A northwest suburban woman who owns an Internet company that hosts ads for escorts across the country is going to prison for tax evasion — but not for the services the business offers.
Julie Karlsen, 63, of Buffalo Grove, has admitted she failed to pay $272,000 in federal income taxes over eight years. She scheduled to report to prison later this month after pleading guilty in November and being sentenced to a year behind bars.
Prosecutors say Karlsen owns KAP Enterprises, which advertises escorts and, according to its web site, helps screen any potential client, who must provide his name, home address, where he works, phone number and other personal information. Approved clients pay a fee to become members — or “hobbyists” as they’re called on the company’s website.
An escort can look up a prospective client on the site to verify his identity — and make sure he’s not an undercover cop. She also can see whether other escorts have complained about him abusing them or shorting them on payments.
“We’ve been performing verifications since 1983, long before web sites even existed,” the escort site says. “We created a web presence and became a part of the Internet in 1997.”
Law enforcement sources said they’ve been told the company’s membership list includes tens of thousands of men.
Cook County sheriff’s officials became aware of a predecessor website during a prostitution investigation several years ago. The website resurfaced in an investigation of a Thai sex-trafficking ring. That investigation resulted in federal charges last year against 17 people nationwide, including Pantilla Rodpholka, a northwest suburban woman accused of being a “house boss” in a Chicago-area prostitution operation.
Karlsen isn’t charged with any wrongdoing in connection with her company or the website.
Still, “The position of the Cook County sheriff’s office remains that sites and services such as [this] are promoting prostitution and protecting criminals, including johns and the possible sex traffickers behind the operations,” said Cmdr. William Leen.
Karlsen must report to prison by Jan. 17 in the tax case and has been ordered to pay the Internal Revenue Service about $272,000 in taxes she owed between 2004 and 2011.
She couldn’t be reached, and her attorney, George Pappas, wouldn’t comment. In a court filing, Pappas wrote: “Although the government may find the manner by which the defendant derives her income as offensive, it is not illegal to sell advertising. There is nothing illegal in the manner by which the defendant earns her income and no harm comes from the advertising she sells. She was interviewed in her home in Buffalo Grove by the FBI in September 2008 concerning her business activities and was never told that she could not continue in that type of business.”
Federal prosecutors responded: “The government has never made any such claim. What is offensive is Ms. Karlsen’s long history of failure to file tax returns and pay tax on her income, however derived.”
