D.C., 'Madam' have Friday night date

Deborah Jeane Palfrey ran her high-end sexual fantasy business in a way she carefully designed to keep the feds at bay. (She didn't take a year of law school for nothing.)

In quintessential Washington style, the woman dubbed "the D.C. Madam" solicited male clients who paid up to $300 an hour and hired some 130 subcontractors -- women as young as 23 and as old as 55 -- under detailed employment agreements that required them to perform only lawful acts.

That worked for 13 years, then she was indicted on charges of running a high-class prostitution ring.

Now, rather than keep her clients secret, she has decided to unmask them -- in the name of her legal defense. And she has elicited the help of ABC News to do it, turning over 46 pounds of phone records, a stack about a foot high, with the names of "thousands and thousands" of clients that, Palfrey promises, reach "high into the echelons of power in the United States."

Palfrey, 50, hopes the maneuver will produce witnesses for her legal defense, since none of her patrons have come forward voluntarily. But her strategy has led to one revelation that ended a top-level career and left official Washington with the feeling that more are to come.

Randall L. Tobias, a deputy secretary of State and the Bush administration's "AIDS czar," abruptly resigned late last week after acknowledging to ABC that he had used Palfrey's service, "but only to have gals come over to the condo to give me a massage." Tobias, who oversaw global AIDS funding, was in charge of enforcing a controversial policy that required groups to sign a pledge denouncing prostitution and sex trafficking in order to receive federal HIV/AIDS prevention money.

Tobias told ABC that "no sex" was involved and that he switched from Palfrey's shop to one "with Central American gals."

Now, classically divided Washington is split along new lines -- those who dread the naming of names and a whole bunch of others who can't wait.

Attorneys for the would-be clients of Pamela Martin and Associates, as Palfrey called her firm, have been pestering her lawyer in a frantic effort to preserve discretion, while ABC prepares to air a report on "20/20" Friday. This happens to be sweeps week.

At a news conference Monday outside U.S. District Court, Palfrey said she was "genuinely sorry" about outing Tobias, a 65-year-old married father of four. But his insistence he had done nothing illegal was precisely her point: Neither did she -- and she wants her clients to help her prove it.

"This is an absolute necessity, since the government has placed me in the untenable position whereby I do not have sufficient monies to undertake this extraordinarily expensive task on my own," she said.

After a two-year investigation, Palfrey, who ran her business out of Vallejo, Calif., was indicted for running an escort service from 1993 to 2006 that prosecutors say did more than escort.

Advertising the "best selection and availability before 9 p.m. each evening," she drew at least 10,000 customers. She took in more than $2 million, splitting the profits with her female subcontractors, according to court filings.

But the government froze her assets when the indictment was handed down, which Palfrey said rendered her financially incapable of mounting a proper defense. That, she says, left her one place to turn -- her clients -- and because they wouldn't come forward on their own, she decided to smoke them out.

"We're looking for witnesses," her attorney, Montgomery Blair Sibley, said Monday when asked about the propriety of making client names public. "If there's a bank robbery, you want to see who's at the scene of the crime so they can testify to the identify of the bank robbers. It's no different."

Palfrey, for her part, read from a prepared statement and refused to take questions.

"Everyone would like to hear Jeane and none of you will," Sibley announced.

At least not until Friday night, when ABC says it has an exclusive interview with Palfrey, who once served 18 months for attempted pimping in San Diego.

ABC has been promoting the interview since early last month. But a network official said the sweeps week timing was coincidental.

"We go to air with stories when we're ready to go to air with them," spokesman Jeffrey Schneider said. "In any story we do, we want to be fair and we want to be right."

On a website she set up for her legal defense fund, Palfrey bemoans that the "full weight of the United States government is bearing down upon her." A link for donations is included.

"She's playing it beautifully," said Robert Hogan, former psychology professor at Johns Hopkins University in Baltimore who runs a leadership consulting business. "These pols she has on her list are not above squeezing those prosecutors to lay off."

Palfrey is fighting prosecutors at every turn, including their contention that she threatened to make life miserable for her clients should the government persist in its case.

On the contrary, Palfrey said, making clients miserable was never the goal, which she explains on her website under the heading, "The Full Story Behind Jeane's 'Threat' to 'Make Life Miserable.' "

Likening her agency to a strip club, she said clients paid $300 for 90 minutes of "legal high-end erotic fantasy service."

She explained the complexities of the law to the Associated Press this way: "You can pay an escort to come to your home, get naked and get a massage and you haven't broken any laws, assuming you stay on your stomach."

All of this could have been avoided, of course, if only Washington's officialdom could remember the oldest rule in politics: Don't do anything you don't want to see in tomorrow's headlines.

Or, as Washington gossip columnist Patrick W. Gavin recently noted: " ... if you make a stink, everyone in this small town will eventually smell it."

faye.fiore@latimes.com

adam.schreck@latimes.com

Times staff writer Johanna Neuman contributed to this report.

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