From today's Washington Times
FBI probe of brothel criticized amid 9/11
Hugh Aynesworth
THE WASHINGTON TIMES

Published 7/5/2002

NEW ORLEANS — The FBI office here received a tip a couple of years ago that a high-dollar brothel was operating just off the city's famed Canal Street and that it might be controlled by a member of the Marcello mob family.
The tip came from a woman who called the New Orleans Police Department from out of state, who explained she had been "ripped off" by the madam who ran the New Orleans prostitution operation.
From that tip grew an FBI investigation that has come under criticism by some who say the agency was spending its time investigating prostitutes instead of potential terrorists during the months leading up to the September 11 attacks.
The woman who tipped off the FBI refused to give her name, but did provide the address of the brothel, several telephone numbers and the names of reputed prostitutes involved. She also said the property was owned by the Marcellos.
Carlos Marcello, considered by Mafia experts as one of the most powerful of the regional mob leaders in the 1960s, 1970s and 1980s, died several years ago, but law enforcement has been steadily watching other family members suspected of dealing in gambling, prostitution and other rackets.
It turned out that the property where the brothel was operating was owned by Vincent Marcello, nephew of Carlos.
The FBI interviewed Vincent Marcello and his attorneys, and were given assurances — and shown documents — that Mr. Marcello owned the property, but had evicted the renters because of neighbors' complaints. The brothel had since moved a block or so away, into a stately old mansion on Canal Street.
FBI agents, still not sure what they were onto but impressed with the high fees ($200 to $300 an hour) paid by the brothel's clients, staked out the place.
At that point, the investigation might not have gone much further. With only one informant — out of state and identity unknown — most say the bureau would have had trouble getting permission to place wiretaps on the mansion's phones.
But then the FBI agents got a break.
A lung surgeon from Ruston, near Shreveport, had been under investigation for several years for defrauding the U.S. government out of millions in Medicare fees. He was indicted in May 2001. Dr. Howard Lippton was sentenced a few days ago to 18 months in prison and a $10,000 fine.
Bureau workers tallied up an estimated $1.3 million that Lippton had earned illegally — false billings for services to 117 nursing home patients. The agency also noticed that more than $300,000 in checks had been written to women in the New Orleans area.
Lippton said he had regularly frequented the brothel. He even had girls driven up to Ruston, and often smoked marijuana with them.
He agreed to be wired and provide evidence, even to re-establish his relationship with the operation. Since he probably had been their top customer between 1994 and 1998, he was warmly welcomed back.
With Lippton providing names and dates, and tape-recording telephone calls to madam Jeanette Maier, 43, and her associates, the FBI began building a case.
And last summer and fall, three different wiretap authorizations were obtained by the FBI as agents sat for hours at a time listening (then summarizing) conversations to and from the brothel.
Finally on April 2, sealed indictments were opened, charging Maier and 14 other defendants with numerous federal crimes — from operating a prostitution ring with connections in several U.S. cities to possession and intent to distribute cocaine, heroin and marijuana.
Maier, confronted with hundreds of hours of wiretaps, agreed to a plea bargain earlier this summer and reportedly has been helping FBI agents make cases in cities such as Boston, Detroit, Pittsburgh and Houston, where the prostitutes operated a loosely aligned network. She is to be sentenced later in the fall
Had it not been for the September 11 terrorist attacks and the intense scrutiny it brought on the FBI, the agency might have simply enjoyed the plaudits that come with a successful sting operation.
But defense lawyers and others representing the brothel's customers point out that on the morning the World Trade Center and the Pentagon were attacked, FBI agents here were spending hours listening to conversations between madams, prostitutes and clients. This revelation angered some in Washington, who questioned why the bureau here hadn't been more interested in terrorism, rather than prostitution.
Word also leaked out that Maier had turned over her "little black book" — a list of hundreds of clients, including a handful of well-known entertainers, a city council member, professional athletes, restaurateurs and business leaders.
For weeks, many brothel customers and their attorneys tried to find out whether they would be publicly named, or even charged.
Finally, acting U.S. Attorney Jim Letten announced that there had been no federal laws violated by the brothel's customers and that any prosecution should be handled by the New Orleans parish district attorney, Harry Connick.
"It's their investigation," said Mr. Connick, who tossed the ball back to the feds.
Some defense lawyers have criticized the FBI decision not to prosecute the brothel's customers, or "johns."
Laurie White, attorney for Maier, said that "the saddest thing about this is that we saw 15 people indicted and not a single john."
"Surely, a conspiracy involves more than one person. And obviously the prostitute is not working alone," she said.
"It makes for an awkward double standard," said Harry Rosenberg, U.S. attorney in New Orleans from 1990 to 1993.
Mr. Rosenberg said the local U.S. Attorney's Office "hasn't been shy in the past about using conspiracy statutes or a more liberal interpretation of conspiracy statutes to pursue certain individuals."
"And I think they could use the same liberal approach in considering the prosecution of these customers," he said.
FBI special agent in charge Dave Kaiser said the FBI has been unfairly criticized.
Some news accounts, he said, "have been off the wall."
"Some have said we had 12 agents working on this for 13 months. That's so far from the truth," he said.
Mr. Kaiser said only two agents worked full-time on the case, with others filling in from time to time over a six- to seven-month span. The organized crime squad, which handled this investigation, said the FBI chief had only eight to 10 agents and continued to work on other cases as well.
As for the demand that the customers be charged criminally, Mr. Kaiser said that decision was the U.S. attorney's.
"If Jim Letten says that — and I'm not a lawyer — if he says there are no federal laws and statutes to prosecute the johns, I rely on what he tells me," Mr. Kaiser said.