There’s a story about Nevada that pops up on the internet regularly. Here is an example, from www.usmessageboard.com: “Our government can’t even run a whore house. Back in 1990, the government seized the Mustang Ranch brothel in Nevada for tax evasion and, as required by law, tried to run it. They failed, and it closed. Now we are trusting the economy of our country to a pack of nit-wits who couldn’t make money running a whore house and selling booze?”
There are variants on this tale, including one in which a federal bailout is claimed.
Last week, the Jacksonville Times Union became the latest outlet to try to correct the record with a fact-checking article. The myth-busting Snopes.com has long since had a page devoted to this fakelore. So does About.com. But with at least 229,000 other sites carrying the fairy tale as gospel, it will probably be around for a while.
For the record, here’s what actually happened: On Sept. 21, 1990, the Internal Revenue Service seized the Mustang Ranch for back taxes estimated at $13 million, and the bankruptcy court here in Reno ordered it be liquidated. Bankruptcy trustee Jerri Coppa intended to run the brothel until it could be sold but, when she arrived to take possession, it had already been shut down. There was talk about someone else being hired to run the business for the government, but in October the Storey County Commission revoked the license and, in November, the ranch and its furnishings were auctioned off. The federal government never operated it and there was no bailout.
However, according to historian Guy Louis Rocha, there was an occasion when the federal government operated a prostitution house in Nevada. It doesn’t fit the anti-government template as well, however—the operation was well managed. On Aug. 20, 1913, a federal judge in Carson City appointed Frank Bonneau a receiver for the financially troubled Big Casino Co. in Tonopah, which owned the Big Casino Saloon & Restaurant, which openly offered prostitution. Bonneau kept the operation going, but in November the Nye County Commission revoked the liquor license on grounds the owners had conducted illegal gambling. It survived as the Big Casino Hotel and still offered prostitution.