Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

U.S. v. BAKER

October 21, 1999

UNITED STATES OF AMERICA, PLAINTIFF,
v.
EVERETTE O. BAKER, DEFENDANT.



The opinion of the court was delivered by: Stiehl, U.S. District Judge.

MEMORANDUM & ORDER

This matter is before the Court for ruling on Count 23 of the Superseding Indictment which seeks forfeiture of real and personal property involved in the offenses charged in Counts 1-22 of the Superseding Indictment. The defendant was convicted after trial by jury on the charges in each of Counts 1-22. Both the defendant and the government waived trial by jury on Count 23 and have submitted the matter to the Court on briefs. The government seeks forfeiture from the defendant in the amount of $7,575,900.24, less construction costs, plus certain real estate, as set forth in the Superseding Indictment. The defendant, in turn, asserts that the government is only entitled to forfeiture in the amount of $2,590, which correlates to the actual amounts of certain credit card transactions specified in the Superseding Indictment.

BACKGROUND

The defendant was charged by the grand jury with money laundering (Counts 1-15), engaging in a monetary transaction in property derived from a specified unlawful activity (Counts 16-20 and 22), and conspiracy to commit money laundering (Count 21). These charges all arose from the defendant's ownership of certain massage parlors that promoted prostitution in violation of Illinois law, 720 ILCS 11-14; 11-17; 8-2; and 5-2(c).

Specifically, the Superseding Indictment charged, and the evidence established, that at all times relevant to the indictment, the defendant was the primary owner, investor, and controller of several business known as: American Printing and Publishing, Co.; Fantasy Massage Parlor; Fantasy Massages; Fantasyland Massage Parlor; Fantasyland Theater and Arcade; Fantasy Land Night Club; and Bettye's Touch Above, also known as Bettye's Top Hat and Bettye's Brown Sugar. The evidence established, and the jury found by its verdict that the defendant kept Fantasy Massage Parlor, Fantasyland Massage Parlor and Bettye's Touch Above as places of prostitution. The evidence further established that the defendant operated and ran the businesses at Fantasy Land Night Club (a topless night club) and Fantasyland Theater and Arcade (an adult video store and adult bookstore) in the same building as the Fantasyland Massage Parlor and in conjunction with the other places of prostitution. During the period from 1989 to 1994, the defendant ran a massage parlor/prostitution business out of a trailer located in Brooklyn, Illinois, under the names of Fantasy Massage Parlor and Fantasy Massages. In 1992, defendant began to build the Fantasyland complex which was financed by the proceeds from the massage parlors and a loan from the DuQuoin State Bank. In 1994, the Fantasyland Massage Parlor opened. In 1995, the defendant added an adult bookstore and video arcade to the complex. In 1996, the defendant opened the Fantasyland Night Club.

The government proved that as part of the defendant's prostitution business, he would deposit money realized from that business in certain bank accounts maintained in the name of American Printing and Publishing, specifically, Account No. 0006940101 (the credit card account) and Account No. 0000024109 (the cash account), both maintained at Magna Bank of Illinois. These deposits were derived from cash, credit card sales drafts, credit card electronic funds transfers, and ATM transactions, which constituted the proceeds of prostitution activities in violation of Illinois law, including prostitution, keeping a place of prostitution, and conspiracy to keep a place of prostitution. The government established that American Printing and Publishing was little more than a "cover" or "front" through which the defendant laundered the prostitution proceeds.

A. The Fantasyland Sex-Mall

The evidence established that the customers at the massage parlors received sexual favors in exchange for payment by either cash or credit cards. The overwhelming testimony presented at trial was that the primary, if not sole, purpose of the massage parlors during the period alleged in the Superseding Indictment was to provide sex for profit. The evidence revealed that the common practice was that the massage parlor manager would "rent" a room to a customer for a certain period of time for a certain sum. The "room rental" and the massage fee were paid to the massage parlor manager. Once in the room, the customer would make arrangements with the masseuse for the sexual services desired, and payment in the form of a "tip" would be made directly to the masseuse/prostitute for the sexual service. The tip amount would often equal the massage fee.

During the period when the massage parlor accepted credit cards, the customers could charge the room rental and massage fees and the tip for the masseuse/prostitute. It was clear, however, that the preferred method of payment was cash for each of those costs. This is further evidenced by the defendant's business decision to install an ATM machine in the massage parlor in 1995. Soon thereafter he stopped accepting credit card charges. Due to the cash-based nature of this business, the Court is persuaded that the amount of money generated by the massage parlor business which the government has been able to trace through deposits into the defendant's banking accounts, does not represent one hundred percent of the income the defendant generated through his massage parlor/prostitution business. Although there was evidence that there were times when no sexual service was actually provided, it was clear that this occurred only on rare occasions.

