VIRGINIA CITY — A $1.6 million civil lawsuit accuses a county commissioner who owns Nevada’s infamous Mustang Ranch brothel of orchestrating a conspiracy to cut an ex-business partner out of his share of the profits at the legal house of prostitution east of Reno.
Testimony began Wednesday in the trial expected to continue through Aug. 30 in Storey County District Court in Virginia City.
Lance Gilman, elected commissioner in November, also owned the Wild Horse brothel neighboring the Mustang Ranch along Interstate 80 before the county revoked that license in 2011.
Gilman later merged the two operations under a single license.
His ex-partner, Tony Gonzalez of Fort Lauderdale, Fla., said the move was designed to cut him out of his monthly 1 percent share of gross revenue at the Wild Horse.
Gonzalez is asking for $1.6 million, which he said is the amount owed by Gilman and co-defendant Susan Austin to his TC Investments LLC.
Gilman denied there is a conspiracy. His lawyer, Mark Gunderson of Reno, said it was Gonzalez’s responsibility to understand Storey County brothel laws in which a 2009 ordinance states that anyone with any investment in a brothel must be licensed.
“These facts are not about conspiracy,” Gunderson told the jury Wednesday, according to the Reno Gazette-Journal. “These facts are not about influence. This case is not about all of these bad acts that have been spun into the story.”
The dispute dates to 2003 when Gonzalez loaned Gilman $2.25 million to help build the Wild Horse.
Gilman quickly paid off most of the loan with another loan and renegotiated his original deal with Gonzalez.
The deal was changed from giving TC Investments a 5 percent monthly gross until 2043 down to 1 percent, according to testimony Wednesday in the eight-person jury civil suit.
The Wild Horse’s gross revenues ranged from $4.4 million in 2004 to $5.9 million in 2007 to $4.8 million in 2010, according to Gonzalez’s attorney, Mark Wray of Reno.
Gunderson said Gilman stopped making the 1 percent payments to Gonzalez’s TG Investments when the Wild Horse brothel lost its license. He said that was the result of TG Investment’s failure to secure a license, as required by the county brothel ordinance.
Wray said Gonzalez never thought of himself as a co-owner or partner in the brothel business because all he did was loan money to Gilman.
“Everybody understands that you are making a loan,” Wray said. “Everybody agreed that we are making a loan. This was no partnership, ownership or joint venture.”
John Fischer, a lawyer from Los Angeles who handled Gonzalez’s $2.25 million loan to Gilman in 2003, said under questioning that it was Gilman’s responsibility to make sure all Nevada legal matters were proper.