Man sentenced in health club case

PORTLAND – A former police officer was sentenced in federal court Monday to six months in prison followed by 4 1/2 months of house arrest for his role in managing a Kittery health club that fronted a prostitution operation.

Russell Pallas, 47, told U.S. District Judge D. Brock Hornby that he initially didn’t think he was doing anything illegal when he was hired to run the Danish Health Club in 2001. When he later realized that what he was doing was wrong, he didn’t quit because he needed the paycheck and health insurance to pay for a shoulder operation.

“I couldn’t afford the surgery, and I needed the health benefits to do it,” he said. “Since then, I’ve had a lot of time to reflect on my actions. I shouldn’t have been where I was. I shouldn’t have done what I did.”

Pallas, a former police officer in New Hampshire, was responsible for day-to-day operations at the club from 2001 until it was shut down in a federal raid in 2004. He pleaded guilty to inducing at least five women to cross state lines to engage in prostitution.

Pallas was the first of five defendants to be sentenced in the case. He was the key witness for the government at the trial of Gary Reiner, the club’s lawyer and the one-time chairman of the Kittery Town Council who was convicted in September of federal prostitution and money-laundering charges.

Hornby issued a more lenient sentence to Pallas than what was allowed under federal guidelines because of his cooperation with prosecutors. Hornby said that Pallas’ testimony was crucial in Reiner’s conviction and putting an end to the operation, which had operated in Kittery for more than 20 years.

But Pallas also was instrumental in making the illegal enterprise work, Hornby said.

“You of all people should have known better than to be involved in this,” the judge said. “You and your family will carry the shame that you exploited the women involved.”

Pallas’ lawyer, David Beneman, said his client was seduced by the “normalcy” of the business. His paychecks came from a payroll company with tax payments withheld and the club had strict rules that were created by a lawyer.

“It had all the appearance of a regular job,” Beneman said. “It gives perspective how a person who is bright could be involved in a criminal enterprise.”