Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Philip R. Bartlett, Inspector-In-Charge for the New York Division of the U.S. Postal Inspection Service (“USPIS”), and Timothy W. Dumas, the Special Agent in Charge of the New York Field Office of the U.S. Department of State’s Diplomatic Security Service (“DSS”) of the U.S. Department of State, announced today that KWANG KYU KIM, a/k/a “Kevin,” HYUN KYUNG HAN, a/k/a “Jay Hee,” HONG NAE YI, a/k/a “Diane Yi,” BEIRNE LOWRY, a/k/a “Michael,” TIEN CHIH WANG, and ZHENGYI LU, a/k/a “Allen,” were charged with money laundering and conspiring to commit money laundering in connection with a scheme to provide financing and other support services to brothels in the New York metropolitan area. The defendants were arrested this morning and were presented before a U.S. Magistrate judge in federal court in Manhattan this afternoon.
Manhattan U.S. Attorney Geoffrey S. Berman said: “These individuals allegedly offered support to independent owners of illegal brothels in the form of financing, website maintenance, and other administrative assistance to help the brothels function. By allegedly offering their support, they contributed to the commercial sex industry, an industry notorious for heinous victimization of young women.”
USPIS Inspector-in-Charge Philip R. Bartlett said: “As alleged in the complaint, the suspects thought they could hide their crimes by laundering their illicit proceeds using money orders and other financial instruments; but their tricks were uncovered when they underestimated the resolve of law enforcement to follow the trail of money no matter where it leads. Postal Inspectors and their law enforcement partners are doing their part to, ‘turn off the red light,’ on the sex trafficking trade.”
DSS Special Agent in Charge Timothy W. Dumas said: “DSS continues to disrupt and dismantle transnational criminal organizations seeking to profit from the entry and illicit activities of vulnerable foreign nationals. This investigation demonstrates the global reach of the Diplomatic Security Service.”
According to the allegations contained in the Complaint unsealed today:
Since 2012, the Diplomatic Security Service, United States Postal Inspection Service, United States Customs and Border Protection, and the United States Attorney’s Office for the Southern District of New York have been investigating money laundering in connection with a network of Korean brothels that are located in the New York metropolitan area.
These brothels, which are independently owned and operated, receive financing and advertising from common sources. KWANG KYU KIM, a/k/a “Kevin,” HYUN KYUNG HAN, a/k/a “Jay Hee,” and HONG NAE YI, a/k/a “Diane Yi,” provide financing for several brothels in Manhattan, including by issuing loans with high interest rates to Korean brothel owners and employees. KIM and YI also operate rotating credit associations in which individuals, who are often involved in the commercial sex industry, contribute a fixed amount each month and then receive the lump sum on a rotating basis. KIM, HAN, and YI have collectively provided or assisted in providing hundreds of thousands of dollars to finance new and existing brothels in Manhattan.
BEIRNE LOWRY, a/k/a “Michael,” TIEN CHIH WANG, and ZHENGYI LU, a/k/a “Allen,” provide advertising services to Korean brothels in Manhattan. LOWRY, WANG, and LU create and maintain individual websites for brothels, which include sexually suggestive photographs and coded language for specific commercial sex activities. LOWRY also registered and promoted a website that aggregated information and advertising for brothels in the New York metropolitan area. WANG and LU further coordinated online reviews for the brothels’ commercial sex services and facilitated the brothels’ purchase of commercial sex advertisements on third-party websites.
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The defendants, KWANG KYU KIM, a/k/a “Kevin,” 62, of Queens, New York, HYUN KYUNG HAN, a/k/a “Jay Hee,” 49, of Queens, New York, HONG NAE YI, a/k/a “Diane Yi,” 59, of Queens, New York, BEIRNE LOWRY, a/k/a “Michael,” 59, of Manhattan, New York, TIEN CHIH WANG, 44, of Queens, New York, and ZHENGYI LU, a/k/a “Allen,” 35, of Queens, New York, are each charged with one count of conspiring to commit money laundering and one count of committing money laundering. Each count carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Nathan Rehn, Danielle Sassoon, and Elinor Tarlow are in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.