The defendant, in an obvious attempt to insulate himself from prostitution-related charges, held meetings where he would "warn" the masseuses that they were not to engage in sexual activities with the customers. There were even "rules" posted in the massage parlor to the effect that sexual behavior was prohibited, and the customers and masseuses were required to sign an agreement that no sexual services were to be provided. The defendant, on occasion, fined the masseuses for engaging in prostitution and even fired or suspended a few masseuses for this activity. The fines, however, were slight, and the "fired" masseuses were soon reinstated. The evidence clearly established, and the jury found, that the federal charges all arose from the defendant's involvement in the illegal activity which occurred at the massage parlor, e.g. the promotion of prostitution and prostitution related crimes.

As part of the sex business, between 1994 to 1996 the defendant established the Fantasyland complex, which, in addition to sex, provided a full compliment of related businesses, including a topless nightclub, an adult book and an adult video store. All were designed to foster the customer's interest in the sex for sale at the massage parlors. As Art Feole, himself a former manager of several topless nightclubs testified, the massage parlors were located in close proximity to the topless nightclubs to take advantage of the "traffic" provided by the topless nightclub customers. Feole testified that patrons of the nightclubs were drawn to the massage parlors and patrons of the massage parlors were drawn to the nightclubs. It was clear that the Fantasyland complex was designed to provide a total package of sex-related services, from x-rated videos and books, to topless dancers and prostitution services, a sex mall, if you will.

B. The Financial Gains

Between January 1990, and December 1995, the massage parlor accepted credit cards in payment for prostitution services. In May of 1995, the defendant, keeping up with modern times, and for the convenience of the customers, installed an ATM machine in the Fantasyland massage parlor and adjacent topless nightclub. In January of 1996, the defendant stopped accepting credit cards at the massage parlor, and in January of 1997, moved the ATM machine from the massage parlor to the "legitimate" side of the Fantasyland complex. At that time, if a customer of the massage parlor did not have sufficient cash to pay for the desired sexual services, he would be directed by the masseuses and shift managers to the Fantasy Land Night Club or the Fantasyland Theater and Arcade to use the ATM machines. After using these machines, the customers would then return to the massage parlor with the cash they had just obtained from the ATM machine, pay for the room, massage, and sex service. It was clear from the evidence that the room rental rate (usually hourly) was at a higher than normal rate given the location of the room and the short "rental" period.

In January of 1997, the government executed search warrants at the defendant's businesses and seized voluminous documents and items. Anticipating the forthcoming indictment, the defendant transferred management of Fantasy Massage Parlor in April 1997 to his son and co-defendant Edward Everette Johnson, doing business as Gateway Metro, Ink. Johnson continued the prostitution business, under the guidance and direction of his father, until September of 1997, when the first indictment was returned.

As part of the operation of the prostitution business from 1990 to 1995, the defendant, or his employees or agents, used the wires in interstate commerce to obtain credit approval from a credit card clearing house for customers who used their credit cards to obtain prostitution services. In addition to depositing checks and credit card transaction receipts into the Magna bank accounts, the defendant then issued checks on those accounts to pay bills, including payments to Aviston Lumber in the amount of $15,000, Rodgers Heating and Cooling in the amount of $7,700, Crane Agency Company in the amounts of $2,760 and $4,685, and Banking Equipment Service, Inc in the amount of $2,008.12. In addition, funds were drawn from these accounts, inter alia, to make payroll on various occasions, to make payments on a $201,855 commercial loan to the DuQuoin State Bank, and an automobile loan on defendant's Series 600 Mercedes Benz automobile. The defendant also used this same Mercedes Benz automobile to pick up the receipts from the massage parlors and from the Fantasyland Theater and Arcade during the period from January 1996 through April 1997. During the period covered by the indictment, the total amount deposited into the business bank accounts was $9,339,094.99, less transfers to other accounts, plus deposits into a related business account, for a total of $9,248,793.71. The defendant filed tax returns for the period in question, indicating a total net income during this period of $1,323,678.

In short the defendant created a large and profitable prostitution business in the Brooklyn, Illinois area. All of the defendant's businesses were dependent upon the success of the massage parlors. The defendant successfully, until his conviction, laundered large sums of illegally obtained funds through his legitimate businesses and bank accounts.

DISCUSSION

The defendant has been convicted of fifteen counts of money laundering, one count of conspiracy to commit money laundering and six counts of engaging in a monetary transaction in property derived from a specified unlawful activity.

To sustain the charge of money laundering under 18 U.S.C. ยง 1956, "the government needed to show that [the defendant] conducted a financial transaction affecting interstate commerce with property representing the proceeds from some illegal activity, that he knew that the property represented illegal proceeds, and that he conducted the transaction with the intent of promoting the ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.