Escort-service scandal set to ignite D.C. explosion

WASHINGTON — "Miz Julia" doled out a steady stream of advice, practical and philosophical.

From her California home, she e-mailed tips to the 132 women who worked throughout the Washington, D.C., area for the firm Pamela Martin & Associates. Her newsletters, excerpted in court records, were a virtual how-to manual for avoiding all kinds of trouble in a business said to specialize in erotic fantasies.

"One never quite knows where evil, i.e., the vice squad is lurking in this business," read one entry from 1995. "The misogynists get a real kick out of surprising (shocking) you girls, when you give them the opportunity!!! ... Therefore, you are to lock, double lock, triple lock all doors!!! ... Figure it out, before they 'get cha'!!!"

Miz Julia was the pseudonym for Deborah Jeane Palfrey, the woman at the center of a sex scandal that has caused a deputy secretary of state to resign and has lawyers calling around town trying to keep their clients' names out of public view.

Palfrey, a one-time law student, ran for 13 years what she insists was a legal escort service. Federal prosecutors allege she was providing $300-an-hour prostitutes, and a grand jury indicted her in February on federal racketeering charges.

Palfrey piqued fascination, and anxiety, by first threatening to sell phone records that could unveil thousands of clients, and then handing them, apparently for free, to ABC News. She is scheduled to appear Monday in U.S. District Court in the District of Columbia.

On Friday, Randall Tobias resigned as deputy secretary of state one day after confirming to Brian Ross of ABC that he had patronized the Pamela Martin firm.

Saturday on "Good Morning America," Ross said Tobias told him Tobias' number was on Palfrey's phone records because he had called "to have gals come over to the condo to give me a massage." There had been "no sex," Ross quoted Tobias as saying, and that recently he has used another service, "with Central American gals," for massages.

Tobias, 65 and married, was director of U.S. Foreign Assistance and administrator of the U.S. Agency for International Development. He previously held a top job in the Bush administration overseeing AIDS relief, in which he promoted abstinence and a policy requiring grant recipients to swear they oppose prostitution.

Palfrey's attorney, Montgomery Blair Sibley, said Friday that he has been contacted by five lawyers recently, asking whether their clients' names are on Palfrey's list of 10,000 to 15,000 phone numbers.

Some, Sibley said, have asked if accommodations could be made to keep their identities private. ABC is expected to air a report on Palfrey and her clients on Friday night's "20/20."

"Very prominent people"

More revelations are in the offing. Ross said the list includes the names of some "very prominent people," and a number of women with "important and serious jobs" who had worked as escorts for the firm.

The disclosures have been made sparely and artfully. Two weeks ago, in court documents about calling former clients to testify on her behalf, Palfrey named Harlan Ullman, an academic whose main claim to fame was a scholarly paper he wrote more than a decade ago on the military strategy known as "shock and awe."

Responded Ullman: "It doesn't deserve the dignity of a response."

Sibley also filed notice that he intends to depose political consultant Dick Morris in a separate civil proceeding. Morris would not comment.

Palfrey declined to comment on either Tobias' resignation or other names that could arise.

"As the old saying goes, 'I need to dance with the guy who brung me,' " she wrote in an e-mail to a reporter. "I have promised ABC News that the '20/20' interview will be an exclusive one. I am sure you can understand my situation."

For all the attention she is attracting, Palfrey retains an air of mystery. She has dropped intriguing hints about herself over the years but demurs when asked for an interview about her life.

"I am not a quitter," Palfrey wrote in another e-mail. "Additionally, I abhor injustice, on any level and in any forum. I frankly persist despite life's barriers. It is no more complicated than this."

She sees herself as an entrepreneur being railroaded by an all-powerful government, in a "David and Goliath scenario."

Prosecutors have made much of her history: In 1992, she pleaded guilty to attempted felony pimping. She started her Washington, D.C., business while on probation in California.

