Owner vows a hassle in escort-service probe

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A California woman who is the target in an ongoing criminal probe into the operation of her District-based escort agency has told federal authorities she will "make life miserable" for former customers and employees unless her case is dropped, government attorneys say.

"I cannot emphasize to you the terrible and quite unnecessary ramifications this case (civil and/or criminal) will set off, if permitted to advance for both sides," Deborah Jean Palfrey wrote in an e-mail to the U.S. Attorney's Office. "The press will have a field day at each of our expense."

Government attorneys referenced the e-mail in a recent motion to postpone civil forfeiture proceedings against Miss Palfrey pending the outcome of a criminal investigation. But an attorney for Miss Palfrey wants to move forward with the civil case, filing court papers last weekend detailing an attempt to depose former Clinton campaign adviser Dick Morris.

Mr. Morris, a news commentator who resigned from the Clinton campaign in 1996 amid a scandal involving escort services, is "the only customer of the service who has publicly admitted using the services for 'legal' sexual activity," Miss Palfrey's attorney wrote in court papers.

Attempts to reach Mr. Morris were not successful yesterday.

Miss Palfrey, of Vallejo, Calif., has been the target of a two-year investigation by the Internal Revenue Service and U.S. Postal Service into whether she illegally earned money from prostitutes working as escorts for her business.

Miss Palfrey has not been charged criminally.

In October, federal agents seized more than $427,000 in cash and stocks from Miss Palfrey. In pleadings, authorities say the criminal investigation is ongoing.

Miss Palfrey's forfeiture attorney, Montgomery Blair Sibley, said yesterday he is seeking to depose Mr. Morris because the one-time presidential adviser already has admitted using escort services in the District in the mid-1990s, including, he said, Miss Palfrey's business, known as Pamela Martin & Associates.

"The only reason we mentioned Dick Morris is that he had publicly come out," Mr. Sibley said. "We are trying to keep the names of the other hundreds of clients private. ... Nobody wants a circus."

The U.S. Attorney's office declined to comment on the case yesterday.

In recent filings, Assistant U.S. Attorney William R. Cowden expressed concern about what he called Miss Palfrey's "recent threat to harass potential witnesses whose identities remain secret ... through calculated public disclosures of former customers' and former co-workers' identities."

Mr. Cowden also said authorities want to hold off on the pending civil seizure proceedings because it could affect the ongoing criminal investigation.

He said Miss Palfrey's attorney wants the government to turn over the names of cooperating witnesses. That could compromise the ability of criminal investigators to gather confidential information, he wrote.

"At this point, no good purpose would be served by facilitating claimant's apparent effort to expose and potentially embarrass former customers and co-workers of her 'full service' escort agency," Mr. Cowden wrote.

Mr. Sibley declined to comment on the contentsof Miss Palfrey's e-mail. But he disputed the idea Miss Palfrey might seek to "make life miserable" for clients and former employees.

"She's not looking to make life difficult for anyone," Mr. Sibley said.

According to Mr. Cowden's memo, Miss Palfrey's note to government attorneys also warned, "I can state with unequivocal certainty this situation will be a long and unpleasant one. ..."