This morning NYPD Commissioner Ray Kelly and New York Attorney General Eric Schneiderman announced the arrest of 17 people involved in a money laundering prostitution ring that allegedly grossed $7 million in two and a half years, and utilized an advertising firm to place ads on cable access TV, Craigslist, Backpage.com, and the Village Voice. "It was quite a remarkable enterprise…like the mob goes to business school," Schniederman said. According to the AG, the firm, Somad Enterprises, would offer "sophisticated" services to their partners in prostitution, such as SEO optimization and airbrushing. "They went as far as to tell their clients, 'Don't advertise during the Super Bowl, because your johns won't be looking at the ads.' "
Commissioner Kelly described the johns as coming from "all walks of life," and one included a former dean at Scarsdale High School in White Plains. When asked if the investigation included the media outlets that were running the ads bought by Somad, Schneiderman replied, "We urged some publications to remove the ads, but it's sort of a running battle…They have a 1st Amendment right to publish them, and in the internet era they just spring up somewhere else."
According to the indictment, Somad Enterprises, run by 40-year-old Milagros Katz from its main office at 150 West 25th Street, split profits down the middle with the individuals who supplied the prostitutes. Somad allegedly employed an "information technology coordinator," Victor Concepcion, who worked from the Philippines. Concepcion allegedly created an "proprietary auto-posting system" which allowed Somad to quickly alter and post targeted ads for prostitutes on the Internet so that they remained at the top of Internet search results. Johns called bookers, who then arranged a meeting.
Drivers ferried prostitutes, many of whom were brought from China or South Korea, to hotels or the houses of johns, who paid for the prostitutes with check, cash, or credit cards. Shell companies created by Somad registered the charges as being for physical therapy, business consultancy, acupuncture, antiques, party planning, among other services. The prostitution services could also provide johns with drugs, most often cocaine, which was delivered with the prostitute.
Ray Kelly, Eric Schniederman, and members of the NYPD and the New York State Police pose for a photo at today's press conference (Gothamist)
Two women believed to be prostitutes were detained in the raids. One, a 31-year-old from South Korea, told police she had only been in New York for around a week after coming at the behest of a friend. Once here, she was allegedly forced to work as a prostitute. "She said she made no money from Jay King's escort service," Kelly said, referring to one of the managers of the prostitution rings. "She said she worked only for tips, and that she had no idea where she was in New York City." The commissioner said both women were seen by counselors and remain in shelters.
Kelly added that "the human trafficking case has not yet been developed," but that his department was working aggressively to pursue the angle. "Our focus remains the profiteers and johns engaged in promoting prostitution, not the women exploited by them,” he said. The investigation spanned 16 months, and involved the NYPD, the New York State Police, the Department of Immigration and Customs, and Homeland Security. Two individuals named in the indictment are believed to be out of the country and have not yet been detained.
One glowing review of Somad Enterprises posted on Yelp in 2010 seems to be of the astroturfing variety, praising the firm as "great for small business advertising!" Another filtered review is a bit more sour:
