Human trafficking and tax evasion: What's going on at your local massage parlor? - Asbury Park Press

[Jenna Calderón]

Behind the darkened windows and hidden side doors throughout hundreds of towns in New Jersey an underground sex business thrives.

It holds women against their will, sidesteps tax laws and fuels organized crime's pockets, says the state's watchdog agency.

A new report by the New Jersey State Commission of Investigation details a litany of crimes in plain sight from Bergen County to Atlantic City and Shore stops along the Garden State Parkway.

The underworld of illicit massage businesses is not only participating in fraud and tax evasion, said the report published by the State Commission of Investigation (SCI), but also appears to be a hub for kidnapping and human trafficking.

A multi-year investigation by the commission looked into approximately 250 massage businesses across the state, including some in Monmouth and Ocean counties, after legislators were concerned about the industry's veiled operations, said the commission's spokesperson, Kathy Hennessy-Riley.

Key findings​

• New Jersey has high standards for massage therapists but has little oversight of the actual businesses that they operate in
• Many of the women involved in the illicit parlor work are brought in from out of state, particularly from a section of New York referred to as "Chinese Manhattan."
• Tax evasion by business owners allows them to live lavish lifestyles with under the table payments

The report drew from interviews with local police, health inspectors and fire marshals, along with investigators who visited suspicious massage businesses to conduct surveillance and obtained sworn testimony from employees. Confidential sources were also tapped to provide first-hand information on how these businesses sidestepped and circumvented laws governing the commerce.

The money to be made by running these massage parlors has fueled the growth of the underground industry. Nationwide, the number has swelled to an estimated 13,000 as of 2022, an increase of around 38 percent from 2019, according to the report.

SCI called these illicit businesses a blight on communities and pointed to the appalling effects on the victims involved.

"The vulnerability of their circumstances, including financial hardship, debt and shame, often led them to suffer silently," she said Chair Tiffany Brewer Williams. "For women who managed to escape the industry, they remained traumatized with few options to move forward with economic independence."

Massage parlors at the Shore​

Hundreds of massage and bodywork businesses were registered with the New Jersey Board of Massage and Bodywork Therapy as of September 2024, Hennessy-Riley said. Investigators used reviews posted for over 300 Jersey-based massage businesses on an explicit sex-buyer website over the past two years to determine which businesses to look at for questionable activities.

Of the 674 businesses statewide, Monmouth County hosts 55 active massage and bodywork employer licenses and Ocean County holds another 27, Hennessy-Riley said. While not mentioned in the report, Hennessy-Riley said the investigation did look into massage parlor businesses in those two counties but declined to cite which ones specifically.

The Asbury Park Press separately noted those towns that had prostitution-related arrests in this or previous years and that hosted massage parlor businesses.

Mayors of those towns were contacted for comments regarding massage parlor incidents, preventative measures and laws that could be taken to restrict these businesses, but none responded.

Calls and emails to Loch Arbor Mayor Paul Fernicola, Manalapan Mayor Mary Ann Musich, South Toms River Mayor Oscar Cradle, Barnegat Mayor Joseph Marte, Stafford Mayor Robert Henken and Toms River Mayor Daniel Rodrick went unanswered.

Ocean Township Mayor John Napolitani Sr. was reached, but declined to comment, saying he didn't have any information on the incidents and referred all calls to police chief Michael Sorrentino.

A call to the chief was not immediately returned.

New York based but New Jersey bound​

Many of the female workers in New Jersey are not there of their own will. Instead, they are victims of coercive labor conditions and human trafficking, the SCI said. Driven into the industry by financial hardship and undocumented immigrations status, the women - most of whom are from China or South Korea - often speak little or no English and have limited income and education.

Targeted by others in their ethnic community, many women who work in New Jersey massage businesses live in or are part of a trafficking network based in Flushing, New York, the commission said.

"Sometimes called the 'Chinese Manhattan,' Flushing is an active center of commerce, finance and transportation with a population that is more than two-thirds Asian, comprised mainly of Chinese and Koreans," according to the report. "It is also considered the 'epicenter of trafficking for the entire country.'"

A June 2024 search of a state database for actively licensed massage therapists, administered by the New Jersey Division of Consumer Affairs, revealed that more licensees listed their addresses at a location in Flushing than from any other place, including those within the Garden State.

"State regulation of the massage industry in New Jersey has rigid standards for massage therapists yet provides minimal oversight of the businesses that operate in it," the report said.

This lends itself to parlors operating under false ownership or with rented licenses, cash payments under the table and suspicious practices like darkening windows and obscuring the view from the street, the commission said.

To combat the growth and illegal operation of these massage parlors inside their municipal boundaries, some towns have enacted their own local laws to oversee or even prohibit massage therapy businesses, and most ordinances require them to be inspected, but parameters vary.

"Several of the municipalities adopted ordinances that prohibit on-site sleeping quarters, long hours of operation, locked doors and sexual activity at massage facilities," the report said. "The City of Bayonne in Hudson County prohibits massage businesses altogether."

Edison Township is a prime example of the success of strict requirements, with officials having shut down around 20 illicit massage businesses and prevented one from opening since 2022, the report said.

