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Fatal Connection

When a Chicago call girl turned up dead, it didn’t take police long to zero in on her killer. But the case also sheds light on the growing, hidden, and largely lawless world of online prostitution

When Hogue entered the Gypsy Love Room, she became Cheryl. “She knew how to make you feel special,” says a friend.
She called herself Cheryl of Chicago, and she was a high-priced escort. Her booking sheets listed the names of hundreds of lovelorn and lusty clients-doctors, lawyers, accountants, CEOs, traders, bankers, pro athletes, mobsters, even police officers. “It was the whole spectrum,” says Chicago police detective Mike Landando of Cheryl’s roster of customers. “A cross section of Chicago.”

So the potential suspects ranged far and wide when Cheryl of Chicago, whose real name was Kathryn Hogue, turned up dead in November 2004 inside her Wicker Park condominium. She was 45. Her roommate discovered her lying naked and face-down on a bed in the subterranean cathouse where she entertained clients, a space Hogue dubbed the “Gypsy Love Room.” An autopsy showed ligature marks around Hogue’s neck, indicating to investigators that she had been strangled.

The murder sent investigators into the new cyberworld of vice-where prostitutes, often working alone, manage their careers through the Internet; where johns browse Web sites to find their “escorts,” then rate their skills online. That world is a far cry from the seedy underground of streetwalking, but sex arranged through the Internet is still isolating and virtually lawless, and those who engage in it-as the case of Cheryl of Chicago suggests-are still at risk of violence.

 

As a young girl growing up in Ann Arbor, Michigan, Kathryn Hogue dreamed of being a professional ballerina, but by 17, she was lap dancing at strip clubs. (The limited information on her background, as well as events leading up to her death, comes from police investigators and from friends in Chicago. Members of her family could not be located.) After several years on the exotic dancing circuit, she turned to the sex business. Before long, Hogue became a recognizable fixture in Chicago’s escort-for-hire scene, marketing herself over the Internet and on her own Web site, CherylofChicago.com.

Friends and former clients who agreed to be interviewed for this story recall Hogue’s “heart of gold” and her “million-dollar smile.” But for as much as $400 an hour, with a two-hour minimum, the five or so johns she saw each week could buy more than her seven-figure smile.

Hogue promised the ultimate “GFE,” an abbreviation used in the escort business to mean the “girlfriend experience,” or paid sex, plus paid companionship and affection. And Hogue typically delivered, judging by her reviews on TheErotic Review.com and BigDoggie.net-two popular online clearinghouses for the paid-sex trade.

Rated by customers on a scale of 1 to 10 for both appearance and performance, she consistently piled up 8s and 9s, and every so often a perfect 10 (defined as “one in a lifetime"). Chicago posted interview requests on BigDoggie’s online message board, and one former client who responded said he first booked a “date” with Hogue after reading the glowing reports on the Internet. “If you read the boards awhile, names come up,” says the man, a business owner in his mid-50s from the north suburbs, who spoke on the condition that his name not be used. “She was well reviewed and had a reputation in the community. She had a very, very upscale side to her, and that appeals to me.”

Police say some of her relationships with customers, particularly with older ones, didn’t even involve sexual intercourse; men in midlife crises would pay top dollar for her to be a trophy wife of sorts. And sometimes she just kept friendly company with lonely men, boosting their morale with cheerful conversation.

One of Hogue’s best friends, another escort whose professional name is Kelly Shannon, says several of Hogue’s clients fell in love with her. “She knew how to make you feel special,” says Shannon. “It was instinctive.”

After Hogue’s death, detectives discovered documents from one of her regulars, a businessman who promised to give her 100,000 shares of stock in Lucent Technologies to start a retirement fund. (At press time, Lucent was trading at $2.75 per share.)

Standing five feet eight inches, with sharp facial features, sexy locks of blond hair, and a 125-pound, toned dancer’s body, Hogue recalled Nicollette Sheridan of Desperate Housewives. And inwardly, she was as desperate as the housewives of Wisteria Lane.

Another friend, Jim Delorta of Matteson, says Hogue badly wanted to get out of the escort business. “She wanted to find a job and have a normal life,” he says. “But you get trapped in your way of living; you’re stuck until you find a way out.”

