Goldman Sachs had stake in sex trade website - 14 News, WFIE, Evansville, Henderson, Owensboro

Goldman Sachs had stake in sex trade website

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Sen. Carl Levin, D-MI, grilled top Goldman Sachs executives at a Senate hearing in 2010. (Source: Wikicommons) Sen. Carl Levin, D-MI, grilled top Goldman Sachs executives at a Senate hearing in 2010. (Source: Wikicommons)

(RNN) - One of the largest and most prestigious investment firms in the world responded to allegations that it was a stakeholder in a website involved in underage sex trafficking by selling its stake in the company.

In 2000, a private equity fund run by Goldman Sachs Group Inc.  invested $30 million – a 16 percent stake – in Village Voice Media, which owns Backpage.com, a website that sells sex services and has been exposed by New York prosecutors as using underage girls.

Goldman Sachs signed a deal Friday to sell its stake in Village Voice Media to GS Capital Partners III. The sale price was not disclosed.

Backpage.com has been termed "THE biggest forum for sex trafficking of under-age girls" in the United States by the New York Times. Approximately 80 percent of the revenue generated by the top-five sex trafficking websites in the U.S. come from Backpage.com.

A spokeswoman for Goldman Sachs told New York Times columnist Nicholas D. Kristof that its role with the website was just as financier.

"We had no influence over operations," said Andrea Raphael.

Goldman Sachs has suffered a black eye in the media lately after a former broker blasted its business practices, calling the company greedy and ruthless. The company was also investigated for its involvement in betting on and profiting from the housing bubble collapse.

Goldman Sachs had been working to unload its stake in Village Voice Media since 2010 when it became increasingly "uncomfortable with the direction of the company," Reuters reported.

The investment bank released a transcript of the interview about the Backpage.com website with the New York Times on its website.

In the interview, the reporter refers to a former top executive at the private equity fund involved in the Village Voice Media investments, Marc Cohodes.

According to the reporter's question, Cohodes painted Goldman Sachs as a "racketeering entity that does whatever they can to make a dime without conscience, thought, foresight or care about ramification."

The investment firm, which was founded in 1869 and has offices in every major financial center in the world, was in the news recently when a disillusioned broker published his resignation letter in the New York Times, calling the company "toxic and destructive."

Greg Smith had worked for Goldman Sachs for 12 years when he resigned March 14, the same day the op-ed was published.

"Over the last 12 months I have seen five different managing directors refer to their own clients as "muppets," Smith said.

And later, "People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer."

In 2010, Goldman Sachs CEO Lloyd Blankenfein, claiming he was doing "God's work," was grilled by U.S. senators over whether he thought it morally acceptable to sell customers questionable bundled mortgage-backed securities while at the same time betting on their collapse.

"You shouldn't be selling junk. You shouldn't be selling crap," said Sen. Carl Levin, D-MI. "You shouldn't be betting against your own customer at the same time you're selling to them."

In March, the company announced it had begun a new round of staff cuts after cutting 2,400 positions last year. In 2011, it generated $28.8 billion in revenue, according to the Economic Times.

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