The defunct Mustang Ranch bordello remained in government hands after a federal judge on Tuesday denied the owners' request to sell the property to a group of private investors. The ruling by a federal bankruptcy judge clears the way for the Internal Revenue Service to auction off the ranch to pay off its owners' back taxes. Lawyers for the owners, Joe and Sally Conforte, sought permission from a federal bankruptcy judge to immediately sell the 440-acre ranch that once was America's best-known legal bordello. The IRS opposed a private sale, saying the property would bring a higher price later. An IRS auction is scheduled for Nov. 13-14. Earlier this month, Storey County commissioners revoked the Mustang's permit to operate as a brothel, which means it can't re-open as a legal house of prostitution no matter who gets title. Austin Cooper, one of the Conforte's lawyers, said they had a buyer willing to immediately put down $500,000 and pay a balance of $1.6 million within three years. He argued the property is depreciating rapidly and taxpayers would receive more from the sale if it went through immediately on the Confortes' terms. The IRS said the couple no longer had claim to the property. The 105-room ranch operated as a legal brothel for 35 years. ``We felt the auction was not properly advertised to maximize the number of bidders who might be interested,'' said Dierdre Pagni, an IRS manager. The Mustang closed Sept. 18 when it was forced into liquidation under Chapter 7 of the federal bankruptcy code. For three days, bankruptcy trustees sought to reopen the bordello to recoup about $13 million in federal taxes owed by the Confortes, who did not attend Tuesday's hearing. The IRS seized and padlocked the ranch Sept. 21 when the trustees' efforts were hampered by cash flow and other problems. Rollin Thorley, representing the IRS, said the government will sell the property for a minimum of $1.8 million. The ranch will be divided for auction into real estate, a trailer park and personal property.
