A D.C. Superior Court jury on Monday found that the nonprofit group Miracle Hands, Inc., and its executive director, Cornell Jones, improperly diverted grant funds intended for the District’s HIV/AIDS program. The city has alleged the money went to pay for renovations at a former warehouse at 2127 Queens Chapel Road NE, the home of the strip joint Stadium Club.

The jury smacked Jones and Miracle Hands with a total of $329,653 in damages following a four-day trial that capped a lengthy legal battle waged by D.C. Attorney General Irv Nathan.

Urged to take action by At-Large Councilmember David Catania, an independent candidate for mayor, after a series of articles in the Washington Times, the Attorney General’s Office in 2011 charged that Miracle Hands received the funds from 2006 to 2008 so that the warehouse could be converted into a job training facility for people with HIV/AIDS.  Instead, a liquor license from another club was transferred to the location and the warehouse was renovated and sold to politically-connected developer Keith Forney and Baltimore-based nightclub owner James “Tru” Redding, proprietors of the strip club, which briefly closed last year due to tax problems at another venue owned by Redding.

At trial last week, the witnesses testified that four months after receiving the grant funds, Jones, a convicted drug kingpin once profiled in the BET series American Gangster, signed a letter of intent stating that he was negotiating a lease for the warehouse to be used as a nightclub. District witnesses testified that neither Jones nor Miracle Hands informed the District that Jones intended to transfer the warehouse to be used as a strip club.

When it first opened, Stadium Club boasted a “Five-Star Dining and Premiere Gentleman’s Club Experience.”

According to evidence at trial, Miracle Hands and Jones submitted invoices to the District for work at the warehouse that was never done. Although the defendants claimed the location of the job training facility had changed, witnesses said in court that Jones didn’t obtain a building permit for the purported new location until the second year of the grant had nearly expired. The defendants then submitted invoices for work that was either not performed or performed without a building permit.

The jury verdict came under the District’s False Claims Act for submitting nine statements of false claims to the District’s former HIV/AIDS administration. The case went to lengthy mediation before trial. In 2012, a federal judge tossed a defamation lawsuit by Jones, who claimed equal rights violations on the basis that officials redirected his group’s funding to another organization that “was not African American run or owned.”

Neither Jones nor his attorney immediately returned calls for comment.

The current status of Miracle Hands—a nonprofit that purports to serve the “city’s most underprivileged and neglected communities”—could not be immediately confirmed. City financial records show that the group received more than $5.8 million in D.C. funds from 2000 through February 2011.

In 2013, D.C. Mayor Vince Gray tapped Debra Rowe, a cofounder with Jones of a different nonprofit called Returning Citizens United, for the Commission on Re-Entry and Returning Citizen Affairs, but pulled the nomination after concerns about Rowe surfaced. Those concerns were chronicled in a 2010 series in the Washington Post that revealed how Rowe, then-director of the D.C. HIV/AIDS Administration, steered millions of dollars to nonprofit groups that provided questionable services. Miracle Hands received $4.5 million of the money while employing three of Rowe’s relatives, including her son, the Post reported.

“The verdict should serve as a warning to all those who would attempt to misuse District grant funds,” Nathan said in a written statement.

Correction: Due to a reporting error, this post originally said Stadium Club was closed due to tax problems. It has since reopened. Also, the post initially stated that Jimmy Bell was Cornell Jones’ attorney; he was his former attorney, but Jones is now represented by Paul S. Blumenthal. It also initially misstated the jury’s finding—the jury was not charged with determining whether the money went to Stadium Club, only with whether it was misused—and incorrectly stated that the trial was delayed.

Photo by Darrow Montgomery