ACORN Brothel Advice Might Work -- but It's Full of Holes, Analysts Say

ACORN workers have been caught on camera offering all manner of advice on how to avoid tax, zoning and prostitution laws.

So what if a real pimp and prostitute took ACORN's advice? Would it work?

The people they were taped offering it to were a filmmaker and his associate, who posed as a pimp and prostitute looking for help setting up an imaginary brothel, staffed by underage girls.

Legal and tax analysts say there's a chance ACORN's advice, however astonishing, could be used to set up an illegal brothel — but that the racket might not last long.

The pimp and prostitute could be throwing up red flags left and right by following the advice, and they wouldn't withstand an audit if an authority chose to investigate.

"Unfortunately, it's much easier than one would think," said Mercedes Colwin, managing partner of Gordon & Rees' New York office and a FOX News legal analyst.

In three videotapess produced by filmmaker James O'Keefe and his partner, Hannah Giles, the ACORN workers in Baltimore, Washington and Brooklyn, N.Y., are seen offering a slew of tricks that the pair can use to establish and operate a brothel. The advice ranges from simply lying about the manner of their business to claiming underage prostitutes as dependents.

Colwin said the two could skirt zoning laws by following the advice they were given and claiming to be "performing artists," provided the proposed location is in a commercially zoned or mixed-use area.

That term could reasonably be used on a tax return without arousing suspicion, as well.

But attorney Robert Massi noted that if any authority bothered to investigate, it would be "fraud," plain and simple.

Massi said suggestions by the ACORN workers that the pair report earning only a fraction of the prostitute's income were a clear attempt to get them to qualify for a Section 8 housing loan. But he noted that the applications require a lot of documentation.

And analysts said the advice given on dependents is even more fraught with risk.

In a video shot at the Baltimore office, the "pimp" says that he and "Kenya" plan to bring 13 "very young" girls from El Salvador to work as prostitutes.

A staffer then suggests that as many as three of the underage girls can be listed as dependents at the home, so as to be eligible for child tax credits.

But the scheme is contingent on not arousing any suspicion. An audit or examination by the authorities would leave the brothel exposed, the attorneys said.

"If they're audited they have to establish that they pay for everything from A to Z for these individuals — food, clothing, education," Colwin said.

Cindy Hockenberry, research coordinator with the National Association of Tax Professionals, noted that a good scam needs good documentation — and it's not clear whether ACORN thought that far ahead.

"I don't know how they could do that unless they had some really good fake documents," she said about the tax advice.

Hockenberry rattled off the ways the pair could get caught. First, if anybody else were to claim any of the young girls as dependents, that would raise a flag. Second, a sudden listing of dependents on the couple's tax return could raise a flag.

"Last year on your return, you had no children — this year you have 13. Explain," Hockenberry said.

Steve Lee, managing partner at Steve Lee & Associates, said the dependent advice is "demonstrably crazy" since the sudden appearance of adolescent-age dependents would attract attention from the Treasury Department.

"It's not very effective. It demonstrates a pretty remedial knowledge of not only law but law enforcement," Lee said.

Massi said such a scheme would usually require the creation of fake identities and Social Security numbers, but that was not discussed.

"That's a red flag," he said. "These people that are doing this — they think they're cute. They think they're smart. But in practicality they're not very smart because if they do the things they're saying, they're going to get caught."

But the ACORN workers did go out of their way to offer advice on ways to avoid triggering those flags. They told O'Keefe and Giles to list no more than three dependents to avoid raising suspicion. In one case, a staff member is heard telling Giles to open multiple bank accounts in which she should deposit no more than $500 a week, also to avoid raising suspicion.

But Hockenberry pointed out that if the "prostitute" opened a slew of bank accounts, each taking in $500 a week, that could trigger alarms as well. She said the IRS and Justice Department are becoming more efficient at catching this kind of suspicious behavior.

"They're getting better and better at cracking down on bad preparers," she said.

Since the videos went public, four ACORN employees have been fired at the Baltimore and Washington offices, the U.S. Census Bureau has severed ties with the group and the Senate has moved to cut off funding.

But ACORN says it's being set up, and that O'Keefe tried the hidden-camera operation in a number of other offices with no luck.

ACORN chief organizer Bertha Lewis said in a written statement that while she could not defend the actions of the terminated workers, filmmaker O'Keefe may have committed a felony during the operation.

"It is clear that the videos are doctored, edited and in no way the result of the fabricated story being portrayed by conservative activist 'filmmaker' O'Keefe and his partner in crime," Lewis said.

ACORN offers tax preparation and benefits application services free of charge during tax season. It charges nominal fees during non-tax season.

Hockenberry said she was "appalled" by the video.

"I was watching this video and I thought, 'Who trained this woman?'" she said.