Arrow-right Camera
The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Woman faces laundering charges

The operator of a large-scale Spokane escort service is accused of laundering more than $3 million in profits from her alleged prostitution ring through Northern Quest Casino, where authorities say she also occasionally hustled customers.

Cheryl Mae Larson remained in jail Friday under a $500,000 bond on state charges of money laundering and promoting prostitution, both felonies.

Her associate, Ricky V. Doran, who acted as a driver and bodyguard for prostitutes, according to investigators, was booked on a charge of promoting prostitution.

The two suspects, who are both 48, were arrested Wednesday, but their arrests weren’t disclosed by authorities until Friday when court documents, including search warrant affidavits, were filed.

Those documents disclose that Larson spent as much as $10,000 a year for telephone book advertising for at least five “escort services” she operated – “Cheryl’s Class, AA Always Available, A Extra Help, Consulting Services and Gents for Rent.”

Customers of both sexes would call those escort businesses, and male or female prostitutes would be driven to the customer’s location – frequently hotel and motor inn rooms throughout the Spokane and Coeur d’Alene areas, said Gary Drumheller, special agent with the Washington state Gambling Commission.

Instead of depositing money from her escort operations in a bank account, Larson is accused of buying gambling tickets at Northern Quest – apparently an attempt to launder the illegal proceeds so they would be harder to track, Drumheller said.

Criminal investigators with the Gambling Commission opened the investigation in late 2005 after developing information that Larson frequently was seen acting suspiciously at Northern Quest, a large Airway Heights casino operated by the Kalispel Tribe, Drumheller said.

“They thought something was suspicious about her – both the amount of money she was gambling, plus the people she was meeting and interacting with at the casino,” Drumheller said Friday.

“Northern Quest was very cooperative” and is accused of no wrongdoing, the state gambling investigator said.

At the casino, Larson had a Camas Club card, and her purchases of gambling tickets were meticulously recorded by computers which are audited, court documents say. Surveillance cameras frequently recorded Larson using her cell phone in the casino, and she also regularly was seen with various younger women. Casino records revealed Larson is “one of the top 25 bettors” at Northern Quest, court documents say.

“There are also some indications that she contacted her potential customers or they contacted her at the casino,” Drumheller said.

On at least one occasion in November, the court documents say, Larson was caught on surveillance cameras in the casino showing a young man photos of young women, apparently prostitutes, on her cell phone.

Northern Quest officials issued a brief prepared statement.

“While it would be inappropriate for us to comment on any potential ongoing investigation, it is our policy to always report suspicious activity to appropriate law enforcement authorities and proceed as requested by those officials,” said Phillip Haugen, executive director of the Kalispel Tribal Gaming Agency,

“We have acted in accordance with this policy,” the tribal official said in a prepared statement.

Court documents said that between 2003 and the time of her arrest, Larson’s “buy-ins at the electronic machines exceed $3.3 million, while her cash-outs exceed $3.1 million.” The $200,000 difference between the “buy-ins” and “cash-outs” accounted for Larson’s losses at the casino, Drumheller said.

Larson and Doran were arrested Wednesday, but their arrests weren’t made public until Friday when criminal investigation agents with the state Gambling Commission filed court documents. Those state agents were assisted in making the arrests by officers from the Airway Heights and Spokane police departments.

Larson was arrested in Airway Heights, where she personally responded to a request from an undercover officer who called one of her escort services and asked for a sex act. After her arrest, other gambling agents used a search warrant to seize a computer and other business records from Larson’s home at 3004 W. South Loop, in west Spokane.

Those computer and business files apparently contain the names of various men and women who have called her escort services, Drumheller said.

Doran, who identified himself as Larson’s boyfriend, also lived at the home and was paid $25 for each time he drove an “escort” to a client’s hotel room, the court documents said.

Larson is a “confirmed associate” of John Earl Petersen, who was convicted in U.S. District Court in Spokane in 1998 of embezzling more than $6 million from a Montana bank, according to the newly filed court documents.

Petersen, who served a federal prison sentence, is now out and on supervised release. He was named, but not charged in the criminal case filed against Larson and Doran.