Mahalo for supporting Honolulu Star-Advertiser. Enjoy this free story!

On any given day, the scores of illegal massage parlors in Hawaii each can take in thousands of dollars from sex transactions. Read more

On any given day, the scores of illegal massage parlors in Hawaii each can take in thousands of dollars from sex transactions. Over the course of a year, the revenue at a single establishment can climb into the hundreds of thousands of dollars or more.

By one conservative estimate, the illegal operations collectively generate more than $30 million annually in the islands.

“That is a very, very low estimate,” John Tobon, acting special agent in charge of Homeland Security Investigations in Honolulu, said at a recent City Council committee meeting.

How the businesses regularly launder such hefty sums to conceal illegal activity is unclear, given the opaque underworld of the illicit sex trade.

But Hawaii law enforcement agencies, unable to curtail the proliferation of such businesses over the years, are readjusting their approach, delving into ownership ties and looking for ways to disrupt the financial infrastructure that supports the industry.

“We all came to the table and said we have to look at this in a different way,” Tobon told the Honolulu Star-Advertiser.

When Tobon arrived in Honolulu in February to oversee the lead federal agency for investigating human trafficking, one of the first things he did was to reach out to the Hawaii Bankers Association.

Banks and other deposit-taking institutions can play important roles in combating trafficking by looking for red flags commonly associated with such activity.

A massage parlor or spa, for instance, that incurs unusually high credit-card charges for grocery bills may signal that people are living at the business, a possible sign of trafficking, experts say.

Yet since mid-2018, Hawaii’s deposit-taking institutions filed only one report of suspicious activity related to human trafficking — the lowest total among the 50 states, according to a Star-Advertiser review of data from the federal Financial Crimes Enforcement Network. The per-state average for that period was 60.

Even depository institutions in Guam and Puerto Rico filed more reports — two for each U.S. territory — than those in Hawaii.

“Somebody needs to look at why that is, particularly in an area like Hawaii and Honolulu where we know there’s a lot of prostitution,” said Kieran Beer, the New York-based chief analyst and director of editorial content for the Association of Certified Anti-Money Laundering Specialists.

The question “isn’t even can we do better,” Tobon told the Star-Advertiser. “We have to do better. We have no choice.”

The Hawaii association in September held a Bank Secrecy Act and Anti-Money Laundering conference at which several sessions focused on human trafficking and writing suspicious activity reports. Tobon spoke at the conference.

Human trafficking includes sex and labor trafficking, with either form entailing the use of force, fraud or coercion to essentially enslave the victims.

Getting financial institutions to become more alert to trafficking red flags is just one area in which Tobon and others in the law enforcement community are trying to combat the proliferation of illicit massage parlors here.

City prosecutors so far this year have shut down eight, pursuing prosecutions using statutes dealing with unlawful ownership or operation of a business and promoting prostitution, according to Dwight Nadamoto, the acting prosecutor, and Lynn Costales, the acting first deputy.

Since 2015, that office has shut down more than a dozen illicit parlors.

It also has targeted property owners of buildings in which such businesses are tenants, issuing so-called nuisance abatement letters that can put landlords at risk if the suspected prostitution or sex trafficking is not ended within 45 days. Landlords can face civil litigation, fines and the possibility of losing their property.

But even as some illicit sex-trade operations shut down, others open elsewhere, often linked to the closed ones but using different business names and shell corporations for licensing purposes, investigators say.

Given the ebb and flow of such a whack-a-mole enforcement approach, investigators increasingly are looking deeper into the trade, searching for connections that lead to the organized crime organizations believed to control many of the illicit parlors here. Those organizations often have ties to illegal operations in other states as well, agents say.

“Making those connections is a matter of looking in the right places,” Tobon said. “This is transnational organized crime. These are the big players.”

Estimates vary widely on how many illicit parlors operate here.

Tobon refers to a 2017 study published in the Journal of Human Trafficking as a guide for gauging the size of Hawaii’s industry. He extrapolated data from the study to come up with his $30 million revenue estimate.

The study’s authors, including a Texas Christian University expert on human trafficking, found that only 20% of the licensed massage parlors in Houston were legitimate.

If that ratio is applied to Hawaii’s 885 licensed massage therapy businesses, the illicit ones would total about 700.

The Hawaii State Commission on the Status of Women, which is scheduled to release a report early next month on illicit massage businesses, found 104 active ones listed in urban Honolulu in March on rubmaps.com, a website where customers can write reviews of women they hire at “erotic massage parlors.”

