D.C. Attorney General Irvin Nathan has accused a District HIV/AIDS service provider of spending nearly $330,000 in federal tax dollars to open a strip club.
In a lawsuit filed Tuesday, Nathan said Miracle Hands Inc. promised the city it was using the cash to renovate a warehouse in Northeast for use as a job training center for residents with HIV/AIDS. Instead, the warehouse was turned into the Stadium Club, a strip club that continues to operate, the suit says. Miracle Hands shares an address with the club, according to the company's website. Nathan asked in the suit that the city be awarded at least $988,959 in damages.
D.C. Councilman David Catania requested in a February letter to Nathan that the attorney general open an investigation into Miracle Hands and its relationship with Stadium Club.
"I am pleased that the attorney general has decided to take action regarding this egregious impropriety," Catania said Tuesday.
Attempts to reach Miracle Hands owner Cornell Jones were not successful. Jones is a self-described former D.C. drug kingpin with convictions for narcotics distribution on his record.
In 2009, federal authorities told the Washington Post they had started an investigation into how the money was spent. On Tuesday, a spokesman for the U.S. Attorney's Office declined to comment on the status of the investigation.
The grants for the renovations to the warehouse at 2127 Queens Chapel Road NE, were first given to Miracle Hands in 2006 by the District's HIV/AIDS administration. Earlier this month, an inspector general's audit of the administration found that during the four-year tenure of the agency's former director, Debra Rowe, little attention was paid to how dollars were spent by service providers, even as the city's HIV/AIDS rate reached epidemic levels.
When Rowe was fired in 2008, she went to work for Miracle Hands as its executive director. She could not be reached for comment Tuesday.
In November 2006, nearly one year after Miracle Hands first won its grant to renovate the Queens Chapel Road warehouse, a city grant monitor visited the site and found little work had been done toward meeting a March 2007 deadline, the lawsuit said.
The monitor advised Rowe that Miracle Hands' funding should be cut. But Rowe, called a "close friend of Jones" in the lawsuit, reportedly said the project was on pace and kept the funding in place. By then, though, Jones had already transferred a liquor license from a strip club he owned in Southeast to the Miracle Hands warehouse in Northeast, the suit said.
In March 2007, "the renovation work ... was at best, many months from completion," the lawsuit said. In April 2007, HIV/AIDS administration gave Miracle Hands an additional $139,000 to continue the renovations, adding another year to the nonprofit's deadline.
In the middle of that year, Miracle Hands informed the administration that it had decided to open the job training center at a different warehouse and it would be applying the funds to that project, the suit said. A job center never opened at either location. Stadium Club opened in early 2010.
fklopott@washingtonexaminer.com
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