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Escort-service houses go on auction block
CLOSED: As authorities shut some businesses down, others rise to replace them.

By MEGAN HOLLAND
Anchorage Daily News

(Published: March 12, 2006)

For sale: the Bunny Club, Miss Susies and Moon's House. Great locations. Must be converted to legitimate businesses or homes. Going to the highest bidder.

Once flourishing as three of Spenard's most infamous dating and escort businesses -- and police targets for years as thriving haunts of prostitution and other crimes -- the houses are going on the auction block sometime this spring.

They stand empty now, taken over by federal authorities. Blinds shut, strings of Christmas lights turned off and business signs sun bleached, they have, for all intents and purposes, already been stripped of their pasts.

"Everybody in Anchorage knew what they were," said Anchorage Police Department deputy chief Audie Holloway, sitting in his office at Anchorage police headquarters recently with stacks and binders of files in front of him on the cases made. "We had whorehouses right in the middle of town. And we just accepted it in our culture, or it looked like we accepted it, but that wasn't the case at all."

Mun Sun Pak, 57, owned all three houses until June when she pleaded guilty to tax charges after an Internal Revenue Service investigation. The IRS took the houses in September as part of the forfeiture agreement and now plans to sell them to the highest bidder.

According to police records, Anchorage investigators repeatedly targeted Pak and other property owners who they claim ran brothels, but a web of complicated city business licenses, compliance codes and grandfathered zoning rights for old Anchorage homes often got in the way. All the while police had trouble acting fast enough and collecting enough evidence to prove a crime had been committed, Holloway said.

One of them, the Bunny Club, even operated in the same block as a police substation on 36th Avenue.

"For the past 30 years, we would do prostitution cases, but we could only charge the girls who committed the act; we couldn't get the owners," Holloway said. "Those cases were good (to arrest) the prostitutes, but they weren't any good for getting the johns or the madams."

Today, the boxy, single-story home that was Miss Susies is nestled between a preschool playground and a home just off Arctic Boulevard near Northern Lights Boulevard. On a recent afternoon, a school bus pulled up to the nearby curb and unloaded children. Moon's House, similar in structure with big front windows, is across the street.

The property that was the Bunny Club is on the busier West 36th Avenue near Spenard Road, adjacent to a deli and eclectic grocery store.

The reputation of the properties grew at police headquarters over the years. Repeated 911 calls involving drugs, robberies, violence and even a homicide at the Bunny Club in 1998 created an aura of crime around the places, authorities said.

In the years that Pak owned the real estate, seven women with criminal histories that included prostitution offenses held business licenses on the properties, according to a February 2004 search warrant affidavit filed in U.S. District Court. Pak's business, Mun Enterprises, had legal brothels in Elko, Nev. And Pak pleaded no contest to prostitution charges in 1992 in Anchorage, according to the affidavit.

SEX TOYS AND NAKED MEN

Several police raids starting in the early 1990s on Pak's Anchorage properties discovered sex toys and naked men. Condoms were hidden throughout the houses in nooks and crannies including Advil bottles and fried onion food containers. During one bust at Moon's House in January 2004, when police tried to walk to the rear of the home where bedrooms were located, a woman blocked the hallway, yelling in an Asian language, according to the affidavit. When the police officer made it to the bedroom, he looked through a door peephole and saw a naked man lying on a bed, the affidavit says.

Police frustrations were not exclusive to Pak's properties. They said half a dozen other businesses in Midtown and Spenard that claimed to provide adult entertainment and services were really brothels. One such business was The Chateau, a tan and brown building on Minnesota Drive near Tudor Road owned by Mary Elstad and her company, Chyna Inc.

In 1987, police raided The Chateau and seized a Rolodex that contained the names of 4,752 customers and their sexual preferences, according to a February 2004 affidavit filed in U.S. District Court. In a civil suit filed that same year by the Spenard Action Committee, a group trying to rid the neighborhood of prostitution, Elstad said in court that the preferences were what her customers liked to talk about or were business notes on the legitimate services she was licensed to offer, according to media reports at the time.

Elstad won the case in 1993 before the Anchorage Superior Court, which ruled there was no recent evidence to say The Chateau was in the sex trade.

"Cops were just pulling their hair out," Holloway said. "We weren't looking at the big picture."

But then, several years ago, during a raid of one of the Pak properties, police noticed credit card receipts and an ATM machine.

"Finally the stars aligned," Holloway said. Police asked the federal government to look at the businesses' financial records.

A BREAKTHROUGH

Acting U.S. Attorney Deborah Smith said federal authorities took up the cases against Pak and Elstad because of the repeated criminal activities around the properties.

"Whether it's a crack house or a bar or a massage parlor or any kind of home or business, if it is generating criminal activity and violence we will be looking at it closely," she said.

In May 2005, Elstad pleaded guilty to failing to file for taxes and agreed to pay a $25,000 fine. She donated The Chateau -- with its mirrored walls, stone fireplace and Jacuzzi room -- to the Corporation of the Catholic Archbishop of Anchorage after the investigation began but before federal authorities could file charges, Smith said.

The property has since been sold by the church, chancellor Charlotte Davenport said.

"We tried to bring Mary down for 20 years, but she's just more agile than us and she's smart. And, she had very good, expensive lawyers," Holloway said. The lawyer who handled Elstad's case on the federal charges was former U.S. Attorney Robert Bundy.

Elstad did not return repeated phone calls; neither did Bundy. Elstad, now 49, owns several coffee cafes and a hot dog stand in Anchorage, according to a database of public records.

In June 2005, Pak pleaded guilty in U.S. District Court to concealing income from the federal government. The IRS seized the three properties and Pak agreed to pay $120,000.

Ron Offret, lawyer for Pak, said his client had a legitimate city business license to offer adult entertainment. Was she running a house of prostitution? "The police were never able to prove that. They used to attempt to do a lot of illegal entries into the place, but even with those illegal entries they were never able to prove that," he said.

AUCTION BLOCK

The Spenard properties will be auctioned in May or June, said Jann Tompkins, the asset forfeiture coordinator for the IRS. They are assessed at a total of about $320,000, according to municipal tax records. The Anchorage Police Department, which spearheaded the investigations, stands to gain 80 percent of the proceeds. The IRS will claim the remaining funds.

"I just hope somebody buys it and does something nice with it or tears it down," said Janice Lawson, administrator for Northern Lights Preschool and Kindergarten, which is next door to the property that was Miss Susies. "The kids couldn't see what I could see over the fence. We've not really had problems per se, but it was an eyesore."

Holloway said, "Our focus was to shut these down and at least not have places in town that are so obviously places of prostitution."

But is Anchorage cleaning up? Not really, police say. Holloway said a few businesses have since opened that are the new bordellos of Anchorage. More so, though, with the Internet and cell phones, the prostitution business doesn't need a storefront anymore. Prostitutes move from hotel rooms to apartments to customer homes, police said.

Many of the sting operations now are initiated over the Web. Police have also started more aggressively going after the johns -- those who solicit the prostitutes -- by impounding their vehicles and publicizing their names to embarrass them.


Daily News reporter Megan Holland can be reached at mrholland@adn.com.

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