A man and his wife, who for more than a decade have been major figures in the sexually oriented businesses along 14th Street NW, were sentenced to federal prison yesterday, in a major step toward the demise of Washington's notorious row of massage parlors and peep shows.
Herbert Cole, 47, was sentenced to two to eight years in federal prison and fined $10,000 on tax evasion and racketeering charges stemming from his involvement in two massage parlors in the 800 block of 14th Street NW that the goverment said were fronts for prostitution. His wife Mary, 44, was sentenced to six months to three years in prison and fined $10,000 for tax evasion.
In addition, the Coles, as part of a plea agreement with the government, were required to pay the Internal Revenue Service $1.5 million -- including nearly $700,000 in back taxes, plus interest and late penalties -- for the years 1977 through 1981.
U.S. Attorney Joseph E. diGenova said this was the largest payment ever for a tax case in U.S. District Court here.
"The key in this investigation . . . is getting a racketeer in the wallet as well as giving him serious jail time," diGenova said.
Cole can expect to be imprisoned for at least four years and his wife for at least a year, prosecutors said.
Herbert Cole also was required to sell the Casino Royale building, which extends midway up the block from 1401 H Street NW and houses five sexually oriented businesses, including the Adam and Eve and Paradise massage parlors, an adult bookstore, a video store and a theater.
Cole sold the building for $5 million to a partnership headed by Dominick F. Antonelli Jr., a major Washington developer and businessman, according to records filed in court yesterday.
Cole's attorney said Antonelli plans to raze the building and turn it into an office complex after leases for the sexually oriented businesses run out nearly two years from now.
"It's clear that [Cole] was a major figure in that area and this case is significant in the clean-up of that corridor," diGenova said.
Yesterday's sentencing stemmed from a three-year investigation of sexually oriented businesses along 14th Street that has forced several topless bars and other sex businesses to close down. Buildings that formerly housed sex establishments have been purchased by developers who plan to turn the area into an office and retail site.
The investigation has resulted in convictions of nine people, including the Coles, involved in management or ownership of buildings along the strip that housed sex-oriented businesses.
For years, police were frustrated in their efforts to control prostitution and other illicit activities in the area because the owners of the clubs could easily afford to pay the small fines assessed against employes charged with prostitution and related offenses.
Three years ago police and federal officials decided to go after the owners and operators of the sex establishments and launched complex financial investigations, as well as infiltrating one of the businesses with an undercover FBI agent. Prosecutors said they found a confusing maze of corporate entities and secret business deals devised to hide illegal activities and the vast profits they made.
In court yesterday, attorneys for the Coles said they have done all they can to divest themselves of any possible connections with illegal activities and urged that they not be given stiff sentences.
However, U.S. District Court Judge Thomas Flannery said that Cole and his wife had long profited from their involvement in sexually oriented businesses. Flannery said that Cole has not shown any remorse and had not offered to cooperate with the government in continuing investigations.
Kenneth Michael Robinson, Cole's attorney, said prosecutors had sought from Cole evidence against "public officials in this city," whom he did not identify, but Cole had no such information.
Art Schultz, executive director of the Franklin Square Association, formed by developers to clean up the 14th Street area, yesterday praised the prosecution of the Coles, but said he was disappointed that efforts to eliminate sex establishments are not moving quicker.
He said the Coles still will be allowed to operate the sex-oriented video cassette store and theater in the Casino Royale building until May 31, 1986. Developer Antonelli leased the two sites to the Coles as part of the sale agreement, according to purchase records filed in court. Schultz said Antonelli is also waiting for the lease of the adult bookstore in the building to expire.
Assistant U.S. Attorney Brian Murtagh said in court yesterday that the two massage parlors in the building that have been fronts for prostitution also are continuing to operate.
Both Schultz and developer Jeffrey N. Cohen, who has purchased several sites in the area, said they believe Antonelli would like to quickly remove the sexually oriented businesses from his new building. "Given Nick Antonelli's excellent reputation I suspect that type of property is more of an embarrassment to him," Cohen said.
An attorney for Antonelli declined to comment yesterday. A secretary for Antonelli said that the developer does not speak to the press.