A civil lawsuit and criminal indictment describe an alleged attack involving a WD-40-soaked rag and a plan to stage a fatal crash.
GLOUCESTER, MA — A Massachusetts woman accused of pressing a chemical-soaked rag over her lifelong friend’s face has been indicted on attempted murder and other charges after a dispute over an unpaid $180,000 debt, court records show.
The allegations against Phyllis Palazzola appear in a civil lawsuit filed by Marianna DiMercurio and in a five-count criminal indictment returned by an Essex County grand jury. DiMercurio says the January 2024 encounter left her with chemical burns, scratches and lasting emotional trauma. Palazzola is scheduled to be arraigned July 21 in Essex Superior Court in Salem. Attempts by NBC10 Boston to obtain comment from Palazzola and an attorney representing her were unsuccessful.
DiMercurio and Palazzola had known each other since childhood and later became neighbors in Gloucester, according to the civil complaint. Their relationship deteriorated after DiMercurio loaned Palazzola $160,000 between October 2021 and February 2022. The women agreed that Palazzola would repay the principal plus $20,000 in interest, bringing the total obligation to $180,000. The complaint says the money was due by July 12, 2022, but DiMercurio did not receive the promised repayment. She continued asking Palazzola for the money as the dispute stretched into the following year. DiMercurio’s attorney, Joseph Orlando, said the debt had been intended to help Palazzola cover legal costs connected to an insurance fraud case. The lawsuit describes the loan as a formal financial agreement rather than a gift between friends.
On Jan. 3, 2024, Palazzola offered to take DiMercurio to a bank so she could repay the debt, the lawsuit says. Instead, Palazzola allegedly drove to her home on Washington Street in Gloucester. She went inside, then returned to the vehicle carrying a rag that had been soaked with WD-40, a petroleum-based spray commonly sold as a lubricant and water-displacing product. The complaint alleges that Palazzola forced the rag over DiMercurio’s nose and mouth in an effort to make her unconscious. DiMercurio fought back, escaped from the vehicle and fell to the ground, according to the filing. She later entered Palazzola’s house to rinse her eyes because they were burning and her sight had become blurry. Palazzola allegedly followed her as she tried to get away.
After reaching her own vehicle, DiMercurio used her phone to record a conversation because she believed she remained in danger, the lawsuit says. The recording lasted about 14 minutes and is now described by her lawyer as a central piece of evidence. According to quotations included in the complaint, Palazzola said she had wanted to sedate DiMercurio so the two could “go together.” When DiMercurio asked what that meant, Palazzola allegedly said she planned to drive off a bridge and make their deaths look like an accident. The filing also quotes Palazzola as saying, “I was gonna kill us both.” Orlando said he could not publicly release the audio. The quotations have not yet been tested through testimony or cross-examination in the criminal case.
The grand jury indicted Palazzola on one count of attempted murder, one count of assault and battery with a dangerous weapon, and one count of assault and battery with a dangerous weapon causing serious bodily injury. The dangerous weapon identified in the court record is the rag. She also faces two counts of witness intimidation. The attempted murder indictment alleges that Palazzola tried to kill DiMercurio on Jan. 3, 2024. Prosecutors have not publicly detailed the conduct behind each witness intimidation count. An indictment is a formal accusation and does not establish guilt. Palazzola will have an opportunity to enter a plea and challenge the government’s evidence after her arraignment.
DiMercurio’s lawsuit seeks financial damages under several legal claims, including assault and battery, intentional infliction of emotional distress and negligence. The complaint says she suffered chemical burns to her eyes, scratches and psychological harm after the confrontation. It also describes fear of leaving her home and trouble sleeping. Orlando said the effects extended beyond the immediate physical injuries because DiMercurio believed a person she had trusted for decades had tried to kill her. The amount of damages sought has not been publicly specified. The civil case and the criminal prosecution are separate proceedings, although evidence such as the phone recording, medical records and witness statements could become important in both.
The lawsuit says the alleged admissions continued after the day of the encounter. On Jan. 7, 2024, four days after the confrontation, relatives from both families attended a meeting about what had happened. Palazzola again acknowledged trying to kill DiMercurio, according to the complaint. The filing does not identify every person present or provide a full account of the meeting. Their testimony could help investigators determine what was said and whether Palazzola’s statements were understood as admissions, threats or something else. It remains unclear when police first obtained the recording, whether investigators recovered the rag or vehicle, and whether chemical testing was completed. Authorities also have not publicly released police reports describing the initial response.
The debt dispute unfolded while Palazzola was dealing with a separate prosecution involving her former insurance business. Massachusetts authorities accused her of taking more than $39,000 in workers’ compensation insurance premiums from small businesses after her insurance producer license had been revoked. Prosecutors said she collected money while promising to obtain policies, then provided six businesses with false insurance certificates linked to coverage that did not exist. A statewide grand jury indicted her on eight felony larceny counts, two forgery counts and one misdemeanor count of acting as an unlicensed insurance adviser. The alleged conduct in that case was separate from DiMercurio’s accusations.
Palazzola pleaded guilty to all 11 insurance-related charges on Feb. 21, 2024, before Essex Superior Court Judge Salim R. Tabit. She received three years of supervised probation on the larceny charges. The court also imposed House of Correction sentences on the forgery and unlicensed-adviser charges but suspended them for three years, meaning she could face incarceration if she violates the terms of probation. Palazzola was ordered to pay $19,870.70 in remaining restitution. State records also show that her insurance producer license had been revoked years earlier after investigators found she had taken more than $16,000 in premiums from clients. The attempted murder case could affect her probation status, but no public ruling on that question has been announced.
The new criminal charges require prosecutors to prove more than the allegations stated in DiMercurio’s lawsuit. For attempted murder, the state must present evidence that Palazzola intended to cause DiMercurio’s death and took a clear step toward carrying out that intent. Prosecutors are expected to rely on the circumstances of the alleged attack, DiMercurio’s injuries, witness accounts and any authenticated recording. Defense attorneys may challenge the accuracy, completeness or legal meaning of those materials. The court also could consider whether statements attributed to Palazzola were voluntary and whether the phone recording was made and preserved in compliance with Massachusetts law. No trial date has been set.
Gloucester is a coastal city about 35 miles northeast of Boston, with closely connected neighborhoods where long personal relationships often overlap with family and business ties. In this case, the women’s shared history forms a key part of the civil complaint. DiMercurio portrays the alleged attack not as a sudden encounter between strangers but as the final rupture in a friendship that had lasted most of their lives. The Washington Street location identified in the lawsuit sits within the same community where both women lived. No bystander account of the roadside struggle has been made public, and authorities have not said whether surveillance video captured any part of the trip or confrontation.
Palazzola’s July 21 arraignment is expected to provide the first formal opportunity for her to answer the five new charges in Superior Court. A judge may address bail, conditions of release, contact with DiMercurio and the possible effect of the indictment on her existing probation. Prosecutors and defense attorneys will then begin exchanging evidence before further hearings. The civil lawsuit over the $180,000 debt and DiMercurio’s alleged injuries also remains pending.
Author note: Last updated July 10, 2026.