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If You Strip, Make Porn, Or Sell Sex Toys, You Might Not Get Any Coronavirus Aid Money. That’s Where The First Amendment Comes In.

Businesses that provide services of a “prurient” nature are excluded from the multi-trillion-dollar bailout because of obscure federal regulation that lawyers say is an unconstitutional limit on free speech.

Posted on April 11, 2020, at 11:03 a.m. ET

Courtesy Monroe's Strip Club

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When Mirna Mosquera first took a job at a strip club in West Palm Beach in 2014, she remembers judging the women who worked there.

“That’s unfortunately what I was taught as a young girl — you know, that strippers were judged and … and you don’t associate yourself with those types of females,” she said.

Mosquera, 45, is the office manager at Monroe’s of Palm Beach, and after seven years of making sure it ran smoothly, she said she’s completely changed her mind. “I have the utmost respect for them, I think they’re beautiful people,” she said. “Their form of entertainment to me is now an art.”

But now, like millions of Americans, Mosquera is out of work because of the coronavirus pandemic, alongside 97 employees and at least a few dozen dancers who work at the club. And she’s worried the club may close for good.

Courtesy Mirna Mosquera

Mosquera and her daughter.

The CARES Act, a $2 trillion relief bill passed by Congress to address the crisis, was meant to help people like Mosquera, but she and her colleagues may be out of luck because of long-standing rules that prohibit loans to anyone who makes their money from activities of a “prurient sexual nature” — even if their work is legal. The restriction at the Small Business Administration, which is responsible for giving out $349 billion of the relief money, has led to an outcry among people who make money at strip clubs, in porn or camming, at sex shops, and even as sex educators, who say they are being unfairly excluded and face financial ruin.

First Amendment lawyers who spoke to BuzzFeed News say people are right to be upset, and that prohibiting funding to the “vast majority” of businesses in the adult industry based on outdated prejudices would be a violation of free speech rights. The restriction has already prompted at least one lawsuit, and lawyers predict there could be many more.

The pandemic has devastated the US economy, with nearly 17 million people filing for unemployment in just three weeks. Sex workers and many parts of the adult industry, like strip clubs, porn studios, and sex shops, have been included in that suffering. “Our industry has been hit pretty hard, and I’m scared that I might not have a job to go back to,” Mosquera said.

The owner of Monroe’s — which has twice been named the best adult club in the country by Exotic Dancer Publications — is Scott Lizza, and he estimated the club had lost about a million dollars in revenue since it was forced to close in the middle of its busy season. "It’s complete devastation,” said Lizza.

Lizza said he was shocked when he read the SBA’s loan application, which asks applicants to verify that they do not “present live performances of a prurient sexual nature” or make money from “the sale of products or services, or the presentation of any depictions or displays, of a prurient sexual nature.”

“When we saw the stimulus package ... my mouth dropped, my heart dropped,” he said.

Lizza argued that he and his employees contributed to their community and deserved help just like anybody else. “We pay our taxes and run a legal business,” said Lizza. “We shut down like they asked us to shut down, under the pretense that the government would help us.”

“You’re dehumanizing people,” Lizza said about the SBA restrictions. “Even though you do everything right, we’re not going to help you.”

Lizza said that Monroe’s employs 97 people, including administrative staff, bartenders, security, servers, and kitchen workers in its restaurant. He estimated the business supports about 300 children. Mosquera herself has nine children, three of whom still live at home, and a grandson she helps support, and is desperate to find enough money to pay her bills.

Lizza said he covered the first round of payroll after the shutdown out of his retirement savings, but can’t afford to keep doing that if the club doesn’t get financial support. He said the situation is particularly dire since many of his staff work “paycheck to paycheck, or even night to night.”

Jennifer Cartwright, who oversees the club’s operations, said there are also about two dozen dancers who work at the club regularly and many more who dance at Monroe’s from time to time. Like most strip clubs, the dancers at Monroe’s are independent contractors, meaning they make money from tips and are not offered the same workplace protections as employees.

