Irvine Investment Firm Purchases Nevada Brothel

The largest legal brothel in Nevada, the Mustang Ranch, has been sold to Strong Point Inc. of Irvine for $18 million in cash, ending a five-year struggle to sell the pink stucco bordello for back taxes.

Strong Point, a little-known real estate investment firm neither registered with the Securities and Exchange Commission nor with the National Assn. of Securities Dealers, said it is still exploring several ways to raise the money needed to complete the agreement and hopes to close escrow by December.

The firm is incorporated in Utah and was taken over just four months ago by John D. Davis, now president of Strong Point, and Roger W. Garrity, now senior vice president.

The brothel had been for sale since 1980, after the Internal Revenue Service put liens on the property for back taxes of about $7 million owed by owners Joe and Sally Conforte. Several other deals, at prices from $15 million to $25 million have fallen through and at one point the Mustang Ranch was taken into a voluntary bankruptcy proceeding. The last time the Mustang Ranch agreed to be sold was 1982, when Specialty Industries of Nevada Corp. (SIN) failed to complete the terms of its purchase agreement, according to Peter A. Perry, the Confortes’ attorney.

During its controversial history, the Mustang Ranch has been noted for its refusal to allow Iranians as customers during the hostage crisis and the killing of Argentine boxer Oscar Bonavena outside the gates by a Mustang Ranch security guard, who later served two years for voluntary manslaughter.

Joe Conforte was released from federal prison in December, 1984, after serving 12 months for tax evasion.

Garrity said Strong Point may possibly buy other Nevada brothels in the future. (Nevada is the only state that allows legalized prostitution.) He said he did not expect any disapproval from Strong Point’s more than 300 stockholders over the purchase. Garrity added that he believes this is the first time that a publicly traded corporation in the United States has bought a brothel, although it has been done in Europe. Strong Point shares, which are quoted in the informal, so-called “pink sheets” over-the-counter market, were quoted yesterday at $2 bid and $2.37 asked.