EVERETT — Carmela Panico saw the writing on the wall well before her arrest last week.
Her lawyer was in court Tuesday, fighting to get back the nearly $250,000 that Everett police seized from Panico’s home and car in June as part of their investigation into prostitution at her espresso stands.
Seattle attorney Gil Levy told a Snohomish County Superior Court judge that his client needs the money to defend herself against impending criminal charges.
Panico, a former exotic dancer with ties to a notorious Seattle crime family, has been accused of slinging sex out of her coffee stands. She is alleged to have used her businesses to launder money.
She was arrested Thursday after allegations surfaced that she was pressuring baristas to not cooperate with Everett police detectives. Her manager told cops that Panico, 51, threatened to kill herself if the manager didn’t recant her statements about criminal activity at Java Juggs and Twin Peaks.
Baristas reported that Panico knew about the prolific prostitution happening inside and outside the stands. The coffee workers also tipped detectives off to the alleged involvement of a former Snohomish County sheriff’s sergeant. Darrell O’Neill resigned from the sheriff’s office in July amid allegations that he fed Panico information about undercover police operations. Detectives say the longtime cop was repaid with sexual favors.
No charges have been filed against the pair.
Following her arrest and multiple raids at her house and stands, Panico filed a lawsuit against Everett and Police Chief Kathy Atwood. The city had notified Panico that it planned to keep nearly $250,000 in cash that investigators had seized, alleging that it was proceeds from criminal activity, including money laundering. Detectives allege Panico was living a lavish lifestyle financed through “organized crime.”
Under the law, the city is allowed to keep seized assets if it can prove they were acquired as a result of criminal activity.
Panico sued to recoup her money but agreed in October to postpone the civil case so she wouldn’t have to talk to investigators and potentially give them ammunition for the criminal case.
In December, her attorney switched gears, saying that his client wanted to go forward with the civil case.
“My client requires the resources the Everett Police Department seized in order to defend herself,” Levy said Tuesday at a hearing to lift the stay on the case.
She has been under investigation for nearly eight months, Levy said. She is going to need “substantial” resources for a proper defense, Levy said.
He reported that Panico has been charged in Kent with operating an adult entertainment business without a license, a misdemeanor. Panico also is accused of violating the conditions of a suspended sentence in Snohomish County District Court. She pleaded guilty in 2011 to lewd acts at her Edmonds stand. Her sentence was suspended provided she didn’t commit any new crimes.
Panico reportedly has sold off at least two of her stands and is leasing the others to her former manager. She also plans to sell her house, her attorney said on Friday.
Levy said Tuesday that while his client wants to get her money back, she still doesn’t want to talk to investigators. He asked Superior Court Judge Eric Lucas to let the case go forward without Panico’s deposition. Alternatively, he proposed that if she is forced to talk to investigators, they should be prohibited from sharing her testimony with county prosecutors, who will handle the criminal case.
“The city is seeking to coerce the plaintiff into waiving the privilege against self-incrimination as the price for obtaining resources needed for the defense of the criminal case,” Levy wrote.
Everett argued against Levy’s proposal, saying Panico shouldn’t be allowed see all the evidence against her before she is deposed.
She should either put the civil case on hold until the criminal case is resolved, or proceed fully in the forfeiture matter, said Ramsey Ramerman, an attorney with the city of Everett.
“The city would have one hand tied behind its back. We can’t depose her but she’s able to depose all of our witnesses,” Ramerman said.
Panico would be able to build her case and the city would be left to scramble at the last minute, Ramerman said.
Panico “faces tough choices with parallel criminal and civil proceedings,” he said.
Lucas declined to make a ruling. Instead, he asked the lawyers to search for a potential middle ground.
In the meantime, Everett keeps the cash and Panico doesn’t have to talk.
Diana Hefley: 425-339-3463; hefley@heraldnet.com.
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