By Paul Duggan
Washington Post Staff Writer
Friday, March 2, 2007
A woman accused of running a prostitution service catering to men in hotels and homes in the Washington area was indicted on federal racketeering charges yesterday in a case with a twist: She has threatened to peddle "the entire 46 pounds of detailed and itemized phone records" of her clients to raise money for her defense.
Working out of her California home, Deborah J. Palfrey, 50, did business in Washington under the name Pamela Martin and Associates. On a Web site seeking donations to her legal defense fund, the company is described as "a high-end adult fantasy firm which offered legal sexual and erotic services across the spectrum of adult sexual behavior."
But federal authorities say it was a thriving call-girl service, begun in 1993, that dispatched college-educated women in their 20s to male clients in the Washington area who paid $275 to $300 per sexual encounter. The prostitutes kept half of the fees and mailed the rest to Palfrey in money orders, authorities allege in an affidavit filed in federal court.
The indictment says that in 13 years, the service employed 132 women and generated about $2 million in income "through prostitution related activities."
From January 2000 to September 2006, "Palfrey received and deposited over $750,000 in money orders from various prostitutes" into bank and investment accounts, according to the affidavit. It also says that Palfrey was convicted of operating a prostitution service in California in 1991 and was jailed for 18 months. She "started her current illegal prostitution business while still on probation," the affidavit says.
Palfrey is scheduled to make her initial appearance in the criminal case at the D.C. federal courthouse next Friday. She had no comment on the charges yesterday, said her attorney, Montgomery Blair Sibley. He is representing Palfrey in a civil asset-forfeiture case brought against her last year by federal authorities in the investigation of the alleged prostitution service.
Sibley said his client's "legal escort service" was almost exclusively a cash business. He said that the women who worked for Palfrey were given 1099 tax statements each year, listing their earnings as independent contractors, and that Palfrey accurately reported her yearly income on federal tax returns prepared for her by H&R Block.
Palfrey has been warring with prosecutors since they raided her home in Vallejo, Calif., in the San Francisco Bay area, in October. Sibley said they seized about $1 million worth of real estate and $500,000 in cash and stocks and began the forfeiture proceedings.
"Ms. Palfrey adamantly disputes the government's claims of illegal behavior," according to her legal defense Web site, where she began seeking donations after the government took her assets.
"It is an unfortunate fact of life that funds will need to be generated to counteract the present injustice," the Web site says. As a result, "consideration is being given" to selling Palfrey's phone records dating to 1993, including the phone numbers of about 10,000 clients in the Washington area who used what Palfrey asserts was her legal escort service.
Palfrey sent an e-mail to prosecutors this year that warned of the disclosure. "I simply cannot emphasize to you the terrible and quite unnecessary ramifications this case (civil and/or criminal) will set off if permitted to advance," she wrote. "The press will have a field day. . . . I can state with unequivocal certainty this situation will be a very long and unpleasant one."
The U.S. attorney's office in the District, which is prosecuting the case, said it had no comment on the client list or the possibility that Palfrey will make it public.
The indictment charges Palfrey with violating the Racketeer Influenced and Corrupt Organizations Act and with three counts of interstate travel in aid of racketeering and one count of conspiracy to launder money.
Authorities said Pamela Martin and Associates advertised in the D.C. Yellow Pages but did not have an address here. They said callers seeking to use the service were connected to Palfrey or someone working for her in California.
"Palfrey hires women who are at least 22 years of age, possess some college education and have employment outside of their prostitution activities," according to the affidavit, filed by an Internal Revenue Service agent last year in the forfeiture case.
Authorities said she placed ads recruiting women in the Washington City Paper, on the Internet, in the student newspaper at the University of Maryland and elsewhere.
"Palfrey personally interviews the women by telephone and has them mail an application with a photograph" to Palfrey's post office box in California, IRS agent Troy A. Burrus said in the affidavit. "The women tell Palfrey the days that they will be available, but Palfrey encourages them to work at least three nights a week."
He added, "After a woman is hired as a prostitute, she is sent to a 'screening' appointment, and is required to engage in sexual activity, without payment, with a male designated by Palfrey." The women had sex with the male "testers," authorities said, "so that Palfrey can ensure that none of her employees are law enforcement officers."
Burrus said "the prostitutes reside in Virginia, Maryland and Washington, D.C., and travel to locations in these three jurisdictions. . . . Palfrey tells the prostitutes where they should go, the time of the meeting with the customer, and the customer's name."
Staff writer Allan Lengel and staff researcher Meg Smith contributed to this report.