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Financial Crimes

Owner of string of brothels sentenced to 18 months on interstate commerce charges; will forfeit more than $10 million in assets

SANTA ANA, Calif. - A West Covina, Calif., woman, who ran a string of brothels out of chiropractic offices, acupuncture clinics, "spas," tanning salons and massage parlors in Southern California and Dallas, was sentenced today to 18 months in federal prison for her role in the scheme.

Jong Ock Mao, 50, a.k.a. "June," appeared this morning before U.S. District Judge James V. Selna. Mao pleaded guilty to two felony counts in August - conspiring to use interstate commerce to promote prostitution and using the proceeds from her six brothels to purchase real estate. As part of her guilty plea, the naturalized Korea native agreed to forfeit more than $10 million dollars in property and assets she derived from the prostitution scheme. The forfeited properties include four private motocross tracks in California, Texas, and Florida operated by MX Oasis, a company owned by Mao.

Today's sentencing stems from an investigation by U.S. Immigration and Customs Enforcement (ICE), IRS-Criminal Investigation Division, and the Los Angeles County Sheriff's Department.

"This case led to the breakup of one of the most lucrative prostitution schemes ever uncovered in Southern California," said Robert Schoch, special agent in charge for the ICE office of investigations in Los Angeles. "Given the huge profits generated by this illegal enterprise it is fitting that this defendant is paying a high price for her crimes."

"Today's sentencing represents the outstanding work in this joint investigation that halted one of Southern California's most lucrative prostitution operations," said Catherine D. Tucker, acting special agent in charge for the Los Angeles field office for IRS-criminal investigation. "IRS-Criminal Investigation's financial expertise led to the forfeiture of more than $10 million in assets that Ms. Mao purchased with illicit funds generated by her prostitution operation."

Mao's plea agreement details how, in the late 1990s, she began operating a series of establishments purporting to offer massage therapy, acupuncture, chiropractic services, and tanning. In reality, the businesses, five in Southern California and one in Dallas, offered customers sexual services. In April 2006, Mao and three other defendants were indicted for their role in the scheme.

There were three other defendants charged in the case. Edward Lutt, 45, of Paramount, Calif., whom investigators allege oversaw the day-to-day operation of the brothels. Lutt remains in federal custody pending his trial, which is scheduled to begin Feb. 24, 2009.

The remaining two defendants are Charles Fields, 51, of Long Beach, Calif., and Randall Johnson, 54, of Los Angeles. According to the case indictment, Fields and Johnson obtained the business licenses for Mao's establishments. In August 2007, both men entered guilty pleas. Fields pleaded guilty to two felony counts, conspiracy to use interstate commerce to promote prostitution and conspiracy to engage in money laundering. Johnson pleaded guilty to one felony count, conspiracy to engage in money laundering. Both men are awaiting sentencing.

According to the original indictment in the case, Mao operated brothels in three Los Angeles area communities, Baldwin Park, Inglewood and South Gate, as well as an establishment in Dallas known as the Paradise Spa.