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<br />- <br /> <br /> <br />: IBIs-a I <br />, ' , I <br />I The Attorney General's Working Group believes that regulatory strategies designed . <br />to reduce the concentration of sexually oriented businesses, insulate residential areas I <br />I from them, and reduce the likelihood of associated criminal activity would constitute a - <br />rational res'ponse to evidence of the impacts which these businesses have upon local I <br />J communities. <br /> <br />I <br /> <br />I SEXUALLY ORIENTED BUSINESSES AND ORGANIZED CRIME <br />I <br />~ Infiltration of organized crime into sexually oriented businesses reinforces the need <br />for prosecution of obscenity and requires specific regulatory or law enforcement tools. I <br />i The Working Group attempted to assess both the present and potential relationship <br />between organized crime and sexually oriented businesses. I <br /> <br />· The Working Group heard testimony from a witness who had been prosecuting <br />. obscenity cases for the past thirteen years that many sexually oriented businesses have I <br />out-of-town absentee owners. If the manager of a local business is prosecuted on an <br />. Clbscsnity charge, his testimony may make it possible to pierce the corporate veil and . I <br />identify the true owners. <br /> <br />8 The Working Group heard testimony that an organized crime entity may operate I <br />somewhat like a franchisor. In order to stay in business, the local manager of a I <br />. sexually oriented business may have to pay fees to organized crime. The makers and <br />wholesalers of pornographic materials are also likely to be involved with organized <br />~~a I <br /> <br />The Working Group conducted additional research to assess the relationship I <br />between sexually oriented businesses and organized crime. The Working Group was <br />informed by prosecutors of obscenity that there were many ways in which organized I <br />crime entities could derive a benefit from sexually oriented businesses. There is a large <br />, profIt margin in pornography. The presence of coin-operated peep booths provides an I <br />~ opportunity to launder money. Cash obtained from illegal activities, such as <br />! prostitution or narcotics, can be explained as the income of peep booths. Cash <br />. income can also escape taxation, in violation of law. I <br /> <br />- <br />I -14- I <br />~ I <br /> <br /> <br />-.---- <br />