Java Juggs bikini coffee stand owner arrested again

EVERETT — Police again have arrested a Snohomish woman accused of raking in more than a $1 million by selling sex out of her bikini espresso stands.

The owner of Java Juggs and Twin Peaks espresso stands was booked into the county jail Thursday for investigation of witness tampering and intimidation.

The allegations are tied to the ongoing investigation into Carmela Panico’s racy coffee stands. She and a former Snohomish County sheriff’s sergeant were arrested in June after witnesses told detectives that Panico was using her coffee stands as drive-through brothels. Allegations also have surfaced that Panico, 51, laundered money through her businesses.

Darrell O’Neill, a 30-year veteran with the sheriff’s office, was accused of tipping off Panico and her employees to ongoing police operations focused on the java huts, mainly located along Highway 99. Panico allegedly gave O’Neill sex in exchange for the inside information.

Video surveillance reportedly captured O’Neill frequently visiting the stands while he was on duty. He allegedly is seen hugging and kissing the coffee workers. O’Neill resigned in July.

No charges have been filed against him or Panico.

“This is an in-depth investigation and it’s not fully complete,” Everett police officer Aaron Snell said.

Thursday’s arrest stems from allegations that Panico pressured potential witnesses not to cooperate with police and lie about being represented by an attorney, according to Everett police. Investigators allege that Panico singled out one witness, urging her to recant the statement she made to police.

Everett police say they have identified more than 100 current and past employees. Many have been interviewed by investigators.

Numerous search warrants show that Everett police also have been piecing together Panico’s finances. Bank records documented Panico making dozens of large cash deposits since spring 2010, ranging from just over $10,000 to $66,000. 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.”

Panico bought seven coffee stands since 2008. She reported profits of more than $1 million out of her businesses. Baristas told investigators that they earned hundreds of thousands of dollars for work that didn’t have anything to do with coffee.

FBI agents also have been involved in the case because of Panico’s ties to Talents West.

For years the sex-oriented entertainment business was operated by the Seattle-based Colacurcio crime family. The Colacurcios formerly owned Honey’s north of Lynnwood, one of several nude nightclubs they operated before being forced to close in 2010 as part of a federal prosecution.

Detectives allege that Panico, a former nude dancer, knew her employees were engaged in prostitution at the stands and off site.

Panico was prosecuted in the past for lewd acts at her coffee stands. Edmonds police arrested her in 2011 for providing customers sexually explicit shows in exchange for cash. Her sentence in that case was suspended.

Panico sued Everett and the city’s police chief in July, alleging that officers wrongfully seized a quarter of a million dollars and her 2012 Ford Expedition.

The lawsuit was filed after the city officials notified Panico that they planned to keep the cash, saying that it was proceeds from criminal activity, including money laundering. Detectives allege that Panico is “living a lavish lifestyle” financed through “organized crime.”

Panico’s lawyer filed a motion putting the lawsuit on hold, citing the ongoing criminal investigation.

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

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