Feds say prostitution rampant at strip clubs

In a move aimed at dismantling the strip-club empire of Frank Colacurcio Sr., federal prosecutors on Monday seized documents and other evidence in a series of raids and revealed that a three-year undercover investigation has turned up "rampant" prostitution and evidence of money laundering and racketeering.

As FBI and Internal Revenue Service (IRS) agents carted away boxes of documents in the raids at several strip clubs, a federal judge in Seattle issued a temporary restraining order that prevents Colacurcio or anyone involved in his operations from selling their interest in the properties in anticipation of federal racketeering charges.

No arrests were made and no criminal charges have been filed.

Targeted in simultaneous raids Monday were Colacurcio's business office, Talents West, and his strip clubs: Rick's, in Seattle; Sugar's, in Shoreline; Honey's, in Everett; and Fox's, in Parkland, Pierce County. Also searched were Colacurcio Sr.'s home and a Seattle apartment.

In an unusually pointed court filing, prosecutors say they anticipate seeking charges against the senior Colacurcio, his son, Frank Jr. and several business associates under the Racketeer Influenced and Corrupt Organizations Act, commonly known as RICO.

U.S. Attorney Jeff Sullivan said Colacurcio, his business partners and several subordinates are under investigation for promoting prostitution, money laundering, tax evasion and mail fraud.

Under a RICO prosecution, law-enforcement officials could seek to shut down and seize the clubs — a penalty prosecutors could not impose after convicting Colacurcio of tax evasion and illegal gambling activities in the past.

"This is the most significant organized-crime investigation we have ever undertaken," Seattle Police Chief Gil Kerlikowske said at a news conference Monday. The raids and an ongoing federal grand-jury investigation will have a "great impact on an organization that is doing significant damage to this city."

Investigators say the Colacurcios and their co-owners, Steve Fueston, David Ebert and Leroy Christiansen, profited handsomely from their clubs. In one 15-month period, they brought in $15.2 million in gross revenues, according to the court filing.

"This is not about the morals police," the chief said. "This is about organized crime ... prostitution and violence."

The investigation has led the city to look into six cold-case homicides and other unsolved disappearances.

Colacurcio Sr.'s attorney, Irwin Schwartz, declined to comment, saying he needed more time to read court documents.

John Wolfe, Colacurcio Jr.'s attorney, said he had no information other than what was contained in court papers. "At this time, no charges have been filed, no arrests have been made, and we will await to hear from the government when they choose to communicate with us," he said.

Colacurcio Jr., 46, arrived at his father's Sheridan Beach house while agents were still searching it. He said he was concerned about the impact of the raid on his 90-year-old father's frail health.

Frank Colacurcio Sr. could be observed at his home reading at his table. Frank Jr. said his father was not available to comment.

Graphic court filings

Court documents filed Monday relate, in graphic detail, pervasive sex-related activities observed by confidential informants and undercover police officers, including one who infiltrated the organization and became a manager at Colacurcio's flagship strip club, Rick's, in Lake City. Investigators also received cooperation from current and former dancers who said they were disturbed by the prostitution they witnessed at the Colacurcio clubs. And police recruited an unnamed business associate of Colacurcio Sr. as an informant.

The document says several of the informants were paid and others went to work for police after they were arrested on criminal charges, including prostitution and drug possession. In some cases, the charges were later dropped.

According to the court documents, one confidential informant said there is an "open invitation" for dancers to earn between $150 and $1,000 by having sex with Colacurcio.

The documents describe semiprivate, dimly lit "VIP areas" where dancers and clients engage in open sex acts and where the floors were littered with used condoms.

The clubs make their money by charging customers a $10 cover charge and $5 for soft drinks, and charging dancers $130 for each shift they work. The dancers make their "rent" back by performing private dances during which they frequently negotiate sex acts in exchange for money, according to investigators. Dancers arrested for prostitution at one club were often sent to work at another.

The clubs also have ATMs that dispense tokens instead of cash. Customers use the tokens to pay for private dances. When the dancers redeem the tokens, the clubs take a 10 percent "exchange fee," the court documents said.

