Gregory L. Mcfarland and Myong Suk Mcfarland Sentenced in U.S. District Cour
The United States Attorney's Office announced that during a federal court session in Billings, on February 1, 2012, before Chief U.S. District Judge Richard F. Cebull, GREGORY L. McFARLAND, age 52, and MYONG SUK "SUZIE" McFARLAND, age 62, residents of Billings, appeared for sentencing. They were each sentenced to a term of:
Prison: 13 months, with supervised release to follow
Special Assessment: $200
They were sentenced in connection with their guilty pleas to interstate promotion of prostitution and money laundering.
In an Offer of Proof filed by Criminal Chief and Assistant U.S. Attorney Kris A. McLean, the government stated it would have proved at trial the following:
From 2005 to 2010, numerous law enforcement agencies investigated allegations of illegal prostitution at the Far West Sauna and Shangri-La Spa and Sauna both located in Billings. Initially, law enforcement was informed in March of 2005 that guests of the Holiday Inn in Billings were complaining that they had been propositioned at the Far West and that the massage parlor was offering sexual services.
During the course of the investigation, law enforcement commenced surveillance on the Far West and Shangri-La. Law enforcement observed numerous men enter and leave the establishments. Several of the men leaving the establishments were interviewed by law enforcement and reported that upon entering the establishment a woman greeted the customer and collected the $60 "door charge." Sometimes the woman asked if the customer wanted to "tip" now or later. According to men, "Tip" referred to sexual services. The men reported they would pay between $200 and $300 for sexual acts to be performed by Far West and Shangri-La employees. The men confirmed that employees told them that the "madam" made all of the money from the massage and 50% of any additional services that the women performed. Several men also told law enforcement that they used a credit card to pay for sexual services at the businesses and it showed up on their credit card statements as Onjona Corporation. MYONG SUK "SUZIE" McFARLAND is the President and GREG McFARLAND is the Treasurer of the Onjona Corporation #2. The men were shown a picture of MYONG "SUZIE" McFARLAND, and confirmed that the picture looked like a person they had seen at Shangri-La that they understood to be "Suzie."
During the investigation, detectives with the Billings Police Department also entered the establishments with recording equipment. At both locations, a woman came to the interior door and greeted detectives. Detectives could not identify the women they spoke with through the screen. At each location the women told the detectives that they had to pay a $60 door fee and a "tip" in the room. At each location, detectives were informed that sexual services would cost at least $200. As the detectives were leaving the Far West they saw SUZIE McFARLAND arrive in the Buick LeSabre and go inside.
During the investigation surveillance was conducted by law enforcement of both the Far West and the Shangri-La. Detectives observed SUZIE McFARLAND's and GREG McFARLAND's vehicles at the Far West and Shangri-La on various dates. On many nights when surveillance was conducted, SUZIE and/or GREG McFARLAND were seen at one or the other, or both the Shangri-La and Far West premises, late in the evening and at times when customers were coming and going. Both SUZIE and GREG McFARLAND were seen transporting women on at least one occasion between establishments.
On September 17, 2010, a search was conducted by federal officers of the Far West and Shangri-La locations pursuant to search warrant. A Korean woman was present at the Far West. She was wearing lingerie. The woman stated that she had worked at the Far West and the Shangri-La for SUZIE for the past 5 years. She identified a photograph of MYONG SUK McFARLAND as "SUZIE". She also identified GREG McFARLAND from a photograph. She reported that GREG McFARLAND comes to the business locations to fix things and that he has also picked up money from the businesses. The charge is a $60 dollar fee plus an additional amount negotiated for sexual services. She stated it is "understood" that money is being paid for sex. Condoms and ledgers were found at the location. A similar statement was given by a woman at the Shangri-La. At the Shangri-La sex toys were found, and many pictures of women in scanty clothing.
Also on September 17, 2010, a search of the McFARLAND residence located in Billings was conducted pursuant to a warrant. The search found hundreds of pages of ledgers/tally sheets with women's names documenting the split of money, hundreds of credit card receipts related to Far West and Shangri-La, security DVDs showing customers entering, women in scanty clothing putting money in the safe or lock box at the Shangri-La and Far West locations, and numerous other records associated with expenses for running the businesses.
Customers paid the Shangri-La and Far West for sexual services with credit cards and cash. FBI financial analysts determined from a review of the records of all the relevant accounts that between September 17, 2005 and May 31, 2010, GREG McFARLAND and MYONG SUK "SUSIE" McFARLAND obtained and illegally laundered at least $1,176,228.70 from their illegal prostitution businesses. Additionally, separate tax returns filed by OnJona Corporation for tax years 2004, 2005, 2006, 2007, and 2008 indicate that OnJona Corporation is a massage parlor and that it employed independent contractors. The U.S. Income Tax Return Form 1099, submitted by OnJona Corporation reveals that it provided compensation or miscellaneous income to 35 women between 2005 and 2010, all with addresses out-of-state, with the largest majority being Minnesota. Several of these women have been interviewed and admit to working as prostitutes at the Far West or Shangri-La for GREG and "SUSIE" McFARLAND.
The United States utilized civil seizure warrants to obtain $120,209 from bank and investment accounts owned by the McFARLANDs. In addition, $86,000 which were traceable to the McFARLANDs' personal residence, were forfeited pursuant to a civil forfeiture complaint. Thus the civil forfeitures against the McFARLANDs add up to a total of $206,209 - all of the funds seized civilly are in the possession of the United States. Eighty percent of the funds seized will be given to the Billings Police Department. All monies paid through civil forfeiture by the McFARLANDs will be a credited against any criminal judgment amount entered by the Court.
Today's sentencings were made possible by the incredible, cooperative efforts of local and federal law enforcement. The sentencings today are a step towards eradicating illegal prostitution and all of the attendant harms that come from illegal prostitution in the Billings community." U.S. Attorney Michael W. Cotter.
These defendants engaged in operating an illegal sex trade for their own personal profit. The FBI won't tolerate this type of criminal activity in any community, and is committed to seeking justice for perpetrators. The Billings Police Department should be commended for initiating this investigation. After inviting the FBI to assist, Billings police detectives and FBI Special Agents were able to incorporate existing evidence, develop new leads, and conduct a thorough financial analysis of the business. With the support and collaboration of the United States Attorney's Office, the United States Marshals Service, and the IRS, this case resulted in federal criminal charges and put an illegal operation out of business." FBI Salt Lake City Division Assistant Special Agent in Charge Robert F. Lasky.
These are very difficult cases to investigate and prosecute and I'm very pleased with the outcome. This case would not have been possible without the support and cooperation of our federal partners. I have had the opportunity to travel the country and watch multi-jurisdictional operations. I can say unequivocally that Montana is blessed to have such great working relationship between all law enforcement partners." Chief of Police Rich St. John, Billings Police Department.
The excellent work of all of the investigative agencies and the U.S. Attorney's Office in this case gave the Marshal's Service the opportunity to take back criminally derived funds from the defendants -- through civil forfeiture -- and give it back to local and federal law enforcement to further their efforts in Billings and Montana. The forfeiture funds in this case are a good example of another of the many different types of work that the U.S. Marshal's Service accomplishes on a daily basis for the people of Montana." U.S. Marshal for the District of Montana, Darrell Bell.
The investigation was a cooperative effort between the Billings Police Department, the Federal Bureau of Investigation, and the Criminal Investigation Division of the Internal Revenue Service. The forfeiture in this case was administered by the U.S. Marshal's Service.