The Associated Press
June 21, 1984
Sex Therapy Clinic Offered Sex For Sale, Officials Charge
Dateline: New York

A prostitution ring disguised as a sex therapy clinic let customers pay with Blue Cross cards, allowing them to get most of their money back from insurance companies, authorities said.

A psychiatrist and two businessmen were arrested Wednesday on charges of running the operation in the heart of midtown Manhattan.

The clinic, New York Health Management Centers Corp., had at least 500 customers and charged about $115 per session, according to District Attorney Robert Morgenthau.

In many cases, Morgenthau said, psychiatrist Alan Pearl would sign an insurance claim saying the customers had received psychiatric services when they actually had received the services of prostitutes.

That allowed customers to get most of their money back from Blue Shield-Blue Cross, Group Health Inc. and other major health insurance carriers. Morgenthau said Pearl received a 10 percent commission on each claim he signed.

Pearl, 40, was charged with insurance fraud and released on his own recognizance.

The other two men, Donald Sherman, 46, of Belle Harbor, and Ronald Miller, 44, of Westbury, were charged with insurance fraud and with promoting prostitution. Each charge is punishable by up to seven years in prison. Sherman and Miller each were held on $10,000 bond.

Authorities said they became aware of the alleged brothel when a sex therapist complained she had applied for work there and found she was expected to be a prostitute.

Police then sent undercover officer Angela Amato, 28, to apply for a job.

“They were very smooth, but it was very clear what they were after,” Miss Amato said. “The first thing they asked me was to take my clothes off. I told them, ‘What you see is what you get.’

“They weren’t looking for a surrogate, they were looking for a prostitute,” she said. “They told me my take would be $20 a session.”

Morgenthau said the brothel solicited customers through ads in New York magazine, the Village Voice, Screw magazine and on cable television.