This is a rush transcript from "Hannity," September 24, 2009. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: The undercover videos captured in several ACORN offices by James O'Keefe and Hannah Giles ignited a firestorm when they were released. The IRS has since severed all ties with the organizations, and the Treasury Department is now formally reviewing ACORN as well as the IRS's oversight over the group.

But ACORN, they're not taking any of this sitting down. In fact, the group is now suing the two young filmmakers, accusing them of violating Maryland law. Now the pair captured this video in ACORN's Baltimore office.

Now the ACORN employees that you see did not know that they were being filmed when they offered advice, ranging on how to cheat the IRS to how to operate an underage prostitution ring. But there are questions tonight about the Maryland law which requires two-party consent when conducting any sort of electronic surveillance and what that actually means.

Video: Watch Sean's interview

Now ACORN is also going after journalist Andrew Breitbart because the videos were first seen on his Web site, Breitbart.com. And not only that, but ACORN is hoping to get a court to stop the distribution of that video altogether and to collect damages because the video, quote, "harmed its reputation."

And joining us now with reaction to all of this is Hannah Giles. She posed as the prostitute in the ACORN offices, and her lawyer, Kelly Shackelford, is with us. He is the chief counsel of the Liberty Legal Institute.

Guys, welcome. Welcome to you, Kelly. Hannah, welcome back. Thanks for being with us.

HANNAH GILES, POSED AS PROSTITUTE IN ACORN VIDEOS: Thanks, Sean.

KELLY SHACKELFORD, LIBERTY LEGAL INSTITUTE: Thanks, Sean.

HANNITY: All right. This really isn't a surprise to you, but your reaction, Hannah, to the lawsuit.

GILES: I think it's kind of silly right now. I mean, I'm a 20-year-old girl being sued for $5 million. So it's just kind of dealing with that.

HANNITY: It's a little overwhelming. Does it scare you a little bit?

GILES: Not necessarily, you know, I've got a good defense counsel right now. So — just taking it as it comes.

HANNITY: All right. Kelly, the first thought I had when I saw this, I'm thinking this is great. Discovery for ACORN. This gives you a lot of latitude in terms of getting involved in this organization, their finances, their hiring, et cetera. Your thoughts?

SHACKELFORD: Well, certainly that's all going to be open. But to us, this is just clearly an attempt to bully a 20-year-old girl. I mean, it's an attempt to intimidate and to chill speech and freedom of the press.

And, you know, we haven't even been served with this lawsuit yet, but from what we've heard, it's just a baseless lawsuit. And not only do we — is it baseless under their statute, but we live in a country with a First Amendment that believes in freedom of the press and certainly citizen journalists like Hannah have protection.

And the idea that, you know, you now get sued if you expose corruption, that'd be a pretty sad country we'd be turning into.

HANNITY: All right. What do you make of the Maryland statute? Then we'll get back to Hannah and some of the specifics here. Because as I understand it, you know, if you look at this particular statute and some of the precedence that has come out here, you know, if you have one party in the conversation, they must have had a reasonable expectation of privacy in the conversation.

So if you have a reasonable expectation of privacy, if, you know, two people walk into your office, I don't think you have a reasonable expectation of privacy in that situation, do you?

SHACKELFORD: No. You're exactly right, Sean. The statute is very specific. It says it had to be, quote, "a private conversation." Anybody who views this tape can see that it was not a private conversation. There were over 10 people in the room. The ACORN folks were pretty loud themselves.

So I think it's just baseless and it's clearly an attempt — I mean, obviously, what is a 20-year-old girl going to do when she's sued by this powerful, you know, special interest? I'm sure they think they're going to shut her up, but I just don't think they know Hannah very well, and — she's certainly going to stand for not only her rights, but for the country.

HANNITY: I think the interesting thing here, Hannah, is what came out of all this. I mean, here you exposed — you would think that you actually did this group a favor. You exposed a willingness to help — you know, cheat the IRS and offer information. And also, we're talking about importing underage girls for prostitution, and they want to make a big deal about this.

What is your reaction when you put it through that prism?

GILES: Well, you're exactly right. Bertha Lewis herself said that James and I did a favor exposing the corruption and — within her own company. So when they came at us with a $5 million lawsuit it was kind of shocking.

HANNITY: Do you think personally that this is an effort — you know, you're a 20-year-old girl, James is 25. Do you think — in your mind this is an effort to intimidate you and silence you and stop you guys from what you're doing?

GILES: I don't think it's just to silence us, I think it's to silence what we've just encouraged. We've encouraged the use — young people like us, journalists — to fight for what's right, to investigate, to uncover the truth. And I think they're frightened that we've just stirred things up and encouraged a lot of people.

HANNITY: We've gotten enormous reaction to the number of appearances you've had on the show and to the videotapes themselves. As you have been out and you have met people and you've talked to people. What has been the reaction that you have gotten?

GILES: It's been an amazing response. Everyone from young children to retired generals have been absolutely supportive of us. They say we've, you know, renewed their hope in this nation. They're excited about the future and they're excited to live in America.

HANNITY: You know, what do you make of this other fact that they may actually use part of your money? Because they have a lot of taxpayer dollars. They've received tens and tens of millions of taxpayer dollars, and the president, you know, he didn't know that much about it — I'll get to that in a second. But he had earmarked $8.5 billion for the organization, and now perhaps some of that money is going to be used to go after you.

Does that make you angry?

GILES: Not angry, but I think it's kind of funny and —

HANNITY: Well, ironic, right?

GILES: Odd.

HANNITY: What did you think — George Stephanopoulos — he did his Sunday full Ginsburg this weekend where he goes on all the different Sunday shows, and George Stephanopoulos, to his credit, asked about the funding of ACORN and whether he'd cut it off.

He wouldn't answer the question. And when he pushed, you know, he said, well, this isn't the biggest issue facing the country. But apparently the president had seen the video and he said, you know, it was inappropriate, deserves to be investigated. So it seems like the president's on your side.

GILES: That's good news.

(LAUGHTER)

SHACKELFORD: Let's — let's hope follows through on that.

HANNITY: What, that they deserve to be investigated, that there's corruption here?

SHACKELFORD: That's exactly right. I mean, you know, when you have a citizen who exposes corruption, exposes abuse of taxpayer money and government support, and then the result is that powerful interest that has a lot of our taxpayer money tries to crush the person who exposed it, you know, we can't let that stand.

HANNITY: Do you think this is going to happen even though the other states have different laws? One party consent. Do you expect that this is going to happen, Kelly, in these other states as well?

SHACKELFORD: I hope not. I think if we're successful, if they really do serve Hannah with this, we plan to get this thrown out of court, and I hope that would serve a message around the country that we still have freedom in this country and citizens can expose the truth.

HANNITY: Well, listen, Hannah, if you get in trouble and you need a lawyer, I'll tell you what, we can help you. We'll put out the word. I'm sure there's a lot of people that may want to help you with a legal defense fund. And if you get to that point, let us know. We'll be glad to bring you back on.

Thank you for being with us.

SHACKELFORD: We've got it right now, actually, Sean. It's DefendHannah.com to support Hannah in this defense.

HANNITY: All right. Hannah, and if worse comes to worst, I'll put a file in a cake and I'll come visit you in jail. Just kidding.

(LAUGHTER)

GILES: Awesome, thank you so much, Sean.

HANNITY: All right. Thanks for being with us.

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