Leaves 
Backpage.com Behind, Advertising Age (Sept. 24, 2012), available at 
http://adage.com/article/media/village-voice-management-buyout-leaves-
backpage/237371/. 
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    Backpage is a market leader: in 2013, it reportedly netted 
more than 80 percent of all revenue from online commercial sex 
advertising in the United States.\15\ NCMEC has reported that 
of the suspected child trafficking reports it receives from the 
public, 71 percent involve Backpage.\16\ According to the 
Massachusetts Attorney General, ``[t]he vast majority of 
prosecutions for sex trafficking now involve online 
advertising, and most of those advertisements appear on 
Backpage.''\17\ A Federal court in Seattle echoed those 
findings, concluding in 2012 that ``[m]any child prostitutes 
are advertised through online escort advertisements displayed 
on Backpage.com and similar websites.''\18\
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    \15\Advanced Interactive Media Group, Prostitution-ad revenue up 
9.8 percent from year ago (Mar. 22, 2013), http://aimgroup.com/2012/03/
22/prostitution-ad-revenue-up-9-8-percent-from-year-ago/. 
    \16\Testimony of Yiota G. Souras, Senior Vice President & General 
Counsel, National Center for Missing & Exploited Children, before 
Permanent Subcommittee on Investigations, at 3 (Nov. 19, 2015). This 
71% figure does not include reports to the cyber tipline made by 
Backpage itself.
    \17\Br. of Commonwealth of Massachusetts, Doe ex rel. Roe v. 
Backpage.com, LLC et al., No. 14-13870, Dkt. No. 30, at 7 (D. Mass. 
Feb. 20, 2015) (``In Massachusetts, seventy-five percent of the cases 
that the Attorney General has prosecuted under our state human 
trafficking law, plus a number of additional investigations, involve 
advertising on Backpage.'').
    \18\Backpage.com, LLC v. McKenna, 881 F. Supp. 2d 1262, 1267 (W.D. 
Wash. 2012).
---------------------------------------------------------------------------
    The National Association of Attorneys General has sounded 
similar alarms concerning Backpage's facilitation of sex 
trafficking. On August 31, 2011, 45 state attorneys general 
sent a letter in which they described Backpage as a ``hub'' of 
``human trafficking, especially the trafficking of 
minors.''\19\ Pointing to more than 50 cases over the previous 
three years involving individuals trafficking or attempting to 
traffic minors on Backpage, the attorneys general argued that 
Backpage's screening efforts were ``ineffective.''\20\ They 
requested documents from Backpage concerning the company's 
public claims that it screens and removes advertisements linked 
to sex trafficking. Backpage provided no substantive response 
to that request.\21\
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    \19\Letter from the Nat'l Ass'n of Attorneys General to Samuel 
Fifer, Esq., Counsel for Backpage.com, LLC (Aug. 31, 2011), http://
www.ct.gov/ag/lib/ag/press_releases/2011/083111backpageletter.pdf. 
    \20\Id.
    \21\Id.
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C. Victim lawsuits

    Backpage has also faced a number of civil lawsuits brought 
by trafficking victims. In September 2010, Backpage faced its 
first civil lawsuit, brought in the Eastern District of 
Missouri by a minor who was sold for sex and advertised on 
Backpage by her trafficker.\22\ She alleged that Backpage ``had 
a strong suspicion'' that the crimes of facilitating 
prostitution, exploitation of children, and child pornography 
were being committed on its site ``yet was so indifferent that 
it failed to investigate for fear of what it would learn.''\23\ 
She further alleged that Backpage ``had a desire that [the] 
posters would accomplish their nefarious illegal prostitution 
activities so that the posters would return to the website and 
pay for more posting.''\24\ The plaintiff sought a civil remedy 
pursuant to 18 U.S.C. Sec. 2255, which creates a private right 
of action for child victims of sexual exploitation. Backpage 
persuaded the district court to dismiss the case on the ground 
that it was entitled to immunity under Section 230 of the 
Communications Decency Act (CDA),\25\ which shields web 
publishers from civil liability for content to which they do 
not materially contribute.\26\
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    \22\Complaint, M.A. ex rel. P.K. v. Village Voice Media Holdings, 
LLC, No. 10-cv-01740, Dkt. No. 1, para.9 (E.D. Mo. Sept. 16, 2010).
    \23\Id. at para. 12.
    \24\Id.
    \25\47 U.S.C. Sec. 230.