Thomas Kolman, one of the Chicago police detectives who worked on the case, says Hogue’s unhappiness in the sex trade led her to drink heavily. “She always would have to drink, like, a bottle of wine-be drunk just to be with these guys,” Kolman says. “This was a business to her.”

 

Given the hidden and anonymous nature of the business, it’s impossible to know exactly how much buying and selling of sex exists in Chicago. Still, David Sobczyk, commander of the Chicago Police Department’s vice control section, argues that the sex business here is “ubiquitous.” “It’s in all four corners of the city,” he says.

Not to mention in the phone book and, most prevalently today, on the Internet. (With “escort services” and “Chicago” as search terms, Google clocks 2.2 million matches in 0.11 seconds.) Every year in Chicago, some 4,000 men and women are arrested on prostitution charges-a number that typically leads the country, beating even New York City, Los Angeles, and Las Vegas, according to a Scripps Howard News Service survey published last February. Thomas Hargrove, the Scripps Howard investigative reporter who analyzed the figures, says Chicago’s high number of arrests probably has more to do with the city’s aggressive law enforcement than the sheer number of prostitutes living here. “They have a vice squad,” he says of Chicago. “Most big city police departments don’t have vice squads anymore, or they’re diminished. If you have fewer vice squads and fewer vice detectives there’ll be fewer arrests.”

As part of the city’s efforts to crack down on prostitution, the vice squad impounds the cars of the johns who are caught soliciting prostitutes. And in June police also set up a controversial Web site (http://www.chicago police.org/ps/list.aspx), which posts the names and mug shots of arrested suspects as a way to humiliate them publicly. (The site has tallied about 800,000 hits.)

Arrests are only a small part of the prostitution picture, however. The Center for Impact Research, a Chicago-based nonprofit that studies poverty and social justice issues, estimates that-based on arrest and court data, police interviews, advertisements, and statistics from various social service providers-"a minimum” of 16,000 women and girls are involved in the sex trade in the Chicago area. “That’s just the tip of the iceberg, though,” says Jody Raphael, a senior research fellow at the DePaul University College of Law. “It’s believed to be an ever-growing industry.”

And while the image of streetwalkers cruising up and down the city’s seediest streets is a common perception, most prostitution-80 percent, according to the Impact Research Center-is not solicited on the streets. Raphael maintains that the Internet is the perfect place for selling sex: it’s virtually anonymous, cheap, far-reaching, and safer than the streets. Ads for sexual services flourish on Web sites like TheErotic Review.com and BigDoggie.net, and even on Craigslist.org, the popular site that posts wide-ranging classified ads. On the sex sites, “hobbyists,” as those with the “hobby” of patronizing escorts are called, can pay monthly membership fees for access to immense databases of escort reviews.

Most online escorts don’t think of themselves as prostitutes, Kelly Shannon and others say. Instead, they call themselves, more respectably, “service providers.” And to many customers who pay for female companionship, the Internet hookup helps launder the stigma that sticks to street-level prostitution.

Although vice officers try to reel in the business, online sex workers are unlikely to be arrested. Typically, they work under a guise, such as exotic dancer or erotic masseuse, making it difficult for police and prosecutors to build criminal cases. Also, because escorts don’t stand on street corners, fewer people complain about them. Sobczyk concedes that the “vast majority” of prostitution arrests are for street-level action.

 

At first glance, the tidy, red-and-gray-brick three-flat at 1261 North Bosworth Avenue appears an unlikely place for a one-woman red-light district. The quiet, visibly gentrified street is lined with trees and dotted with a mixture of vintage row houses and newer-looking condominiums. But for Hogue it was the perfect spot for entertaining clients: “Two blocks from the Kennedy, two blocks from a cabstand and right across the street from an ATM machine,” she noted on her Web site.

Upstairs in her tastefully decorated three-bedroom condominium, there were no signs of its business use. She even had a roommate-a woman who had been tutoring Hogue in French and who had moved in recently. But down the spiral staircase, on the basement level of the duplex, the Gypsy Love Room beckoned. Depending on your tastes, the place was racy and seductive or just tacky. Black and red velvet covered the walls, and the room was amply stocked with sex toys, condoms (protected sex was always the rule), and X-rated videos. Sexy lingerie, S & M paraphernalia, slinky dresses, and stilettos filled the closet. And Hogue had even put in a tiny dancing stage, equipped with a floor-to-ceiling stripper’s pole. “It was the kind of room you’d expect to find in a house of ill repute,” recalls a former client.

