Tatiana Valencia Wallace, the 29-year-old owner and operator of Dreamgirl Companions -- which police call a multistate prostitution ring -- waived her right to a preliminary hearing in federal court Tuesday afternoon.

Wallace was arrested at the Electric Cowboy on Friday night by local and federal agents.

She appeared before William B. Mitchell Carter, U.S. magistrate judge, Tuesday afternoon at the federal courthouse on Georgia Avenue. A few of Wallace's immediate family members attended.

Wallace was represented by Myrlene Marsa, federal public defender.

Since Wallace waived her preliminary hearing Tuesday, she agreed to allow federal prosecutors to move forward with the case, on the original charge brought against her -- knowingly transporting or attempting to transport any individual in interstate commerce with intent that such individual engage in prostitution.

Wallace potentially faces a maximum 10 years in prison if found guilty.

According to federal court documents, Wallace said during police questioning that she formerly worked for an agency based in Washington, D.C., before the owner was arrested on drug trafficking charges.

To maintain an income, Wallace told police she started Dreamgirl Companions and has been operating it for about a year. She was arrested after police traced a Dreamgirl Companions phone number and a plane ticket back to her.

During basic questioning Tuesday, Wallace told the court that she is also a second-year college student.

Prosecutors in Wallace's case agreed to grant her pretrial release, upon installation of a telephone at the residence where she will be staying. Wallace will reside in the area, and her movements will be restricted to East Tennessee and North Georgia. She will regularly report to a parole officer during that time.

Wallace will appear in federal court again on Oct. 24. A grand jury is expected to review her case in the meantime.

Contact staff writer Alex Green at agreen@timesfreepress.com or 423-757-6731.