- The Washington Times - Monday, March 19, 2007

Federal prosecutors want to keep a California woman charged with running a high-end prostitution business in the District from suing former employees and customers, a tactic they say the woman’s attorney had used before in a similar case.

Accusing Deborah J. Palfrey, 50, and her attorney of “witness intimidation,” prosecutors argue they need a protective order to prevent “serious and ongoing harassment of witnesses,” court records unsealed yesterday state.

Miss Palfrey says she is distributing years of old phone records to an unnamed news organization. She also recently sued a woman she says was a former escort for her business.

Prosecutors say such actions are aimed at getting witnesses to recant testimony.

In an unsealed court memo, Assistant U.S. Attorney William R. Cowden noted that Montgomery Blair Sibley, who is representing Miss Palfrey in civil-forfeiture proceedings, last year represented a man who ran a prostitution business in Florida who later sued his former clients.

In that case, Mr. Sibley argued that clients of the escort service breached contracts they had not to break the law.

But the U.S. attorney’s memo accuses Mr. Sibley of “filing vexation litigation in an apparent effort to intimidate witnesses to, or investigators of, his clients’ criminal activity.”

In a telephone interview, Mr. Sibley called the government’s memo “a cheap shot.”

“I take this as an ad hominem attack by the government,” he said. “They’re pounding the table.”

Mr. Sibley said Miss Palfrey gave copies of her phone records to a major news organization. He said the news organization, which he declined to identify, did not pay for the records.

“It was a purely unconditional delivery,” he said. “We hope and expect that their investigation will benefit the case.”

A judge yesterday postponed until Thursday a hearing on whether Miss Palfrey could sell her phone records. The government wants her to forfeit the records. She previously said she wanted to sell her records to pay for her legal defense in the criminal case.

Miss Palfrey faces racketeering and money-laundering charges under a federal indictment issued in federal court in the District.

Earlier this month, prosecutors indicted Miss Palfrey on racketeering charges, saying she ran Pamela Martin & Associates as a prostitution ring in the District from her home in California since 1993.

According to the indictment, the prostitution business involved 132 women who were hired primarily through local newspaper ads, with money split between the prostitutes and Miss Palfrey. She was paid through money orders sent to her California post office box, prosecutors said.

The indictment, which also accuses Miss Palfrey of arranging sex for money in Virginia and Maryland, occurred months after authorities seized Miss Palfrey’s bank accounts, stocks, real estate and gold coins in connection with the investigation.

Miss Palfrey disputes the charges, saying her business operated as a “legal, high-end erotic-fantasy service” whose clientele “came from the more refined walks of life” in the District.

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