Former sergeant admits he helped launder prostitution money

EVERETT — A former Snohomish County sheriff’s sergeant admitted Thursday he ignored his duty and helped launder money he knew came from a multimillion-dollar prostitution operation that transformed roadside coffee huts into drive-through brothels.

Darrell O’Neill, 60, pleaded guilty to one count of felony conspiracy to commit money laundering and two counts of misdemeanor official misconduct. He faces up to a year in jail.

Thursday’s Snohomish County Superior Court hearing came roughly a week before O’Neill was scheduled to face trial on the more serious charge of second-degree promoting prostitution. That offense carried the prospect of a longer prison sentence because prosectors were alleging aggravating circumstances, including the deputy’s abuse of his position of trust and the amount of money involved.

The case stemmed from a public corruption investigation into allegations coffee stands were raking in cash by employing bikini baristas to serve up strip shows and engage in prostitution with customers.

Two women who played key roles in the operation earlier reached plea agreements with prosecutors and were prepared to testify at O’Neill’s trial.

Carmella Panico, a former exotic dancer who owned the Java Juggs and Twin Peaks stands, last fall pleaded guilty to promoting prostitution and laundering the proceeds. Panico has long-standing ties to the Colocurcio family, who for years operated strip clubs in Washington but were shut down by federal prosecutors who proved the businesses were being used as prostitution fronts.

Samantha Lancaster had managed Panico’s coffee stands. She, too, pleaded guilty to promoting prostitution.

Both women told prosecutors they’d traded sex for O’Neill’s assistance.

Everett detectives and the FBI began investigating him after learning from some of Panico’s baristas in Kent about a “dirty cop” in Snohomish County who was supplying their boss with confidential police information, including planned undercover operations.

The investigation became public in June 2013 when the stands were raided and the ringleaders arrested.

O’Neill initially claimed he had frequented the stands to engage in police work. “However, he never notified dispatch of his visits, never wrote a citation for lewd conduct, never made an arrest, and never filed a report on prostitution,” prosecutors wrote in court papers.

Surveillance video showed him in intimate contact with baristas. He also left electronic fingerprints on dozens of license-plate checks, including on vehicles used by undercover officers or driven by their spouses, and the cars used by baristas and their friends.

O’Neill ultimately admitted he’d been trading information in exchange for sexual contact with the coffee stand workers. He “described menus of sex services available at the stands,” prosecutors wrote.

O’Neill resigned from the sheriff’s office shortly after his arrest. He’d been a deputy since 1982.

Both Panico and Lancaster were pioneers in the bikini barista business in Snohomish County and elsewhere around Puget Sound. They’d previously faced police crackdowns over lewd conduct at their coffee stands.

The 2013 investigation uncovered just how lucrative the unlawful conduct had become. Detectives heard from baristas who claimed they were earning hundreds of thousands of dollars providing sexually explicit shows at the stands. Some also engaged in prostitution.

Detectives early on found evidence Panico had hauled in more than $1 million in profits. In court papers, she was described “living a lavish lifestyle” paid for through “organized crime.”

On Thursday, deputy prosecutor Matt Hunter filed an affidavit from deputy prosecutor Robert Grant. It described how bank records showed Panico deposited more than $2 million between January 2010 and June 2013. Detectives also learned that Panico kept two sets of books, “one detailing her actual profit and one for earnings reported to the Department of Revenue and the IRS,” the affidavit said.

In 2012, it was calculated that Panico failed to report $270,000 in profits, prosecutors said. Investigators determined a well-run coffee house typically has a 20 percent profit margin; Panico’s reportedly hauled in up to 52 percent.

“Panico’s businesses were driven by prostitution and lewd behavior,” Grant wrote.

As part of her plea agreement, Panico abandoned her claim to $250,000 in cash seized by investigators. She also agreed to leave the coffee hut business.

Panico’s sentencing is scheduled for November. Lancaster and O’Neill have dates before judges in January. Both women also face about a year behind bars although, given their cooperation, their sentences might be shorter.

Scott North: 425-339-3431; north@heraldnet.com. Twitter: @snorthnews.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

LifeWise local co-directors Darcie Hammer and Sarah Sweeny talk about what a typical classroom routine looks like on Monday, April 14, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Everett off-campus Bible program draws mixed reaction from parents

The weekly optional program, LifeWise Academy, takes children out of public school during the day for religious lessons.

Protesters line Broadway in Everett for Main Street USA rally

Thousands turn out to protest President Trump on Saturday in Everett, joining hundreds of other towns and cities.

An EcoRemedy employee checks a control panel of their equipment at the Edmonds Wastewater Treatment Plant on Thursday, April 17, 2025 in Edmonds, Washington. (Olivia Vanni / The Herald)
Edmonds launches technology to destroy PFAS

Edmonds is the first city in the country to implement… Continue reading

Over a dozen parents and some Snohomish School District students gather outside of the district office to protest and discuss safety concerns after an incident with a student at Machias Elementary School on Friday, April 18, 2025 in Snohomish, Washington. (Olivia Vanni / The Herald)
Parents protest handling of alleged weapon incident at Machias Elementary

Families say district failed to communicate clearly; some have kept kids home for weeks.

Irene Pfister, left, holds a sign reading “Justice for Jonathan” next to another protester with a sign that says “Major Crimes Needs to Investigate,” during a call to action Saturday, April 12, 2025, in Arlington. (Aspen Anderson / The Herald)
Arlington community rallies, a family waits for news on missing man

Family and neighbors say more can be done in the search for Jonathan Hoang. The sheriff’s office says all leads are being pursued.

Mary Ann Karber, 101, spins the wheel during Wheel of Forunte at Washington Oakes on Tuesday, April 1, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Lunch and Wheel of Fortune with some Everett swinging seniors

She’s 101 and he’s 76. At Washington Oakes, fun and friendship are on the menu.

Henry M. Jackson High School’s FIRST Robotics Competition championship robotics Team 2910 Jack in the Bot on Thursday, April 24, 2025 in Mill Creek, Washington. (Olivia Vanni / The Herald)
Mill Creek robotics team celebrates world championship win

The team — known as “Jack in the Bot” — came in first place above about 600 others at a Texas world championship event last week.

The Washington state Capitol on April 18, 2025. (Photo by Jacquelyn Jimenez Romero/Washington State Standard)
Parental rights overhaul gains final approval in WA Legislature

The bill was among the most controversial of this year’s session.

Snohomish firefighters appeal vaccine suspensions to Ninth Circuit

Despite lower court’s decision, eight men maintain their department did not properly accommodate their religious beliefs during COVID.

A rental sign seen in Everett. Saturday, May 23, 2020 (Sue Misao / Herald file)
Compromise reached on Washington bill to cap rent increases

Under a version released Thursday, rent hikes would be limited to 7% plus inflation, or 10%, whichever is lower.

A Mitsubishi Electric heat pump is installed on the wall of a home on Sep. 7, 2023, near Langley, Washington. (Ryan Berry / The Herald)
Kicking Gas urges households to get in line for subsidies while funds last

The climate justice group has enough funding to aid 80 households with making the transition to heat pumps and electric ranges

Everett Fire Department’s color guard Jozef Mendoza, left, and Grady Persons, right, parade the colors at the end of the ceremony on Worker’s Memorial Day on Wednesday, April 23, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Snohomish County officials honor Worker’s Memorial Day

Work-related injuries kill thousands of people nationwide every year.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.