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Massage schools across the US are suspected of ties to prostitution and selling fake diplomas. Many remain open. - USA TODAY

Minnesota officials didn’t know what they’d find after receiving a tip that the American Academy of Acupuncture and Oriental Medicine, a local massage school, could be tied to prostitution. A locked closet full of student records, off-limits to staff, was an alarming discovery.

So, too, were the massage therapists with credentials from the school who’d lost their licenses for ties to prostitution or human trafficking, and the internship sites and supervisors linked to prostitution. A host of paperwork and financial issues only seemed to arise in the school’s Chinese-language Tuina massage program. 

All of it added up to a “theme of prostitution and/or human trafficking,” the Minnesota Office of Higher Education wrote in a letter to the school’s president. 

At the American Academy of Acupuncture and Oriental Medicine, Minnesota regulators said they found "a theme of prostitution and/or human trafficking."
At the American Academy of Acupuncture and Oriental Medicine, Minnesota regulators said they found "a theme of prostitution and/or human trafficking."
Minnesota Office of Higher Education

The office, though, lacked the authority to prosecute either allegation. Instead, it went after more mundane issues: Payments that didn’t add up. Missing student information. A haphazard approval process for off-site training. 

That was enough for the office in February 2020 to crack down on the Roseville school, ultimately ordering it to close or find a new owner by the following February. The operator of a massage school in Wisconsin purchased the institution and renamed it the American Academy of Health and Wellness. 

The Minnesota Office of Higher Education ordered the American Academy of Acupuncture and Oriental Medicine to sell itself or close, but lacked authority to prosecute.
The Minnesota Office of Higher Education ordered the American Academy of Acupuncture and Oriental Medicine to sell itself or close, but lacked authority to prosecute.
Minnesota Office of Higher Education

Around the country, massage schools in towns large and small are suspected of ties to the illicit massage industry, a billion-dollar black market in the U.S. built to sell sex. A monthslong USA TODAY investigation uncovered two dozen schools with connections to either prostitution or fraud, or both. 

Like the sex spas themselves, the schools suspected of feeding them workers are hard to detect. It’s often something innocuous that catches an oversight group’s attention: a cheat-sheet pulled from a boot during a massage therapy exam, a counterfeit massage license or a signature forged on official school documents.

As in the Minnesota case, regulators sometimes find ways to ding a school for other infractions, but many slip through a fragmented system of accountability. Bringing charges on serious crimes such as human trafficking and prostitution is rare and difficult

Sex spas inhabit strip malls and shopping centers across the U.S., operating next to grocery stores and day cares, liquor stores and restaurants. Their names tend to be generically Asian – Oriental Massage, Jade Spa, East-West Therapy – a nod to their often-Asian immigrant workers and a calling card to their predominantly white male customers. 

Their existence hinges on an air of legitimacy, and law enforcement and advocates suggest that their owners, some part of vast criminal rings, will do whatever it takes to avoid detection. To receive a massage license, applicants in most states must have attended an approved school. In many cases, they also must pass an exam. 

The Seldin/Haring-Smith Foundation, a family foundation focused on accountability in higher education, identified the Minnesota school and others in a report it presented Tuesday to the Department of Education.

A subcommittee from the House Oversight Committee on Tuesday gave the Education Department two weeks to outline its procedures to “identify and stop human or sex trafficking connected with postsecondary education,” citing the foundation's report.

The committee also requested a list of cosmetology and massage schools receiving taxpayer money controlled by the department.

Department of Education press secretary Kelly Leon said the agency takes seriously any allegation of unlawful activity at a university or college receiving federal money. She added the agency has several enforcement offices that review such allegations to see if they should be investigated more closely. 

The former owner of the Minnesota massage school, Changzhen Gong, denied the state’s claims and said he was never given a chance to refute them. He is still paid by the school, USA TODAY found, for helping with the ownership change.

Gong also is featured prominently on the school’s website and was referred to as “president” when he hosted a recent interview on WeChat, a China-based social media app. The school’s old name was still being advertised in a Chinese newspaper as of last month, related to a clinic Gong runs.

While the school’s new ownership satisfied the state of Minnesota, the Seldin/Haring-Smith Foundation noted it bears a striking resemblance to the past institution, including similarities in the academic programs and descriptions of the school’s history. 

So far, the new school shows no signs of the alleged ties to human trafficking previously identified by regulators. But Abigail Seldin, a founder of the foundation and recent contender for a Department of Education position, said it was troubling to see institutions continue to operate after concerns were raised, especially in the case of the Minnesota school. 

