Gresham has shut down seven illicit massage businesses after city code compliance teams, business licensing staff and police worked to enforce a tougher new licensing code, according to KATU. Investigators say the closures followed a pattern of warning signs at the targeted storefronts, including on-site living spaces, unlicensed therapists, late-night operations, surveillance cameras, covered windows and locked entrances. Several of the businesses also had phone numbers that turned up in online searches for illicit services, the station reports.
The city is now sharing case details and the names of people connected to the operations with the Oregon Department of Justice's Organized Crime Unit, which investigates links between illicit massage businesses and organized crime and uses that information to hold operators accountable, per the same KATU report. The timeline lines up with reporting from The Outlook, which found that Gresham's code compliance teams, licensing staff and police crime analysts completed the shutdown of all seven target businesses within 12 months of the city's October 2025 application rules taking effect. Those rules required mandatory in-person license filings and on-site physical inspections rather than paperwork alone.
A Local Ordinance Built With Industry Input, Not Against It
Gresham City Council President Cathy Keathley praised the city's approach, according to KATU, and separately praised the collaboration between the city and legitimate massage business owners. That collaboration wasn't automatic. The station notes that Gresham city staff worked directly with legitimate massage business owners while developing and enforcing the licensing code, aiming to ensure the new rules would not disrupt businesses that were already operating above board.
That partnership followed a rocky start. In June 2025, the American Massage Therapy Association sought input on Gresham's initial ordinance, Council Bill 04-25, per the American Massage Therapy Association. Local therapists at the time argued the initial draft overreached and ignored newly passed state rules. Alta Ulrich, a local massage therapy business owner, told KATU that strong enforcement against illicit massage businesses and protecting legitimate professionals do not have competing goals, and thanked city leaders for responding quickly to industry concerns.
What The Final Ordinance Actually Requires
The Gresham City Council approved the finished set of changes on September 1, 2026, designed to close loopholes and strengthen enforcement, according to KATU's reporting. The changes block confirmed illicit business operators from obtaining future massage business licenses in the city and expand licensing rules to cover reflexology businesses as well. Under Gresham Revised Code 9.11, licensed massage businesses must submit updated employee rosters with government IDs within 30 days of hiring. The changes also bring reflexology and foot spas under the city's licensing umbrella.
A Statewide Push Behind the Local Crackdown
Gresham's action fits into a broader statewide effort. Oregon Governor Tina Kotek signed House Bill 3819 into law in June 2025, raising civil fines for operating unlicensed massage parlors from $1,000 to $5,000 per violation, elevating repeat offenses to Class C felonies punishable by up to five years in prison, and authorizing state regulators to post warning placards on non-compliant storefronts, according to Willamette Week. The bill was sponsored by state Representative Thuy Tran and passed the Oregon Senate 28-1.
In November 2025, the Oregon Department of Justice launched a pilot program called SPIRE, short for Special Projects: Investigate, Respond, Enforce, coordinating support for local law enforcement addressing crimes including illicit massage parlors, according to the Oregon Department of Justice. The program was developed under Attorney General Dan Rayfield to address crimes that cross municipal borders.
Similar Raids Playing Out Across the Portland Metro
Gresham isn't operating in isolation. On September 3, an Oregon DOJ SPIRE joint investigation executed search warrants at four locations tied to illicit massage parlors in nearby Washington County, seizing more than $45,000 in cash and arresting three people on prostitution-related charges, as reported by KGW. That raid targeted storefront spas in Sherwood and Tigard along with a residential home in southwest Portland.
The Gap Between Licensed Therapists and Illicit Operators
Gresham officials say the city plans to continue strengthening protections for both the public and legitimate massage businesses going forward, according to KATU.
