Money laundering sentence
The so-called “Lady Pimp” of New York City, Jay King, has been sentenced to three years in prison for running a prostitution operation in three states using escorts. Ms. King pleaded guilty to enterprise corruption and money laundering in connection with the operation. Several men who were clientsÂ were also either indicted or implicatedfor illegal prostitution and/or complicity in the conspiracy that resulted in the creation of false business records and tax fraud.
Ms. King admitted to providing prostitution services and crack, cocaine and Viagra to men over a three year period. Her operation used shell corporations created with false information to fraudulently obtain merchant codes to process bank and credit card transactions so that the banks would not discover the true nature of the services.
Bank, credit card companies, charge card companies and payment processors are required to allocate special merchant codes for escort services because they are high risk for fraud (including bank fraud, employment fraud, business record fraud, tax fraud), money laundering, prostitution,Â human trafficking, gang affiliation and tax evasion. Escort services in Canada and in the U.S. have been known to file fraudulent applications for financial services purposely to obtain non high-risk merchant codes to avoid being monitored.