Defendants Also Sentenced for Money Laundering and Tax Evasion O…

Defendants Also Sentenced for Money Laundering and Tax Evasion Offenses

SAN JOSE – United States Attorney Kevin V. Ryan announced that four defendants in Operation Bad Neighbor have now been sentenced to various periods of incarceration stemming from charges including conspiracy to harbor aliens, money laundering conspiracy, and tax evasion in connection with the operation of 10 residential brothels in the South Bay.

The sentences are the result of an extensive investigation by the U.S. Attorney’s Office for the Northern District of California, the U.S. Department of Justice’s Civil Rights Division, U.S. Immigration and Customs Enforcement (ICE), the Internal Revenue Service-Criminal Investigation Division (IRS-CI), the San Jose Police Department, and the San Mateo Police Department.

U.S. Attorney Kevin V. Ryan stated, “The crimes committed by these defendants have a detrimental impact on the quality of life in our neighborhoods, degrade the women involved in working at these brothels, and oftentimes bring other criminal activity into an area. I commend the outstanding cooperation by the San Jose and San Mateo Police Departments, IRS-CI, and ICE.”

The following defendants were sentenced by U.S. District Judge Jeremy Fogel in San Jose as follows:

Xiao Feng Shen, 35, of San Jose, pleaded guilty on February 15, 2006, to conspiracy to harbor aliens and a money laundering conspiracy and was sentenced today to a prison term of 2 years followed by 2 years of supervised release. Shen also forfeited $65,325 held in bank accounts in his name in addition to $4,543 held jointly with another co-defendant, all of which were funds tied to the investigation.

Jia Jing Chu, 34, of San Jose, pleaded guilty on February 15, 2006, to conspiracy to harbor aliens and was sentenced May 23, 2006, to a prison term of 18 months followed by 2 years of supervised release.

Ai-Ching Chang, 45, of Sunnyvale, pleaded guilty on February 15, 2006, to conspiracy to harbor aliens and a money laundering conspiracy. She was sentenced May 3, 2006, to a prison term of 30 months followed by 2 years supervised release. Chang also forfeited $56,117 in funds tied to the investigation.

Ming Sun, 32, of San Jose, pleaded guilty on February 1, 2006, to conspiracy to harbor aliens and money laundering conspiracy. He was sentenced today to a prison term of 20 months followed by 2 years of supervised release. Sun also forfeited $126,592 in funds tied to the investigation.

Alien Harboring Conspiracy:

According to the plea agreements, Shen, Sun, Chu, and Chang admitted that in 2004 and 2005, they concealed, harbored, and shielded from detection alien women from Asia, knowing that some of these women were not lawfully in the United States. The individuals admitted to employing women as prostitutes in rented, residential locations that masqueraded as unlicensed massage parlors. According to the plea agreements, they would rotate the women through the locations periodically and took measures such as keeping the apartment curtains closed so as to avoid drawing public scrutiny. They would use these measures to avoid attracting attention from law enforcement officials. They provided the aliens with housing, local transportation, supplies for use in the sex trade, and sources of income.

The defendants admitted to keeping a portion of the proceeds from the women’s illicit earnings as their own income. Given the duration of the conspiracy and the number of locations that were operated, the number of illegal aliens whom they harbored in 2004 and 2005 likely numbered between 24 and 99 women.

Money Laundering Conspiracy:

Shen, Sun, and Chang admitted that, as part of the money laundering conspiracy, they would collect the cash proceeds from the locations where the alien women were being harbored. They would use the proceeds to further promote the operation by paying expenses associated with the harboring of the women.

Forfeitures to date of funds tied to this illegal activity are $708,715.22. This includes the money from the bank accounts identified above, as well as other funds seized during search warrants as well as bribe and protection money.

The undercover investigation was initiated by the San Mateo Police Department in the fall of 2004, when one of the defendants, Shen, sought to bribe a police officer for the dismissal of local pimping and pandering charges against another co-defendant.

All of the defendants have been in custody since their arrest in October 2005.

Edward Torpoco is the Assistant U.S. Attorney who prosecuted the case with the assistance of Kristina Pollak and Mae Chu.

Further Information:

Further information from the time of the arrests is available at: http://www.usdoj.gov/usao/can/press/html/2005_10_27_Bad_Neighbor.htm.

Case #: CR 05-00715 JF (HRL)

A copy of this press release may be found on the U.S. Attorney’s Office’s website at www.usdoj.gov/usao/can.

Electronic court filings and further procedural and docket information are available at https://ecf.cand.uscourts.gov/cgi-bin/login.pl .

Judges’ calendars with schedules for upcoming court hearings can be viewed on the court’s website at www.cand.uscourts.gov.

All press inquiries to the U.S. Attorney’s Office should be directed to Luke Macaulay at (415) 436-6757 or by email at Luke.Macaulay[email protected]

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