Even before local and federal agents raided Jade Heart Health in Towson in March and charged its operators with prostitution and human trafficking, what went on at the massage parlor at 1404 E. Joppa Road was hardly a secret.
Men arrived day and night at the small house, customers posted graphic reviews on adult websites, and the owner, Di Zhang, had been arrested multiple times over the past 10 years on charges of running what police said were houses of prostitution.
But court and financial documents reveal what might be the real surprise: Zhang may be as much mogul as alleged madam.
Zhang, 42, has an MBA from the University of Baltimore — as well as a real estate portfolio that includes properties in Oakenshawe and Charles Village, and part-ownership of a publicly traded company that reports doing millions of dollars of business in China.
It is an unexpected profile for someone accused of running an illicit massage parlor, where in small, furtive operations customers often pay less than $100 plus tips for sex in addition to the advertised rubdowns. But, say anti-trafficking advocates, this can be a highly profitable crime and one that can be fought by going after the perpetrators' assets.
"Unlike other items people traffic — guns, drugs — human beings are reusable," said Morgan Weibel, an attorney who works in the Baltimore office of the Tahirih Justice Center, which supports immigrant women who have been trafficked or abused. "Humans can be sold over and over again."
Zhang and Yi Dian Dong, 64, who police say is her boyfriend and father of her child,are awaiting trial on prostitution and human trafficking chargesrelated to the March raid and, in Zhang's case, additional prostitution charges stemming from incidents in May.
"It's not true," Zhang said in a brief interview outside her Towson home. "Everyone thinks I'm a bad person. It's not right."
Dong could not be reached for comment, and no lawyer is listed for him in court records.
Meanwhile, federal authorities have launched a civil-forfeiture case to seize five buildings with a total assessed value of nearly $2 million in which Zhang has an ownership stake. Prosecutors allege that the properties — paid for largely in cash — were purchased with the proceeds from prostitution.
But Zhang's business interests appear to extend beyond the massage parlor and her real estate holdings — and beyond the Baltimore area.
Zhang and Dong are listed as the secretary and CEO of Landmark Energy Enterprise, which uses the same Joppa Road address and phone number as the massage parlor. According to annual reports filed with the Securities and Exchange Commission, the company agreed in 2010 to pay $2.78 million for the patents and assets of a company in China.
Landmark pays Zhang and Dong $8,000 a month each in salary, according to documents filed with the SEC, as well as $2,500 a month in rent for office space at 1404 E. Joppa, which is owned by DZD, a company incorporated by Zhang, Dong and a third person.
It is unclear whether authorities have looked into Landmark as part of their investigation of Zhang and Dong. Rod J. Rosenstein, U.S. attorney for Maryland, declined to comment on whether his office considered the company as part of its forfeiture case against Zhang's real estate assets.
The U.S. attorney's office has been meeting with lawyers representing the owners of the real estate, Zhang and her mother, Xuezhu Zang, "to discuss settlement terms," according to the court documents. Zang did not respond to requests for comment.
The prostitution and human-trafficking charges were transferred from District Court to Circuit Court this summer because "it's a case that's going to require more time and investment," said Assistant State's Attorney John Cox. He declined to discuss the case further.
Zhang has lived in Maryland for more than a dozen years and received her Master of Business Administration degree at the University of Baltimore in 2001, a spokesman there confirmed.
Zhang's biography in Landmark's SEC filings says she earned a bachelor's degree in accounting from Beijing Normal University in China in 1994. She listed two jobs in China, including a stint as an accountant.
On April 1, 2003, she married Michael McGowan at the Baltimore County courthouse, according to a complaint for divorce that she filed five years later. In January 2006 the couple decided to live separately for the purpose of ending their marriage, the complaint said. The divorce was granted in December 2008.
Reached by telephone in Los Angeles where he now lives, McGowan, 35, said he was shocked to learn that Zhang had been arrested on prostitution charges. McGowan said he had no idea Zhang was in the massage parlor business; during the years they were married, he said, she worked with man who had a store selling Chinese imports.
McGowan said he met Zhang when she dined at a Baltimore restaurant where he was working, and they dated for about a half-year before marrying. But he began spending more time in Los Angeles to pursue work in the film industry, and she wanted to stay in Baltimore. Shortly after he moved there, he received divorce papers from Zhang.
McGowan said that he didn't think Zhang married him just to get a green card. But, he said, she did seem very concerned about her immigration status.
"A couple of times, I would come home and she would be in tears. She was going through these episodes where she felt they would deport her," he said. "I explained, 'We are married, I'm an American, no one's going to come and take my wife and deport her.'"
The year they married, Zhang received Maryland certification as a massage therapist. But after she was arrested several times in 2003 and charged with violation of massage regulations and prostitution, both at Jade Heart Health in Towson and at TCM Health and Wellness Center in Glen Burnie, the state Board of Chiropractic & Massage Therapy Examiners revoked her certification in 2004.
