May 19, 2008 12:00 PM

At the high school reunion she organized in 2004, Deborah Jeane Palfrey seemed cheerful, bubbly, positively aglow. “We thought her life was going swimmingly,” says a classmate, Cheryl Deep. “We weren’t exactly sure what she was doing, but she seemed to be successful at it.”

Palfrey’s ex-classmates were later jolted when they learned her great success was in running a Washington, D.C., prostitution ring, via phone and Internet, from her Vallejo, Calif., home. The former high school majorette turned out to be the notorious “D.C. Madam,” as she’d been dubbed by the press. But on May 1 came an even greater shock: Just 15 days after being convicted on prostitution-related racketeering charges in U.S. District Court in Washington, Palfrey, 52, free while she awaited sentencing, hung herself in a shed at her mother’s home in Tarpon Springs, Fla. The two notes she left behind—one to her mother, Blanche, and one to her sister Roberta—explained her suicide: “I cannot live the 6-8 years behind bars … only to come out of prison in my late 50s a broken, penniless & very much alone woman.”

Her tragic end was a stark contrast to the defiant tone Palfrey struck when she was indicted a year ago. She never denied running the upscale escort service, Pamela Martin & Associates. But Palfrey insisted she didn’t know some of the 132 women she employed were actually having sex with clients, as prosecutors charged. Moreover, she warned prosecutors she was a “ferocious fighter” and offered to sell her client list to the highest bidder, an offer that generated huge media interest and sent shivers of fear through Washington. With several prominent names on the list, including Sen. David Vitter (R-La.), prosecutors pursued the case aggressively. “With so much media coverage, it’s a case they definitely didn’t want to lose,” says former White House counsel Chris Bartolomucci.

Palfrey, who was sentenced to 18 months in prison in 1992 for charges connected to a previous escort service, said before the trial that “she would kill herself before going back to jail,” recalls crime author Dan Moldea. He says he was concerned and alerted others. Yet as the legal drama unfolded, Palfrey seemed confident, arriving each day with her hair in a bouffant and her cupid-bow lips a startling red. She usually listened without expression as 13 former escorts testified, including a 38-year-old Navy Lt. Cmdr. and a 63-year-old retired occupational therapist with a doctorate in higher education. The women, who were given immunity, at times wept and were forced to answer embarrassingly explicit questions about sexual acts they performed. Palfrey’s lawyer Preston Burton, meanwhile, didn’t call a single witness or present any evidence, believing prosecutors hadn’t proved their case. “It’s a tragic situation for my client, for her mother and for former escorts who were forced to testify,” says Burton.

Palfrey was convicted on April 15 and scheduled to be sentenced in July, likely to no more than six years. After the verdict she spent much of her time in seclusion with her mother in Florida. “She was upbeat but tired,” says a friend, writer James Grady.

Palfrey, a good student in high school in Charleroi, Pa., struggled to find her niche thereafter. She briefly attended law school in San Diego, and in 1988 she began a romance with a Vietnam veteran. Some time after that relationship, Palfrey became an escort. But soon, says a friend, “she saw that the people who ran the business were incompetent and she could do a better job.” In 1993, not long after completing her first prison sentence, Palfrey opened Pamela Martin. In 2006, however, she closed it and tried to turn over a new leaf. She bought a property in Germany—but with a $70,000 wire transfer. The FBI, which is routinely alerted to such large transfers, investigated and discovered her business. Says her friend Moldea: “It’s a sad irony that her effort to change her life led to the events that trapped her in it and led to her death.”

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