    \26\M.A. ex rel. P.K. v. Village Voice Media Holdings, 809 
F.Supp.2d 1041, 1052, 1058 (E.D. Mo. 2011).
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    Backpage also faces an ongoing civil suit by minor sex-
trafficking victims in Massachusetts.\27\ Unlike the plaintiff 
in the Missouri case, the Massachusetts plaintiffs allege that 
Backpage's platform, categories, and filters actually 
``assist[ed] in the crafting, placement, and promotion of 
illegal advertisements offering plaintiffs for sale.''\28\ But 
again, Backpage prevailed. The district court held that 
Backpage was immune from civil liability under the CDA.\29\ The 
plaintiffs' appeal is pending.
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    \27\Doe ex rel. Roe v. Backpage.com, LLC, 2015 WL 2340771 (D. Mass. 
Oct. 16, 2014).
    \28\Amended Complaint, Doe ex rel. Roe v. Backpage.com, LLC, No. 
14-cv-13870, Dkt. No. 9, para.4 (D. Mass. Nov. 6, 2014).
    \29\See Doe ex rel. Roe, 2015 WL 2340771, at *7-*11.
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    The Supreme Court of Washington State, however, has reached 
a contrary conclusion. That court held, in a suit brought by 
underage sex-trafficking victims, that Backpage would not be 
immune from suit if, as the plaintiffs alleged, Backpage 
``helped develop the content of [the offending] 
advertisements.''\30\ The Washington plaintiffs allege that 
Backpage helped with ad-content creation through its posting 
rules, screening process, and content requirements.\31\ The 
court held these allegations warrant additional factual 
development, explaining that ``[i]t is important to ascertain 
whether in fact Backpage designed its posting rules to induce 
sex trafficking to determine whether Backpage is subject to 
suit under the CDA because `a website helps to develop unlawful 
content, and thus falls within the exception to [CDA immunity], 
if it contributes materially to the alleged illegality of the 
conduct.'''\32\ The Washington case is now entering civil 
discovery.
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    \30\J.S. v. Village Voice Media Holdings, 2015 WL 5164599, at *2 
(Wash. Sup. Ct. Sept. 3, 2015).
    \31\Id.
    \32\Id. at *3.
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                            III. DISCUSSION

A. The procedure followed by the committee in issuing the subpoena to 
        Mr. Ferrer

    Under Rule XXV(k)(1) of the Standing Rules of the Senate, 
the Committee is a duly authorized Senate committee. Under Rule 
7(a) of the Rules of Procedure of the Committee, the 
Subcommittee is a duly authorized subcommittee of the 
Committee. Therefore, under Rule XXVI(1) of the Standing Rules 
of the Senate, both the Committee and the Subcommittee are 
authorized ``to require by subpena [sic] or otherwise the 
attendance of such witnesses.''
    On May 22, 2015, the Subcommittee Chairman and Ranking 
Member notified all Subcommittee members by memorandum that the 
Subcommittee was investigating ``businesses that directly or 
indirectly facilitate criminal sex trafficking conduct, 
including trafficking in minors.''\33\ The investigation was 
authorized by Senate Resolution 73, Section 12(e), 114th 
Congress, which empowers the Subcommittee to investigate ``all 
other aspects of crime'' within the United States that affect 
the ``national health, welfare, and safety,''\34\ and the 
Subcommittee is specifically tasked with examining ``organized 
criminal activity which may operate in or otherwise utilize the 
facilities of interstate or international commerce.''\35\ Human 
trafficking is a Federal crime,\36\ and human trafficking 
offenses are predicates to liability under the Racketeer 
Influenced Corrupt Organizations (RICO) Act.\37\ The 
Subcommittee's authority to investigate crime, its effects on 
public welfare and safety, and how the facilities of interstate 
commerce are used to commit it places this investigation 
squarely within its jurisdiction.\38\
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    \33\Memorandum from Sen. Rob Portman & Sen. Claire McCaskill to 
Members of Subcommittee Re: Notification of Pending Investigations (May 
22, 2015) (on file with Committee staff).
    \34\S. Res. 73 Sec. 12(e)(1)(D), 114th Cong.
    \35\Id. at Sec. 12(e)(1)(C).
    \36\See 18 U.S.C. Sec. Sec. 1581-1592.
    \37\See Pub. L. 108-193, 117 Stat. 2875, 2879, Sec. 5(b); 18 U.S.C. 
Sec. 1961(1).
