Feds couldn't even manage a bawdyhouse


POSTED: Thursday, December 04, 2008

The thing that makes a lot of people nervous about the federal government becoming part owners of huge insurance, banking and automobile manufacturing companies through the current multitrillion-dollar bailouts is that the federal government was once owner of a business involved with the world's oldest profession and sold it at a loss.

In 1999 the IRS closed a world-famous brothel, the Mustang Ranch near Las Vegas, after its owner, Joe Conforte, was indicted for failing to pay millions in back taxes as well as for fraud and money laundering. Conforte fled to South America, and the U.S. government discovered it had a profitable legal brothel on its hands. Internet myth has it that the federal Bureau of Land Management, the Mustang Ranch's new owner, actually kept the sporting house open but eventually ran it into the ground through mismanagement and ended up selling it on eBay for a mere $145,000. The real story is worse.

The feds never really ran the Mustang Ranch, but instead sort of busted it out in the way the Mafia does to businesses it takes over. The government auctioned off the ranch's various assets, like, I suppose, the beds and whips, and then after a few years actually did put the place up on eBay, where someone bought for a fraction of its real worth.

How stupid was that? I mean, they OWNED a business that it's almost impossible to lose money running. And the Mustang Ranch obviously was profitable or else Conforte wouldn't have owed $13 million in back taxes. Do you know how much dough you have to make to OWE those kind of taxes?


If the Federal government had run the Mustang Ranch, it would have brought in millions of dollars of revenue, and the government would have paid taxes to itself. How hard can it be to run a business whose principal products are booze and sex? I'm not much of a businessman, but I bet I could a run a brothel. It is said that running a legal bordello is like printing your own money.

So, through deft oversight, the government lost the $13 million Conforte owed, the millions of dollars in taxes and revenue the joint would have generated in the four years we, the people, owned the ranch, and then sold the would-be thriving bawdyhouse for the price of a triple-wide trailer. They might as well have burned the place down like the Mafia would have and been done with it.

And now the federal government, through great business minds like House Speaker Nancy Pelosi and Senate President Harry Reed, is going to get into the business of running banks and building cars.

If I were Japan or China, I'd just bide my time. It won't be long until they will be able to snap up General Motors or Citibank on eBay for the cost of a moderate-size New Jersey office building.