New D.C. Sex Scandal Looming?

Feds target escort service in money launder, prostitution probe

OCTOBER 9--With the capital already mired in its latest sex scandal, federal agents last week raided the home of a woman they allege has, for the past 13 years, operated a Washington, D.C. escort service that dispatched college-educated prostitutes to the homes and hotel rooms of well-heeled clients.

A two-year probe by Internal Revenue Service and Unites States Postal Inspection Service agents has targeted the Pamela Martin & Associates escort service and its owner, Deborah Jeane Palfrey.

In coordinated actions last week, agents searched the 50-year-old Palfrey's northern California home and froze nearly $500,000 in assorted bank and stock trading accounts. A copy of the seizure affidavit, sworn out by IRS Agent Troy Burrus and filed in U.S. District Court, can be found below.

According to investigators, Palfrey charged clients about $300 per session and split the take with her stable of prostitutes, who were encouraged to "work at least three nights a week." Palfrey, who started Pamela Martin & Associates in 1993, was previously convicted of running a California prostitution business and served 18 months in prison.

In a TSG interview Monday, Palfrey admitted operating an escort firm, but claimed that her workers did not engage in "illegal sexual activities." There are "a lot of erotic activities that one can do without participating in things that are illegal," she claimed.

Investigators contend that after Palfrey hires a prostitute, she sends the woman to a "screening" appointment where she is required to have sex "without payment" so as to ensure that the prospective hooker is not a law enforcement officer.

Palfrey, who spoke to TSG from Germany, said that agents raiding her home would have found nothing since she did not keep computerized records and regularly shredded documents. Asked about the nature of her clientele, Palfrey called the identity of her johns a "salacious detail" of which she was unaware. "I never kept records," she claimed. "I protected the client's confidentiality...they trusted me." But Palfrey did speculate that she may have come to the attention of federal agents because her operation had somehow intersected with a more high profile case, like that of convicted ex-congressman Randy "Duke" Cunningham.

Investigators are reportedly examining charges that a defense contractor provided hookers to Cunningham as part of an influence-peddling scheme. Palfrey did not claim a nexis between her escort service and Cunningham, but invoked the disgraced pol's name while saying that she would wager that the basis for the federal probe of her business "had solely to do with some Duke Cunningham-type bigwig client that got caught up in something and started to say, 'Do you know this?' and 'Do you know that?' And that he might have been able to lead them to somebody."

Palfrey, who said she started her service in D.C. because "it's a very liberal, sophisticated, cosmopolitan area," advertised her company as featuring women "23 and older, with two or more years of college education, who either work and/or go to school in the daytime."

Palfrey told TSG that she shuttered her escort business in mid-August because her female employees were "driving me crazy. They were a pain in the ass to deal with." She added, "It was just time to start a different life and do different things, move on."

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