Unregistered, cash-only Honolulu massage parlors raising red flags for law enforcement

Nearly two-thirds of Honolulu massage parlors reviewed by customers on a popular website within the past year were not registered to do business in Hawaii, and almost all of the unregistered establishments accepted cash only, according to a Honolulu Star-Advertiser analysis.

Massage parlors and spas that do not register with the state and deal only in cash tend to be viewed suspiciously by law enforcement officials, who question whether prostitution, sex trafficking, tax evasion and other criminal activity may be happening there.

“To me, that’s a red flag for crime, period, and organized crime specifically,” said John Tobon, acting special agent in charge of Homeland Security Investigations in Honolulu.

But such businesses often fall under the radar of regulatory agencies — even when they operate in plain sight — and can result in uncollected tax revenue and other impacts.

“They’re so brazen they don’t even care,” said Farshad “Sha” Talebi, who focused on combating sex trafficking in the massage industry in Washington state before moving to Hawaii. “No one is doing anything.”

The Star-Advertiser recently compiled a list of urban Honolulu establishments that had reviews within the past year on a website on which customers post comments about mostly women they hire at what are described as exotic massage parlors. Fifty- three had reviews within the past year. The reviews often mention sex acts.

Nearly two-thirds of the 53 had no record of being registered to do business in Hawaii, according to a Star-Advertiser search of the state Department of Commerce and Consumer Affairs’ business registration database online.

Only 9 of the 53 had valid registrations, while a few others had expired or terminated registrations or were not in good standing.

The Star-Advertiser analysis found all but one of the 34 unregistered businesses operated on a cash-only basis, and the website devoted to exotic massage parlors show that they mostly charge $50 to $100 an hour.

Catering to their clientele, many establishments have ATMs on their premises.

As part of its analysis, the Star-Advertiser ran the names of the 53 establishments through the state Department of Taxation’s online database to determine whether they had legitimate tax licenses.

None could be found for roughly two-thirds of the businesses. But that doesn’t necessarily mean they lack licenses. The newspaper did not have enough information to make a determination one way or the other.

“A business could be operating with a business name and paying tax under a different name,” said Deborah Kwan, a tax department spokeswoman, in a written response to the Star-Advertiser.

But massage parlors and spas that are unregistered and accept cash only are unlikely to be paying taxes on such clandestine transactions, experts say.

While massage parlors are found throughout Oahu, the epicenter of the trade appears to be a 41-floor condominium tower just a few minutes walk from the Hawaii Convention Center.

Nearly two-thirds of the 53 establishments in the Star-Advertiser survey were located at 1750 Kalakaua Ave., or Century Center, according to the massage parlor website. The high-rise is just mauka of the convention center, which is at 1801 Kalakaua Ave.

“The proximity is not a coincidence,” said Khara Jabola-Carolus, who as executive director of the Hawaii State Commission on the Status of Women has done research on Hawaii’s sex trade and trafficking.

Demand for commercial sex is fed in part by some who attend the many conventions in Hawaii, according to Jabola-Carolus and others. It also is fed by a large military presence here and by local residents.

Century Center has long been a hub for massage parlors, at times bringing unflattering publicity.

In 2015 federal and local authorities raided an illegal massage business there, Mayflower LLC, and its operator later was sent to prison for bribing a federal agent to protect the establishment from prostitution raids and to help her gain citizenship.

She previously had been accused of prostitution and performing massages without a license but those charges were dropped because the state took too long to take her to trial, according to court documents.

When the Bistro at Century Center closed in 2007 over a lease dispute, an executive of the company that owned the restaurant told the Honolulu Star-Bulletin that the high-rise had become notorious for permitting massage parlors, hookers and drug dealers to operate with relative impunity.

More than a decade later, it’s not clear why Century Center remains a hub for massage parlors.

John Dotten, president of the association of condo owners at the high-rise, declined to answer Star-Advertiser questions, including why so many such establishments are in the building and whether they are solicited to locate there.

Property management officials for Century Center also would not answer the newspaper’s questions, Dotten said.

Many of the Century Center massage parlors and spas included in the Star- Advertiser’s analysis still operate from the high-rise, according to a phone check done by the newspaper.

Only a few had numbers that no longer were in service.

Most of the establishments that the Star-Advertiser asked to comment for this story did not respond, including Sera, Miho and Akiko Massage.

A woman who answered the phone at what massage parlor website listed as Good Massage said her license was under Alohawai Service, which had a current registration. She said she did not know why her business was listed under Good Massage.

When the newspaper asked another massage parlor whether it still was located at Century Center, someone responded via text that the operation had moved downtown.

But the sender, alluding to the anonymity considered critical for attracting and retaining customers, included a cautionary note about patronizing Century Center establishments.

“CC now has a camera on every floor,” the person texted. “Be careful to go there.”

Anonymity is crucial because research has shown that the majority of men who patronize brothels are married or have partners, according to Jabola-Carolus.

“The customers never want to be known,” she said. “The more informal, untraceable the business is, the better for that customer base.”

The Star-Advertiser sent its registration survey data to DCCA to ensure that the analysis was sound. William Nhieu, a department spokesman, said it was.

He said massage parlors are not permitted to use names for their businesses that are different from those under which they obtained their licenses.

But the agency doesn’t consider the Star-Advertiser’s findings representative for the industry.

“We believe the vast majority of licensed massage establishments and individuals operate legally (they do not engage in prostitution) and are in compliance with licensure requirements,” Nhieu wrote in a statement to the Star-Advertiser.

Massage establishments and the therapists who work there are required to have their licenses posted on the premises, he said. If members of the public suspect unlicensed activity, the department says its Regulated Industries Complaints Office accepts complaints or tips.

Suspected criminal activity, such as prostitution, should be reported to law enforcement.

“Regarding ‘erotic massage parlors,’ if a business is intent on engaging in illegal activity, they will probably do so whether they register as a business or not,” Nhieu said.

Critics say the Star- Advertiser’s findings reflect the state’s lax oversight of illicit businesses that take little effort to find.

But even massage parlors that have legitimate licenses can engage in illegal activity, according to Homeland Security’s Tobon, who cited a 2017 study in Houston showing only 20% of licensed establishments there were legitimate.

Hawaii businesses that do things by the book are hurt by the illicit ones that give the local industry a bad name, Tobon added.

Jabola-Carolus said the Star-Advertiser’s findings underscore that the state needs to crack down on the proliferation of unlicensed establishments.

“This system of selling such vulnerable women is abhorrent and should not be sanctioned by the state,” she said.

But Tracy Ryan, who has worked with sex trade workers for years, said the state’s unwillingness to decriminalize prostitution contributes to the problem of massage parlors operating illicitly, including failing to abide by registration requirements.

That’s why Ryan wasn’t surprised by the Star- Advertiser’s findings.

“The state has made this industry criminal,” she said. “So of course you would have this problem.”