At a board hearing, Zhang rebutted the testimony of an undercover detective who said that he had scheduled a massage with her, solicited sex and that she had agreed. Zhang denied that and said she just gave him a one-hour massage, according to the order revoking her license. Police said during the board's hearing that prostitution charges against Zhang either went to the inactive docket or were not prosecuted.
TCM was closed for zoning and fire code violations in December 2003, police told The Baltimore Sun at the time. But Zhang continued operating Jade Heart Health and was arrested again in 2008 and charged with prostitution, human trafficking and massage violations. She was found guilty in District Court and received suspended sentences, deferred fines and unsupervised probation. On appeal to Circuit Court, the prostitution and human-trafficking charges resulted in no prosecution; she received a nine-month unsupervised probation before judgment on the massage violation and a $250 fine.
It is unclear when Dong, who is listed in Landmark Energy's SEC reports as a citizen of China, moved to the Baltimore area. According to the filings, he earned a bachelor's degree in Chinese literature in 1979 from Fuzhou Normal University in China, owned Chinese restaurants and food companies and, since 2005, was in the business of developing commercial real estate in New York.
Zhang and Dong have incorporated a number of companies in Maryland, state records show, some for the purposes of buying and developing real estate and others for dealing in health-related products and services.
In October 2012, one of multiple times police have searched Jade Heart Health, Zhang said she was the operator of Herbal Healthcare and sold products for "weight loss and other health issues," according to documents filed as part of the federal civil-forfeiture case.
But "no significant evidence of any such retail business was found," according to the court documents.
Instead, a bank account in Herbal Healthcare's name received credit card payments from Jade Heart Health's customers, an agent for Immigration and Customs Enforcement who specializes in assets identification wrote in an affidavit supporting the forfeiture case. During a 15-month period ending in September 2012, he wrote, about $193,800 in cash and credit card payments was deposited in the account.
During roughly that same time period, investigators said, $122,000 in cash and $28,000 in checks labeled as rental income were deposited in a bank account in Zhang's name. And, during a two-month period in 2011, Zhang's account received $30,530 in cash and three wire transfers of money from China that totaled $139,155, court documents said.
"Based on surveillance, wage records, and the products of searches, no record of other employment has been found for Di Zhang or Yi Dong," the federal agent wrote. "Other than the prostitution business, I am not aware of any source of cash income to Di Zhang or Yi Dong."
Zhang and Dong bought ads in a Chinese-language newspaper in New York to recruit "young pretty" masseuses, offering them "good income" and "room and board," according to court documents. And they advertised for customers in the adult entertainment section of backpage.com, offering Asian escorts and "outcalls," the documents said.
One woman who worked at Jade Heart Health told investigators that the massage parlor had 30 to 40 customers a day, charged $70 each, with $60 going to the house and $10 to the masseuse.
Another woman told investigators that Zhang charged employees $10 a day for room and board — although she supplied condoms for free. And, the woman said, Zhang told her it would be safer if Zhang held on to the money she made, as well as her passport.
"Di Zhang would not permit [the employee] to take breaks and limited her opportunity to leave 1404 East Joppa Road, with the exception of two occasions," both of which were "outcall" prostitution visits to clients, the documents state.
County police have repeatedly told Zhang to stop "running illegal massage and prostitution businesses," according to charging documents. In October 2012, a county detective and U.S. Homeland Security agents warned her she could face federal and immigration charges if she didn't comply, the documents said.
"The vice unit has conducted numerous search and seizure warrants at Jade Heart Health on the following dates," a Baltimore County detective noted in the documents, listing five dates between 2007 and 2012. "Detectives have advised Di Zhang numerous times to stop conducting such practices."
Even after Zhang and Dong were arrested in March, police said, the alleged prostitution continued — both at the original Jade Heart Health on Joppa Road and a new location on the 9100 block of Belair Road in Perry Hall.
Advocates say prostitution and trafficking cases can be difficult to prosecute — sometimes, sex workers are fearful of testifying, or penalties for those convicted are minimal. The charges Zhang and Dong face are misdemeanors, although human trafficking carries a penalty of up to 10 years in prison and as much as a $5,000 fine.
In 2007, Maryland strengthened its human-trafficking law, which prohibits transporting someone to a house of prostitution. And earlier this year, the General Assembly passed a new law authorizing the seizure of certain property owned by those convicted of human trafficking.
As the new state law was making its way through the legislature, though, federal authorities were already tracing the profits of Jade Heart Health, alleging that they went toward the purchase of four houses and one office building in North Baltimore's Charles Village and Oakenshawe neighborhoods.
"When individuals involved in criminal activities accumulate large amounts of proceeds," the federal agent wrote in the civil-forfeiture filing, "they attempt to legitimize the money through transfers between accounts and investments in various assets such as securities, stocks, and real estate."