Apart from her work, though, Hogue led a relatively quiet life, according to people who knew her. She loved the arts: photography, theatre, the opera and ballet. Especially ballet. She was a committed dancer, taking ballet classes three times a week for 15-plus years. She liked to cook, and had a penchant for gourmet foods and expensive Champagne, as well as for the fresh corn she would buy from the Mexican street vendors on Ashland Avenue in her Wicker Park neighborhood. She frequented the boutiques and thrift stores along Division Street, often walking with Prieta, the mutt she had adopted from a local animal shelter.

Kelly Shannon says Hogue didn’t socialize much with other escorts and never got romantically involved with clients. “She tried to keep her personal life and professional life separate,” says Shannon. “When she was up making soup and taking care of Prieta, she was Kathryn. When she entered the Gypsy Love Room, that’s when she became Cheryl.”

Hogue talked seriously of pursuing a photography career once she quit the escort business, or starting an adult Web site for various sexual fetishes. Police say she was thinking about taking a job offer as a madam at a suburban strip club-a kind of den mother among the dancers. It wasn’t a full break from the flesh trade, but at least it wouldn’t be her body for sale anymore, she figured. “Cheryl knew she needed to get out,” says Shannon. “She wanted to find Mr. Right. She wanted to start a life. She wanted a family. She wanted the fairy tale.”

 

Police hoped to pressure Rallo (above) into confessing to foul play. “The more he tried to be a tough guy,” says a detective, “the more it showed through that he was just a little weasel.”
Sometime in late 2001 or early 2002, Hogue met a client named Daniel Rallo, a man in his mid-30s who lived in Streamwood and who called himself a mortgage broker. She was having trouble refinancing the mortgage on her condominium, and police believe she turned to Rallo for help in October 2002.

When she had bought the condo for $295,500 two years earlier, she listed her mother as a co-owner. But in February 2002, Hogue’s mother turned over the title to her daughter in a quitclaim deed. When Hogue tried to take advantage of low interest rates to refinance, she was stymied, police say, because she had no proof of employment.

Rallo told Hogue he could help by laundering her money. According to police, he connived a few business associates into creating phony office jobs for Hogue, so she could have W2s, which show wages. (Forms listed her as a “general office manager” with a yearly salary of $56,100.) She gave Rallo $20,000, and he arranged to refinance her mortgage and pay part of it down through the mortgage firm in Roselle where he worked.

In Hogue’s underground world, the smooth-talking Rallo seemed like the perfect type to handle her money discreetly. “Because she earned her money illegally she thought she could trust him,” says Robert Cordaro, another Chicago police detective who worked on the case.

Rallo fancied himself a Chicago gangster, and he often bragged to Hogue and others that he was “connected.” He wore flashy, expensive suits over his beefy, five-foot six-inch, 180-pound frame. He drove a black Cadillac. “He gave the persona that he was a wise guy,” adds Cordaro. “He’d want to be the big shot, the guy who’d walk into a restaurant and always have to buy.”

Around January 2004, authorities say, Rallo was fired from his job in Roselle for stealing commissions. He then opened D.A.R. Financial Corp., a supposed mortgage brokerage firm, in his Streamwood home.

Sometime in April 2004, Hogue gave Rallo more money, this time $56,000 in cash: $50,000 to pay down and refinance her mortgage again, and $6,000 for Rallo for brokering the arrangement. But the deal never went through. Friends and police say Rallo strung Hogue along, making excuse after excuse for the delays. When Hogue received a notice of delinquent payment, he told her he had cancer and was receiving treatment at the Mayo Clinic. Another time when Hogue pressed him he told her his mother was dying. In fact, she was already dead.

Hogue “was extremely savvy when it came to her business and dealing with clients,” Cordaro says. “But outside of that-in the business world, she was a 17-year-old kid who started stripping. What kind of knowledge is she going to have about the mortgage business? She got sucked into trusting Danny Rallo.”

