Coffee stands raked in millions through sex trade, prosecutors say

EVERETT — A former nude dancer who jumped into the controversial bikini coffee stand business deposited more than $2 million in her bank in just three years.

She bought property and coffee huts with other cash, sometimes bringing along a money counter to dole out the bills. Her baristas reported making hundreds of thousands of dollars out of her stands, working mainly for tips. The women told cops the price for a cup of coffee started at $6 and customers typically paid with a $20 bill. The baristas kept the rest to shake their breasts or expose their genitals. They charged more for sex acts with the droves of men who stopped at the stands, mainly located along Highway 99 in Snohomish County.

Prosecutors on Thursday charged Carmela Panico, 52, of Snohomish, with promoting prostitution and money laundering. They allege that Panico was the madam of drive-through brothels, raking in millions of dollars and laundering the illegal profits through property acquisitions.

“Panico’s businesses were driven by prostitution and lewd behavior,” Snohomish County deputy prosecutor Bob Hendrix wrote in charging documents.

Her profit margin at times was twice that of well-run, established coffee stands, Hendrix said. Panico allegedly under-reported her earnings to the Internal Revenue Service, dealing in large quantities of cash. Investigators seized nearly $250,000 from her Snohomish home during a raid last year. The city of Everett has taken legal steps to keep the cash, alleging the money is profits from a criminal enterprise.

Panico is scheduled to appear in Snohomish County Superior Court next week to answer to the felony charges. She remains out of custody. Her attorney had told the court that Panico is no longer in the coffee business and has sold off some of her stands and leased others.

A former Snohomish County sheriff’s sergeant also remains charged with multiple crimes in connection with the lengthy investigation into Panico’s Java Juggs stands. Darrell O’Neill is accused of tipping off Panico and baristas to ongoing police investigations.

O’Neill was given sexual favors in exchange for the information, according to court documents. Five of Panico’s stands were located in his patrol area in south Snohomish County, mainly along Highway 99.

O’Neill, a 30-year veteran with the sheriff’s office, resigned after his arrest last year. He has pleaded not guilty to the charges. His trial is scheduled for November.

Detectives say before Panico went into the coffee business she was connected to Talents West, a sex-oriented entertainment business that for years was operated by the Seattle-based Colacurcio crime family.

Panico opened Java Juggs in 2008. One of her stands burned down that same year. Police suspected a rival coffee stand owner was to blame. She rebuilt the stand and opened up six more. Panico preferred to hire women with previous “dancer” or “escort” experience, police were told.

Baristas were expected to make a certain amount of money during their shifts. Panico collected that money and her employees kept whatever was left over. Panico gave more hours at busier stands to the women who made more money for her.

“The sales goals were effectively rent that the girls paid to have the opportunity to perform lewd conduct or acts of prostitution,” Hendrix wrote.

Baristas said Panico fined them for what she called infractions. Those included not wearing high heels throughout their shifts, failing to maintain a tan or not wearing proper makeup. The baristas were fined if they wore boots in the winter or didn’t keep supplies up in the stands. The fines came out of their paychecks, but they weren’t regularly paid by Panico.

They worked for tips and sex acts and sexually explicit shows, which garnered more money than just slinging coffee. Some women reported earning between $15,000 and $30,000 a month.

One barista told investigators she earned half a million dollars working at Panico’s stands.

The boss allegedly encouraged the women to do shows but other times warned them against exposing themselves, court papers said. Each stand had video cameras and Panico regularly reviewed the surveillance footage, according to the baristas.

Panico was prosecuted in the past for lewd acts at her coffee stands. In 2011, she was caught breaking the law at Java Juggs in Edmonds. That stand was equipped with a stripper pole and Panico and others were accused of giving customers sexually explicit shows. She never spent any time in jail in connection with the Edmonds case.

Her stands again came to the attention of investigators after Kent police detectives in 2012 arrested several baristas at one of her espresso huts in their city. It was during that investigation when detectives learned of O’Neill’s alleged involvement. Witnesses told police about a “dirty cop.”

Everett police launched an investigation in concert with other police agencies. Detectives pored over Panico’s finances. Investigators reportedly documented Panico making dozens of large cash deposits since spring 2010. Her bankers told police that the money often had a foul smell, and that Panico told them it was because “she maintained these denominations in her freezer at home with fish.”

She allegedly kept two sets of books, one detailing her actual profit and another for the earnings she reported to the IRS.

Panico was arrested in January based on allegations that she was pressuring baristas not to cooperate with Everett investigators. Her manager also alleged that Panico was threatening to fire her and kill herself if the woman cooperated with detectives.

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

More in Local News

Suspect sought in two Everett bank robberies

He’s described as 5-foot-10 to 6-foot-1, with dark hair and a goatee, and may have a neck tattoo.

Jogger unharmed after fending off attacker in Edmonds

Police released video of a man they believe to be the attacker.

Two missing men found, one alive and one dead

The man found alive was found in an apartment across the hallway and taken to a hospital.

Darrington School Board dealing with upheavals

The crux of the controversy seems to be the superintendent’s job.

Alaska Airlines has selected destinations for new service from Paine Field. (Alaska Airlines)
Alaska Airlines will fly from Everett to 8 West Coast cities

Two destinations that didn’t make the list were Spokane and Hawaii.

Three teens arrested for Marysville school vandalism

Windows were broken and a trash bin was on fire Sunday night at a Marysville middle school.

Langley mayor threatens newspaper with lawsuit

The mayor threatened to sue the paper over claims he withheld public records disclosure information.

Divers called to recover body after train hits pedestrian

The accident was reported by a BNSF crew near Woods Creek in Monroe.

Katharine Graham, then CEO and chairwoman of the board of The Washington Post Co., looks over a copy of The Daily Herald with Larry Hanson, then The Herald’s publisher, during her visit to Everett on Sept. 20, 1984. The Washington Post Co. owned The Herald from 1978 until 2013. (Herald archives)
A local connection to history

Retired Herald publisher Larry Hanson remembers The Post’s Katharine Graham, who visited several times.

Most Read