High-end brothels serviced elected officials, tech and pharma execs, military brass: Feds

A network of "sophisticated" high-end brothels in greater Boston and eastern Virginia provided sex for pay to "elected officials, high tech and pharmaceutical executives, doctors, military officers, government contractors that possess security clearances, professors," and others, federal prosecutors said Wednesday.

"Pick a profession, they are probably represented in this case," said acting U.S. Attorney for Massachusetts Joshua Levy at a press conference announcing the arrests of three people in connection with operating the pricey sex shops.

Levy's office said that the brothels required "interested sex buyers" to provide employer information and references before booking sessions with prostitutes.

The brothels charged customers about $350 to "upwards of $600 per hour depending on the services and were paid in cash," according to Levy's office.

The appointments with sex workers allegedly took place in "high-end apartment complexes" where the rent was as much as $5,600, authorities said.

Two websites used to advertise services by prostitutes who worked at the brothels include nude photos of women as well as their physical dimensions.

"Here to serve our wonderful Boston friends," one of the websites said, according to an image viewed by CNBC.

"Each website allegedly described a verification process that interested sex buyers undertook to be eligible for appointment bookings — including requiring clients complete a form providing their full names, email address, phone number, employer and reference if they had one," the U.S. Attorney's office said.

At least five apartments rented by one of the defendants, California resident James Lee, were used as brothels.

In addition to James Lee, arrested in the case were two Massachusetts residents, Han "Hana" Lee, 41, and 30-year-old Junmyung Lee.

Each defendant was charged with conspiracy to coerce and entice to travel to engage in illegal sexual activity. The charge carries a maximum possible sentence of 20 years in prison.

"It is alleged that the defendants collectively established the infrastructure for brothels in multiple states which they used to persuade, induce and entice women – primarily Asian women – to travel to Massachusetts and Virginia to engage in prostitution," the U.S. Attorney's office said.

The brothels, which began operating around July 2020, were located in Cambridge and Watertown, Massachusetts, as well as in Fairfax and Tysons, Virginia.

The Virginia locations are close to Washington, D.C., in an area that is rife with government contractors, many of whom have government security clearances.

The Boston area is home to many pharmaceutical and tech firms, top financial services and law firms, and leading American universities.

In addition to politicians and military brass, business executives and government contractors, customers included "lawyers, scientists and accountants."

"The investigation into the involvement of sex buyers is active and ongoing," the U.S. Attorney's office said.

About 20 "sex buyers" were interviewed by the investigators as part of a multiyear probe of the network, according to an affidavit that supported the criminal complaint.

"I believe there are potentially hundreds of yet to be identified customers," a Department of Homeland Security special agent wrote in that affidavit.

The agent did not name the customers known to have used the brothels' services, but noted, "I do not do this for purposes of maintaining their anonymity, but instead do so because our investigation into their involvement in prostitution is active and ongoing."

In a court filing later Wednesday seeking to have James Lee, 68, detained without bail as a flight risk, prosecutors pointed to evidence showing that he had rented the apartments used as brothels under his name and "at least two fraudulent identities."

"Financial records indicate that James has several businesses and corresponding business bank accounts in his name and in the names of his fraudulent identities, which I believe he uses to launder the proceeds of the prostitution business," Department of Homeland Security Special Agent Zachary Mitlitsky wrote in an affidavit supporting that detention request.

James Lee's business accounts also show deposits of $550,633 in federal Covid-19 relief funds related to various companies controlled by him or by identities that are suspected of being him, the affidavit said.

The affidavit says the Covid-19 relief funds were possibly "fraudulently obtained."

The complaint suggests that the investigation began in 2020, when a confidential source who was awaiting sentencing on then-pending federal criminal charges provided information to authorities about the network of brothels.

The criminal complaint says that between December 2019 and October this year, Han Lee "has deposited just under $795,000 of cash into her personal Bank of America bank accounts, while also utilizing another approximately $109,000 in cash to make payments against her Bank of America credit card account, which she utilizes regularly for travel related purchases and other expenses associated with brothel operations."

During the same time period, Junmyung, who is a student, "has deposited just under $194,000 cash into his personal Bank of America account, while also utilizing another $47,305 in cash to make payments against his Bank of America credit card account," the complaint said.

Han Lee and Junmyung Lee were arrested Wednesday morning and are due to appear in Boston federal court later in the day.

James Lee was arrested in California, where he resides, and will appear in Boston court at a later date.