Tax evasion and fraud​

While the state strictly regulates massage therapists, there is minimal oversight for businesses, owners and operators, the report said. Weak and fragmented framework that supports the industry was undermined in some instances, enabling corrupt operators to engage in unlawful conduct, including fraud and tax evasion, without detection.

Illicit business practices like operating primarily in cash, reporting little to no taxable income and installing straw owners to hide true ownership have resulted, and allowed business owners to live lavish lifestyles despite having modest reportable incomes.

Some of the questionable massage establishments investigated ran mainly in cash and reported minimal wage or other tax-related information to government authorities, the report said.

"By paying employees in cash, the business owners avoided reporting their existence to federal and state authorities for state unemployment and disability funds and Social Security taxes," the report said. "For workers who do not have legal status within the country, cash payments help them remain hidden from immigration authorities. They also aid business operators in concealing illicit activity, including commercial sex sales."

A Manalapan sex den and a lavish lifestyle​

Juan Zhou was charged twice with running commercial sex operations while managing two parlors over the last 20 years, the report said. The second time was in 2020, when she was charged with prostitution-related offenses at a massage business she owned, Oriental Natural Healing Center in Manalapan, where police investigation found a female employee was living on site.

Zhou's charges were later downgraded to a disorderly persons offense. Oriental Natural Healing Center is not listed as having an active license, according to the New Jersey Division of Consumer Affairs.

In addition to the suspicious activity at the parlor, financial records showed that Zhou purchased four properties in the state despite only reporting a little over $43,000 in wages to the state between 2013 and 2020, equaling an average of $5,397 annually.

She purchased a nearly $700,000 home in East Brunswick in 2014 without a mortgage, according to the commission. In 2017, she bought another home for around $312,000. In 2018, she spent $745,000 to buy two homes in Edison, one of which was bought with cash.

This kind of lavish lifestyle is another common tip-off found with owners of the illicit businesses, the report said. Meanwhile, many of them are not paying the appropriate business taxes, employer payroll/personal income and sales taxes, according to Hennessey-Riley.

Straw owners hide the truth​

To get around licensing issues and background checks, some parlors will use straw owners, the commission said. This hides the true identity of the person operating the business.

Michael DeMaria served as the owner, at least on paper, of Evergreen Day Spa in Pleasantville and had registered several other New Jersey massage parlors and other businesses associated with Chun Yung Evans with the appropriate government entities, the report said. He also helped Evans secure a nearly $30,000 federal disaster relief loan during the COVID-19 pandemic for one of the spas registered in his name, which she later used to open an unrelated business in another location.

DeMaria's role, he told the investigators, was mainly to help Evans fill out paperwork for the businesses to operate legally. Records reviewed during the investigation found DeMaria was the registered agent for a now-closed Asian restaurant in Williamstown and at least two massage businesses: Aqua Blue Day Spa in Cherry Hill and Rainbow Day Spa in Vineland.

Evans is the registered agent for Waterfall Therapy Day Spa in Mays Landing. However, DeMaria’s home address appeared under her name instead of her own, raising legal implications and questions as to the legitimacy of their business operations.

James Yoo monetized his state massage therapist license by renting it to numerous businesses in New Jersey and beyond, collecting tens of thousands of dollars by illicitly using his state-issued credentials while also evading rules and regulations, the report said. Financial records found Yoo got monthly payments ranging from $500 to $1,500 each from three different massage parlors – including two in New Jersey – between January 2021 and May 2023 – totaling $58,300.

Yoo also deposited 108 checks totaling $80,459.63 from 16 massage businesses between January 1, 2020 and October 25, 2021, according to the report.

The sex trade alive and well at Shore towns​

Despite the report and authors failing to cite specific businesses at the Shore in this latest report, a sampling of arrests for related offenses locally included:

Since 2023, six prostitution-related arrests have been made in Ocean Township, according to arrest records obtained by the Asbury Park Press. At least one person arrested had connections to Flushing, New York.

In August, four people were charged with operating a series of massage parlors in New Jersey and New York — including one in South Toms River — which had been peddling sex since at least May 2017.

A few months before that, an investigation revealed that women who were living at both the Rainbow Spa in Barnegat and Bay Spa in Stafford were engaging in sexual activity in exchange for payment.

Less recently, a Toms River couple was charged in 2021 with promoting prostitution at the spa they owned on Route 9. In 2017, two Flushing women faced prostitution charges after authorities busted their Main Street parlor in Loch Arbour.

Proposed solutions​

The SCI presented recommendations to Governor Murphy, the 120 members of the Legislature, policymakers and other interested stakeholders.

In the case of illicit massage parlors, the commission offered the following recommendations:

1. Bolster and expand the state's oversight of massage therapy businesses
2. Improve the massage therapist licensing process
3. Facilitate and strengthen law enforcement investigations into human trafficking
4. Study alternate methods to combat human trafficking and other trafficking-related issues

"The Commission urges the adoption of the proposed regulatory and legislative reforms to eradicate illicit massage businesses, hold owners accountable for corrupt practices and to protect the women often targeted and victimized by traffickers," Williams Brewer said.

If you believe you have identified a trafficking victim, call the 24/7 toll-free NJ Human Trafficking Hotline at 855.END.NJ.HT (855-363-6548). For victim assistance call: Covenant House 862-240-2453.