    \38\The Subcommittee is also authorized to investigate ``the 
efficiency and economy of operations of all branches of the 
Government.'' S. Res. 73 Sec. 12(e)(1)(A). This provision provides an 
additional, independent jurisdictional basis for the present 
investigation. Congress funds an array of government agencies and 
programs that are engaged in anti-trafficking efforts, and has an 
interest in determining whether these programs are operating 
efficiently and effectively.
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    The Subcommittee's investigation has not been limited to 
Backpage. To the contrary, the Subcommittee has been engaged 
since April 2015 in a broad investigation of the problem of 
human trafficking on the Internet. The Subcommittee has 
conducted interviews and briefings with over fifty relevant 
parties, including victims' rights groups, nonprofit 
organizations, technology companies, financial institutions, 
academic researchers, and Federal, state, and local law-
enforcement officials. The Subcommittee has also conducted 
interviews with--and received documents from--several websites 
in the commercial sex advertising industry that are similar to 
Backpage.
    The Subcommittee first contacted Backpage on April 15, 
2015, to request an interview to discuss Backpage's business 
practices. On June 19, 2015, after extensive communication with 
Backpage's outside counsel regarding the specific topics that 
the Subcommittee wished to discuss, the Subcommittee 
interviewed Backpage's General Counsel, Elizabeth McDougall.
    During the interview, Ms. McDougall could not answer 
several critical questions about Backpage's ownership, 
statistics on reporting to law enforcement and to NCMEC, and 
the ``moderation'' procedures Backpage uses to review and 
screen advertisements. After the interview, on June 22, 2015, 
the Subcommittee sent Backpage follow-up questions and requests 
for information.\39\ Despite initially indicating that it would 
do so, Backpage failed to provide answers or documents.\40\
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    \39\Email from Senior Counsel of Subcommittee to Backpage (Jun. 22, 
2015) (on file with Committee staff).
    \40\Email from Backpage to Subcommittee (July 1, 2015) (on file 
with Committee staff).
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    On July 7, 2015, after providing the required notice to the 
Committee Chairman and Ranking Member, the Subcommittee issued 
a duly-authorized subpoena (the July 7 subpoena) to Backpage 
requesting documents related to Backpage's basic corporate 
structure, the steps it takes to review advertisements for 
illegal activity, its interaction with law enforcement, and its 
data retention policies, among other relevant subjects.\41\ The 
subpoena was returnable August 7, 2015. On August 6, Backpage 
informed the Subcommittee by letter that it would not produce 
any documents in response to the subpoena.\42\ It contended 
that the subpoena violated the First Amendment, on the ground 
that Backpage is a publisher of protected speech.
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    \41\Subcommittee Subpoena, Oct. 1, 2015 (on file with Committee 
staff).
    \42\Letter from Backpage to Subcommittee (Aug. 6, 2015) (on file 
with Committee staff).
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    After carefully considering Backpage's position, the 
Subcommittee Chairman and Ranking Member sent a letter to 
Backpage explaining that the First Amendment cases on which 
Backpage relied were inapposite.\43\ The Subcommittee invited 
Backpage to submit further explanation of its position.\44\ 
Despite committing to do so in a September 14, 2015, meeting 
with Subcommittee staff, Backpage never submitted a further 
explanation of its refusal to produce documents pursuant to the 
July 7 subpoena.
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    \43\Letter from Subcommittee to Backpage (Aug. 26, 2015) (on file 
with Committee staff).
    \44\Id.
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    In an attempt to continue its fact-finding, the 
Subcommittee issued subpoenas for the depositions of two 
Backpage employees on August 13, 2015.\45\ The two employees 
retained individual counsel and, invoking their Fifth Amendment 
privilege, declined to answer any questions on the ground that 
their testimony might tend to incriminate them.\46\ In 
addition, Mr. Ferrer declined to be voluntarily interviewed by 
Subcommittee staff.
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    \45\Subcommittee Subpoena to Backpage Employee A, Aug. 13, 2015 (on 
file with Committee staff); Subcommittee Subpoena to Backpage Employee 
B, Aug. 13, 2015 (on file with Committee staff).
    \46\Letter from counsel for Backpage Employee A and Employee B to 
Subcommittee (Sept. 3, 2016) (on file with Committee staff).
