updated 5/20/2009 7:13:57 PM ET 2009-05-20T23:13:57

Seven New York residents have been indicted on charges of running a prostitution ring on Craigslist, the online classified advertising site.

The office of Attorney General Andrew Cuomo said five of the seven New York residents were arrested Wednesday on charges of corruption, conspiracy and money laundering. Five of the seven New York residents were arrested Wednesday on charges of corruption, conspiracy and money laundering.

The five pleaded not guilty at their arraignment in state Supreme Court in Queens, where authorities say the operation was based.

Authorities are searching for the two others.

Cuomo's office said the group operated a ring called Room Service Entertainment in the "erotic services" section of Craigslist from June 2007 through December 2008.

The arrests come shortly after heavy attention was paid to the arrest of a Boston medical student accused of killing a masseuse he met through the site.

Legal debate
Meanwhile, Craigslist's chief executive is suing South Carolina's attorney general, claiming the prosecutor's threat to file prostitution charges against the San Francisco company is unreasonable.

CEO Jim Buckmaster said on his blog he wants a restraining order to keep Attorney General Henry McMaster from pursuing criminal charges.

"Misuse of Craigslist in connection with illicit activity is unacceptable, and we work closely with law enforcement to address it," Buckmaster said in a statement. He said Craigslist will cooperate with New York Attorney General Andrew Cuomo's investigation.

McMaster said last week he would prosecute Craigslist executives for aiding and abetting prostitution if an ad on the site leads to a prostitution case in South Carolina. McMaster has said his office is investigating, but no charges have been brought.

In a statement, McMaster said the lawsuit shows Craigslist is taking his investigation seriously and called it a victory. The lawsuit was filed late Tuesday night in a federal court in South Carolina.

Last year, McMaster and attorneys general from dozens of other states entered into an agreement with Craigslist to improve the site's safeguards. But McMaster said he doesn't think Craigslist has done enough to keep ads for prostitution off the Web site.

Earlier this month, McMaster called on Buckmaster to take down ads related to prostitution and pornography, giving Craigslist 10 days to comply or face possible charges. When that deadline passed, McMaster said he would prosecute Craigslist executives for aiding and abetting prostitution if an ad on the Web site leads to a prostitution case in South Carolina.

Craigslist 'dates'
The group named in the 47-count indictment unsealed Wednesday in New York is accused of operating Room Service Entertainment, which investigators say posted ads on Craigslist that included explicit or seminude photographs and a phone number to arrange "dates."

The defendants each face a maximum 25 years in prison if convicted.

"Until Craigslist gets serious about putting real protections in place," Cuomo said in a statement, "it will continue to be an environment where criminal operations thrive with impunity."

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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