Washington Post, 5/28/81:
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.
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.