Herbert C. Cole, owner of a major portion of Washington's fast-disappearing "combat zone" of topless bars, massage parlors and pornographic bookstores on 14th Street NW, pleaded guilty yesterday in federal court to income tax evasion and racketeering through prostitution.
Cole also agreed, under a plea bargain with federal prosecutors, to pay the government $1.5 million from the sale of one of his properties, the Casino Royal Building at 1401 H St. NW. The forfeiture is the largest ever in the District under federal racketeering laws, according to U.S. Attorney Joseph E. diGenova.
The sale and possible closure of the sexually oriented businesses in the Casino Royal -- which include two bookstores, two massage parlors and a movie house -- could have a "profound effect on the future of the strip," a spokesman for the Franklin Square Association said yesterday.
Efforts by the business association and a local and federal law enforcement crackdown, have closed several businesses in the area.
The Franklin Square spokesman said the future of the enterprises in the Casino Royal building depends on whether Cole sells the property to a developer who will raze it, or to a landlord who will continue the businesses. Several persons familiar with the real estate situation said they believed Cole had already sold the building to a developer, but that could not be confirmed last night.
Meanwhile, there was business as usual along the 14th Street strip, with Casino Royal, the This Is It? and Adam and Eve and the Paradise doing a bustling business in magazines, marital aides and movies.
Inside the Paradise, located in the Casino Royal building, the manager said she was unaware of the day's court action, but was familiar with efforts by law enforcement agencies and real estate developers to put their "leisure spots" out of business.
"Police keep hassling us to give the appearance that they are doing something but they are just wasting the taxpayers' money," said the manager, who didn't want her name used. "Closing these places will only mean that more girls will be out on the street. We have rules and regulations in here, but there are no rules on the street. It will only make the situation more dangerous."
As she spoke, the women who worked for her stood in the doorway, dressed in scanty clothing as businessmen and others out for a noonday lunch and stroll stared at them. Some walked in.
As far as those women were concerned, they were simply doing a job.
"It's a living," said one of the bikini-clad women. "Most of us are unwed mothers and it's not that easy supporting a kid on a secretary's salary. People have seen so many movies where the girls are forced into this -- but it's not true. I used to be a secretary and worked my butt off for $125 a week. At least now I can pay the car note and the baby sitter."
"There is such a double standard," said one of her colleagues. "If there wasn't a market, we would not be here. We have some pretty upstanding guys coming through. But we are made out to be the creeps. Most of these guys only want somebody to talk to."
Cole, 49, who lives in Temple Hills, faces a maximum of five years in prison on the income tax charge and 20 years in prison on the racketeering charge. His wife, Mary, also pleaded guilty to the tax charge of failing to pay $236,097 in taxes on their 1981 taxable income of $686,000, according to Assistant U.S. Attorney Brian M. Murtagh. The Coles owed more than $750,000 in back taxes for 1977-81, not including interest and penalties, according to papers filed in the case by federal prosecutors.
The Internal Revenue Service has been investigating Cole's complex financial dealings for the last three years, diGenova said. That investigation coincided with an FBI undercover operation that recently led to the income tax evasion and racketeering pleas of two of Cole's business associates.
The associates, William Michael Hohman and Ira Louis Mayerson, who were Cole's tenants in the building, were indicted by a federal grand jury in August 1983. Both pleaded guilty in October 1983 to income tax evasion and racketeering charges and cooperated with federal investigators.
U.S. District Court Judge Thomas Flannery sentenced them last May. Hohman was sentenced to one to four years in prison and Mayerson was sentenced to serve six to 36 months in prison.
DiGenova said yesterday that their cooperation apparently prompted the Coles to seek a plea bargain rather than wait for a formal indictment by a grand jury.
Murtagh said that Cole owned or operated a large portion of the realty on the 800 block of 14th Street NW, including Benny's Rebel Room and This Is It?
Murtagh said that the massage parlors that were operated in the Casino Royal Building were fronts for prostitution and that the evidence would show that Cole and his tenants shared in the proceeds of the massage parlors and that Cole was aware of and participated in the illegal operations.
Cole said he "disagreed with some of the facts" outlined by Murtagh but waived his rights both to a formal indictment by a grand jury and to a jury trial.
Flannery agreed to allow the Coles to remain free on personal recognizance pending sentencing on Nov. 2.