'Factor' Investigation: Residential Swingers Club in Legal Battle With Small Texas Town

This is a rush transcript from "The O'Reilly Factor," January 16, 2008. This copy may not be in its final form and may be updated.

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BILL O'REILLY, HOST: In the "Factor Follow-up" segment tonight: Duncanville, Texas, it's a small town outside of Dallas, is involved in legal action with a swingers club, which is located in a residential neighborhood there. The club, Cherry Pit, is suing the town and vice versa.

Now we sent a "Factor" producer down to see what was happening inside that club.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I'm ready to take a donation if you want to donate tonight.

UNIDENTIFIED MALE: Is $50 OK?

UNIDENTIFIED FEMALE: That's suggested. Some give more, some give less. That's why I always ask that way.

UNIDENTIFIED MALE: This is what we call the fantasy room. We like bondage. We do gang bangs. This is the public room. (INAUDIBLE.) You know if somebody is here playing they need to ask you to join or ask — you know, you understand. This is the hot tub room. I always say no clothes, no bathing suits.

(END VIDEO CLIP)

O'REILLY: All right. Again, that's going on in a residential neighborhood. And the controversy here is, of course, quality of life. Some neighbors simply don't want this kind of business on their street. And they made that quite clear to "The Factor."

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I don't agree with the lifestyle. I definitely don't. The kids are getting old enough to ask us what all the cars are doing over there.

UNIDENTIFIED FEMALE: A sex business shouldn't operate in a neighborhood and close to a park where children play.

UNIDENTIFIED FEMALE: You know, we're both scout leaders. And our concern is that is a Boy Scout camp right across the street from it. The fence, you know, just right across the street from the Cherry Pit.

UNIDENTIFIED FEMALE: What I don't like is if you look at it, from my perspective, it's just like having a bar down the street.

UNIDENTIFIED MALE: I absolutely believe that they're violating the law and practicing a business there for profit solely. Then yeah, it should be shut down and closed up.

(END VIDEO CLIP)

O'REILLY: Joining us now from Dallas is the attorney for the club, Edward Klein. Can you understand that the neighbors — and they were almost unanimous, you really don't have anybody down there supporting you on this one, really don't want to be in proximity to this kind of activity, however you describe it. They just want it in a different place, not in a residential place. Are you sympathetic to that argument, sir?

ED KLEIN, ATTORNEY FOR THE CHERRY PIT: Well, certainly we're sympathetic to the problems that the city has enumerated to us, and also with the neighbors, absolutely.

O'REILLY: Well, then why don't you move — why don't you suggest to your clients that they move this operation into a rented facility someplace else and then all the controversy would go away?

KLEIN: Well, not exactly, Bill, because in a rented facility, it then would be a business, which it isn't. And it would be required to get licenses and the activity probably that goes on may not be legal in a commercial establishment.

O'REILLY: So you're submitting that if you rented a place, there would be all kinds of regulations. But look, if you are saying I can rent a storage operation, sir, and I'm not having a business. I could rent a storage operation and then say, if you want to come into my big storage operation, I need a donation of $50, which is what they're saying here in this house.

"But that's not a business. You're just helping me out because you're a good guy." I mean, that's the whole ruse here. We all know it's a business. If you don't give the $50, they don't want you there, and they make it quite clear.

So I'm not, you know, I can't sympathize with you. And I think you're going to lose your suit, because this is obviously a business that's got loopholes. You're just going around and around, and you're hiding behind the freedom of expression within it, within a house, but the house is there for the purpose of getting a $50 donation. Come on.

KLEIN: Well, no. I mean, people get in without having to pay money.

O'REILLY: Who? We have it on tape. The woman said, "You want to make a donation? Suggested $50 donation." When we called, because you have to get a list to call — you have to get on a list before you can even get in the door.

KLEIN: Right, right.

O'REILLY: That was made quite clear to us. Now, we didn't identify ourselves as the press, obviously. But when our undercover people called, that was made quite clear that they were expected to pony up 50 bucks a head.

KLEIN: Well, I don't have the benefit of seeing the tape that you played, but I know from looking at my clients' records, that some people make donations, some people don't make donations.

O'REILLY: Yes, well, if you can produce somebody who didn't, I'd like to know who they are.

Now does your client, is this an IRS deal? Do they declare this money?

KLEIN: I don't have any idea what they do in terms of their taxes.

O'REILLY: Really? Because you could get in trouble, counselor. I'm looking out for you here, man. If they're taking 50 bucks a head every Friday and Saturday night, and they're racking up that score, I think the federal government is going to want to know about that.

Now, there's no state tax in Texas, but the feds certainly will. And if you're fronting this operation as their legal counsel, you better damn well know whether they're paying taxes on this money or not, sir.

KLEIN: It's my understanding that they do account for it, and they — I'm not a tax lawyer or an accountant.

O'REILLY: Well, you ought to take a look at their sheet, because I don't want to have to be defending you on this program and have my attorneys defending you while you are, you know, charged with the IRS. You don't want to get into a Wesley Snipes situation, do you?

KLEIN: No, of course not. I don't think that's going to happen either.

O'REILLY: Well, you ought to check out their tax returns then, and I am looking out for you.

Now, the basic debate is a quality of life debate. That's what the debate is. And you and the operation are infringing, I believe, on the quality of life of all the people that live in that residential area. Can you convince me that you're not infringing on their quality of life?

KLEIN: Well, prior to this becoming something that's in the media spotlight, nobody in the neighborhood knew what was going on in there. So...

O'REILLY: But they knew there were lots of folks showing up.

KLEIN: And that's been addressed. And it wasn't always lots of folks showing up. Sometimes it was just three or four people or three or four cars. So until this, again, became something that was so open, the neighbors didn't really know what was going on there.

O'REILLY: Well, and it's the media's fault?

KLEIN: Pardon me?

O'REILLY: It's the media's fault?

KLEIN: I don't think it's the media's fault so much, but I think the city has got to take some responsibility in this because they're the ones that made it such a public spectacle.

O'REILLY: Yes, because it was brought — you know how people talk. I mean, come on. Everybody knew this was going on in the town, once word got out and people said, "Hey, I'm going over there for a good time."

All right. When is the next court appearance?

KLEIN: There's a hearing scheduled January 25 where we've asked the court to issue an injunction to keep them from enforcing the ordinance.

O'REILLY: To shut it down. All right, counselor. We'll follow the story. We appreciate your time very much tonight.

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