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    On October 1, 2015, after providing the required notice to 
the full Committee Chairman and Ranking Member, the 
Subcommittee withdrew its original subpoena and issued a new, 
more targeted subpoena directly to Mr. Ferrer.\47\ This 
subpoena requested, among other items, documents concerning 
Backpage's review of advertisements, commonly referred to 
within the company as ``moderation,'' including information 
related to editing or modifying ads before publishing. The 
subpoena also requested documents concerning metadata, document 
retention, basic corporate information, and revenue derived 
from adult advertisements. The subpoena required Mr. Ferrer to 
produce the documents named in the subpoena schedule by October 
23, 2015, or else to appear personally on that date. The 
Subcommittee later continued Mr. Ferrer's personal appearance 
to November 19, 2015--the date of the Subcommittee's 
hearing.\48\
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    \47\Letter from Subcommittee to Backpage (Oct. 1, 2015) (on file 
with Committee staff): Subcommittee Subpoena, Oct. 1, 2015, (on file 
with Committee staff).
    \48\Letter from Subcommittee to Mr. Ferrer (Oct. 20, 2015) (on file 
with Committee staff).
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B. The extent to which Mr. Ferrer has complied with the subpoena

    On the return date of October 23, 2015, Mr. Ferrer produced 
twenty-one pages of publicly available documents.\49\ The 
company also submitted a letter objecting to the subpoena on 
the grounds that it violated the First Amendment and contained 
document requests that were not pertinent to a proper 
legislative investigation.\50\
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    \49\Submission from Backpage to Subcommittee (Oct. 23, 2015) (on 
file with Committee staff).
    \50\Letter from Backpage to Subcommittee (Oct. 23, 2015) (on file 
with Committee staff).
---------------------------------------------------------------------------
    On November 3, 2015, the Subcommittee overruled Backpage's 
objections and ordered and directed Mr. Ferrer to comply with 
the subpoena by November 12, 2015.\51\ On November 13, 
2015,\52\ Backpage attorneys wrote to the Subcommittee to 
explain that the company maintained its First Amendment and 
pertinence objections to the subpoena, but as a ``gesture of 
good faith,'' it would produce some documents in response to 
certain of the subpoena's eight document requests.\53\ The bulk 
of Backpage's November 13 production consisted of records that 
the company had previously provided to law-enforcement entities 
pursuant to subpoena. Based on the nature of that production, 
however, and the dearth of documents produced in response to 
requests concerning the review of adult advertisements, the 
Subcommittee is confident that Backpage is withholding a 
substantial volume of responsive documents. Indeed, counsel for 
Backpage has acknowledged that the company did not conduct a 
complete search for responsive documents.\54\
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    \51\Subcommittee Ruling, Nov. 3, 2015 (on file with Committee 
staff). In that ruling the Chairman and Ranking Member also continued 
Mr. Ferrer's appearance to November 19, 2015. See supra Part III.C.
    \52\Despite the order to comply with the subpoena by November 12, 
Backpage did not file any response until the following day, November 
13. Backpage neither sought an extension of the deadline nor did it 
furnish any excuse for its tardy submission.
    \53\Letter from Backpage to Subcommittee (Nov. 13, 2015) (on file 
with Committee staff).
    \54\Letter from Backpage to Subcommittee (Nov. 16, 2015) (on file 
with Committee staff).
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    Apart from publicly available documents, Mr. Ferrer 
produced no more than twenty pages of documents responsive to 
the core of the Subcommittee's request--the review and editing 
of adult advertisements--embodied in Requests One, Two, and 
Three. Importantly, Backpage failed to produce any internal 
emails concerning the moderation of ads--the subject of Request 
One (``[a]ny documents concerning Backpage's reviewing, 
blocking, deleting, editing, or modifying advertisements in 
Adult Sections, either by Backpage personnel or by automated 
software processes . . .''). As for Request Two, which 
concerned Backpage's ``Banned Terms List,'' (i.e., terms not 
permitted in adult advertisements), Backpage provided a one-
page list of banned terms, but failed to provide any internal 
documents relating to the creation or modification of the list, 
as required by the subpoena.\55\ Nor did it provide any 
internal emails concerning the blocking or flagging of user 
accounts--the subject of Request Three (``[a]ny documents 
concerning reviewing, verifying, blocking, deleting, disabling, 
or flagging user accounts or user account information, 
including but not limited to the verification of name, age, 
phone number, payment information, email address, photo, and IP 
address.'').
---------------------------------------------------------------------------
    \55\Backpage also produced twenty pages of publicly available 
``error messages'' in response to Request Two.
