A nonprofit group run by a convicted drug kingpin who campaigned for Mayor Vincent C. Gray is the focus of an investigation by the U.S. Attorney's Office, the FBI and the D.C. Office of the Inspector General (OIG) into its use of public funds, according to a letter by a senior official with the District HIV/AIDS Administration.
The administration "has provided all documentation requested by the FBI and OIG," wrote Senior Deputy Director Dr. Gregory Pappas in a March 9 letter to D.C. Council member David A. Catania, chairman of the Committee on Health. "This is a serious issue, and it requires a thorough examination."
Cornell Jones, who was spotlighted in the Black Entertainment Television documentary series "American Gangster," was the owner of a dilapidated industrial space at 2127 Queens Chapel Road NE when his nonprofit group, Miracle Hands Inc., received two grants from the HIV/AIDS Administration in 2006 and 2007 totaling more than $400,000.
City records show that shortly after Miracle Hands received the second of the grants to renovate the property as a job-training center, a nightclub owner in Southeast positioned his liquor license for transfer to the same address. The following year, Mr. Jones became involved with plans to sell the property, according to sworn testimony before the Alcoholic Beverage Control Board.
Following a report in The Washington Times that detailed Mr. Jones' 2010 sale of the property for $2.7 million to a politically connected developer who converted it into a high-end strip club, Mr. Catania asked D.C. Attorney General Irvin B. Nathan to investigate the matter.
"The circumstances surrounding the timing of the grants in question, coupled with the contemplated sale of this building, give the impression that District funds were used to renovate the building in anticipation of its sale," Mr. Catania wrote. "As you can imagine, this possibility is extremely troubling to me."
The grants were funded with federal housing dollars intended for people with AIDS, the letter from Dr. Pappas states. The grants were overseen by former HIV/AIDS Housing Administrator Debra Rowe.
In 2006, Miracle Hands requested and received a grant to renovate a building to house its job-training program, according to the letter. A second grant was allocated for the same purpose in 2007. A central question is whether the grant money was used for its intended purpose.
"There is a 'use requirement' for facilities renovated with federal funds that requires the renovated facility to remain in service for a certain number of years," the letter states. "In the case of sale of a renovated building, the provider can request that the use requirement be transferred to another facility under its control."
The letter, a copy of which was obtained by The Times, notes that the HIV/AIDS Administration "discontinued funding for the renovation prior to completion of the work."
Mr. Jones did not return calls for this article.
A spokesman for the FBI said the agency "does not confirm the existence of investigations routinely, and cannot provide details of any investigations which might be under way."
The U.S. Attorney's Office declined comment.
Questions about Miracle Hands first surfaced in a 2009 investigation by The Washington Post that examined a fiscal crisis at the HIV/AIDS Administration and resulted in the firing of Ms. Rowe, who now works for a different nonprofit founded by Mr. Jones.
Since 2004, D.C. records show, Miracle Hands has received more than $5.8 million in public funds to provide job training and social services to former offenders, the homeless, youths and people with HIV/AIDS.
On his weekly radio show, Mr. Jones has claimed that he used the housing funds intended to renovate 2127 Queens Chapel Road to renovate a different property he owns nearby to what is now the Stadium Club, featuring "upscale adult entertainment and fine dining." On a recent visit, The Times spoke with Mr. Jones' tenant at 2145 Queens Chapel Road, who said renovations had occurred on the building's second floor, which appeared vacant.
But questions also remain about what improvements, if any, occurred at 2127 Queens Chapel Road prior to its sale.
During the mayoral election, Mr. Jones appeared at straw polls and other campaign activities wearing a Gray for Mayor sticker, according to multiple sources. When The Times contacted him to discuss the Gray campaign, Mr. Jones said, "It's looking good. He's in the lead, so it looks like we've done a piece of a good job. He's the most personable candidate."
But when The Times pressed for details about his role, Mr. Jones said in a text: "Please don't use me in any way concerning the Gray campaign." Mr. Jones then pledged his support for incumbent Adrian M. Fenty. When asked if he was trying to have it both ways, he wrote, "Who don't want it both ways."
Last summer, then-candidate Gray attended a family-reunion picnic that featured voter registration at Langdon Park in Northeast Washington organized by Returning Citizens United, which Mr. Jones co-founded. The Gray campaign confirmed that Mr. Gray spoke at the event.
A Gray campaign spokesman later told The Times that "Mr. Gray doesn't know a Cornell Jones. He doesn't know who that is."
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