A Hermantown man was sentenced Friday to three years of supervised probation for failing to pay taxes in a case stemming from a sex trafficking investigation at three Northland massage parlors.
Matthew Scott Shykes, 60, received a stay of imposition, which will allow his felony conviction to be deemed a misdemeanor if he complies with conditions of probation.
Shykes admitted at a December plea hearing that he failed to pay taxes on about $12,000 in income and failed to file his tax return on time after he and his wife, 49-year-old Shuangyan Yang, were arrested in March.
The pair owned Shuangyan's Spa, 2521 Miller Trunk Highway, and Better Massage, 2304 Mountain Shadow Drive, both in Duluth, as well as Superior Soothing Massage, 1225 Tower Ave., Superior. They were charged after an 18-month investigation by the Duluth Police Department's Sex Crimes Unit and other agencies.
Authorities initially alleged Yang and Shykes recruited women to provide sexual services to clients at the parlors, sharing in the proceeds from prostitution and allowing many of the women to live at their townhome. But charges of engaging in the sex trafficking of an individual were dismissed under the terms of plea agreements with each defendant.
"The allegations of sex trafficking — I had no idea that was going on," Shykes said Friday. "There were statements about the girls sleeping on the floor and eating only rice. That is not true. I made a bad judgment about the taxes. That is all."
Shykes must pay restitution to the state, complete 50 hours of community service and comply with other standard conditions of probation.
Defense attorney Chris Stocke noted his client does not have any criminal history, has long worked in the area and has been cooperative throughout the case. Assistant St. Louis County Attorney Nichole Carter also urged the court to accept the recommended sentence, which Judge David Johnson said he found appropriate given Shykes' lack of history.
Police began investigating the case in late 2017 after learning of online advertisements for sexual services. Investigators subsequently conducted surveillance, went undercover and interviewed customers at the parlors, discovering workers were providing sexual services in exchange for money.
Criminal complaints stated that the victims, Asian women recruited from California, had come to Minnesota to live with the couple. Authorities said they were charged $10 a day to stay in a bedroom, sharing mattresses on the floor, while working as long as 12 hours a day, six or seven days a week at the parlors.
After the couple's arrests, Shykes allegedly told police that he took over the businesses' finances in 2017. He said employees were moved between the parlors depending on demand and that they were paid in cash. Police said both Shykes and Yang were involved in running and managing all three businesses and that both shared in the proceeds from the prostitution services at the parlors.
Yang admitted at her plea hearing that she knew employees were providing sexual services to patrons in exchange for money. Yang also admitted that she and Shykes took money from their employees in exchange for allowing them to use the massage parlor for sexual services.
During a search of the couple's home in March, police said they recovered about $25,000 in U.S. currency, as well as Chinese currency. Five people were initially arrested, but three were released after they were determined to be "employee victims."
Yang pleaded guilty to a felony count of racketeering. She was sentenced Dec. 20 to four years of supervised probation, though attorneys indicated she is facing deportation from the country as a result of her conviction. She remains in the Douglas County Jail in custody of U.S. Immigration and Customs Enforcement.