MUSTANG, NEV., SEPT. 22 -- The Internal Revenue Service has seized the 100-room Mustang Ranch brothel for back taxes, ending a colorful, notorious chapter in Nevada history.
Ron Smith, chief of special procedures for the IRS in Nevada, said the bordello, which was padlocked late Friday, would be put on the auction block within 30 to 60 days.
Smith said the agency would not attempt to find a new operator to replace Mustang Ranch founder and owner Joe Conforte, who the IRS claims owes $13 million in back taxes. Conforte has said the debt is no more than $7 million.
A ruling by U.S. Bankruptcy Judge James Thompson put an abrupt end to the government's earlier plans to continue running the brothel. Federal bankruptcy trustees, who assumed management of the brothel on Tuesday, had hoped to open during the weekend to pay off creditors.
But after a brief hearing, Thompson said the only creditor of significance was the IRS. So he turned it over to the agency to dispose of.
Peter Perry, Conforte's lawyer, said, "It's closed and it's going to stay closed and it's doubtful that it will ever reopen again."
A handful of prostitutes gathered their possessions and left the sprawling 440-acre ranch before agents arrived to padlock the doors.
Conforte and his wife, Sally, founded the brothel, illegally at first, in the 1950s. It was burned to the ground in 1960 by local authorities who contended it was a public nuisance.
The Confortes won approval for the brothel a decade later, paving the way for legalized prostitution in most Nevada counties.
In 1981 Conforte fled to Brazil after being convicted of tax evasion. He returned two years later in a deal with prosecutors to testify against U.S. District Judge Harry Claiborne of Las Vegas, who was convicted of hiding more than $100,000 in income from the IRS. He was later impeached and removed from the bench.