Defense begins in Mustang Ranch federal trial

RENO, Nev. - Former Storey County Commissioner and ex-brothel madam Shirley Colletti says she didn't steal money from the Mustang Ranch and never delivered funds to fugitive brothel baron Joe Conforte.

Colletti took the witness stand Wednesday in U.S. District Court to defend herself against government allegations that she was part of an elaborate scheme to conceal Conforte's secret ownership of the Mustang Ranch bordello.

Colletti and A.G.E. Corp., the company that owns the brothel, are being tried for wire fraud, bankruptcy fraud, money laundering and racketeering.

Conforte was also indicted but is a fugitive believed to be living in South America.

Colletti, a friend of Conforte's for 40 years, said she was following orders from Peter Perry, Conforte's former lawyer, when she wired money overseas. Perry would get 10 percent of the money sent to A.G.E. shareholders, she added.

Conforte was a consultant for the brothel because the new owners, who live in Italy, were unfamiliar with the business, she said. Colletti added that she didn't know if Conforte was paid for his work.

Conforte called "sometimes three times a week, sometimes three times a day," Colletti recalled, adding that she never had a way to contact him.

"He always knew where I was," she said, even contacting her while she was on vacation in Biloxi, Miss.

Colletti managed the Mustang Ranch while serving out her two terms as Storey County commissioner, but said receiving a salary of up to $10,000 a month didn't influence how she voted.

Earlier in the day, A.G.E. lawyer Richard Sherman told jurors the company is a legitimate business and not a front for Conforte.

Federal prosecutors allege Conforte, Perry and others set up the scheme to hide Conforte's continued ownership of the Mustang Ranch after the Internal Revenue Service sold it at auction for back taxes in 1990.

Sherman agreed with the government's charge that Conforte illegally bought the brothel under the guise of Mustang Properties, Inc.

But the subsequent sale to A.G.E. was completely legal, he said.

"Joe Conforte sold his interest when he sold the property to A.G.E. He was paid off. He took his money and took off," Sherman said.

The government's case relies on the testimony of Perry, Sherman said, reminding jurors Perry pled guilty to wire fraud and is awaiting sentencing.

Sherman said former Mustang Ranch bookkeeper Joann Olcese is in the same situation - the length of both witnesses' sentences depends on how well they testify for the prosecution.

"What wouldn't somebody say to avoid spending time in the clink?" he asked, adding that Olcese is a compulsive gambler who he believes stole money from A.G.E.

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