A Baltimore businessman, who the FBI said owns one of the largest pornography distribution firms on the East Coast, was arrested today along with six other men in what federal law enforcement officials said was an effort to shut down a complex corporate network of sexually oriented businesses.
"We're not going to just put these people in jail, we're going to take their whole empire," U.S. Attorney Russell T. Baker Jr., told reporters today in announcing the indictment and arrest of Jacob (Jack) Gresser, who allegedly ran the lucrative sex business through his principal company, Bon-Jay Sales Inc.
Baker and FBI officials noted that Gresser was charged under a federal antiracketeering law that would enable the government to seize the businesses and their assets if Gresser is convicted.
Federal officials alleged that Gresser's multimillion-dollar-a-year empire included massage parlors, adult bookstores, a bookkeeping company and distributors of pornographic magazines, as well as production of video cassettes of pirated copies of such major motion pictures as "Jaws," "Rocky" and "Animal House."
Gresser, 47, was charged along with seven others in a 52-count indictment handed down Tuesday by a special federal grand jury. The jury alleged that he also used his sex-related businesses as an outlet for prostitution here and in Washington and the illegal distribution of the cassettes. One of the men indicted has yet to be arrested.
The indictment alleged that Gresser controlled two Washington businesses, the Magic Touch massage parlor, at 819 13th St. NW, and the Pleasure Palace, an adult bookstore and massage parlor at 1220 New York Ave. NW, and that they were centers for prostitution.
The Bon-Jay probe is the latest of a series of local and national efforts by the FBI to control the multibillion-dollar pornography industry, which the FBI alleges is in part controlled at the highest echelons by major organized crime figures based in New York City and Cleveland.
Earlier this month, FBI agents and D.C. police seized business records and other financial data as part of an investigation into a separate Washington-based pornography operation allegedly run by a man identified as Donald David Epstein. No charges have been filed yet in that case.
In February 1980, a federal grand jury in Miami indicted 45 persons from 10 states as part of a 2 1/2-year nationwide undercover probe, dubbed "MIPORN." Iin that case, FBI agents established a phony mail order house in Miami to make contact with the pornographers. The investigation also resulted in additional charges relating to the sale and distribution of illegal videotape cassettes of motion pictures.
The investigation of Bon-Jay also included the establishement in August 1978 of a fake FBI pornography and videotape cassette distribution company in Washington called Odyssey Productions. It operated out of a suite of offices at 7826 Eastern Ave. NW.
An undercover FBI agent posing as a distributor with the fictitious name of Joseph M. Sciandra purchased thousands of dollars worth of illegal videotape cassettes along with sex books and magazines under the pretense that he planned to sell the items to his own outlets, FBI officials said. Actually the FBI kept the materials.
The FBI also had a woman undercover agent pose as someone interested in setting up a prostitution business for Odyssey, in an effort to learn about Gresser's alleged prostitution operation. A second woman agent worked as a secretary at Bon-Jay's Baltimore offices for about a month, according to law enforcement sources. The probe also relied on court-approved wiretaps placed on Bon-Jay phones.
While officials said the investigation was aimed at the Baltimore-Washington-area pornography business, the indictment does not charge any violations of federal obscenity laws. Instead the charges, which include interstate transportation to promote prostitution, wire and mail fraud and infringement of copyright laws, are based on alleged prostitution and production of the video cassettes.
Law enforcement sources said a major reason that obscenity violations were not brought is because of the difficulty of obtaining convictions under that statute. Federal obscenity laws require prosecutors to partly show that the sexually oriented material violates "community standards" for obscenity, a difficult concept to establish in court because such standards vary from city to city.
"We're not trying to say something is obscene or is not obscene. We're attacking it from the financial end," said Thomas Baker, an official in the FBI's Washington office, which assisted the Baltimore FBI office in the investigation.
The others charged in the indictment include one Washington businessman and several others from the Baltimore area. They allegedly helped operate aspects of Gresser's business complex, including managing adult bookstores, the distribution of the video cassettes and bookkepping services.
Cleo Yarbough, 43, of 2950 Van Ness St. NW. is alleged to have supplied prostitutes for the two massage parlors in the District of Columbia. s
A second indictment charged a ninth person, George Louis Sharkey Sr., 55, operator of The Video Center in Rockville, and a Gresser associate also named in the main indictment, with participating in an illegal videotape cassette distribution scheme. Sharkey was arrested today in the parking lot of his store at 1761 Rockville Pike.
Bon-Jay, incorporated in 1971, has previously been described by law enforcement officials as a $3.5 million-a-year operation with more than 30 related businesses in Washington, Baltimore and North Carolina.