By June 2004, after many calls to Rallo, Hogue began to suspect that he had kept the money. Police say she asked a friend who was a bouncer at a strip club to phone Rallo and demand that he either complete the mortgage deal or return her money. Rallo, furious, warned Hogue the next day that he would kill her if she ever again had any heavies threaten him. “That’s when she went off the deep end,” recalls Delorta.

Police believe that by then Rallo had spent Hogue’s money. Detectives learned he had bet large sums on the online gambling site Poker.com, and they later found scores of receipts from riverboat casinos. What’s more, police suspect Rallo used most of the money to woo Kimberly Damato, a mortgage lender from Elk Grove Village. He wined and dined Damato, then 37, and bought her an engagement ring that, police say, cost around $10,000. They were married in August 2004 at St. Paul of the Cross church in Park Ridge.

Police say things for Damato changed swiftly and drastically once she became Mrs. Rallo. Her new husband started borrowing large sums of money from her to pay off credit card debts. “She was writing checks for, like, $10,000, $15,000,” says Cordaro, and when she would question him about his finances, he became abusive. “She thought he had all kinds of money,” says police detective Mike Landando. “He scammed her, too, hook, line, and sinker.” (She later moved out, and could not be located for this story.)

By September, Hogue was deeply distraught. “She would be fine one minute and bursting into tears the next,” recalls Delorta. By then, friends and police say, she was taking prescription pills for anxiety and drinking more heavily than usual. “Cheryl was so consumed by this money being gone,” recalls Shannon. “It was a lot of money. She worked on her back for that money.”

Hogue posted a plea for help on the Big Doggie Web site, and she spoke about her problems with Rallo to anyone who would listen-from her mother and close friends to her housekeeper, her ballet instructor and masseuse, even to some of her clients. “There was not one person in her life that didn’t know that this guy had $56,000 of her money,” Landando says. Police records show she told one friend a few weeks before her murder, “This guy’s probably going to kill me, you know. I’m bugging him so much.”

A panicked call on November 16th to the bank that held her mortgage finally confirmed her worst fears: there never was a refinancing agreement. “The jig was up,” says Kolman. “She knew she was being ripped.”

When she phoned Rallo, he angrily insisted that the mortgage company was mistaken and that the deal had, indeed, gone through. He would come over the next day with all the paperwork. Remarkably, Hogue was relieved. She jubilantly told her friends the good news, though why she believed Rallo then, after nearly eight agonizing months of lies and excuses, is still a mystery.

 

A one-minute-and-12-second cell phone call placed at 11:18 a.m. on November 17th from Rallo to Hogue is the last known record of her alive. Sometime later that day, police say, Rallo came over, fell into a violent rage, and strangled her, possibly with a cord.

That night, police say, when Hogue’s roommate-her name has not been released-arrived home around eight, she found Prieta locked up, a sign Hogue didn’t want to be bothered. The door to the Gypsy Love Room was closed, so the roommate assumed Hogue was entertaining a client. By the next morning, with no sign of Hogue, the worried roommate peered into the Gypsy Love Room and saw Hogue lying face-down on the bed, her naked body covered with a sheet. She thought Hogue was sleeping off a bender. Hours later, she saw that Hogue hadn’t moved. She sat on the bed and gently stroked Hogue’s hair. Then she touched Hogue’s shoulder. It was ice cold.

Word of Hogue’s death traveled quickly around escort circles. Web sites registered an outpouring of grief, shock, and anger. And then fear. The murder of a call girl in Atlanta just days after Hogue’s slaying further alarmed many escorts. The anxiety escalated when someone on the online message boards posted a newspaper story about a string of three violent homicides on the South Side that had prompted police to issue a citywide warning to women of “high-risk lifestyles” (a euphemism for prostitution).

One escort calling herself New Orleans Natalie announced on the message boards that she had abruptly canceled her scheduled liaisons “[i]n light of recent incidents of violence against providers.” Another jittery observer with the invented name Frankenstein posted a chilling question to the rest of the city’s escorts: “Do we have a Jack the Ripper out there?”