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    With respect to Request Five, which covers documents 
relating to image hashing, metadata, and data retention,\56\ 
Backpage produced no documents, claiming that it did not 
maintain formal data retention policies and was ``unaware of 
non-privileged documents responsive to the remainder of the 
request[.]'' Backpage failed to articulate the type of 
privilege to which it was referring; it also failed to provide 
a log of privileged items that it was withholding, as the 
subpoena requires.
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    \56\Subcommittee staff has learned that image hashing and the 
collection of metadata are important anti-trafficking tools available 
for reviewing commercial sex advertisements. ``Hashing'' gives photos a 
unique fingerprint that enables one to search for identical photos in 
other places, including on different web pages. Similarly, the 
``metadata'' contained in electronic files is another important law-
enforcement tool. A file's ``metadata'' may include author, date and 
time created, date modified, and file size. Image metadata may also 
include geographic coordinates for location at the time the image was 
created.
---------------------------------------------------------------------------
    The company's response to the rest of the subpoena was 
similarly inadequate, as it produced incomplete information in 
response to Requests Six and Seven relating to advertising 
volume and reporting, and no documents at all in response to 
Request Eight concerning financial information.\57\
---------------------------------------------------------------------------
    \57\By letter dated November 13, 2015, Backpage produced incomplete 
statistics with respect to subparts (a) and (b) of Request Six, and 
failed to address subpart (c) concerning the number of adult 
advertisements directly reported to law enforcement. Instead, Backpage 
provided statistics concerning the company's reporting to the National 
Center for Missing and Exploited Children. As for Request Seven, the 
company produced no statistics in response to subpart (a), and 
incomplete statistics in response to subparts (b) and (c).
---------------------------------------------------------------------------
    While Backpage produced virtually no non-public documents 
concerning moderation, which is the core of the Subcommittee's 
request, it did make a production of law-enforcement related 
documents that are of marginal value to the Subcommittee. That 
production consisted of 16,838 pages of documents, more than 
16,000 of which, or some 96 percent, constituted the entire 
production of Backpage's responses to law-enforcement 
subpoenas. Just one file produced in this category contained 
more than 750 pages of documents--including hundreds of pages 
of ads and photos from 2013 and 2014--responsive to a single 
government subpoena requesting information relevant to one 
Backpage user. Although Backpage explained that it believed 
this material was responsive to Request Four and that the 
company had ``five million'' additional pages of this material 
to produce, Subcommittee staff informed Backpage it had no need 
for that submission. Backpage also produced an additional 350 
pages of emails from law enforcement officials thanking 
Backpage employees for responding to police inquiries.
    Accordingly, Backpage's production cannot properly be 
described as a ``gesture of good faith,'' as the company 
claimed in its November 13 letter. For example, Backpage 
produced eight pages of email correspondence with a third-party 
consultant who voiced concern about potentially underage 
children advertised for sex on Backpage.com. Despite producing 
these emails exchanged with a third party, Backpage failed to 
produce any internal emails about the same or similar 
subjects--that is, the company's efforts to combat the problem 
of human trafficking on its site. As the Subcommittee's 
November 19, 2015, report\58\ demonstrates, many such emails 
have been exchanged between Backpage employees during the time 
period covered by the subpoena. Indeed, by the company's own 
admission,\59\ a significant majority of Backpage employees are 
engaged in the review of adult advertisements; it is therefore 
highly likely that the company has more than twenty internal 
pages relevant to the review of adult advertisements.
---------------------------------------------------------------------------
    \58\Subcommittee Report, Recommendation to Enforce a Subpoena 
Issued to the CEO of Backpage.com, LLC, (Nov. 19, 2015), available at 
http://www.hsgac.senate.gov/subcommittees/investigations/hearings/
human-trafficking-investigation.
    \59\In a June 19, 2015 interview with Backpage General Counsel 
Elizabeth McDougall, she explained that 120 of 180 total employees 
worked in Backpage's ``moderation'' section. It is unclear how many 
employees are still engaged in the review of adult advertisements.
---------------------------------------------------------------------------
    Not only has Backpage failed to produce responsive 
documents, but it has also failed to describe them in a 
privilege log that would enable the Subcommittee to assess 
individualized objections to producing them. A privilege log is 
required by the subpoena's terms, and the failure to produce 
one despite the Subcommittee's repeated requests is further 
evidence of the company's default.\60\ In addition, by 
Backpage's own admission, it did not conduct a ``complete 
search'' of its records for responsive documents, claiming that 
to be required to do so would be ``constitutionally 
inappropriate.''\61\ Indeed, Backpage counsel was unable to 
tell the Subcommittee which data sources or custodian email 
accounts, if any, the company searched for responsive 
documents. By all indications, Backpage produced a self-
selected subset of documents to support a pretense of 
cooperation, and nothing more.