“Everybody did everything they could here,” Seldin said. “Our current regulatory structure doesn't empower them to do anything more than what happened. So we have to ask: Is it enough?”

Massage parlors: ‘Substantial’ fraud, connections to human trafficking

The predicament the Minnesota Office of Higher Education found itself in has confounded other authorities across America. 

By design, sex spas are easy to overlook. Neon lights and opaque windows are among the only outward cues; all male clientele and late business hours can be hints, too. Even when they’re identified by local governments and police, what to do about them remains a quandary.

Law enforcement has begun to move away from prostitution arrests in favor of targeting human trafficking, but this approach is notoriously difficult.

Sex trafficking cases typically hinge on whether a masseuse is willing to say she was forced to perform sex acts – a big ask for immigrant women. Prosecutors tend to press charges for crimes connected to trafficking instead, such as money laundering, wire fraud or racketeering. 

Local authorities use yet another tool to weed out shady spas: regulation.

The nonprofit that administers one of the most widely used exams for massage therapy licensure, the Federation of State Massage Therapy Boards, has a bird’s eye view of fraud in the industry. Anyone who wants to take the test must provide personal information such as mailing address and birth date, along with proof they’ve attended an approved massage school. 

Analyzing this data has exposed what the federation called a “substantial amount of fraud” in a 2017 report prepared by its Human Trafficking Task Force. That includes cheating on the national exam, selling fake diplomas and filing license applications on behalf of other people, said Debra Persinger, the federation's executive director.

Ahmos Netanel, chief executive officer of the California Massage Therapy Council
We have seen substantial evidence that indicates that human traffickers try to use fraudulent schools to support their operations, specifically in the form of either purchasing diplomas or enrolling their victims in schools that do not provide the education they claim they actually provide.

Ahmos Netanel, chief executive officer of the California Massage Therapy Council, which runs that state’s voluntary massage therapist certification, has observed it, too.

“We have seen substantial evidence that indicates that human traffickers try to use fraudulent schools to support their operations,” Netanel said, “specifically in the form of either purchasing diplomas or enrolling their victims in schools that do not provide the education they claim they actually provide.”

Illicit massage businesses are often connected to fraudulent schools “that will, for a high fee, provide a fraudulent diploma so that a woman can sit for her licensing exam without any formal training,” according to a 2018 report by Polaris, the nonprofit behind the National Human Trafficking Hotline.

Such “diploma mills” also supply certificates to every worker at a given spa, sometimes issued on the same day and under the same name, Polaris wrote.

In an independent analysis of licensing data from 15 states, USA TODAY identified a similar pattern. In one case, a massage therapist used the address for Royal Irvin College in California to obtain a license in Virginia. It was one of three Virginia massage licenses in her name. In total, the woman held a dozen licenses in various states. She was arrested for prostitution in Illinois and subsequently lost her license in Florida, according to disciplinary records.

Many of the students of American massage schools are Asian immigrants, particularly Chinese. USA TODAY found through interviews and legal cases that schools often prey on those who speak little English or are in economic need.

Many of the students of American massage schools are Asian immigrants, particularly Chinese. USA TODAY found through interviews and legal cases that schools often prey on those who speak little English or are in economic need. Some schools’ websites and advertisements are entirely in Mandarin. 

Sandra Anderson, executive director of Nevada’s State Board of Massage Therapy, said she’s also seen signs of debt bondage, where a school or criminal organization charges students excessive fees and then requires them to work in spas to pay it off. That can leave workers vulnerable to pressure to perform sex acts, she said, which pay more.

“I go out on a regular basis and speak to the students, and in some cases they don’t know they can’t perform sex acts as a massage therapist; they’re not necessarily being taught that,” Anderson said. “It helps curtail it somewhat and helps educate them that perhaps what they're being told to do by their handlers is not legal.”  

Hidden cameras, test answers, fake diplomas

At a test center for a national massage exam, a proctor noticed something odd in November 2015: A test-taker was referring to several pages of notes. It was a cheat-sheet filled with exact questions and answers, members of the Federation of State Massage Boards realized after a closer review. Surveillance video showed the woman had sneaked it into the test center in her boot. 

Investigators learned the applicant had used the email address of a training program based in California and Texas. They went back further in surveillance video and identified one of the program’s owners sitting for the exam a few months earlier. He wore a button-up shirt with one button conspicuously larger – a camera he allegedly used to record test questions, according to records filed by the federation in U.S. District Court. 

