Continuity mistake: Outside the brothel, there is an orange post next to the old man's trailer. Suddenly, it is gone in the second scene where the old man is approaching. In the third scene there is one again, but this time it is an orange cone instead of an orange post.
Continuity mistake: As Brass interviews people at the whorehouse, the curtains switch back and forth several times between shots: pulled back with no light, then stretched out with the sun behind them. They keep switching back and forth.
Continuity mistake: When Brass is interrogating the bartender, there is a cup of coffee in front of him. In the next shot of the bartender's face, the cup is gone. It reappears later on in the scene in a shot from the side. (00:27:00)
Continuity mistake: In the scene just after Hodges and Greg find the seafood they were hunting for in the "Pleasure Providers'" stations or whatnot, Hodges collects a sample of the shrimp by cutting off a little piece. He picks it up with his fingers. In the very next frame, the shrimp piece is in tweezers. Lightning speed. (00:30:55)
Answer: He doesn't have the authority to arrest him - when anyone is arrested in the show, a police officer does it. Also he tells Ty that he is going to be submitting his case findings to Ty's insurance company, who would no doubt contact the IRS, who then would have him arrested for fraud etc.