The South Carolina Attorney General has threatened Craigslist with a criminal investigation if it does not remove prostitution listings and pornography on the site by May 15, 2009. AG Henry McMaster sent a strongly worded open letter (PDF) to Craigslist CEO Jim Buckmaster yesterday, accusing Craigslist of not instituting the appropriate safeguards to fight unlawful activity, despite an agreement from last November between Craigslist and the Attorneys General of more than 40 states to do so. Meanwhile, Craigslist is keeping a cool head and maintains that there's no legal basis for such a threat.

"Recent national events, along with ongoing law enforcement efforts in South Carolina, indicate that craigslist has not installed sufficient safeguards since November to prohibit the Internet site from being used as a vehicle to advertise or solicit prostitution," McMaster wrote in his letter. "Also of concern is the unrestricted manner in which graphic pornographic pictures are posted and displayed by users on the craigslist site and their accessibility to minors."

Note that these "graphic pornographic pictures" are being posted by users of the site and not Craigslist itself, just like those posted by people with questionable judgement on MySpace or Facebook. These photos are also limited to parts of Craigslist that are meant for adults—these sections require the same "Yes I am over 18 and I understand this will contain adult content" clickthrough disclaimer as do most adult sites on the Internet.

But graphic images are hardly the biggest of Craigslist's worries. The site has been battling its growing reputation for facilitating prostitution for some time now, resulting in an agreement with the attorneys general of 40 states late last year to take steps to reduce illegal activity on the site. Those steps included instituting a phone verification system for listings in the Erotic Services section, as well the charging of a small listing fee to help discourage those who don't want to be identified. Craigslist claims that these changes have resulted in a 90 percent drop in Erotic Services listings, but they apparently aren't enough to satisfy some members of law enforcement; the Cook County Sheriff's Department in Chicago recently decided to sue Craigslist for continuing to enable prostitution.

McMaster's legal threat comes as a 23-year-old Boston University student has been charged with murdering a "masseuse" (or a stripper? No one seems to know exactly) that he found in Craigslist's (you guessed it) Erotic Services section. The minutia of that case aren't relevant so much as the fact that it has drawn mainstream attention to Craigslist as a place for women and their killers to meet—just like how MySpace became the de facto destination for pedophiles to find victims in previous years—and the Erotic Services section isn't helping. In fact, Craigslist's lawyers are currently meeting with the AGs of several states in New York this week to discuss the possibility of blocking access to that section of the site.

Still, Craigslist hasn't allowed itself to be bullied into closing Erotic Services just yet; Buckmaster and gang must know that those listings would just disperse into other adult sections of the site and, if that happens, the level of prostitution on Craigslist might even go back up. In a blog posting (hat tip to TechCrunch) made yesterday, Craigslist stated that it planned to speak with McMaster about his concerns and find ways to address them "without compromising the utility of craigslist for South Carolinians, or anyone’s Constitutional rights." The company reiterated that misuse has been decreased dramatically over the last six months and that it continues to work with law enforcement to make improvements to the site. "However, we see no legal basis whatsoever for filing a lawsuit against craigslist or its principals and hope that the Attorney General will realize this upon further reflection," Craigslist wrote.