A one-stop-shop company for massage licenses was providing exam answers to clients, according to civil court records. One woman was caught hiding a cheat sheet in her boot.
A one-stop-shop company for massage licenses was providing exam answers to clients, according to civil court records. One woman was caught hiding a cheat sheet in her boot.
U.S. District Court, Southern District of Texas
A one-stop-shop company for massage licenses was providing exam answers to clients. A man recorded the answers via a button-shaped camera, civil court records say.
A one-stop-shop company for massage licenses was providing exam answers to clients. A man recorded the answers via a button-shaped camera, civil court records say.
U.S. District Court, Southern District of Texas

Those stolen questions became an integral part of a one-stop shop for massage licenses that the owner ran with his wife and co-owner, according to the civil court records. 

The federation hired a private investigator to contact the training center, posing as a prospective student. She was told they offered everything she would need to get a license: A certification for massage training hours that cost $2,800 to $3,800. Coaching via a thumb drive full of exam answers for $1,000. Fake high school diplomas for an extra $80. Room and board could be purchased for an additional fee.

The owners claimed in online ads they had helped thousands of people obtain licenses within days, posting photos of dozens of licenses from clients in 20 states. The federation was able to confirm hundreds of clients. 

The case ended in a $450,000 settlement in favor of the federation, though details are sealed. The company declared bankruptcy soon after.

USA TODAY identified other cases where authorities found irregularities at massage schools.

Operators of Majestic Vocational Training Center in Colorado, another one-stop shop, pleaded guilty to federal charges of wire fraud. The Colorado Division of Private Occupational Schools found the school was operating out of the back of a barbershop, casting doubt on whether students ever saw a classroom.

The president of the Academy of Oriental Therapy, a New Jersey massage school, told a private investigator that passing the exam was easy – he’d once helped a Chinese student with a fourth-grade education pass it. The federation found the president and employees stole test questions, according to civil court records. 

The school denied the allegations in court records. The case ended with the judge ordering the school to stop copying and distributing test material.

The owner of another New Jersey massage school, Axiom Healthcare Academy, pleaded guilty in a federal case to selling fake transcripts he knew would be used by sex spas to obtain massage therapy licenses. Naresh Rane’s co-conspirator, a former Westwood, New Jersey, councilman, pleaded guilty as well but died by suicide before his sentencing, according to news reports.

A New Jersey massage school owner was selling fake transcripts he knew would be used by sex spas to obtain massage therapy licenses, federal court documents say.
A New Jersey massage school owner was selling fake transcripts he knew would be used by sex spas to obtain massage therapy licenses, federal court documents say.
U.S. District Court, District of New Jersey
Suspicions at massage school, but limited power to act

In its past life, the American Academy of Acupuncture and Oriental Medicine could have passed for any other small, for-profit college. It operated out of a nondescript office park in Roseville, Minnesota. On Facebook it advertised graduation ceremonies and discounted acupuncture treatments by interns. 

In late 2019, the town of Brooklyn Park found at least seven of the school’s graduates had their massage therapy licenses revoked for “ties to prostitution/trafficking,” and the town tipped off the Minnesota Office of Higher Education. The state said the employer of two other students was listed on rubmaps, an online review site for sex spas.

Betsy Talbot, who oversees registration and licensing of private colleges, said she knew she needed to act but had to figure out what action her office could take.

Talbot said students are the ones who suffer when institutions close, leaving them scrambling to find a new school and transfer credits. Still, the state gave the school two options in a June 2020 consent decree: shut down or find a new owner. That person did not have to adopt a new curriculum or hire new faculty, Talbot said, but the school was barred from offering a massage program.

Talbot also said her office had communicated with Minnesota’s Bureau of Criminal Apprehension regarding the American Academy. That agency said it hadn’t received any information from the Office of Higher Education and did not respond to questions about whether it was investigating the school.

XiPing Zhou, who also owns a massage school in Wisconsin, decided to acquire the troubled college after the Minnesota office issued its order. He has known the former owner, Gong, since 1998.

Zhou told USA TODAY he believed Gong and his wife, Wei Liu, had “good intentions” but “they didn’t pay attention” to whom they partnered with. Zhou said people involved in the massage program who had been charged with prostitution weren’t Gong’s employees..

Zhou renamed the school the American Academy of Health and Wellness and dropped the massage programs and all instruction in Chinese, he said. He said most of the faculty are new hires. 

“I owned a massage school since May 2000; that's over 21 years,” Zhou said. “We don’t have any single trouble.”

Gong, the school’s former president, told USA TODAY that he first heard the allegations of prostitution connections from the state of Minnesota – connections he said he doesn’t believe ever existed. He expressed frustration that he “never had a chance to explain” after the state seized documents.

As for the locked closet, Gong said because his administrative staff didn’t understand Chinese, he secured files for the Chinese speakers in his office. 

