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Front Page November 23, 2012  RSS feed

Local Link To Tri- State Money Laundering Bust

Ad Agency Funneled Sex Sale Proceeds

A Forest Hills man was among 19 individuals indicted on Tuesday, Nov. 20, for allegedly participating in a money laundering ring in which proceeds from prostitution and drug sales were funneled through an advertising agency, law enforcement sources announced.

Christopher Fairbairn, 24, of 73rd Road in Forest Hills was among those named in the 180 count indictment charging the suspects variously with money laundering, falsifying business records, narcotics sales and prostitution.

The charges were announced by Attorney General Eric T. Schneiderman and Police Commissioner Raymond Kelly on Tuesday. The indictment was the result of a 16- month, tri-state investigation cond- ducted by the Attorney General’s Organized Crime Task Force (OCTF) and the NYPD Organized Crime Control Bureau Vice Enforcement Major Case Team.

During the course of the arrests and execution of search warrants on Tuesday, investigators found two women who were the victims of human trafficking by two of the ringleaders of the operation. Investigators from the Attorney General’s office and the NYPD rescued the two trafficking victims from locations in Manhattan and, in coordination with Sanctuary for Families, brought them to a safe haven. The investigation is ongoing.

Also named in the indictment were the following:

• Milagros Katz, 50, of Jersey City, N.J.;

• Sean Bagdonas, 37, of Lake Ariel, Pa.;

• Victor (a.k.a. Torio) Concepcion, 45, of Caivta in the Philippines;

• Arlene Meyers, 67, of Hendersonville, N.C.;

• Ying (a.k.a. Lily) Li, 48, of Bayside;

• Jay King, 52, of Whitestone;

• Woo (a.k.a. Ahjuci) Yang, 60, of Oakland Gardens;

• Wei (a.k.a. William or Andy) Qu, 51, of Flushing;

• Jian Hui (a.k.a. James or Bill) Niu, 40, of Flushing;

• Woosub Kim, 46, of Fresh Meadows;

• Sun T. Fink, 61, of Flushing;

• No Mi (a.k.a. Sarah) Kwon, 49, of Palisades Park, N.J.;

• Fannie (a.k.a. Alex) Hubbard, 23, of Yonkers;

• Melanie Reyes, 27, of Jamaica;

• Shi In (a.k.a. Older Miss) Kang, 58, of Flushing;

• Renshun (a.k.a. Younger Miss) Kang, 53, of Flushing; and

• Jacob (a.k.a. Sarah’s Driver) Kim, 36, of Flushing.

Through the use of electronic surveillance, physical surveillance and the review and analysis of a voluminous number of bank records and tax related documents, in conjunction with other investigative tools and during the 16-month investigation, identified an advertising agency, Somad Enterprises, Inc., which created, monitored, facilitated and employed online (on Backpage.com, for example) and print (in the Village Voice, for example) advertisements and cable television commercials.

It is alleged that by doing so, the company knowingly and systematically promote prostitution for its clients' large- and small-scale prostitution businesses—or pimps for which Somad and its employees, as well as the prostitution business clients.

“This investigation led to the arrests of multiple individuals who were part of a criminal enterprise that made millions of dollars by profiting off the exploitation of women,” Schneiderman said. “With law enforcement partners like Police Commissioner Kelly and the investigators at the NYPD and our other law enforcement partners we will continue to root out criminal networks like this prostitution and narcotics ring. The message we are sending is clear: these crimes will not be tolerated in the State of New York.”

Kelly added, “All anyone has to do is open a copy of the Village Voice to get a good sense of how classified advertising and prostitution go hand in hand, particularly in the prostituting of Asian women. Our focus remains the profiteers and johns engaged in promoting prostitution – not the women exploited by them.”

Homeland Security Investigations Special Agent in Charge in New York James T. Hayes Jr. said, “The arrests end an alleged conspiracy to use legitimate businesses to disguise a prostitution and narcotics distribution ring. Working cooperatively with our local law enforcement partners, HSI will continue to dismantle organizations that negatively impact our communities and endanger the welfare of our citizens.”