---------------------------------------------------------------------------
    \60\See Subcommittee Subpoena, Oct. 1, 2015 (on file with Committee 
staff); see also Letter from Subcommittee to Backpage (Aug. 26, 2015) 
(on file with Committee staff); Letter from Subcommittee to Backpage 
(Aug. 28, 2015) (on file with Committee staff).
    \61\See Part III.C.
---------------------------------------------------------------------------
    In addition to Mr. Ferrer's failure to produce documents 
responsive to the Subcommittee's subpoena, he also defaulted on 
his obligation to appear personally before the Subcommittee at 
the November 19, 2015, hearing. On November 16, 2015--three 
days before the hearing--Backpage attorneys informed the 
Subcommittee that Mr. Ferrer would decline to answer questions 
based on a First Amendment objection and his Fifth Amendment 
privilege against self-incrimination.\62\ In the same letter, 
Backpage requested that the Subcommittee waive Mr. Ferrer's 
personal appearance. The Subcommittee promptly rejected the 
request.\63\
---------------------------------------------------------------------------
    \62\Letter from Backpage to Subcommittee (Nov. 16, 2015) (on file 
with Committee staff).
    \63\Email from Chief Counsel of Subcommittee to Backpage (Nov. 16, 
2015) (on file with Committee staff).
---------------------------------------------------------------------------
    On November 18, 2015, the day before the hearing, counsel 
for Backpage informed the Subcommittee that Mr. Ferrer was out 
of the country on ``important international business travel'' 
and would therefore not appear.\64\ Mr. Ferrer subsequently 
failed to appear before the Subcommittee at the November 19, 
2015, hearing.
---------------------------------------------------------------------------
    \64\Letter from Backpage to Subcommittee (Nov. 18, 2015) (on file 
with Committee staff).
---------------------------------------------------------------------------

C. Objections to the subpoena

    Throughout the Subcommittee's dealings with Mr. Ferrer and 
Backpage, the company has argued that most of the document 
requests in the subpoena were impermissible under the First 
Amendment. In particular, Backpage objected that ``First 
Amendment tensions'' inherent in requesting information from a 
``publisher'' counseled in favor of reading the Subcommittee's 
authorizing resolution not to encompass the power to issue the 
October 1 subpoena.\65\
---------------------------------------------------------------------------
    \65\Letter from Backpage to Subcommittee (Oct. 23, 2015) (on file 
with Committee staff).
---------------------------------------------------------------------------
    In its objections, Backpage relied principally on cases in 
which courts have invalidated investigative demands for 
information about disfavored political dissenters--for example, 
Alabama seeking the identities of NAACP members in the 
1950s,\66\ or a House committee trying to discover who is 
reading ``books of a particular political 
tendentiousness.''\67\ Although Backpage asserted that several 
items in the subpoena violate the First Amendment, it did not 
attempt to show either (i) that any request for documents 
sought information that infringed recognized First Amendment 
rights; or (ii) that any such request was not supported by an 
adequate legislative interest--as required to sustain a First 
Amendment objection in this context.\68\
---------------------------------------------------------------------------
    \66\NAACP v. Alabama, 357 U.S. 449 (1958)
    \67\United States v. Rumely, 345 U.S. 41, 42 (1953).
    \68\See NAACP, 357 U.S. at 463.
---------------------------------------------------------------------------
    After carefully considering the proffered objections, the 
Chairman and Ranking Member overruled them in a detailed ruling 
dated November 3, 2015.\69\ Unlike the cases cited by Backpage, 
in which investigative demands were used to further the 
official suppression of ideas, the Subcommittee's subpoena 
infringed no First Amendment rights. And unlike the demands for 
membership lists 60 years ago, the October 1 subpoena 
proactively instructed Backpage to redact any personally 
identifying information of its users. Finally, the mere fact 
that Backpage is a publisher of commercial speech does not 
immunize it from legitimate investigations into the 
unprotected, unlawful activity that undisputedly also occurs on 
its facilities.\70\
---------------------------------------------------------------------------
    \69\Subcommittee Ruling, Nov. 3, 2015 (on file with Committee 
staff).