Although the SBA funding is open to independent contractors and people who are self-employed, sex workers would face the same hurdles as anyone else applying.

Courtesy Kyra Lane

Lane and her mother

Kyra Lane, who works regularly at Monroe’s, said dancers were already struggling before the shutdown. When the coronavirus began to spread, fewer and fewer people came to the club, hitting the dancers particularly hard because they rely on tips. Lane said she supports her 3-year-old daughter, two siblings, and her mother from her work at Monroe’s. She said she hasn’t been able to speak to her mom, who is currently incarcerated, for a few weeks because she doesn’t have the money to cover the email fees charged by for-profit companies that contract with prisons.

Like Mosquera, Lane said she was worried the club would be forced to permanently close. “I’m just kind of stuck right now because I do understand that we don’t know when we might open again at this point,” she said. “My landlord is still telling me I have to pay rent on 15th, and I don’t know how that’s going to happen.”

Nearly everyone who spoke to BuzzFeed News said they had faced judgment for their work at some point or another, but were shocked by the outright discrimination in the middle of a worldwide disaster.

“Whorephobia is literally written into this covid19 relief for New Yorkers,” wrote stripper and comedian Jacqueline Frances on Twitter. “In a global pandemic, policy makers are actively making the world a worse place for sex workers and their families.”

Whorephobia is literally written into this covid19 relief for New Yorkers. In a global pandemic, policy makers are actively making the world a worse place for sex workers and their families Source: https://t.co/ek2RwAAazX

News about the restriction on relief money spread quickly on social media. Cartwright said she had been getting panicked messages from the staff at Monroe’s: “I immediately started getting text messages that said ‘Wait a second, we’re not worthy of help? We’re humans just like anybody else.’”

Fear over being denied the relief money has also extended into the world of porn, sex toys, and sex education. Justyn Hintze, the vice-chair of the board of the Center for Sexual Pleasure and Health, a sex education organization based in Rhode Island, said the organization was concerned about its ability to get relief money from the SBA. Hintze said such judgmental regulations were common, and that they frequently faced similar restrictions from grant-making organizations. She compared the SBA rules to restrictions on funding for abortion providers.

“There’s a correlation there with a lot of sexphobia, and who’s allowed to receive money in terms of what they will and won’t talk about,” said Hintze.

Angelina Spencer, who is the executive manager of the Association of Club Executives, the industry trade group for strip clubs, said the restrictions were particularly galling because many of the people who judge the industry see dancers as victims. “The thing that always kills me too is that they always say ‘every dancer that works in a club is a victim.’ If that’s so, you’ve just victimized them further because we can’t get any relief to help them,” said Spencer.

Cartwright said that in the meantime she was working to support staff and dancers who were struggling by helping people navigate unemployment filings and loan deferments. She also organized a petition to demand that adult businesses get the relief money, which has been circulating the petition among other strip clubs. She said she even sent it to J.Lo and Lizzo, who she saw as advocates for the industry because of their performances in the movie Hustlers.

“We’re going to have to go to war to defend a legally run business," said Cartwright.

The SBA’s restriction against funding businesses engaged in activities of a “prurient sexual nature” dates from the Clinton administration. A proposal to add the restriction says the SBA has an obligation to direct its limited resources toward businesses it considers to be in the public interest, and that it is within its rights to exclude strip clubs and shops that sell porn because “obscene” speech is not protected by the First Amendment.

Free speech lawyers argue, though, that the SBA is wrong. They don’t dispute that businesses engaged in “obscene” and “prurient” activities could be excluded from getting the money, but they say those labels don’t apply to most businesses in the adult industry.

Jeffrey Douglas, who is the chair of the board for the porn industry trade organization, the Free Speech Coalition, and a chair emeritus of First Amendment Lawyers Association (FALA), called the restriction a “complete absurdity.”

