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'Hannity' Exclusive: Undercover Video From Los Angeles ACORN Office

This is a rush transcript from "Hannity," November 16, 2009. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: The group ACORN is attempting to sue the U.S. government in order to regain its federal funding. But as those legal proceedings are taking place, another undercover video from filmmaker James O'Keefe and Hannah Giles has now surfaced, this time from ACORN's Los Angeles offices. And once again, it appeared they had found someone who had helped them secure a loan to set up a prostitution ring.

Let's take a look at this exclusive video.

(BEGIN VIDEO CLIP)

JAMES O'KEEFE, POSED AS PIMP IN VIDEO: You're not going to be biased against us because we're running this prostitution business?

FELIX HARRIS, ACORN: No, when it comes to the clients I give everybody — No, I'm telling you it doesn't matter to us what you do. We prepare you. If you come into my class and you say, "My business is a prostitution business," that don't mean nothing to me. My concern is to give you the information how to go out and access the loan.

(END VIDEO CLIP)

HANNITY: Now, believe it or not, Felix Harris was the only ACORN employee who refused to assist James and Hannah in setting up a prostitution ring during that nationwide investigation. But that was only after underaged girls were mentioned. Let's take a look.

(BEGIN VIDEO CLIP)

O'KEEFE: We've got like 15 girls coming out of this house, and they're all under aged.

Watch the exclusive video and Sean's interview

HARRIS: No, it has to be legitimate.

O'KEEFE: They're not legitimate. Underaged girls.

HARRIS: It's not going to work. It's not a legitimate business.

O'KEEFE: What do you mean?

HARRIS: No bank is going to finance an illegitimate business.

O'KEEFE: Well, that's why we're coming to ACORN.

HARRIS: ACORN do not do anything illegitimate.

(END VIDEO CLIP)

HANNITY: And I'm joined now in studio by filmmaker James O'Keefe, and from Miami tonight, Hannah Giles is with us.

First of all, all right, let's give credit where credit is due. Felix is the only employee so far — you're calling him the employee of the year.

O'KEEFE: Yes. He's the employee of the year. He's the only one who would not assist us set up a prostitution business, and he's the best they've got.

HANNITY: And all the investigations. All right. Now, when you went into the office — he did say, "I don't care about that part." It seemed — what seemed to bother him, and finally, we saw somebody who said, "OK, I don't support the underaged aspect of that." Correct?

O'KEEFE: Right. He didn't care about the underage girls, but he showed absolutely no moral outrage about the prostitution business with taxpayer money.

HANNITY: Yes. All right. And Hannah, what were your thoughts when you went in there? A little surprised? This was the first time you had somebody that gave you even a slight amount of pushback.

HANNAH GILES, POSED AS PROSTITUTE IN VIDEO: We were like, wow, someone that didn't endorse underaged prostitution. We're a little disappointed that we — you know, the experiment didn't follow along the rest of the lines, but it was kinds of relieving that someone was against underaged prostitution in regards to ACORN.

HANNITY: All right. But did you feel he showed enough moral outrage for you? Because it seemed in that video, especially on the underaged part, that he did.

GILES: He wasn't necessarily morally outraged. He just said that ACORN and other banks wouldn't deal with an illegitimate business, such as underaged prostitution.

HANNITY: All right. Now we — I can't reveal everything that we're going to be doing, but later this week you're both coming back on the program. There's a part two to this story. So without giving away that part of it, the next part of this is not as — well, let's just say morally upright as this part.

O'KEEFE: Yes. There are more tapes, and they're especially devastating. We just want to set the record straight before we release any more tapes. This is the only example in the entire country where someone did not assist us. You've heard a lot of reports in the media, people saying things. This is the only guy.

HANNITY: All right. You were both dressed as — and by the way, you are the least convincing pimp in the entire world. I mean, I just don't — I don't get it.

O'KEEFE: It's pretty outrageous. It's ridiculous. And look at the way that Hannah's dressed. They didn't blink an eye.

HANNITY: And by the way, Hannah, you are the least convincing prostitute. I want that to be clear, too, in the entire world.

But in all honesty, it is outrageous.

Now, ACORN, Hannah, is now suing to get back the federal funds. As a result of both of you and your work, funds were cut off for them. They're now suing. Do you have a reaction to that?

GILES: Yes. I think it's outrageous. ACORN is suing the American government for taking away their money, money that they shouldn't have had in the first place.

HANNITY: Yes, well, I guess they think it's their money. I — somehow, I grew up with the understanding that it's actually the taxpayers' money.

All right. Now, I'll ask you, Hannah, the same thing, without giving away part two that's coming up later this week, there's more to this story. You were — can I say this part — Felix sort of advised you that there were other people to talk to.

O'KEEFE: Right.

HANNITY: OK. And so you guys followed Felix's lead, correct, Hannah?

GILES: L.A. is a story. This is just part one of the story. Part two of the story takes a different turn.

HANNITY: So why did you feel that you wanted to come out here and show this part of the tape that actually showed an ACORN employee at least seemingly wanting to do the right thing? Why is that important to the setup for part two later this week?

GILES: You know, it's the truth. It's part of our story. It's like we did a science experiment. We went around the country testing out this hypothesis, this pimp and prostitute scenario, and this is one that didn't follow the rest of them.

HANNITY: Of all...

GILES: The other ones that showed...

HANNITY: Go ahead.

GILES: Of all the ones showed ACORN as a corrupt organization willing to aid and abet underaged prostitution, Felix in L.A., part one, is the only guy who didn't fall for that.

HANNITY: Yes, which is the interesting part.

Of all the tapes, when we reveal part two of this, how does it compare to some of the other tapes?

O'KEEFE: I mean, the rest of the tapes we have are absolutely devastating. We're just setting the record straight about the only guy who wouldn't help us, and now everybody knows what our batting average is.

And the thing that's more outrageous than even what we see is the fact that it takes two citizen journalists to do this type of thing. The media is not devoting resources, doing creative investigative journalism. So we hope people will join us in future projects.

HANNITY: What do you make of the fact that — that there's been such an overwhelming reaction to this and even Congress getting involved and funds being cut off? What is your reaction?

O'KEEFE: I think that's a prime example. People want to see creative investigative journalism. They want to see people take risks and go out and expose the truth, where other media outlets aren't willing to do it.

HANNITY: Hannah, I'll ask you the same question. What is your reaction to everything that has happened as a result of your investigative work?

GILES: I think the American people are tired of seeing their money used and abused, and this is them reacting.

HANNITY: And do you think this is, by far, the tape that's part two of this story that is going to come up later this week, do you think it's the most devastating of all the tapes you've had?

GILES: It's definitely up there.

HANNITY: All right. Guys, thanks for being with us. Hannah, James, good to see you.

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