    \70\Cf. Arcara v. Cloud Books, Inc, 478 U.S. 697, 707 (1986) 
(``[T]he First Amendment is not implicated by the enforcement of a 
public health regulation of general application against the physical 
premises in which respondents happen to sell books.'').
---------------------------------------------------------------------------
    The Chairman and Ranking Member also overruled Backpage's 
jurisdictional objection, finding that the investigation fit 
squarely within the Subcommittee's authorizing resolution.\71\ 
As noted above, the Subcommittee is authorized to investigate 
``all other aspects of crime'' within the United States that 
affect the ``national health, welfare, and safety,''\72\ as 
well as ``organized criminal activity which may operate in or 
otherwise utilize the facilities of interstate or international 
commerce.''\73\ Human trafficking is a federal crime.\74\ 
Importantly, Congress has specifically recognized human 
trafficking as an activity of organized crime; the Trafficking 
Victims Protection Reauthorization Act of 2003 declared that 
human trafficking offenses are predicates to liability under 
RICO.\75\ And the Internet, an important facility of interstate 
commerce, has become an increasingly central marketplace for 
human trafficking in the United States.\76\ The Subcommittee is 
therefore empowered to investigate how individuals utilize the 
Internet, including commercial sex advertising websites like 
Backpage.com, to further their illicit trafficking schemes, as 
well as examine the mechanisms websites can use to prevent such 
abuse of interstate facilities.
---------------------------------------------------------------------------
    \71\Subcommittee Ruling at 7-10, Nov. 3, 2015 (on file with 
Committee staff).
    \72\S. Res. 73 Sec. 12(e)(1)(D), 114th Cong.
    \73\Id. at Sec. 12(e)(1)(C).
    \74\See 18 U.S.C. Sec. Sec. 1581-1592.
    \75\See 18 U.S.C. Sec. 1961(1).
    \76\See generally Mark Latonero, supra n.13.
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    The Chairman and Ranking Member further rejected Backpage's 
entirely unexplained contention that the document requests in 
the October 1 subpoena were not pertinent to a proper 
investigation.\77\ The Subcommittee's ruling articulated 
clearly why each request relates to its efforts to understand 
online sex trafficking, what companies like Backpage can do to 
prevent it (and may be doing to facilitate it), and what 
further steps the government might take to combat it. Having 
considered and rejected Backpage's objections as unfounded, the 
Chairman and Ranking Member ordered and directed Mr. Ferrer to 
comply with the subpoena by November 12, 2015.\78\
---------------------------------------------------------------------------
    \77\Subcommittee Ruling at 15-18, Nov. 3, 2015 (on file with 
Committee staff).
    \78\Id. at 19.
---------------------------------------------------------------------------
    Despite the ruling dismissing his objections, Mr. Ferrer 
has continued to defy the Subcommittee's lawful process. After 
Mr. Ferrer's failure to appear on November 19, 2015, Backpage 
attorneys wrote in a November 24, 2015, letter that it was 
standing by its First Amendment, overbreadth, and pertinence 
objections to the subpoena.\79\ The company's lawyers had 
previously stated that the company's submissions of information 
did not ``constitute either the fruits of a complete search of 
every bit of data possessed by Backpage.com or by all of its 
employees over the full (nearly six year) time period covered 
by the Subpoena.''\80\ Instead, Backpage took the position that 
even ``to be required to conduct such a search and review'' 
would be ``constitutionally inappropriate.''\81\ Backpage 
encouraged the Subcommittee to ``present[] this issue to the 
courts for resolution'' by invoking the statutory mechanism for 
civil enforcement of Senate subpoenas.\82\ The Subcommittee, 
through the present report prepared pursuant to Sec. 288d, is 
taking the necessary action to enable Senate Legal Counsel to 
file such an action.
---------------------------------------------------------------------------
    \79\Letter from Backpage to Subcommittee (Nov. 24, 2015) (on file 
with Committee staff).
    \80\Letter from Backpage to Subcommittee (Nov. 16, 2015) (on file 
with Committee staff).
    \81\Id.
    \82\Id.
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    In an attempt to focus on information of highest priority, 
the Subcommittee is only seeking to enforce Requests One, Two, 
and Three of the subpoena. The Subcommittee has obtained 
sufficient information responsive to the remaining requests--
Four, Five, Six, Seven, and Eight--from either third-party 
sources or Backpage itself.
