Overnight, the NYT's Nicholas Kristof penned an article which exposes Goldman, already deeply embroiled in muppetgate damage control, as being a 16% indirect owner in Backpage, an "emporium for girls and women - some under age or forced into prostitution... which has 70 percent of the market for prostitution ads, according to AIM Group, a trade organization." Up until now Backpage, shielded by its Village Voice Media which owns it, and is also a private company, has had its ownership structure far from the public's view, until now that is. Kristoff writes: "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)." Probably more interesting is the firm's response when confronted about this previously unknown 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."

Needless to say it is difficult to make any extended ethical conclusions based on an isolated incident of what may have been simply a forgotten legacy position, although Kristof does try "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."

Yet some may be surprised to learn that this is not the firm's only expansion into the world of monetized prostitution. As the chart below shows, as of Q4, 2011, the firm also happens to be the top ten owner of Adult Friend Finder (Nasdaq: FFN), a company which recently went public, and which is nothing more than a porn portal for women, who can sell their "assets" to the highest bidder (and where any men members have to pay a monthly fee). Of course, the firm's own vision of itself as an adult Facebook is slightly different, if not supported by its share price which has been a one way ticket down ever since going public in May of 2011.

And while Goldman may be forced to dump its stake in Backpage now that the firm is about to find itself in "pimpgate" courtesy of the NYT, we wonder why it is that it was the only major firm adding to an Adult Friend Finder stake (which it built up entirely in Q4, 2001) in the last trading quarter?

So just to make the life of Lucas van Praag's (whom we had gotten quite fond of in the past few months) replacement, one ex-Tim Geithner assistant Jake Siewert a little more complicated, we would like to ask: just what is the firm's Internal Rate of Return when putting its money into websites encouraging pimping and prostitution? Such as this one:

Finally, and what everyone really wants to know, is do Goldman employees get some sizable discounts when spending money on minority investments?