Source: Office of United States Attorneys
BOSTON – A Torrance, Calif. man pleaded guilty today in federal court in Boston to his involvement in operating sophisticated high-end brothels in greater Boston and eastern Virginia and to his involvement in fraudulently obtaining over $580,000 in COVID-19 relief funds.
James Lee, 70, pleaded guilty to one count of conspiracy to persuade, induce, entice, and coerce one or more individuals to travel in interstate or foreign commerce to engage in prostitution; one count of money laundering conspiracy; and one count of wire fraud. U.S. District Court Judge Julia E. Kobick scheduled sentencing for April 29, 2025. James Lee was arrested and charged in November 2023 with co-defendants Han Lee, 42, of Cambridge, Mass. and Junmyung Lee, 31, of Dedham, Mass. The defendants were subsequently indicted by a federal grand jury in February 2024.
From at least January 2022 through and including November 2023, James Lee knowingly conspired with Han Lee and Junmyung Lee to operate an interstate prostitution network with multiple brothels in greater Boston and eastern Virginia designed to entice women to travel interstate to engage in prostitution. James Lee and his co-conspirators also knowingly conspired with one another, and others, to launder the proceeds of the prostitution network by concealing that the money was derived from the prostitution conspiracy.
James Lee rented several high-end apartments in Boston and Eastern Virginia that were used as brothel locations. James Lee was the sole and legal tenant of at least six locations used by this prostitution network. In addition to using his own name to lease the apartments, James Lee would use fraudulent identities and, at times, stolen identities of actual people. James Lee was regularly compensated by his co-conspirators for both leasing apartments and for his travel to and from the brothel locations. Han Lee paid James Lee approximately $1,000 per month per active lease as a commission. James Lee served as a liaison between the females working in the units and the property managers by fielding calls and coordinating any issues that arose relating to maintenance and inspections.
James Lee and his co-conspirators concealed the proceeds of the prostitution network by depositing hundreds of thousands of dollars of cash proceeds into their personal bank accounts and peer-to-peer transfers. Additionally, the defendants regularly used hundreds of thousands of dollars of the cash proceeds from the prostitution business to purchase money orders (in values under an amount that would trigger reporting and identification requirements) to conceal the source of the funds. These money orders were then used to pay for rent and utilities at brothel locations in Massachusetts and Virginia.
Beginning in our around March 2020 through September 2021, James Lee submitted fraudulent information in an effort to obtain loans through CARES Act and the Small Business Administration’s programs like the Economic Injury Disaster Loan (“EIDL”) program and the Paycheck Protection Program (PPP). James Lee used personal identifying information of a third-party to submit false loan applications and open bank accounts used to accept COVID-19 relief funds. In addition James Lee fraudulently applied for PPP Loans and EIDL funds using the names of businesses that did not exist or served as shell companies in furtherance of the scheme. In support of the loan applications, James Lee submitted fraudulent tax documents in the name of the third party and a fraudulent lease between himself and his fraudulent identity. As a result of the scheme, James Lee obtained at least $580,000 in fraudulent EIDL funds and PPP loans.
Han Lee pleaded guilty in September 2024 and is scheduled to be sentenced on March 19, 2025. In October 2024, Junmyung Lee pleaded guilty and is scheduled to be sentenced on April 18, 2025.
Members of the public who have questions, concerns or information regarding this case should contact USAMA.VictimAssistance@usdoj.gov.
The charge of conspiracy to persuade, induce, entice, and coerce one or more individuals to travel in interstate or foreign commerce to engage in prostitution provides for a sentence of up to five years in prison, three years of supervised release and a fine of up to $250,000. The charge of money laundering conspiracy provides for a sentence of up to 20 years in prison, three years of supervised release and a $500,000 fine or twice the value of funds laundered, whatever is greater. The charge of wire fraud provides for a sentence of up to 20 years in prison, three years of supervised release and a fine of up to $250,000 or twice the loss from the scheme. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
United States Attorney Leah B. Foley; Michael J. Krol, Special Agent in Charge of Homeland Security Investigations in New England; and Cambridge Police Commissioner Christine Elow made the announcement today. Valuable assistance was provided by the Central District of California; Eastern District of Virginia; U.S. Postal Service; and Watertown Police Department. Assistant U.S. Attorney Lindsey E. Weinstein of the Criminal Division and Assistant U.S. Attorney Raquelle Kaye, of the Asset Recovery Unit are prosecuting the case.