The woman who authorities allege ran a prostitution business in the Washington area for 13 years and counted high-profile government officials among her clientele confirmed this week that she employed a female Naval Academy officer as an escort and believes that the woman has agreed to testify against her.
Two Navy sources familiar with the matter said the academy's superintendent had been notified that the woman might testify against Deborah Jeane Palfrey, known as the "D.C. Madam."
In a wide-ranging interview, Palfrey, whom federal prosecutors have charged with racketeering and conspiracy to commit money laundering, said the Navy officer met clients in the Annapolis area and charged them about $275 an hour for "erotic fantasy" services.
The telephone number Palfrey said the woman used appears more than 300 times in phone records she posted on the Web site, according to a Sun analysis of the records.
The sources said the woman worked for several years at the academy in a senior, non-faculty position.
"Her name is splattered throughout the records," Palfrey said. "We would not talk to each other if the girl wasn't working."
The woman did not return phone messages left at a number listed as hers yesterday. Her attorney responded to an e-mail sent to her and said that neither she nor he would comment.
Hundreds of Annapolis telephone numbers and dozens of others from Baltimore, Glen Burnie, Severna Park, Columbia and other areas appear on the phone records, which Palfrey has posted on a Web site.
The phone number of Brandy Britton, who committed suicide after being charged with running a prostitution business from her home in suburban Howard County, appears in the records.
One number appears to be that of an editor for the Army Times Publishing Co., which publishes several military weekly newspapers. Its Navy Times first reported a Naval Academy employee among the escorts.
That editor's calls were placed in 2004 and 2005, according to the records. The Chicago Tribune, which is owned by the same company as The Sun, has reported that one number apparently originated in its Washington bureau.
Speaking from her home in California, Palfrey lashed out at the government's case. Palfrey, 50, and her legal team have maintained that she ran a legal escort service where the women who worked for her were instructed not to have sex with clients.
"Otherwise, everything else is pretty much a go. I have no knowledge of what did or did not go on in these homes," she said.
One man whose Annapolis number appeared on the records declined to identify himself but acknowledged that he used Palfrey's service - Pamela Martin & Associates - several times.
The man said none of the women he paid ever identified herself as a military officer, although they appeared educated and did use "great SAT buzz words."
He disputed Palfrey's characterization of the service as one of only erotic fantasy and not sex.
"Yeah, sex was involved," the man said. "It was higher-end stuff, that's how it was billed. These were extremely professional girls, very attractive. ... It's not a low-level chemistry."
Authorities, who have seized about $1 million in real estate and half that in cash and stocks from Palfrey, have said in court documents that she made more than $2 million in the 13 years she operated the business.
Palfrey said the Naval Academy officer's affiliation or rank would never have been disclosed to clients. Like the other 133 women who worked for her, according to the government's count, "she would have been described as a professional with a graduate degree and left it at that."
Palfrey first called the woman in October 2005, according to the phone records, which contain only outgoing calls, she said. The last call appeared to be on May 9, 2006, three months before Palfrey decided to close her business.
Lt. Cindy Moore, a Navy spokeswoman, said no Navy investigation regarding the officer is taking place, and she would not comment on the woman's possible connection to the Palfrey case. She confirmed that the woman is in the Navy and based out of state.
Questions on the Palfrey case were referred to the U.S. attorney's office, which declined to comment, as did the Naval Academy.
Prosecutors tried to keep Palfrey from releasing the phone records to media outlets, accusing her of witness intimidation. But a federal judge lifted a temporary restraining order this month, allowing Palfrey to release the records.
A phone number for Britton, a sociologist and former assistant professor at the University of Maryland, Baltimore County, appears multiple times on the list. Britton was found dead in her Ellicott City home Jan. 27, days before she was to be evicted and her trial on prostitution charges was to begin.
Palfrey recruited escorts through ads in the Washington City Paper and The Diamondback, the University of Maryland student newspaper.
Already, the records have tagged powerful people in Washington, including Sen. David Vitter, a Louisiana Republican. In April, Randall Tobias, a former CEO of Eli Lilly, resigned as deputy secretary of state after being linked to the escort service by ABC News.
Larry Flynt, publisher of Hustler magazine, hired an investigative reporter to comb through the records and offered $1 million to anyone who could prove that a high-ranking government official had had an illicit affair.
In an interview that lasted almost an hour, Palfrey vowed never to agree to a plea with prosecutors and said she was pleased with Flynt's efforts: "I think that's wonderful. These people pretend to be one thing and then in actuality are another."
Palfrey gave a complete chronology of the federal probe into her business, beginning in August 2006, when she decided to close it, sell her home and move to Germany. She wired $70,000 to an escrow agent in Berlin, hoping to buy a small flat. She decided to close the business on a whim, she said, and was not motivated by suspicions of an investigation.
In October 2006, federal agents executed a search warrant on her home that had been issued out of Sacramento based on information that was three to five years old, Palfrey said. From there, they seized files Palfrey kept on all the women who worked for her.
Before Palfrey was indicted in March, prosecutors came to her and offered her an eight-month prison sentence if she would plead guilty. She declined.
"They wanted to take two-thirds of my life savings, put me away for eight months and destroy me," she said, noting that she responded to their offer with an expletive. "I didn't do anything wrong here, and whatever I did sure as hell doesn't deserve this."
Prosecutors then ordered the women to testify in a grand jury investigation that indicted Palfrey in March. She believes the Naval Academy officer testified at that hearing and will do so again for the prosecution in her coming trial, which her attorney and spokesman, Montgomery Blair Sibley, said would not likely begin until early 2008.
Palfrey served an 18-month prison sentence for running a prostitution business in San Diego before she opened Pamela Martin & Associates.
"I think this goes back to the situation that we're all living in here where our rights are being taken away day after day," she said. "I was sitting on a powder keg of information. Somebody did not want this information to get out."
Sun reporter Andrea F. Siegel contributed to this article.