Thousands of pounds in cash was sent to three European countries as part of the alleged vice ring based, it was claimed.
Detectives from the PSNI’s organised crime branch detained one suspect in a raid carried out 24 hours after a newspaper published its probe into the sex trade.
Nocolae Razvan Gros (25), a Romanian man from Kular Court, William Street, Derry, is charged with controlling prostitution for gain and improperly obtaining a Romanian driving licence and identity card.
The PSNI believe Gros was controlling prostitution in Donegal.
With the accused linked to two alternative names, a judge was told police are still not sure of his real identity. He was arrested during searches of his flat on January 16 which led to the discovery of “paraphernalia associated with prostitution”.
Officers found substantial quantities of condoms, baby oil and towelling lying on the bed, said Crown counsel Conor Maguire.
A number of mobile phones and SIM cards with female names written on them were seized. Some were for use in the UK, others in the Irish Republic, the court heard.
Gros was present with a Romanian woman who he said was his girlfriend.
One of the phones contained images of her identical to those on an escort website advertising sexual services, it was claimed.
Although Gros denied any knowledge of the SIM cards, Mr Maguire said forensic examinations found his DNA on them.
A day before the search, the Sunday Life newspaper published details of an undercover reporter being offered sex by a woman at the apartment block, the court heard.
Her description was said to match that of Gros’ alleged girlfriend.
The accused claimed he had rented the flat with savings brought from his native country.
Between them, Gros and the woman have sent £7,747 in cash to Romania, France and Germany, the court was told.
The judge, Lord Justice Higgins, adjourned the bail application to allow further checks on the documents and a possible bail address.