The cash was packed in cardboard boxes and paper bags, and Hung V. "Mikey" Tran, a slender Vietnamese man with an engaging smile, would drive it every few months to Knoxville, Tenn.There was $50,000 on one trip, $80,000 on another, $99,000 on another, $102,000 on still another. At least once, it was all in $20 bills.
Tran says he was only doing a favor for friend, at no profit to himself.
But federal investigators said Tran, 34, was the trusted bagman for an interstate prostitution and money-laundering operation, part of a three-state massage-parlor ring that had a major part of its operation in Louisville.
They said Tran would arrive in Knoxville and walk into a small, one-story office building to a business called CMI , and find his contact, Duffy Price. Price was a friendly man, always eager to chat up Tran and always willing to take the money and wire it to places such as South Korea.
What Tran did not know was that CMI was a bogus company set up by the FBI. And that Duffy Pri ce was a federal agent working undercover.
The public record of the federal investigation, on file in U.S. District Court in Toledo, Ohio, shows that between 2000 and 2002, three massage parlors owned by an unmarried Korean couple living in Toledo were bringing in huge sums of money.
One of them, in suburban Louisville, was the Olympia Spa, at 4119 Bardstown Road in the Buechel neighborhood. A business by the same name operates there today, but under different owners. The two other spas were the Rainbow Spa in Toledo and the Oriental Spa in Barboursville, W. Va., near Huntington.
All three were owned by Young A. Kim, and Michael M. Tak, 60, the government alleged in court documents.
In indictments in 2002 and 2003, a federal grand jury in northern Ohio charged Kim and Tak, along with Tran, with 242 counts of racketeering and money laundering. Another federal grand jury last year also charged Kyong Suk An, also of Toledo, with conspiring to launder money in the same operation.
All four have pleaded guilty. Tak began serving his 18-month sentence March 31, and the other three are awaiting sentencing.
Tran - as the courier and what a prosecutor called a "lesser player" in the conspiracy - pleaded guilty in October to a single count of racketeering conspiracy, a charge based on allegations that included transporting money and prostitutes across state lines.
The files of those cases provide a rare window into the world of prostitution at massage parlors, and on the sizable amounts of money customers pour into it.
For example:
Federal authorities seized $634,775.75 in cash in searches of two Toledo homes owned by Kim, and of the three parlors themselves, in July 2002, court records show, along with $85,730.32 more from bank accounts. A safe in one of Kim's homes held $329,640 in cash; a safe in her other home held $212,640, records show.
The FBI and the IRS tracked credit-card sales of $541,405 in the three massage parlors over roughly two years - even though authorities believe that only a small portion of massage parlor transactions use credit cards. About $174,000 of those charges occurred over about 20 months at the Olympia Spa in Louisville.
Cash totaling $418,800 was delivered to the undercover FBI agent in Knoxville, most of it by Tran, that was intended for wire transfer to places such as South Korea, or even back to Toledo, according to court records. The deliveries occurred over a five-month period in late 2001 and early 2002.
The federal court records also provide glimpses of the daily workings of three illicit massage parlors.
At least one spa chose not to throw used condoms into its trash, fearing that police would use them as evidence of prostitution. Instead, at the Rainbow Spa in Toledo, employees would "wrap them in tissue and secrete them above the shower, from which Kim would periodically remove the used condoms for off-site disposal," according to information from a confidential informant quoted in an affidavit by Terry Lehman, a special agent with the IRS involved in a two-year undercover investigation of massage parlors.
The federal grand jury in Ohio described Olympia Spa in Louisville as harboring a "prostitution business." One employee told an undercover federal agent that the masseuses who were working there in April 2000 "stayed in the spa, had been there approximately one month and rotated between states," according to the affidavit. The employee said that "every four or five months, she is moved just to change girls," court records show.
John Czarnecki, a Toledo criminal defense lawyer who represents Kim, said he has represented eight or nine Korean massage parlor defendants and sympathizes with them.
"I've represented a lot of these folks and my heart really goes out to them because we ... propose to put them in jail because they're doing the only thing that they know how to do to make a living."
Tran said in an interview that he met Kim about 10 years after he visited a massage parlor in New Orleans, and they developed a friendship.
The two fell out of touch but reconnected a few years ago, Tran said. By that time, Kim was with Tak, and they had begun to build their multi state chain of massage parlors.
Between October 2001and March 2002, Tran made five trips to Knoxville with massage parlor proceeds and credit card receipts, either alone or with Kim accompanying him.
"I was just there to help her out," Tran said.
The FBI got involved through an informant, records indicate.
Since 1997, the FBI had been conducting a large investigation of massage parlors called Operation White Spider that largely focused on Knoxville.
"The FBI undercover agent was initially introduced (to Kim, Tak and Tran) through a cooperating witness," according to IRS agent Lehman's affidavit.
Through CMI's machines, customers' credit card charges would be billed as purchases from CMI, rather than from the parlor, court records show.
In addition, "the owners believed that the business laundered the illegal proceeds through offshore accounts and that the money was 'clean' when it was returned," according to Lehman's affidavit.
The court records show that a customer's credit card typically would be charged twice when prostitution occurred. First, an "entrance fee" of $40 to $65 would be charged; a short time later, a charge typically ranging from $40 to $160 would occur.
The extra fees, Lehman's affidavit said , "were paid for sex acts."
Tran was quoted in Lehman's affidavit as saying that he knew of some masseuses "who are earning more than $50,000 per month." But he said in the interview with The Courier-Journal that he had only overheard some of the masseuses say that.
"I never asked them how much they make," he said.
But he said that whatever they made was usually gone in short order - some sent to their families overseas, and much of the rest often lost in casinos.
"They spend it all up," Tran said.
Authorities tracked credit-card sales at three massage parlors, including one in suburban Louisville.
