The 6-year-old girl's body was found in her parents' house on Dec. 26, 1996.
"Yes, he could have been there," Pam Paugh told the television show "Inside Edition." "You have to understand, the Ramsey parties were open -- if you were invited, you could bring someone else. They were such likable, welcoming people."
Paugh said that investigators asked her sister if she would be willing to have a meeting with the suspect, John Mark Karr. Patsy Ramsey said "wholeheartedly yes," Paugh added. But Patsy Ramsey died of cancer before the meeting was arranged.
Karr, who had been living in Thailand to avoid child pornography charges in the United States, was returned to the United States this week.