A.G. Schneiderman: Ad Agency Head And Pimp Involved In Prostitution-based Money Laundering Ring Enter Felony Guilty Plea

Prostitution Ring Generating Millions Of Dollars To Advertise Sex Services

Ad Agency Boss And Pimp She Worked With Will Each Go To State Prison For Up To 3 Years

Schneiderman: My Office Will Continue To Uncover And Punish Those Who Exploit Women And Profit From Exploitation


NEW YORK - Attorney General Eric T. Schneiderman today announced the guilty plea of Milagros Katz, the head of Manhattan-based advertising agency Somad Enterprises, Inc., to a felony Money Laundering charge in Queens Supreme Court. Katz, 50, of Jersey City, is charged with Enterprise Corruption and Money Laundering for her role in the illegal operations at Somad, which created, monitored, facilitated and employed online, print and cable television advertisements to knowingly and systematically promote prostitution for large- and small-scale prostitution businesses across the Tri-State area. The ads ran in a variety of high-profile outlets, including Backpage.com, the Village Voice and the Yellow Pages.


A pimp that worked with Somad, Wei Qu, 51, of Flushing, pled guilty to Enterprise Corruption before Justice Buchter today. He will be sentenced to a state prison term of 1 to 3 years and be required to forfeit $45,000.   


“Today’s guilty pleas are part of our ongoing effort to ensure that those who participate in large-scale, lucrative prostitution based money laundering operations – including advertising bosses who use seemingly legitimate business to hide their roles in these illegal activities – are held accountable,” said Attorney General Schneiderman. “My office will continue to work with law enforcement agencies around the state to root out criminal networks that launder money, promote prostitution and exploit women.”


Katz, who is out of jail on $500,000 bail with an electronic monitoring ankle bracelet, will be required, as part of her plea deal, to pay $100,000 to settle the lawsuit lodged by the Attorney General’s office targeting the proceeds of Katz's Money Laundering activities. The ad agency, Somad, also pleaded guilty today before Queens Supreme Court Justice Richard Buchter to the same Money Laundering charge.


This plea is the result of a 16-month joint investigation by the Attorney General's Organized Crime Task Force and the New York City Police Department that uncovered the illegal operations headed by Somad Enterprises, Inc., that was run out of an office at 150 W. 25th St., Suite 1202, and remote locations in Queens, New Jersey, Pennsylvania and the Philippines. The investigation resulted in a Queens County indictment which charged 19 people and the corporate defendant with a variety of crimes, including enterprise corruption, money laundering, falsifying business records, promoting prostitution and top narcotics possession and sales charges.


During the course of the arrests and execution of search warrants last fall, investigators found two women who were the victims of human trafficking by two of the ringleaders of the operation. Investigators from the Attorney General’s office and the NYPD rescued the two trafficking victims from locations in Manhattan and, in coordination with Sanctuary for Families, brought them to a safe haven. The investigation is ongoing.


Through the use of electronic surveillance, physical surveillance and the review and analysis of a voluminous number of bank records and tax related documents, in conjunction with other investigative tools, the Attorney General’s investigation identified Somad Enterprises, Inc., which created, monitored, facilitated and employed online and print advertisements, including on Backpage.com and in the Village Voice, and cable television commercials to knowingly and systematically promote prostitution for pimps and for which Somad and its employees, as well as the prostitution business clients, profited handsomely.


According to a review of Somad's financial documents, between January 1, 2010 and October 2012, prostitution businesses paid in excess of $3 million in advertising to promote their prostitution business.


This enterprise utilized numerous shell corporations, created with false information, which were used to process millions of dollars in credit card transactions which hid the true nature of the charges by claiming the corporations services were for cleaning, acupuncture, antiques and party planning rather than for sex and/or drugs.


Each prostitution prong of the enterprise utilized the income derived from their illegal prostitution and drug related businesses to pay Somad for their advertising services, effectively laundering money through Somad, disguising the origin of the proceeds as legitimate advertisement payments. These payments to Somad were used to both pay Somad employees who ran the advertising business and to place additional ads which promoted their prostitution businesses. 


The prostitution groups relied on Somad’s well-established relationships with media to secure discounts for the criminal enterprise's clients. The prostitution managers controlled the flow of money from johns, bookers, drivers, house mothers and Somad.


Katz was the vice president and principal of SOMAD Enterprises, Inc.– the advertising agency that created, monitored, facilitated and employed online and print advertisements from which Somad employees and prostitution business clients profited. The agency created customized prostitution advertisements including photos and text for use in various online and print publications. The money came into Somad for the prostitution ads and was then covered up by false documents and passed off as "clean money." SOMAD passed itself off as a legitimate advertising agency. Katz had been released upon $500,000 bail and the requirement of wearing a monitoring bracelet upon her ankle. 


Wei Qu a/k/a William, a/k/a Andy, 51, Flushing, NY, pled guilty to Enterprise Corruption, a class B felony. He will be sentenced to a state prison term 1 to 3 years and be required to forfeit $45,000.


Katz and Somad each pled guilty to one count of Money Laundering in the Second degree.


The charges are the result of a joint investigation by the New York State Attorney General’s Organized Crime Task Force and the New York City Police Department’s Organized Crime Control Bureau Vice Enforcement Major Case Team, with the assistance of the New York State Police, New York State Department of Taxation and Finance, U.S. Homeland Security and the Westchester County District Attorney's Office.


The case is being prosecuted by OCTF Assistant Deputy Attorneys General Diego Hernandez and Brandi Kligman under the supervision of Deputy Attorney General Peri Alyse Kadanoff and Executive Deputy Attorney General for Criminal Justice Kelly Donovan.