Based on the rubmaps.com information, discussions with law enforcement officials and first-hand accounts from women who used to be in the industry, the report estimates that the urban Honolulu brothels generate about $75 million per year, according to Khara Jabola-Carolus, executive director of the commission.

“It’s very, very lucrative,” Jabola- Carolus said.

The report counted a massage parlor or spa as a brothel based on customer reviews on rubmaps.com detailing sex acts they received at the businesses. Besides the 104 active ones, 68 were listed as inactive on the website.

Jabola-Carolus said the brothels are run like plantations, with the women mostly recruited from Asia, grouped and advertised based on race and often living on the premises, usually sleeping on the very tables where they had to perform sex acts.

As the commission report underscores, many of the illicit businesses operate openly in Hawaii, touting their mostly cash-only services on websites known for commercial sex ads.

It doesn’t stop there.

Polaris, a leading nonprofit in the fight against human trafficking internationally, found examples of illicit Hawaii massage parlors advertising on Groupon, the popular e-commerce website that connects customers to merchants.

“It’s, like, that blatant. It is in plain sight everywhere,” said Farshad “Sha” Talebi, a Leeward Community College official who used to work for the Washington state attorney general’s office and conducted training on investigating illicit massage parlors.

Polaris also found that Hawaii’s illegal massage operations had connections to ones in 11 other states, suggesting a network that extends far beyond the islands.

Talebi agrees with Tobon’s assessment that organized criminal enterprises have a hand in the illicit massage trade here, partly because of Hawaii’s proximity to China, South Korea and other Asian countries from which many of the women are recruited.

But establishing links to the organized crime groups is difficult, agents and others say, and the investigations typically are complex and time- consuming.

“The hardest thing is to figure out who’s in charge,” Talebi said.

Focusing on the ownership and financial side, however, is the best way to make a lasting impact on curtailing the trade and also can reduce the reliance on testimony of workers who often are victims of sex trafficking, according to Talebi and others.

“When you look at the finances and conduct a more financial investigation, you start to get at who is the head honcho, who is ultimately the key kingpin in the network,” said Sara Crowe, director of strategic initiatives for Polaris. “If you can shut them down, that’s not victimizing the victims by arresting them.”

Crowe likened the strategy to what investigators did to take down the 1920s’ American gangster Al Capone. “They got him in the end on tax evasion.”

Neal Okabayashi, executive director of the banker’s association, said in a written statement to the Star- Advertiser that Hawaii banks continue to be diligent in filing suspicious activity reports, noting that more than 15,000 have been filed so far this year, including in categories that may implicate human trafficking.

He cautioned that relying on the Financial Crimes Enforcement data can be misleading when it involves human trafficking, partly because that category wasn’t even added to the suspicious activity list until mid-2018.

Okabayashi also said the red flags for trafficking are vague and not as obvious as money laundering or structuring deposits.

In addition, human trafficking usually involves an activity from another category so reporting that activity still achieves the goal of informing law enforcement about a person of interest, he added.

Given Hawaii’s geographic isolation, Talebi said the illicit industry could largely be shut down if agencies here make that a priority and aggressively go after the owners.

“I think you could realistically wipe them out more so than in other places in the country,” he said.

Without such an approach, though, Talebi maintains that the businesses will continue to brazenly tout their services, unafraid of getting caught.

“They have such a nice model that they’re not even concerned,” he said. “They’ll just continue to operate next to your favorite poke place or whatever.”

—

RAISING RED FLAGS

Since mid-2018, banks and other depository institutions in Hawaii filed only one suspicious activity report with the federal government related to human trafficking, the lowest total of any state in the country. The per-state average was 60. Here are the five states with the most reports filed and the five with the least:

Top 5

Delaware: 489

California: 338

Ohio: 305

Texas: 178

New York: 166

Bottom five

Maine: 4

New Hampshire: 4

Alaska: 2

Vermont: 2

Hawaii: 1

Source: Financial Crime Enforcement Network

—

BY THE NUMBERS

48: Hawaii trafficking cases reported to national hotline in 2018

36: Sex trafficking cases

3: Labor trafficking

4: Sex and labor

5: Not specified

Hotline: 1-888-373-7888

Tip line to report suspected criminal activity, Homeland Security Investigations: 1-866-347-2423

Source: Polaris, HSI

Correction: An earlier version of this story misspelled the last name of Sara Crowe, director of strategic initiatives for Polaris, the nonprofit that combats human trafficking.