Indecipherable

The little that is known about Palfrey comes from court records in California and Washington, D.C., interviews with acquaintances and a series of e-mails.

Through her writing — facile, self-assured, with triple exclamation points for emphasis — she shows contradictions and gumption, a woman who says she lives by "the Golden Rule," who describes herself as sophisticated, a perfectionist and "a cat person" who will not go away without a fight.

Old friends can't decipher the contrasting images.

"I thought I was a pretty good friend in high school," said Debbie Blozik, who now lives in Birmingham, Ala. "But I'm thinking now how many things I really didn't know about her."

Home was Charleroi, Pa., population 5,000, which sits on a hillside overlooking the Monongahela River south of Pittsburgh, its older homes clustered on steep streets.

The elder of two girls, Palfrey was born in 1956 to Frank Palfrey, who worked for a grocery company and died in 2002, and Blanche, a homemaker now living in Florida. The family resided for awhile in Orlando but returned to Charleroi when Palfrey was 10, to a modest house with striped awnings on Shady Avenue.

Palfrey graduated with a bachelor's degree in criminal justice from Rollins College in Winter Park, Fla., attended a year at what is now Thomas Jefferson School of Law in San Diego and completed a nine-month paralegal course.

Appalled, disgusted

She got into the escort business in San Diego, she said, because she was "appalled and disgusted" by how "seedy, lazy and incompetent" other escort agencies were, she wrote in court papers. An avowed teetotaler, she said she did not like the drug-related atmosphere.

"I decided to branch out, so to speak, from my solo state and began working with one or two (maybe three at the most) other women," she said in her California legal pleadings.

She told Thomas Czech, a career Marine who said he dated Palfrey for about two months, that she was an interior designer. Things ended badly, and Czech took out a restraining order against her in San Diego County in 1989.

Palfrey's business crashed when she was arrested in 1990; an employee's angry mother apparently tipped off police. She employed about a dozen women and would have made $100,000 that year, she said.

She said her employees were "independent agents" and allowed that she should have "done something to police/eliminate such conduct from occurring."

Palfrey was a no-show at her scheduled trial in August 1991. She was captured that October in Montana. She explained to the court that the stress from the criminal proceedings had caused her to flee.

Her mother, she said, was so upset that she developed a life-threatening aneurysm and required surgery. She said her parents "just can't comprehend how my offense could be viewed so harshly." Once free, she said, she planned to go into business exporting "authentic American Western and Indian art to the United Kingdom."

"Best adult agency"

Instead, after 18 months in state prison, Palfrey started Pamela Martin. The firm recruited escorts through the University of Maryland student newspaper and Washington City Paper. It advertised in the Yellow Pages and on Web sites, touting itself as "undoubtedly the best adult agency around."

Prosecutors say she made about $2 million running Pamela Martin over 13 years, on average, less than $160,000 a year. Her Escondido home was valued at about $480,000 last year and a Vallejo house at about $495,000, according to court papers related to their seizure by the federal government.

Recently, Palfrey returned, quietly, to Charleroi to visit her parents.

In late 2002, she launched a Charleroi Area High School alumni association Web site. On it, she expressed interest in the National Innocence Project for prison inmates: "Never could stomach injustice, social or otherwise," she wrote, adding a photograph of herself as a young girl with shiny bangs by a Christmas tree.

In 2004, the IRS and the U.S. Postal Service began a joint investigation of Pamela Martin & Associates. Palfrey, who conducted most of her business by e-mail and phone, allegedly instructed her "subcontractors" to convert her share of fees into money orders and mail them to her California post-office box.

Palfrey's legal strategy is to aver she had no idea that the women working for her engaged in prostitution.

In papers filed in U.S District Court, Palfrey alleged that a former escort identified as Paula Neble and 15 "Jane Does" breached their contracts by engaging in illegal sex. Neble's attorney, Kathy Voelker, said she has "no comment at all."