Box Turtle Bulletin has a very interesting article linked about one of the first recorded gay scandals in the U.S. Navy:
The first national gay sex scandal was instigated in Newport in early 1919, by a sailor with an ear for gossip and a hatred for homosexuals.
Before it ended, the scandal had blazed in headlines across America, embarrassed future President Franklin Delano Roosevelt and led to FDR suing The Providence Journal.
Court trials and a U.S. Senate investigation into the Newport episode exposed that the Navy had sent sailors to entrap homosexuals by having sex with them... (Providence Journal)
Interesting approach: they used men to have sex with other men in order to find out who the gays in the Navy were. What a clever use of their...er, assets. Could this be the first known case of "gay for pay"? Of course given the government involvement in this sting operation, it wasn't long before the original intentions were expanded and these same decoys were used to expose gay civilians as well. Now that's a remarkable abuse of power...