Fifty-year old Deborah Jeane Palfrey, the California woman accused of running a $2 million Washington prostitution ring, denied any role in illegal activities and said for 13 years she headed a "legal, high-end erotic fantasy service."
Emerging from the Washington offices of her court-appointed attorney near U.S. District Court, where she was arraigned this morning on federal racketeering charges, Palfrey said that she hired college-educated women between the ages of 23 and 55 to provide an "upscale" escort service and a "refined way of life" to her clients.
Palfrey said her firm, Pamela Martin and Associates, "did not engage in illegal behavior."
Her attorney in a separate civil suit, Montgomery Blair Sibley, said that Palfrey has her "back to the wall," and threatens to reveal what he says are more than 15,000 telephone record of her clients. Sibley said that there are at least 12 news organizations and publications interested in seeking access to those lists. Sibley did not say the client list was for sale; rather he said Palfrey wanted to "partner" with someone who could "mine the list on what went on," which Palfrey insisted was not illegal sexual activity.
Sibley also announced that Palfrey has filed another suit in federal court against Dr. Paula Neble and 15 Jane Does seeking damages in excess of $75,000.
The suit contends that Neble materially breached her contract with Palfrey "by engaging in illegal sexual activities with customers of the escort service without the knowledge or consent of Plaintiff."
The court filing states that Neble signed a contract with Pamela Martin and Associates "to solely provide legal sexual services to the customers of the escort service thereby establishing a legitimate bond between the parties."
Palfrey's legal defense fund, www.deborahjeanepalfrey.com, says, "consideration is being given to selling the entire 46 pounds of detailed and itemized phone records for the 13 year period, to raise the requisite defense funds." Included on the Web site is "(a)n example from a randomly selected 6 day period in August of 1996," containing a Sprint phone bill and 124 phone numbers in and around the Washington area.
In court Friday for her arraignment before U.S. District Judge Gladys Kessler, when asked how she would plead, Palfrey said, "I plead not guilty."
Liquidating assets
Palfrey says she had 10,000 clients contained in lists since 1993 which, according to her Web site, weigh in at "46 pounds of detailed and itemized phone records."
Palfrey may have no other choice but to "liquidate her only remaining asset," records involving some 10,000 clients, said Washington attorney Montgomery Blair Sibley, who is representing her in a civil asset-forfeiture case that is now on hold because of the criminal indictment.
Prosecutors said that she may not be able to keep any profit from the sale of her client lists. Assistant U.S. Attorney Bill Cowden said, Palfrey, "might have to forfeit the money."
Authorities have already seized about $1 million worth of real estate and $500,000 in cash and stocks in the civil case, Sibley said. She faces criminal charges under the Racketeer Influenced and Corrupt Organizations Act — known as RICO — and conspiracy to commit money laundering.
In a February e-mail to federal prosecutors, Palfrey threatened to make "life miserable for those who used her escort agency's services," court records show.
Clinton administration connection?
While Palfrey has not specifically mentioned any individuals or Washington power brokers as clients, on Thursday the political newsletter The Hotline wrote, "A lawyer for an indicted D.C. madam is trying to drag Dick Morris into a juicy case that may involve thousands of former clients" and that when he was a Clinton adviser, Morris' "toe-sucking sessions with a professional call girl" were revealed. Though Morris "admitted publicly that he hired prostitutes from more than one agency, it's unclear whether he has any connection."
The Hotline went on to say Palfrey's attorney served a subpoena on Morris to "give a deposition on information, if any, he may have about the call-girl service."
"The press will have a field day at each of our expense," she wrote of the prospect of being prosecuted and releasing her 46 pounds of client records. "I can state with unequivocal certainty this situation will be a very long and unpleasant one. This, despite the sickening and humiliating additional lambasting I expect to receive in the media."
The background
Officials say Palfrey advertised for her "female employees" at the University of Maryland's Diamondback newspaper and did business in Washington under the name Pamela Martin and Associates.
Palfrey, the say, also hired "male 'testers' who agreed to and did meet with women who wanted to work with Pamela Martin and Associates and determine the ability of those women to perform the appropriate prostitution activities," according to the indictment.
The prostitution business allegedly involved 132 women, with the prostitutes keeping half of the fees and mailing the rest to Palfrey in money orders, prosecutors allege in the court filing.
The indictment, which also accuses Palfrey of arranging sex for money in Virginia and Maryland, occurred months after authorities seized Palfrey's bank accounts, stocks, real estate and gold coins in connection with the investigation.
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.
Palfrey has three homes, two in California and one in Florida. Judge Kessler ordered her to wear an electronic monitoring device, and she will be allowed to travel to her properties but not outside the country.
No date had been set for her trial.