    By contrast, Requests One, Two, and Three, concern the 
moderation practices at the core of the Subcommittee's inquiry, 
as evidenced by the Staff Report that examined Backpage's 
screening and editing practices using information obtained from 
third parties.\83\ By Backpage's own admission, the screening 
of adult advertisements is a key function of its business. And 
the Subcommittee has information, in the form of emails from 
third parties, indicating that Backpage possesses significant 
records responsive to these requests. Nevertheless, Mr. Ferrer 
has withheld those records based on a vague and undeveloped 
First Amendment claim. The Subcommittee therefore seeks 
authorization to obtain from the district court an order 
directing Mr. Ferrer's compliance with the Subcommittee's 
October 1, 2015, subpoena.
---------------------------------------------------------------------------
    \83\Subcommittee Report, Recommendation to Enforce a Subpoena 
Issued to the CEO of Backpage.com, LLC, (Nov. 19, 2015), available at 
http://www.hsgac.senate.gov/subcommittees/investigations/hearings/
human-trafficking-investigation.
---------------------------------------------------------------------------

D. Comparative effectiveness of a civil action or invoking inherent 
        contempt

    The Subcommittee has considered the effectiveness of a 
civil action to enforce the Subcommittee's subpoena compared to 
an immediate referral to the United States Department of 
Justice for criminal prosecution. Although the Subcommittee 
continues to consider whether to refer Mr. Ferrer's failure to 
comply with the subpoena and failure to appear at the November 
19 hearing for criminal prosecution, the Subcommittee has 
concluded that a civil action is the most effective and 
expeditious means to enforce the subpoena.
    In a civil action under 28 U.S.C. Sec. 1365, the 
Subcommittee would apply to the United States District Court 
for the District of Columbia for an order requiring Mr. Ferrer 
to produce the subpoenaed documents. If the district court 
determines that Mr. Ferrer has no valid reason to refuse, the 
court would direct him to produce the subpoenaed documents. 
Disobedience of that order would subject Mr. Ferrer to 
sanctions to induce compliance. Mr. Ferrer could free himself 
of sanctions by producing the subpoenaed documents.
    In a criminal referral under 2 U.S.C. Sec. Sec. 192-194, 
the Senate would direct the president pro tempore to certify to 
the U.S. Attorney for the District of Columbia the facts 
concerning the witness's refusal to produce the subpoenaed 
documents. If convicted, the witness could receive a sentence 
of up to one year in prison and a $100,000 fine.
    The Subcommittee and Committee recommend that the Senate 
proceed at this time with a civil action to enforce the 
Subcommittee's subpoena to Mr. Ferrer. The Subcommittee has a 
continuing interest in obtaining the subpoenaed documents as 
part of its ongoing investigation into sex trafficking. That 
goal is best advanced by the civil remedy--an order to 
produce--rather than the purely punitive remedies available 
through criminal prosecution. In addition, the Subcommittee 
believes a civil enforcement action will be more expeditious. 
The Subcommittee has an interest in speedy adjudication of Mr. 
Ferrer's legal obligations so that it may proceed with its 
investigation and potential future hearings or reports in the 
current Congress. Such fact-finding is urgently needed for 
potential legislation in this important area. The Subcommittee 
notes, however, that its recommendation to pursue a civil 
enforcement action at this time does not preclude a later 
determination to refer the matter to the Department of Justice 
for criminal prosecution of Mr. Ferrer for contempt of 
Congress.

                        IV. LEGISLATIVE HISTORY

    The Committee considered the original resolution at a 
business meeting on February 10, 2016. With a majority of the 
Members of the Committee present, constituting a quorum under 
Committee Rules for the purpose of reporting measures, matters 
or recommendations, the Committee ordered the original 
resolution reported favorably by a roll call vote of 15 in 
favor and none opposed. Members voting in the affirmative were: 
Ron Johnson (R-WI), John McCain (R-AZ), Rob Portman (R-OH), 
Rand Paul (R-KY), James Lankford (R-OK), Kelly Ayotte (R-NH), 
Joni Ernst (R-IA), Ben Sasse (R-NE), Thomas R. Carper (D-DE), 
Claire McCaskill (D-MO), Jon Tester (D-MT), Tammy Baldwin (D-
WI), Heidi Heitkamp (D-ND), Cory A. Booker (D-NJ), and Gary C. 
Peters (D-MI). For the record only, Senator Michael B. Enzi (R-
WY) voted ``aye'' by proxy. There were no votes cast in the 
negative.

                                  [all]