The Baltimore buildings were bought by Zhang, her mother or their company, NIU Holdings, according to documents filed as part of the civil-forfeiture case. In several of the purchases, Dong also provided cash, according to the documents.
The properties were bought in 2011 and 2012 for a combined price of more than $956,000.
The forfeiture case makes no mention of Landmark Energy Enterprise, the publicly traded company based at Jade Heart Health.
The company said in its SEC filings that it researches and develops hydrogen- and oxygen-generation technologies. It designs, manufactures and sells machines using that technology for welding, cutting and other industrial uses, the filings say.
Landmark's most recent annual report, for the year ending Jan. 31, 2012, listed $212,233 in sales and a net loss of $510,302 "We have incurred losses since inception, and have not yet received revenues from sales of products or services," the report states.
Despite the losses, the company reported some big-ticket deals. Most notably, in September 2010, it agreed to pay $2.78 million for the assets and patents of a company in China. Payment was made in the form of a promissory note that could be converted into $1 million in Landmark stock.
"Just speculating … but if you have a company with no profits but it's making a $2.78 million deal — that's a red flag," said Martina E. Vandenberg, a Washington D.C.-based lawyer whose Human Trafficking Pro Bono Legal Center helps victims through the criminal justice system and in seeking damages against perpetrators.
Speaking generally about human-trafficking cases, Vandenberg said, "You have all of this cash from an illegal business, and you have to figure out how to get that cash in the regular economy."
Securities lawyers say it's hard to tell from SEC documents alone whether any company is a legitimate entity or a means of laundering money.
In recent years, groups such as Global Financial Integrity have sought to highlight how companies can be used to hide so-called "dirty money" made from crime, making it harder to recover than when it's used to buy property such as homes or cars.
"That's concrete. That's something that authorities can seize," said Josh Simmons, a legal consultant to GFI. "You can send money all over the world; it's extremely difficult to trace."
According to the SEC filings, Landmark began as Reflex Inc., which was incorporated in Nevada in 2007 and described its business as developing, manufacturing, and selling degradable fast-food packaging in Asian countries.
Reflex was sold in December 2009 for $180,000 to a group that was led by Nai Sung Chou and included Dong and Zhang, according to the SEC filings, and the company's name was changed to Landmark Energy Enterprise. Landmark went on to create a subsidiary in China, which partnered with a Chinese company called Dalian Aquarius.
There is little physical evidence of Landmark's operations in the Baltimore area. The company reported to the SEC that it leased a showroom at 706 N. Crain Highway in Glen Burnie for $1,062.75 a month, but it no longer is there.
The address is shared by a complex of buildings, including one that has a sign for Aquarius Energy in the window. A website for Aquarius Energy says that it works in hydrogen-oxygen generation, which can produce an environmentally friendly source of energy for industry. According to documents filed with the Maryland Department of Assessment and Taxation, Chou, of Severna Park, incorporated Aquarius Energy in December 2004 "to provide energy research, development and invention."
The company's space, though, currently houses a satellite TV company, whose employees say the Aquarius Energy sign was left behind by a previous tenant. The landlord of the building did not return calls for comment.
Earl Johnson, manager of Smith Auto Glass next door, said the tenants rarely used the space and appeared to be trying to sell a steel-cutting torch that was powered by hydrogen rather than the more common oxygen acetylene.
Johnson said the men occasionally had a group of potential customers who would arrive for a demonstration of the torch cutting through a pipe. "We have a display today, come see it," Johnson said the men would tell him when they demonstrated the torch in the parking lot. "It wasn't too interesting to me."
As the legal proceedings play out in state and federal court, Pik Hang Lew, 56, a jewelry designer and shop owner, says she is worried about money she invested in Landmark. She is listed on Landmark's SEC filings as a member of the board of directors, but said she is merely an investor and knows nothing about its operations.
Lew declined to say how much she invested. Landmark's annual report to the SEC says she owns 310,000 shares, and is among a group of officers who occasionally provide loans to the company for working capital. As of July 2012, the SEC filings say, Landmark owed a total of $298,012 to its officers.
Lew now worries that she has lost her money, having been unable to locate Chou, who once rented a home in Hanover from her, or reach Zhang and Dong by phone.
Lew said she met Dong and Zhang, who also uses the name Lily, through Chou about five years ago. Lew said Zhang frequently visited her shop and tried to get her and her relatives to invest in the company. She was surprised to learn about Zhang's arrest.
"I didn't know she has this kind of business," she said. "I don't believe she could do that kind of business."
As for Zhang, she said her attorney advised her not to comment publicly. On a recent morning outside her home, in a quiet neighborhood of narrow streets and stone houses in the Towson area, the shade from towering trees and the gurgle of koi ponds made the legal turbulence seem far away.