Douglas said that members of FALA had been discussing the SBA’s restrictions on the relief money on a listserv and generally agreed that the restrictions would not apply to the “vast majority” of businesses in the adult industry. He said that although the SBA guidelines may have been intended to prohibit funding to strip clubs and sex shops, they weren’t applicable in most cases because the language used in the regulation had a very specific meaning.

“The people who wrote [the SBA’s guidelines] may have intended it to cover a wide range of speech, or even, potentially, anything that they themselves would be aroused by,” said Douglas. “But the Constitution requires enormous specificity when you attempt to restrict speech or punish speech or, in this category, deny access to government services based on speech.”

Courtesy Monroe's

A sign at Monroe's informing customers of their closure.

He said the regulation’s use of the word “prurient” meant it only applied to really extreme cases.

“What prurience means according to scores, probably hundreds of [court] cases over the last 60 years is essentially identical to obscenity,” he explained. And he said legally, the standard for something to be considered obscene is incredibly high. “None of [the porn that is currently available through mainstream outlets] could possibly fail the obscenity test.”

He said that because the definition of “prurience” was so narrow, most businesses would be afforded free speech protections and that the SBA would open itself up to lawsuits if it told banks not to give money to strip clubs or porn producers.

Indeed, the regulation has already prompted at least one lawsuit by the owners of Little Darlings strip club in Flint, Michigan, first reported by NBC. The lawsuit asserts that the SBA and the US Treasury Department violated the First and Fifth Amendments by proposing to deny funding to a business engaged in protected free expression.

Alfonso Moreno / MAD Creativity Photography

A dancer at Monroe's performing before the pandemic began.

Douglas said the restrictive language still served a purpose for the government. “Adult businesses have typically regarded themselves and accepted that they have pariah status,” he said. “Having that language in there serves a purpose because it causes self-censorship. They think ‘I probably don’t qualify,’ so they don’t apply. But, it’s wrong."

So far the SBA has only issued preliminary guidance for banks on how to handle the applications. In an effort to speed up the loan process, the guidelines say lenders can rely on businesses themselves to say whether or not they are eligible for the programs. But the guidelines also note that applicants could be held liable for fraud if they “knowingly use the funds for unauthorized purposes.”

The rollout of the relief program at the SBA has been plagued by reported power struggles and delays, and lingering questions over who should qualify. President Trump appeared to consider advocating for the gambling industry to be included during a press briefing on Wednesday.

Carol Chastang, a spokesperson for the SBA, told BuzzFeed News the organization was scrambling to answer questions about the loan programs, but was overwhelmed by the unprecedented scope of helping virtually all small businesses across the US at the same time. “So many pieces of this are still being put into place,” said Chastang speaking to BuzzFeed News last week, the night before SBA was due to issue guidelines for banks.

“It’s beyond a disaster. I mostly work with the disaster program,” said Chastang. “There’s a flood; there’s a hurricane. There’s a beginning, a middle and an end. There’s so much more clarity about how we can respond, what we can do. This is so different because it has affected so many more people.”

Chastang said that the SBA had provided disaster loans after 9/11, but that this relief program was much bigger. “After 9/11 the SBA expanded the disaster loan program nationwide. It was somewhat comparable, but not really and not as extensive,” said Chastang. “This is on a totally different scale.”

When asked if the restriction on “prurient” businesses might be waived by the SBA in light of the rushed rollout, though, Chastang said, “Probably not.”

Luke Lirot, a lawyer who has spent 30 years working with adult businesses and is also a chair emeritus of FALA, said he was advising clients like Lizza to go ahead and file the paperwork.

Lirot said he expected more businesses to sue the government if they were denied the aid money. “There would be no lawful basis for them to be denied and other businesses to be granted those benefits,” said Lirot. “I imagine I will have a class action of monumental proportions,” if the restriction is applied, he said.

Lizza said a denial, though, would be devastating for his business and employees like Mosquera.

“Long term, what Luke said — this is a constitutional issue,” said Lizza. “But that’s not going to help my bartender. How do I help my servers, hostesses, entertainers?”

“How do we get these people back to work?”

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