How does arresting the ringleader of the brothel affect the story?

If you pass him through, the sex workers will be killed the next day (story in the paper).

If you reject his entry, the sex workers will be killed the next day anyways (story in the paper).

If you detain him legally, the sex workers will not be killed. To detain him legally, you need to:

In inspect mode, highlight his name on the note, and on his other documentation. The game will report there is a discrepancy. This will allow you to legally detain him.

If you let him through, the paper the following day mentions that sex workers have been killed. I don't remember about other consequences.