D.C. seeks to recover nonprofit funds used to renovate strip club

D.C. Attorney General Irvin B. Nathan filed a false-claims complaint Tuesday against the nonprofit group Miracle Hands and its director, reformed gangster Cornell Jones, charging them with misappropriating more than $300,000 from the city’s HIV/AIDS program for renovations on a proposed job training center that instead was used to open a strip club.

The complaint, filed in D.C. Superior Court, seeks $1 million in damages and accuses Mr. Jones and Miracle Hands of unjust enrichment and submitting false expenditure reports in violation of the District’s False Claims Act. It states that Mr. Jones improperly received $329,000 in city funds for renovations at a warehouse in Northeast that now houses the Stadium Club, which advertises “Five Star Dining and a Premier Gentleman’s Club Experience.”

The funds, which originated from the Department of Housing and Urban Development and were distributed by the District's HIV/AIDS Administration, required that the warehouse be converted into a job-training facility for people with HIV/AIDS, according to the attorney general’s office.

Yet the conversion did not occur and the job-training facility has never opened, the complaint says.

City financial records show that Miracle Hands received more than $5.8 million in D.C. funds from 2000 through February.

In January, The Washington Times reported that the Stadium Club operates with a liquor license reserved in 2007 for a blighted warehouse property at 2127 Queens Chapel Road, which Mr. Jones owned at the time and used as the Miracle Hands office. By 2009, he had leased the property to a pair of businessmen who were in the process of purchasing the liquor license and planning to open a strip club there.

In 2010, Mr. Jones, a convicted drug trafficker immortalized in the Black Entertainment Television series “American Gangster,” sold the property for $2.7 million, according to D.C. property records. The Stadium Club opened at 2127 Queens Chapel Road in March 2010.

But as plans to launch an upscale strip club came together, Mr. Jones and Miracle Hands also were receiving grants from the HIV/AIDS Administration for renovation work at the same location, the attorney general’s office said. By early 2007, according to the complaint, Miracle Hands had decided to move the job-training facility to 2145 Queens Chapel Road, yet it continued to submit invoices to the District for renovation work at 2127 Queens Chapel Road.

At the same time, the complaint states, “A company controlled by Mr. Jones agreed to have a nightclub liquor license transferred to the 2127 Queens Chapel Road location, even though use of the building as a nightclub would not have been consistent with conversion of the building to a Job Training Facility, as described in Miracle Hands‘ grant agreement.”

The renovations at 2145 Queens Chapel Road have never been completed, the attorney general’s office said.

On Tuesday, Mr. Nathan said the office “will continue to be relentless in our efforts to recover government funds from those who have unjustly enriched themselves at the expense of the District of Columbia.”

Mr. Jones did not return calls for comment. Contact information for Miracle Hands was not available.

The attorney general’s action was prompted by a letter from D.C. Council member David A. Catania in February, in reaction to The Times story and a 2009 report in The Washington Post that questioned the relationship between Mr. Jones and the HIV/AIDS Administration’s former contracting officer, Debra Rowe.

“I am pleased that the attorney general has decided to take action regarding this egregious impropriety,” Mr. Catania said Tuesday.

The Stadium Club is co-owned by politically connected developer Keith Forney, the second-highest contributor to the controversial nonprofit Team Thomas controlled by D.C. Council member Harry Thomas Jr., Ward 5 Democrat, whose constituents have complained to the Alcoholic Beverage Control Board and the Board of Zoning Adjustment about the club’s permits and business practices.

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