Superintendent of the New York State Police Joseph D'Amico added, “The culmination of this investigation would not have been possible without the dedication, hard work and expertise of our partners in law enforcement at the Attorney General's Organized Crime Task Force and the New York City Police Department. These arrests are the result of the investigators and officers working together to gather intelligence, track leads, and act on those leads. The New York State Police will continue to work with our partners in law enforcement to take these criminals off our streets and keep our citizens safe.”

The Somad Enterprises ad agency was run out of an office in midtown Manhattan, at 150 W. 25th St., Suite 1202, and remote locations in Queens, New Jersey, Pennsylvania, and the Philippines.

It is alleged that Somad's lucrative enterprise partners were large-scale prostitution managers Ying Li, Wei Qu, Jian Hui Nu, Woosub Kim, Jay King and No Mi Kwon, and their employees, some of whom provided cocaine in addition to sex for sale. This enterprise utilized numerous shell corporations created with false information and which were used to process millions of dollars in credit card transactions which hid the true nature of the charges by claiming the corporations services were for cleaning, acupuncture, antiques, and party planning rather than for sex and/or drugs.

Each prostitution prong of the enterprise utilized the income derived from their illegal prostitution and drug related businesses to pay Somad for their advertising services, effectively laundering money through Somad, disguising the origin of the proceeds as legitimate advertisement payments. These payments to Somad were used to both pay Somad employees who ran the advertising business and to place additional ads which promoted their prostitution businesses.

According to a review of Somad's financial documents, between Jan. 1, 2010 and October 2012, prostitution businesses paid in excess of $3 million in advertising to promote their prostitution business.

The prostitution groups relied on Somad’s well-established relationships with media to secure discounts for the criminal enterprise's clients. The prostitution managers controlled the flow of money from johns, bookers, drivers, house mothers and Somad.

The investigation started with an OCTF focus on “backpage” advertising, its origins and patterns. OCTF recognized a pattern of advertising coming from Somad and followed the money trail. The investigation uncovered prostitution and drug enterprises in what started off as a money laundering investigation. The investigation included multiple wiretaps.

The indictment, which was unsealed Tuesday in Queens County Supreme Court, charges 19 people and the corporate defendant with enterprise corruption as well as a variety of other crimes including, money laundering, falsifying business records, promoting prostitution, A-II felony narcotics possession and B felony narcotics sales. They each face up to 8 1/3 to 25 years in prison.

The charges are the result of a joint investigation by the New York State Attorney General’s Organized Crime Task Force and the New York City Police Department’s Organized Crime Control Bureau Vice Enforcement Major Case Team, with the assistance of the New York State Police, New York State Department of Taxation and Finance, U.S. Homeland Security and the Westchester County District Attorney's Office.

Schneiderman thanked these agencies for their partnership in the investigation.

The investigation was directed by OCTF Senior Investigator Kerry Buttner under the supervision of OCTF Supervising Investigators Paul Grzegorski and Arthur Schwartz and Downstate OCTF Deputy Chief Christopher Vasta, all under the supervision of Chief Dominick Zarrella of the Investigations Bureau, and NYPD Det. William Perez, under the supervision of Sgt. Sunghoon Kim and Lt. Michael Costello of the Vice Enforcement Major Case Team and overall supervision of Deputy Inspector Anthony Favale and Organized Crime Control Chief Anthony Izzo.

The case is being prosecuted by OCTF Assistant Deputy Attorneys General Brandi Kligman and Diego Hernandez, under the supervision of Deputy Attorney General Peri Alyse Kadanoff, and under the overall supervision of Executive Deputy Attorney General for Criminal Justice Kelly Donovan.

It was noted that the charges against the defendants are merely accusations and the defendants are presumed innocent until proven guilty.