Plan to Take Bordello Public Resurfaces
An investment group wants to take the nation’s largest legal brothel to the public by selling stock ownership at $20 a share.
The investors hope to raise $23.3 million from the stock sale to buy the Mustang Ranch, lawyer Peter Perry said Wednesday. He and real estate developer Donald Clough head the group.
A proposed stock sale by another group fell through in 1985.
The money would be used to buy the brothel from Joe and Sally Conforte, who started the business in the 1950s.
The investment group filed an application Friday with the Securities and Exchange Commission to sell 1.165 million common shares of Mustang Ranch Inc. for $20 each, Perry said.
“We’ve got everything in motion now and are just waiting to see what the SEC does,” said Perry, who is chief executive of Mustang Ranch Inc., which was formed last year.
But Perry, citing strict SEC rules against discussing pending stock sales, declined to discuss details of the deal or name the other two officers besides Clough who would control more than 40% of the company after the stock sale.
According to papers filed with the SEC, $18 million would be used to buy the 105-room brothel east of Reno. The remainder would be used for capital improvements, financial reserves and administrative costs.
The brothel’s revenues dropped last year to $5.6 million from $5.9 million in 1986, but profits rose to $917,000 from $848,000, the prospectus said.
The prospectus said the prostitutes work as independent contractors, paying the ranch $10 a day for room and board and splitting their fees 50-50 with the house.
The prospectus noted that the stock offering was a high-risk venture because of potential lawsuits, adverse publicity and the possibility that clients could acquire AIDS, the sexually transmitted fatal disease.
Nevada law requires prostitutes to be tested monthly for acquired immune deficiency syndrome. So far, no prostitute has tested positive for the AIDS virus. The brothels require the use of condoms to protect against disease.
If the stock sale succeeds, it will be the first time a bordello has become a publicly traded corporation.
In 1985, a similar stock offering by Strong Point Inc. that intended to raise $18 million fell through.
The Confortes began operations at the 440-acre ranch in the late 1950s, when prostitution was tolerated in Nevada. In 1971, Conforte won Storey County’s approval for the brothel, pioneering the statewide movement to allow prostitution in most Nevada counties outside urban areas.
Conforte announced in July that he planned to retire because more than 30 years in the prostitution business was enough.
“I’m 62 years old. I only have a few years left to live the good life and I want to enjoy them,” Conforte said.