Not a Happy Ending: Massage Parlors Raided in Prostitution Stings Received Over $100K in COVID Relief

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August 4, 2022

The federal government doled out thousands of dollars of COVID-19 relief funds to "happy ending" massage parlors, a Washington Free Beacon analysis found.

The Small Business Administration disbursed $117,000 to six massage parlors later busted for sex crimes, the Free Beacon found. At least $15,000 of those loans came from the agency’s Economic Injury Disaster Loan Advance program, which does not require repayment. The agency said that because these payments were classified as loans, businesses could avoid the more stringent reporting "requirements that come with a U.S. government grant."

South Bend, Indiana’s Best Chinese Massage scored $98,000 in relief funds in June 2020. Two years later, police raided the parlor after undercover officers were offered sex. Police seized $88,538 in cash from owner James Belkiewitz, an amount roughly equal to the amount he borrowed from the government at reduced interest. Following the raid, workers told police that women were being held at the parlor against their will and forced to provide sexual services to customers.

Wasteful and fraudulent spending related to COVID-19 relief payments from the Small Business Administration was widely reported during the pandemic. Some estimates found that as much as 10 percent of Paycheck Protection Program funds, roughly $80 billion, were obtained fraudulently. Critics have argued that the Small Business Administration, which disbursed PPP loans, should have subjected loan applicants to greater scrutiny to avoid abuse of federal funds. Such criticisms are supported by the fact that some businesses were given funds despite being legally barred from receiving low-interest federal loans.

Best Chinese Massage was hardly the only brothel to pocket government relief funds. Pine Therapy, located just outside Denver, received $14,000 in June 2020 and was raided in April. A grand jury indicted the parlor’s owners for forcing female workers to provide sexual services to customers.

Balance Massage in Bethany, Okla., got $1,000 in aid in May 2020 and was busted this March after an employee offered sexual services to an undercover cop. Healing Massage in Topeka, Kan., pocketed $2,000 in April 2020 and was busted for prostitution in January 2022. In New York, 7 Foot Spa took $1,000 from the Small Business Administration in May 2020 and was raided for prostitution this May. Dream Spa in Wilmington, Del., received  $1,000 in July 2020 and was shut down by law enforcement for human trafficking in February.

These parlors were not the only questionable recipients of COVID relief. The Small Business Administration paid out more than $1 million in COVID relief funds to porn studios, sex shops, and marijuana dispensaries.

The federal government also doled out thousands of dollars in direct payments and loans to drag queens and organizations that promote drag queens. Portland Drag Queen Brunch LLC received $44,500 in assistance and Drag Queen Story Hour NYC LTD. got $6,875.

The Small Business Administration did not respond to a request for comment.