By Mark Waite
All the investigative costs of the licenses for Dennis Hof led the prominent brothel owner to complain he was getting financially squeezed by Nye County during an appearance before the Licensing and Liquor Board Tuesday.
Hof acquired two brothels from Joe Richards in Crystal and Lathrop Wells, the former Cherry Patch I and II.
First he was charged a $5,000 investigative fee for the brothel license to open the Love Ranch South in Crystal and a $500 liquor license application fee, then a $5,000 investigative fee for the Area 51/Death Valley Alien Cathouse brothel license and a $500 liquor license fee.
Board members were receptive to Hof’s complaints about being asked to pay an additional $1,810 for the costs of the financial investigation by Certified Public Accountant Mark Alden for the Alien Cathouse license. Board members agreed to send the bill back for an explanation.
Callie Stark, who handles privileged licenses for the sheriff’s department, said Alden billed the county $6,810 for 38 hours of work. County code allows Nye County to collect $5,000 for application and investigative fees, she said.
Sheriff Tony DeMeo said Hof’s $5,000 payment didn’t cover the investigation costs for the Alien Cathouse.
Hof said he thought the investigative process was broken.
“I came to your county with a 45-year, small business history, never any troubles, never any license troubles, never any arrest. I also came to you with 20 years of brothel experience,” Hof said. He boasted of bringing a financial statement with seven figure dollar amounts in the bank.
“I’ve never been in trouble in my life. Mr. Alden, this is not acceptable to him. What he requires now is a compiled financial statement,” Hof said.
That includes listing every piece of property he owns, every car, every business and have a professional evaluate them, he said.
“It’s an unbelievable task and I paid $25,000 for it. There’s been other applicants that have spent up to $150,000 and never came before you because it just got too tough, because when you have partners, this financial person wants all the partners’ financial information,” Hof said.
DeMeo said he didn’t know of any other license in the county that cost an applicant over $100,000.
Hof said the $5,000 brothel investigative fee is the highest of any county in the state, but it’s doable except he had to pay the same fee for acquiring the second brothel. Stark admitted Hof applied for both brothel licenses at the same time.
Hof was granted a temporary brothel and liquor license to operate the Area 51/Alien Cathouse last December after already being granted a license for the Love Ranch South. He won’t be required to appear to get his permanent license for the cathouse, which Hof expects to open in a month. The Cherry Patch Bar is already operating.
“What we all want is the same thing. As the business owner, to protect the business I’m in, I want reputable people in it that work hard, give back to the community and pay taxes. You want the same thing and so do your constituents. But we’re not being protected by that. You have a brothel right now, Mr. Alden just checked, that has nine partners that are unlicensed,” Hof said. “If something goes bad in their life and it pops up they own a brothel, or part of a brothel in Nevada, they’re a black eye to our business.”
DeMeo said afterwards the brothel Hof was referring to was Sheri’s Ranch in 2001, which was licensed before he became sheriff under a different district attorney. That brothel is involved in a civil court case involving a management dispute.
“Mr. Hof brings up a good point. We don’t know who these people are and if we don’t do a background check, we don’t know who the people are with the current brothels,” DeMeo said.
Nye County Commissioner Butch Borasky, the Licensing and Liquor Board Chairman, gave Hof a stern reminder.
“Nobody’s doubting your business practices, we all know who you are. You have worldwide ding, there’s no doubt about that. But you hold what very few people in this country hold, it’s a brothel license. It’s a privileged license and we at Nye County, and I believe I speak for every one of my colleagues, want to make sure the people who are getting these licenses are squeaky clean and that’s to protect the public.”
Commissioner Lorinda Wichman assumed applications for one license in the county would be retained and not pitched out. Someone checking on a person’s second license application could just look at their first application and do a quick update, she said.
Stark said Alden is the one who bills for the investigation. Hof said if he doesn’t get relief from the bill, he’d prefer to pay for the extra charges himself without involving the county.
Nye County Manager Pam Webster said the county needed to review the brothel ordinance to see if there can be a provision if an existing application was the same as a previous one.
“I don’t think this is a systemic problem, this is a one-time problem we need to address. We need to review some of our investigative protocols in the books,” Nye County District Attorney Brian Kunzi said. The county has a right to question a bill, he said, a position endorsed by the sheriff.
Nye County Commissioner Dan Schinhofen wanted to review ordinances used by other counties. Eastley felt the ordinances were Nye County’s own ordinances.
“Yes we want to be thorough and protect the public, but we also want to be fair to business owners who invested a lot of money,” Schinhofen said. “I’m not inclined to pay this bill.”
DeMeo told the Pahrump Valley Times the sheriff’s department used to do the criminal investigation and the financial audit of brothel applicants at the same time.
Now the financial aspect is done first to be sure the applicant can afford to run a brothel. The criminal investigation is much quicker, he said.
Mack Moore objected to having to go through the whole application process again to reopen Angel’s Ladies Brothel near Beatty in October 2009. Moore had sold the business in 2005, but it later closed.
At the time the district attorney’s office asked Moore to provide annual audits, with business records and proof of his annual tax returns.
Nye County reached a settlement earlier this year with Western Best Ltd. owners, dba The Chicken Ranch Brothel, which sued Nye County after Bruce Kahn was denied a brothel license to acquire the ranch. The investigation found out Kahn had three tax liens and only a $3.5 million loan to purchase a $5.25 million property.
“There was one application where a person was using a pickup truck for collateral for a brothel which is a multi-million dollar operation,” DeMeo said in a follow-up interview.
“You need someone with enough financial background and financial ability to take care of the brothel in good times and bad times. If not you could have someone who used a brothel to launder money,” DeMeo said after the meeting.