EVERETT — The city is moving to seize and sell several controversial bikini espresso stands that were once a front for a lucrative prostitution operation ran by a former exotic dancer.

Carmela Panico agreed to forfeit her roadside coffee huts as part of the plea agreement she struck with Snohomish County prosecutors earlier this year. Panico was busted in 2013 after Everett police and FBI agents began investigating rumors that a “dirty cop” was tipping Panico off to undercover operations targeting her stands.

Darrell O’Neill, a former Snohomish County sheriff’s sergeant, is accused of feeding Panico and her employees information in exchange for sexual favors. He resigned not long after his arrest. His trial is scheduled for February.

Panico, 52, pleaded guilty in September to promoting prostitution and money laundering. She admitted that she operated drive-through brothels that made her millions.

Prosecutors aren’t expected to ask for any more jail time for the coffee stand madam. In exchange, Panico agreed to surrender her claims to more than $250,000 that Everett police seized from her home. She also agreed to walk away from her coffee businesses, formerly named Java Juggs and Twin Peaks.

Panico started leasing her stands in January. The city recently sent letters to the tenants, advising them that if they don’t vacate and surrender all Panico-owned equipment by Nov. 19 they will face civil lawsuits.

Two of the stands have been operated by a Monroe woman; three are being operated by Bambam, Inc., a company run by one of Panico’s former employees, a Shoreline woman.

The subleasing agreements Panico entered with the women were fraudulent, assistant city attorney Ramsey Ramerman said.

“Because you were intimately aware of the illegal activities and ongoing investigation, the subleases were invalid,” he wrote both Panico’s tenants.

“We are also aware that you and your employees continue to engage in the same illegal conduct,” Ramerman wrote the Shoreline woman. “Moreover, you have failed to comply with the payments under the lease, and Panico has given you notice to vacate.”

The city’s attorneys are expected to ask the City Council next week to move quickly to sell off the five stands. There are some people who have shown interest “who we believe would be responsible owners,” city spokeswoman Meghan Pembroke said.

Panico employees engaged in sexually explicit shows and sex acts to earn bigger tips. One barista told detectives she made $500,000 working for Panico.

Investigators dug deep into Panico’s finances. She deposited more than $2 million in her bank accounts over a period of about three years. She purchased multiple espresso stands, often with cash. Detectives alleged that Panico used proceeds from criminal activity to finance a “lavish lifestyle” that included expensive hobbies, including horses and boats. She also paid for several plastic surgeries, court papers said.

The profit margin at the Java Juggs stands at times was twice that of well-run, established coffee huts.

Before Panico went into the coffee business, she was connected to Talents West, a company owned by Frank Colacurcio and his son. The Colacurcios ran multiple strip clubs, including Honey’s in Lynnwood. The Colacurcios were forced to shut down their nightclubs as part of federal organized-crime prosecution.

Diana Hefley: 425-339-3463, hefley@heraldnet.com. Twitter: @dianahefley