“As the school’s president, I have the right to save the files in a safe place,” he said.

Minnesota officials didn’t know what they’d find after receiving a tip that the American Academy of Acupuncture and Oriental Medicine could be tied to prostitution. A locked closet full of student records, off-limits to staff, was an alarming discovery.

Following publication of this story, the school’s former chief operating officer, Leila Nielsen, wrote the problems off as paperwork errors and overzealous oversight and . If there were issues with prostitution, she said, that occurred only among graduates.

“The majority of graduates of that program are, to the best of my knowledge, decent people who are trying to earn a living,” she said. “ 'Massage’ does not automatically equal 'prostitution.’ If a lawyer embezzles money from his clients, does the Department of Education close the law school he attended?”

Gong will remain with the school through August, Zhou said, to help with the transition. Talbot said the state was aware of the arrangement and felt it would help minimize impact on students. 

USA TODAY reporters found four other cases where schools were disciplined, dropped their problematic massage programs and remained open and accredited. They also found evidence that other schools might have changed names while under scrutiny. 

Royal Irvin College in California was among them. The Nevada Board of Massage Therapy suspended Royal Irvin’s approval as an acceptable out-of-state massage school in 2009 following disciplinary actions against four of its students, three for prostitution. 

After the California Massage Therapy Council stripped the school of its recognition three years later, its owners tried to reopen in Las Vegas as Elbe Institute.

The Nevada massage board fought the reopening. A student from the school, the board said, received the lowest national exam score they’d ever seen. And the owners failed to disclose the previous revocation in their application for the new school. 

The owner’s daughter offered an explanation at a 2018 massage board meeting. She said her dad stepped away from Royal Irvin for health reasons and the person he appointed to oversee it “did a lot of things he didn’t tell my father,” according to the transcript.

Anderson, from the state massage board, said they succeeded in shuttering the school. But USA TODAY found a remnant may still exist: A website for Elbe Institute advertises in Mandarin training for masseuses who don’t speak English.

When contacted by USA TODAY, the current Elbe owner said he took over the school from the former owner after it lost its accreditation. The school only provides training and is not an accredited massage program, he said, adding that he knew nothing about the previous school’s ties to prostitution. 

Nevada has been more aggressive in policing massage schools than many other states. Its massage board must accept credentials from schools approved by the state education department, even when it questions the caliber of training students are receiving. But Anderson said a member of the board helps the education department review massage school curriculum for signs of subpar programs. 

“That’s where the difficulty lies: You have to have enough evidence for the postsecondary education commission to do something about the school, and gathering that kind of evidence is difficult,” Anderson said. 

Not all states have close partnerships between massage boards and higher education overseers. USA TODAY found several California schools that are not approved by the California Massage Therapy Council for massage therapy certificates, but have credentials from California’s Bureau of Private Postsecondary Education. 

Netanel, the state massage council’s chief executive, says the group has a memorandum of understanding with the state education bureau, and the two engage in robust communication about programs. 

Part of that discrepancy grows from California’s model: The council is a nonprofit, not a government agency, and issues massage certificates, not licenses. The state doesn’t require massage therapists to be licensed either, although most local jurisdictions in California require licenses.

As part of the Seldin/Haring-Smith Foundation’s research, senior fellow Ellie Bruecker, contacted dozens of state authorizers and licensing boards to ask how they handled colleges suspected of being involved in human trafficking.

Of the 57 that responded, a majority told her they hadn’t heard about the issue, or they denied sex trafficking was happening in their state. She and Seldin said that because multiple state regulators often oversee the massage industry, officials from one agency might not know everything they should look for. Additionally, some agencies operate on thin budgets with skeletal staffs, hampering their ability to conduct investigations. 

Seldin asked: Would a state authorizer even be able to spot the issue if it was happening at one of their schools? “It’s hard to look for something you’ve never heard of,” she said. 

Local laws can limit how much power a state’s office of higher education has to approve or monitor colleges. The foundation is advocating for a nationwide set of standards for these offices to combat not only trafficking concerns, but also issues tied to lackluster education programs that don’t lead to well-paying careers. 

Seldin said governors should ensure these state offices are adequately staffed and have a big enough budget to monitor their local institutions. 

Massage schools can access federal money

Communication gaps between state authorizers and college accreditors – independent groups empowered by the federal government to monitor universities – may also obscure a school’s past. 

Accreditation isn’t required for colleges to operate, but it gives their students access to F-1 visas and federal money through student loans and grants. And it’s supposed to signal to students the college they hope to attend is worth their investment.

