After 16-Month Investigation, N.Y. Officials Take Down Alleged Prostitution Operation
NEW YORK (CBSNewYork) -- An advertising agency and 19 individuals were charged Tuesday in what New York officials called a prostitution-based money laundering bust.
New York Attorney General Eric Schneiderman and NYPD Commissioner Ray Kelly announced the unsealing of the 180-count indictment that included accusations of money laundering, falsifying business records, narcotics sales and prostitution.
It was all part of a 16-month investigation, officials said.
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At the heart of the alleged criminal operation is Somad Enterprises, Inc. Kelly bemoaned that classified advertising in New York City goes "hand in hand" with prostitution, "particularly in the prostituting of Asian women."
"Somad and five so-called escort services, specializing in Korean and Chinese women, generated over $7 million in revenue over the last 2 1/2 years," Kelly said.
Despite the high profits, it's charged they were split between the ad agency and the escort services, with the call girls receiving only tip money, CBS 2's John Slattery reported.
Officials said that Somad was run out of 150 W. 25th St., Suite 1202 in Midtown, Manhattan and had remote locations in Queens, New Jersey, Pennsylvania and the Philippines.
"They would make your ads, they would give you advice on how to place them. They would make videos for you, for cable TV. It was like a big advertising agency, but specializing in prostitution rings," Schneiderman said.
Authorities also said Somad created and placed ads in places like the Village Voice and online at sites like Backpage.com, allegedly to promote prostitution.
"They did so much business they were receiving volume discounts from publications and websites they were buying ads for," Schneiderman said.
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When the johns paid with credit cards, the money was allegedly laundered by claiming the services were for cleaning, antiques or acupuncture.
Officials also said that the operation included a manager, bookers, drivers and prostitutes. Bookers would answer calls and make arrangements for johns to meet with prostitutes for either "in-call" or "out-call" services, officials said.
The individuals charged face up to 8 1/3 to 25 years in prison.
Schneiderman said the investigation is continuing into possible charges of human trafficking as well.
In addition to the defendants mentioned in the indictment, three "johns" were arrested, including David Mendelowitz, a former guidance counselor and Dean of Students at the prestigious Scarsdale High School.
According to a criminal complaint, Mendelowitz paid for the services of prostituted women and for crack cocaine.
"I'm very confused because he was a trusted, adult figure in our school and he really helped a lot of students, and people looked up to him. No one expected this," student Sarah Korzec told Slattery.
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