Espresso stands raided; sheriff’s sergeant arrested

EVERETT — A veteran Snohomish County sheriff’s sergeant has been arrested for investigation of tipping off bikini baristas in exchange for sexual favors, even while he was in full police uniform.

Police in Everett, Edmonds, Lynnwood and Kent raided seven espresso stands Tuesday and made multiple arrests, including the sheriff’s sergeant.

The investigation found the Java Juggs stands hire young women who have worked as strippers and escorts and “essentially operate as drive-through strip clubs or brothels,” according to a Snohomish County Superior Court search warrant filed in the case.

Sheriff’s Sgt. Darrell L. O’Neill, 58, allegedly was warning baristas when their espresso stands were targeted by undercover officers. He was so much a part of the operation that at least one worker told police there was an “unwritten rule” about how he should be treated in exchange for his help, according to the 16-page search warrant affidavit.

One barista told detectives “it was common knowledge among the baristas that (two co-workers) have engaged in sex acts with (the sheriff’s sergeant) in exchange for information about law enforcement investigations targeting the stands.”

O’Neill, a deputy for 30 years, was arrested for investigation of conspiracy to promote prostitution and official misconduct, Snohomish County Sheriff’s Office spokeswoman Shari Ireton said.

He was placed on paid administrative leave following his arrest and his law enforcement authority was suspended. An internal investigation will follow the criminal case. He was expected to be booked into the Marysville jail later on Tuesday.

The investigation of the barista stands also includes allegations of promoting prostitution, conspiracy to promote prostitution, money laundering, leading organized crime and lewd conduct.

According to the search warrant, a key figure in the investigation is Carmela Panico, 51, who is described as the owner of the Java Juggs coffee huts. She was booked into the Snohomish County Jail for investigation of promoting prostitution and permitting prostitution. Detectives also searched her home.

Detectives say the Snohomish-area woman had long ties to Talents West, a sex-oriented entertainment business that for years 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 in the region before being forced to close as part of a federal prosecution.

Talents West was closed in 2010 as part of that case. Honey’s was razed.

Panico opened the Java Juggs business in 2008 and swiftly drew complaints about the behavior of her scantily clad baristas. In late 2011, she pleaded guilty to misdemeanor lewd conduct after being charged in Edmonds.

She’s now connected to roughly a dozen businesses with different names, state records show.

The search warrant says investigators are probing the finances and tax records for the Java Juggs operation. As of Tuesday, federal prosecutors are not involved in the case, said Emily Langlie, a spokeswoman for the U.S. Attorneys Office in Seattle.

Investigators reportedly have documented Panico making dozens of large cash deposits since spring 2010, ranging from just over $10,000 to $66,000, according to the search warrant.

Her bankers told police that the money often has a foul smell, and that Panico told them it was because “she maintained these denominations in her freezer at home with fish.”

The investigation began in October 2012 when Kent police began investigating a Panico-owned stand there.

Kent police were told that baristas at a drive-through espresso stand were routinely exposing their breasts and other private parts. Detectives posing as customers observed six different baristas engage in lewd behavior.

Detectives learned that the baristas also worked at other espresso stands. One barista told an undercover Kent officer that she preferred to work in Everett because she was able to put on more of a “show” and be more “naughty,” the search warrant said.

In February, Kent police arrested several baristas for allegedly violating the city’s adult entertainment laws and for prostitution. During the investigation, they were told the stands’ owner and the manager would reward baristas who put on “shows” for customers, scheduling them to work more hours or to fill shifts at busier stands.

In March, one of the baristas reportedly told Kent detectives that a Snohomish County sheriff’s deputy was frequenting the stands and touching the baristas without paying for coffee.

That’s when Kent police brought the allegations of O’Neill’s involvement to the attention of the Snohomish County Sheriff’s Office, which asked Everett police to continue the investigation. Everett detectives soon enlisted help from the FBI.

The FBI installed surveillance cameras near some of the stands. Video footage documents O’Neill repeatedly hugging and kissing the women, the search warrant said.

Detectives also documented numerous cellphone calls placed between O’Neill and Panico, and O’Neill and the baristas, the search warrant said.

Although O’Neill made numerous visits to the Java Juggs stands, on duty and in his uniform, “in our review of the surveillance footage thus far, not once have we witnessed (the sergeant) purchasing coffee at the stands or giving the baristas any money,” the search warrant affidavit said.

The cameras also reportedly filmed women workers exchanging sex for money from customers.

In some instances, O’Neill was nearby, using state computers to check the license plates of the people visiting the stands, the search warrant said.

O’Neill reportedly was speaking with detectives after his arrest Tuesday. He allegedly admitted communicating with two baristas via text messages, the search warrant said.

He also reportedly knew he might be in trouble after the arrests in Kent and learning that video existed of activities near the coffee stands.

O’Neill joined the sheriff’s office in November 1982. As of Tuesday, he still was listed as a regional director with the Washington State Crime Prevention Association, a nonprofit.

Five of the stands raided in Snohomish County are along Highway 99. One is on Broadway in Everett.

Eight young women were detained Tuesday. They’re suspected of lewd conduct and prostitution.

“We are doing a large operation,” Everett police officer Aaron Snell said Tuesday afternoon. “This is part of a larger investigation.”

Only one of the stands was in Everett city limits.

One of the baristas told detectives that one Java Juggs manager made between $100,000 and $200,000 a year managing the stands and working as an escort from the stands.

Tuesday’s raid did not involve the two roadside bikini coffee huts in Everett where baristas were arrested in February for investigation of violating the city’s adult cabaret laws and engaging in lewd conduct. Police said they began investigating the stands, one on Broadway and one on SE Everett Mall Way, after receiving complaints. Four adult baristas have been charged in connection with the sting.

The stand’s owner, Bill Wheeler Jr., has been charged with sexual exploitation of a minor. Prosecutors allege that he knew one of his employees was 16.

Everett police working an undercover operation reported that the girl was seen exposing herself to customers. Prosecutors allege that Wheeler knew the girl was a minor and was aware that she was flashing for tips.

In 2009, when Wheeler’s dad owned the Grab-N-Go espresso stands, Everett police investigated allegations of lewd conduct at the coffee huts. Five baristas were arrested for prostitution. The women’s arrests drew national headlines as the older Wheeler publicly defended his businesses and denied any knowledge of wrongdoing at the stands.

The elder Wheeler was never prosecuted in connection with the prostitution sting. He was reported missing a year later, after failing to return from a business trip in Las Vegas.

Police have long maintained that the bikini barista business is just the strip club model in different packaging.

Honey’s was the last licensed strip club operating in Snohomish County before it was shut down in May 2010 and demolished under federal court orders. Investigators at the time said drugs and prostitution were rampant at the club.

A former owner, Frank Colacurcio Sr., 93, died weeks later while the federal prosecution was underway.

His son, Frank Colacurcio Jr., already had pleaded guilty to a federal conspiracy charge. A federal prison database shows the younger Colacurcio was released in fall 2011.

Several others also pleaded guilty to racketeering or prostitution-related charges.

Other clubs belonging to the group in King County also were shut down as part of the case.

Eric Stevick: 425-339-3446, stevick@heraldnet.com