Posted on September 1, 2011

D.C. Seeks to Recover Nonprofit Funds Used to Renovate Strip Club

Jeffrey Anderson, Washington Times, August 30, 2011

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.