Fortunately, Daniel Rallo was no criminal mastermind. His slip-ups led investigators to settle on him early on as the prime suspect after they saw his name on a truth-in-lending statement they found at Hogue’s home. For starters, police say, he initially consented to be interviewed, then never showed up. While it’s fair to say that at least a few men in this city of three million were nervous when detectives contacted them about Hogue’s murder, the worried johns-except for Rallo-all complied with police interviews. By the time detectives contacted him again, he had hired an attorney, who told investigators that his client was invoking the Fifth Amendment right not to talk. Rallo’s refusal to cooperate, says Landando, “wasn’t a red flag-it was a target.”

The team of detectives working on the case fanned out across Chicago and the northwest suburbs, gathering information on the suspect. They subpoenaed records and interviewed dozens of Rallo’s friends, family members and business associates, about 70 in all. “Our plan was to be all over his life,” says Landando.

Detectives say they also started receiving anonymous tips from people who knew Rallo and who said he had been behaving erratically-talking about committing murders and carrying guns. “He was asking guys, What kind of mistakes would you make if you did a murder?” says Detective Cordaro. “How would you cover it up? It looked as though Danny was fishing to outthink us, try to be a step ahead of the police.”

But although investigators were “backing Rallo up like a rat in the corner,” as Thomas Kolman, the Chicago police detective, puts it, they weren’t able to amass enough evidence-other than the circumstantial-for an arrest. Still, the detectives were relentless. “There was no way this guy was going to kill this woman and just walk away because he’s hiding behind his Miranda warnings,” says Landando. “It ain’t gonna happen, not with us.”

With the case lagging, homicide detectives turned to the police department’s Asset Forfeiture Unit, which cracks financial crimes, for help. Investigators knew that Rallo had forged employee tax documents for Hogue and helped launder her money. They figured if they couldn’t nab him for murder, then they could follow this shady paper trail to uncover proof of possible financial crimes.

On January 27th, a Cook County judge granted detectives a warrant to search Rallo’s home. Police say they wanted, at the very least, to gather enough evidence for money laundering charges. And maybe they could fool Rallo into thinking that they were coming to arrest him for murder, not simply to rummage through his file cabinets. They hoped, under pressure, he might even confess to foul play. “We knew if we could just talk to him-get him in a room-he’d crack,” says Landando. “The more he tried to be a tough guy, the more it showed through that he was just a little weasel.”

The next morning, around 8:45, the detectives drove to Rallo’s home in suburban Streamwood. They arrived at 223 Monarch Drive, a three-story white townhouse indistinguishable from the others in the large ring-shaped subdivision. They knocked on the door and yelled, “Police! Police! Police!” No answer. Kolman, a burly Paul Bunyan type, swung a battering hammer, crushing the steel door. As they stormed inside the tiny entry foyer, Rallo stood just a few feet away-six steps up a stairwell at the entrance to the living room-out of their sight and with a snub-nosed revolver in his hand.

The detectives suspect Rallo was set for a shootout, but at the last second he put his gun to his temple and pulled the trigger. They found him sprawled in a pool of blood on the living room floor, the .38-caliber Taurus and a cell phone by his side.

Upstairs in his home office they discovered garbage bags filled with shredded documents and financial records, not to mention books on the mobsters John Gotti, Tony “The Ant” Spilotro, and Henry Hill. In his bedroom, they also found a packed suitcase and tickets for a “Freestyle Caribbean” vacation on the Norwegian Sun cruise line.

 

“Cheryl’s [murderer] has been found!” The news, posted on the BigDoggie Web site by an escort named Gemini, set off an online celebration. “The monster is dead,” wrote an observer calling himself Admiral Dewey. Many escorts heaped praise on the police, normally their archenemy.

Police and friends still aren’t completely sure how a scam about “a lousy 50 grand,” as Delorta puts it, turned to murder. Landando guesses that Rallo was probably just “playing a game, being a wise guy wannabe.” He probably spent Hogue’s money, “and when she starts pressuring him, I think Danny felt like his back was up against the wall.”

Kelly Shannon has a slightly different theory: Rallo, she says, simply figured, “‘What’s one dead hooker?’” She sighs, and then adds, wistfully, “She wasn’t just some hooker. She was someone’s daughter. She was someone’s sister. She was someone’s niece. She was someone’s best friend.”

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