Colleges that want accreditation must go through site visits, reviews of academic programs and ongoing monitoring of financial health. 

Despite this scrutiny, some accreditors still seem to miss what states find.

At Diamond Beauty College, a small for-profit college in El Monte, California, offerings include programs in cosmetology, barbering and massage therapy. The Nevada massage board revoked its approval as an out-of-state school in 2011 following three prostitution charges against former students.

The California Massage Therapy Council also took Diamond Beauty College off its list of approved schools, in 2012. But it remains accredited by the National Accrediting Commission of Career Arts and Sciences. 

The California Bureau for Private Postsecondary Education has been threatening to shut down the college since 2015. From the beginning, state officials encountered violations including failure to maintain student and faculty records and other issues related to paperwork, court records show.

They also found evidence of cheating on an exam meant to test students’ readiness for college. Specifically, an individual who didn’t graduate from high school or have a GED sped through the test in less than 15 minutes.

“These times are inconsistent with a person completing the examination under normal conditions,” the state agency stated. “Rather, they are indicative of a person completing the examination with the answers already available.” 

In 2016, the postsecondary bureau put the college on probation. By 2019, it was back on the state’s radar. California said the school again was helping students fraudulently pass entrance exams, this time handing out exam booklets that “contained marks indicating the correct answer,” according to a court filing.

The state agency also said the college forged the signature of owner Tony Do, who had died in March 2018. It found his daughter, Selenas Do, had signed school documents in his name after his death. The state still failed to shut down the college and instead put it on probation.

Most of that information is missing from the accreditor’s publicly documented actions. Following a site visit in October 2019, the National Accrediting Commission of Career Arts and Sciences placed the institution on probation tied to student paperwork. It made no mention of the allegations of cheating or forgery. The accreditor did not respond to requests for comment.

In Minnesota, the accreditor for the American Academy also put the school on probation but only said its action was tied to the state's revocation order. 

Mark McKenzie, executive director of the Accreditation Commission for Acupuncture and Oriental Medicine, said initially his agency didn’t know the scope of the state’s investigation, so it wouldn’t have been able to include that information in its explanation of its actions. 

Accreditors, he said, don’t have the same investigative authority as states, so they rely on what those agencies are able and willing to share. 

The end result of the mishmash of regulatory bodies and their separate investigations is some schools benefit from multiple second chances and, in some cases, federal money. 

Diamond Beauty College’s continued accreditation allowed it to benefit from emergency relief money connected to the coronavirus. It received about $156,000, a little more than half of which went to students, and $84,000 more through the pandemic Paycheck Protection Program.

At the American Academy of Health and Wellness, accredited master’s and doctorate programs will be reviewed again in August. The Department of Education has also given the school temporary approval to operate and to access federal money, Talbot said.

The school is currently advertising its ability to offer federal and state student loans.

The House subcommittee looking into massage schools said it is concerned some schools may have concealed illicit acts to receive federal money.

“The Subcommittee would like to work together to determine if any other federal funds are unknowingly being provided to bad actors,” the subcommittee chair, Rep. Raja Krishnamoorthi, D-Ill., wrote to the Department of Education on Tuesday.

Online massage schools: The next frontier for fraud? 

Industry watchdogs worry the next frontier for fraud could be online massage schools. Massage schools wading into online instruction say they’re meeting a need, not doing anything illicit. 

Zhou, for instance, told USA TODAY he wants to extend his program’s reach by applying next year for accreditation for a hybrid acupuncture program – combining online and on-site education – from the Accreditation Commission for Acupuncture and Oriental Medicine.

Shelene Taylor, who owns nine massage spas and clinics, said a shortage of massage therapists led her to launch a hybrid program. Her Allied Health Career Institute operates in Arizona and Virginia and, she said, has partnerships with Texas A&M and Auburn universities. 

“In every state we are in, we are set up according to ... the laws of the state,” she said. 

In a presentation to the Arizona State Board of Massage Therapy last month, members of the massage federation urged caution.

“We’re just trying to educate you with respect to the gaps that might exist,” Mai Lin Petrine, director of legal and regulatory affairs, told members of the Arizona board. “You don’t want to necessarily ban or prohibit them. But there is probably a way and there are mechanisms to allow these programs to exist.”

Asked about online programs, Anderson, the Nevada massage board director, went further. 

“We don’t allow it in Nevada,” Anderson said. “It’s a traffickers dream, online education. Absolutely. That is something they want.”

Chris Quintana, Cara Kelly, Dian Zhang and Kevin Crowe are USA TODAY reporters. Anne Ryman writes for the Arizona Republic.

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