Assistant U.S. Attorney Todd Greenberg said the money-laundering allegations stem partly from the use of the tokens. The tax-evasion and mail-fraud allegations relate to alleged underreporting of a city's admissions tax, which is levied on the cover charges collected at the clubs. Court documents say agents set up surveillance cameras on utility poles outside the clubs and counted the number of customers.

The raids began just before 10 a.m. Monday with FBI, IRS and local police swarming Rick's, on Lake City Way, as well as Talents West, the nearby business office from which the strip clubs are run. Simultaneous raids were conducted at the other club locations.

At Honey's strip club in South Everett, dancer Shawna Graves arrived early for work to be greeted by FBI agents and uniformed Snohomish County sheriff's deputies. Graves said she was asked by authorities to fill out a lengthy questionnaire, which asked her about prostitution in the club and the activities of managers and owners.

"We're not bad girls, we're not prostitutes," said Graves, 27. "We all have kids, we're all single parents. What the hell are we going to do?"

At Fox's in Parkland, FBI agents and Pierce County sheriff's deputies used a crowbar to pry their way inside the strip club. A woman who gave her name only as Christy told a reporter that Fox's was a great place to work and that management didn't allow illegal behavior.

"I've worked here for four years and I would break their fingers if anyone tried to touch me," said Christy, who said she was a dancer.

FBI Special Agent in Charge Laura Laughlin said investigators hope the raids will result in further leads and tips. She asked that anyone with information call an FBI tip line, 1-877-774-8889.

Notorious figure

Colacurcio Sr. has played cat-and-mouse with federal and local law-enforcement officials for six decades, making him one of Seattle's most notorious racketeering figures. As far back as the 1950s, he was identified as a racketeer in testimony before a U.S. Senate committee and accused of using strong-arm tactics to control Seattle's pinball trade.

The three-year investigation that led to Monday's raids was indirectly triggered by a seemingly mundane zoning issue — the Colacurcios' long-standing effort to add seven or eight parking spaces at Rick's.

The so-called "Strippergate" scandal erupted at City Hall in 2003 after the Colacurcios secretly funneled thousands of dollars in illegal campaign contributions through friends, relatives and business partners to the re-election campaigns of Seattle City Council members Judy Nicastro, Heidi Wills and Jim Compton.

The contributions came shortly before the council approved a rezone allowing Rick's to add parking spaces as the clubs moved toward expanding and opening the VIP areas that prosecutors have singled out in court documents as being at the core of prostitution problems in the clubs. The dimly lit areas are designed for maximum privacy and are where most of the sex is taking place, according to the documents.

The rezoning was opposed by neighbors and the city's planning department. Nicastro and Wills were defeated in the November election, and Compton, who was re-elected, later left the council. None of the council members was aware of the Colacurcios' scheme, prosecutors said.

The elder Colacurcio and his son pleaded guilty in January to felony and misdemeanor charges, admitting they reimbursed others to skirt campaign-donation limits. The Colacurcios agreed to each pay $75,000 in criminal and civil penalties.

The Strippergate case revived law-enforcement interest in the Colacurcios, prompting the FBI and the other agencies to form a task force in 2005.

Colacurcio Sr. has served four federal prison terms, primarily for skimming cash to avoid taxes and violating the terms of his probation. His son has served time for tax fraud.

But their strip-club operations continued to operate, initially as liquor establishments and then soda-pop clubs when state liquor rules were tightened.

Dancers have been repeatedly cited by undercover police in recent years for engaging in prostitution and lewd conduct inside the clubs. Some floor managers have been cited for permitting illegal conduct.

Additionally, investigators have looked at Colacurcio Sr. or associates in the slayings of five people in the 1970s and 1980s. The victims were a rival strip-club operator and his fiancée, a bar owner in Central Washington, a mechanic in a murder-for-hire scheme and a police informant.

That effort has led to the conviction of a man in the Central Washington case, a guilty plea by a woman in the murder-for-hire scheme, and the apparent suicide of an Oregon man arrested in the killing of the strip-club operator and his fiancée.

But neither Colacurcio Sr. nor his associates have been tied to the killings, and involvement in the Central Washington case has been ruled out. But a King County sheriff's detective is continuing to pursue leads in some cases.

Seattle Times staff reporters Steve Miletich, Jennifer Sullivan and Christine Clarridge contributed to this report.

Mike Carter: 206-464-3706 or mcarter@seattletimes.com