A.G. Schneiderman: Ad Agency Head And Pimp Involved In Prostitution-based Money Laundering Ring Sentenced For Up To 3 Years
Prostitution Ring Generated Millions Of Dollars To Advertise Sex Services
Schneiderman: My Office Will Continue To Uncover And Punish Those Who Exploit Women And Profit From Exploitation
NEW YORK - Attorney General Eric T. Schneiderman today announced the sentence of Milagros Katz, the head of Manhattan-based advertising agency Somad Enterprises Inc., as the result of a felony Money Laundering in the Second Degree plea in Queens Supreme Court. Katz, 50, of Jersey City, was charged with Enterprise Corruption and Money Laundering for her role in the illegal operations at Somad, which created, monitored, facilitated and employed online, print and cable television advertisements to knowingly and systematically promote prostitution for large- and small-scale prostitution businesses across the Tri-State area. The ads ran in a variety of high-profile outlets, including Backpage.com, the Village Voice and the Yellow Pages.
Wei Qu a/k/a William, a/k/a Andy, 51, of Flushing NY, is a pimp who worked with Somad and previously pled guilty to Enterprise Corruption before Justice Richard Buchter. He was sentenced today to a state prison term of 1 to 3 years, and will be required to forfeit $45,000.
“Today’s sentences are part of our ongoing effort to ensure that those who participate in large-scale, lucrative prostitution-based money laundering operations – including advertising bosses who use seemingly legitimate business to hide their roles in these illegal activities – are held accountable,” said Attorney General Schneiderman. “My office will continue to work with law enforcement agencies around the state to root out criminal networks that launder money, promote prostitution and exploit women.”
Katz, the vice president and principal of Somad, who was out of jail on $500,000 bail with an electronic monitoring ankle bracelet, is also required, as part of her plea deal, to pay $100,000 to settle the lawsuit lodged by the Attorney General’s office targeting the proceeds of Katz's Money Laundering activities. She was sentenced to 1 to 3 years in prison.
These convictions were the result of a 16-month joint investigation by the Attorney General's Organized Crime Task Force (OCTF) and the New York City Police Department that uncovered the illegal operations headed by Somad Enterprises Inc., a company that was run out of an office at 150 W. 25th St., Suite 1202, and remote locations in Queens, New Jersey, Pennsylvania and the Philippines. The investigation resulted in a Queens County indictment that charged 19 people and the corporate defendant with a variety of crimes, including enterprise corruption, money laundering, falsifying business records, promoting prostitution and top narcotics possession and sales charges.
During the course of the arrests and execution of search warrants last fall, 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.
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, the Attorney General’s investigation identified Somad Enterprises Inc., which promoted prostitution for pimps and for which Somad and its employees, as well as the prostitution business clients, profited handsomely.
According to a review of Somad's financial documents, between January 1, 2010, and October 2012, prostitution businesses bought in excess of $3 million in advertising.
This enterprise utilized numerous shell corporations, created with false information, which were used to process millions of dollars in credit card transactions to hide 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 and 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.
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 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.
The case is being prosecuted by OCTF Assistant Deputy Attorneys General Diego Hernandez and Brandi Kligman under the supervision of Deputy Attorney General Peri Alyse Kadanoff and Executive Deputy Attorney General for Criminal Justice Kelly Donovan.