Investigation of Prostitution Ring Attracts IRS Interest

Setting the stage for a possible federal probe, officials from the Internal Revenue Service on Friday sought information from Los Angeles detectives about their investigation into an international call girl ring that catered to the rich and famous.

Although IRS Special Agent Lance Sumpter refused to confirm whether the agency was investigating allegations of Los Angeles’ latest high-priced prostitution ring, he said it is the type of case that historically has sparked IRS interest.

“If what is being said about this case is true, it would be reasonable for us to look at it,” said Sumpter, a supervisor in the Criminal Investigations Division.

In fact, a law enforcement source confirmed that the IRS is already making inquiries about Jody Diane “Babydol” Gibson, the 41-year-old alleged madam arrested this week on suspicion of pimping. The case has echoes of the celebrated arrest of Hollywood Madam Heidi Fleiss, who in interviews with The Times once described Gibson as a rival without Fleiss’ flair and flashy clientele.

According to police, Gibson went by the name Sasha and operated one of Los Angeles’ largest illegal escort services for the last nine years. Police said Gibson dubbed her service “California Dreamin” and had as many as 34 prostitutes working for her. The service charged clients $500 to $3,000 a night, police said. The women, who are provocatively advertised on an Internet Web site, were believed to ply their trade in 16 states across the nation and in Europe. Mostly, however, they allegedly worked in Los Angeles and New York.

Police said Gibson, an aspiring singer, kept careful track of her clients, logging their appointments, which girls they liked, how much they spent and whether they had any fetishes. Among her more than 100 clients were actors, producers, powerful businessmen and a professional athlete, police say. The clients’ names were not released.

For the last 10 months, Gibson had been the target of an LAPD investigation in which an undercover female officer infiltrated the ring posing as a prostitute. The probe was sparked when a disgruntled escort who said she was shortchanged by Gibson called police and described the operation; as the investigation continues, sources say detectives are looking at Gibson’s contacts with the recording industry and reputed crime figures in New York.

There are hundreds of prostitution businesses working in Los Angeles at any time, but few operate at the high end of the trade--where prostitutes command upward of $1,000 a night, police said.

Fleiss operated one such ring, which came to public attention in the early 1990s. According to police, Fleiss and Gibson knew each other and were bitter rivals. Ultimately, Fleiss was pursued not only by the LAPD but also by the IRS.

Because the authorities tend to be so outnumbered, the LAPD’s vice unit picks its shots, following a rule of thumb that one investigator once dubbed “the three Cs: commercial, conspicuous and complained about.”

How long the authorities knew about Gibson is unclear, but it seems unlikely that her business, which was run out of a San Fernando Valley hotel, was a recent discovery. The world of high-priced prostitution in Los Angeles is rife with petty rivalries and constant betrayals, and it is considered common business practice for madams to report one another to the police.

In 1992, the late Beverly Hills Madam Elizabeth “Alex” Adams told a Times reporter that Gibson was one of seven madams--Heidi Fleiss also among them--who had materialized to serve the market for high-end call girls since Adams’ arrest.

Indeed, Adams said at the time--perhaps truthfully, perhaps not--that Fleiss had already tipped the police that Gibson was operating a call girl ring in the San Fernando Valley.

“Heidi’s about to get her busted,” the colorful Adams cackled from the four-poster bed where she always entertained visitors. “She’s setting her up, and it will happen in the next few days. I tried to tell her, ‘Listen, in an industry that has so many men and women, why be so concerned with what the other person is doing? Live and let live! Why be so freaked out just because Sasha’s making money?’ But you know Heidi.”

Fleiss, however, talked about Gibson at the time in disparaging terms, as a lesser madam with older call girls and a less prestigious address and clientele. The prices quoted for Gibson’s women seem to bear that out: $500 to $3,000 for a date, even in 1992, was fairly cheap for the upper bracket of the prostitution business. Fleiss’ rock-bottom price was $1,500, and most of her clients ended up paying three or four times that, depending on the length of the date.

Moreover, Fleiss told The Times then, it was Gibson--or “Sasha in the Valley,” as she called her--who harassed her, not the other way around.

“She used to leave threatening messages on the answering machine, or find out what hotel [Fleiss employees and clients] were using, and call. She once threatened to have the IRS come after me,” Fleiss said. In fact, she said at the time, part of the reason for her arrest was that call girls with a grudge against her were inspired by Gibson’s dirty tricks.

In tones that underscore the cattiness that characterizes the day-to-day relationships in the business, Fleiss then described her reaction when one of her call girls tried to freelance for Gibson:

“Madam Sasha calls and says, ‘She’s working for me.’ And I say, ‘Great.’ And hung up. Then I say, ‘Are you working for Madam Sasha?” ’Yes.’ And I say, ‘That’s it. You can’t be my friend anymore.’ ”