Three individuals have been indicted for operating massage businesses tied to human trafficking, prostitution, tax evasion and unemployment benefit fraud.
On February 27, a New Castle County grand jury charged Xui Li Kong, 57, Jing Zhang, 40, and Hua Li, 59, with one count each of Criminal Racketeering, Conspiracy to Commit Criminal Racketeering, Human Trafficking, Promoting Prostitution 3rdDegree, Money Laundering, Conspiracy 2ndDegree, Criminal Nuisance, and Operating a Massage Establishment without a License.
Additionally, Kong was indicted on two counts of Insurance Fraud, one count of Theft, and one count of Tax Evasion. Zhang was indicted on an additional count of Tax Evasion. Li was indicted on one count of Failure to File a Return.
The indictment alleges that from March 2020 to February 2023, the three unindicted co-conspirators operated massage establishments in the north Wilmington and greater Newark areas. Search warrants were executed at several locations — Kong and Zhang’s personal residence on Ballymeade Drive in Wilmington, Bloom Head-to-Toe at 2610 Kirkwood Highway near Newark, Rainbow 7 Spa at 610 Capitol Trail near Newark, and Royal 7 Spa at 785 Pulaski Highway, Bear.
An investigation revealed that female victims lived in closed quarters and unsanitary living conditions at the establishments. The victims were forced to perform sexual services on male clients, and work long hours, seven days a week.
The investigation further determined that Kong had applied for unemployment through the Department of Labor and was awarded over $25,000 in unemployment payments, alleging that one of the businesses, Bloom Head-to-Toe, was closed because of the pandemic.
Bank records showed that the business was in fact open and operating. In addition, Kong had applied for Medicaid through the Department of Health and Social Services and was approved based on her alleged income meeting the threshold of under $18,075.00 per year.
The investigation revealed that during the period of time covered in the indictment, the organization made over $300,000 in cash deposits across multiple personal bank accounts. These cash deposits are in addition to credit card receipts, and cash deposits into the business accounts for each establishment. Kong and her husband, Zhang, are alleged to have evaded taxes by not claiming appropriate income on their personal tax returns. Li did not file any tax returns for this period.
As part of the investigation, the Department of Justice and Delaware State Police executed multiple search warrants on associated banks that froze over $200,000 in suspected illegal proceeds from the businesses. In addition, a Racketeering Lien was signed and filed with the Court as part of the indictment, which places a lien on Kong and Zhang’s property at 122 Ballymeade Drive.
“Some people assume human trafficking only happens on the other side of the world, but the reality is that it is right in our backyard — and cases like these are just the tip of the iceberg,” said Delaware Attorney General Kathy Jennings. “I’m grateful to the prosecutors and law enforcement who continue to aggressively pursue traffickers and to support the victims of these atrocities.”
Earlier Jennings joined other attorneys general in pressing for changes in a national human trafficking alert system that is allegedly not performing its functions.
“Human trafficking is a continuing epidemic that brings challenges not only to the United States of America but countries across the globe,” said Colonel Melissa Zebley, the Superintendent of the Delaware State Police. “Locally, the Delaware State Police is working tirelessly with the Delaware Department of Justice and other law enforcement allies to identify and combat human trafficking by aggressively investigating individuals and businesses who prey upon unsuspecting victims.”
This indictment was secured by Deputy Attorneys General Michael Cooksey and Caroline Brittingham of the DOJ’s Human Trafficking Unit. The investigation was a collaborative effort between members of the DOJ, the Delaware State Police, the Federal Bureau of Investigation, the Wilmington Police Department, and members of the Delaware Division of Professional Regulation.