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Woman threatens to create sex scandal in Washington DC

A woman accused of running a prostitution ring on Friday threatened to immerse Washington in a sex scandal by saying she was considering selling 13 years of phone records to raise funds for her legal defense.

The threat by Deborah Palfrey, who was indicted on racketeering charges this week, saw lawyers claiming that the records would soon lead to a client list of 10,000, including some of Washington's most influential figures.

"Statistically, when you have 10,000 clients in DC, you are going to cover a broad spectrum of the governmental and private sector that operates here," said Montgomery Sibley, Palfrey's lawyer in her civil proceedings.

"You can make an assumption based on these facts: The escorts only responded to private residences in good sections of DC, Virginia, or Maryland, or in four or five-star hotels ... The clientele was about 20 percent foreign, and it was not an inexpensive service," he said.

Palfrey is accused of running a service from her California home that offered, according to her company Web site, "legal sexual and erotic services across the spectrum of adult sexual behavior."

It was a lucrative operation, earning Palfrey US$750,000 over the last six years, court documents said.

Only college-educated women were recruited, and only after they had consented to have sex with a client of Palfrey's choosing without taking a fee -- a device meant to thwart a sting operation, according to court documents.

Clients paid between US$275 and US$300 for an encounter. The prostitutes kept half of the fees and sent the rest to Palfrey by money order. It was this transaction that appeared to have led to Palfrey's undoing, after the postal service and internal revenue service began tracking the payments.

Palfrey's home was raided last October, and about US$1 million worth of property was seized along with US$500,000 in cash and stocks. That was when Palfrey decided to fight back, implicitly threatening her client base to pay for her silence.

This unorthodox tactic is a favorite of Sibley's. He attempted a similarly proactive approach last year for a client called "Big Pimpin Pappy," who was arrested for running an escort business in Florida. However, a judge dismissed the attempt to sue former clients.

Sibley denied Palfrey was stooping to blackmail.

"She has had 13 years to blackmail people if that was what she wanted to do," he said. "It is only now ... she has to resort to this."
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