D.C. failed to retain copies of documents FBI seized

The D.C. Health Department does not have copies of its own records of a nonprofit company run by a convicted drug dealer that received more than $400,000 in grants to renovate a job-training center that was never completed.

Deputy General Counsel Phillip L. Husband, in a response to a Freedom of Information Act request by The Washington Times, acknowledged this week that the department’s files on Miracle Hands - run by Cornell Jones, who was spotlighted in the Black Entertainment Television documentary series “American Gangster” - had been seized by the FBI as part of an ongoing federal investigation.

“As such, the Department of Health does not have the files it would normally have,” he said.

The lack of documentation has hampered the efforts of D.C. Attorney General Irvin B. Nathan to investigate whether Miracle Hands misappropriated or misspent the funds, according to city officials familiar with the matter.

Miracle Hands received two grants from the department’s HIV/AIDS Administration in 2006 and 2007, totaling $420,000. City records show that shortly after the organization received the second of the grants to renovate a property owned by Mr. Jones’ family 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 Times detailing 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, D.C. Council member David A. Catania asked Mr. Nathan to investigate the matter. A federal investigation, assisted by the D.C. Office of Inspector General (OIG), was already under way. A source at the OIG described the federal probe as “very active,” but declined to elaborate.

In a March 9 letter to Mr. Catania, who chairs the Committee on Health, Senior Deputy Director Dr. Gregory Pappas wrote that the HIV/AIDS Administration “has provided all documentation requested by the FBI and OIG.” Dr. Pappas added, “This is a serious issue, and it requires a thorough examination.”

But the thoroughness of that examination is now in question. “It’s troubling that the Health Department wouldn’t have retained copies of its own documents,” said a city official who was not authorized to comment on the pending investigation.

The Health Department and Mr. Nathan’s office declined to comment. Mr. Jones, who campaigned for Mayor Vincent C. Gray, did not return a call for comment.

Though the FBI routinely seizes documents from local government agencies, lapses in recordkeeping at the local level occur less frequently, officials said.

Katherine W. Schweit, spokeswoman for the FBIs Washington field office, said there is no generic answer for how the FBI handles documents it seizes from local governmental agencies. Though investigative needs take priority, she said, the FBI makes every effort to minimize the negative impact a search might have on day-to-day operations.

A spokesman for Mr. Catania said, “We hope the District’s attorney general will seek to re-obtain copies of these records and pursue the recoupment of these funds if it is determined that they were misappropriated.”