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These businesses violated Massachusetts COVID-19 rules. Then the state gave them $1.4 million

Mardi Gras, a strip club in Springfield, received a grant of $75,000 despite its COVID violations.Erin Clark/Globe Staff

Inside a Springfield strip club raided a year earlier by the FBI, state inspectors found maskless strippers giving lap dances. Over in Gardner, a hotel was slapped with thousands of dollars in fines for hosting an estimated 420 people for a pair of August weddings. A Weymouth bar owner, confronted by licensing officials about various COVID-19 violations, retorted that “no government is going to tell me how to run my business.”

Since the summer, these and other businesses’ violations of Governor Charlie Baker’s coronavirus orders were so egregious, regulators said, they temporarily lost their liquor licenses. But the Baker administration also determined they deserved something else: coveted COVID relief grants, even as thousands of other businesses have yet to see their applications fulfilled.

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In fact, of the 57 restaurants, bars, and others whose liquor licenses the Alcoholic Beverages Control Commission suspended over COVID-19 breaches, 23 — or 40 percent — also received small business grants, totaling nearly $1.4 million.

“We have dealt with and spoken with countless small businesses that have moved heaven and earth to keep their businesses open, to keep their employees getting paid, and to follow the rules and keep everybody safe. And many of them have done everything right and haven’t gotten a penny,” said state Senator Eric P. Lesser, a Longmeadow Democrat who cochairs the Legislature’s committee on economic development.

“The businesses that are not following the rules should be at the back of the line to get help.”

Each of the 23 businesses, identified in a Globe review of ABCC records, lost their licenses for days or weeks after investigators said they found unmasked customers and staff, booze with no food service in violation of state rules, or overcrowded tables.

In one case, a Boston bar was so packed that investigators had trouble walking through the crowd, according to records. All but two of the businesses identified had faced suspensions prior to the state announcing them as a grant recipient.

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Any losses they incurred from losing their liquor licenses, however, were softened by the state’s financial help. The 23 businesses collectively received $1.36 million in COVID relief grants, many at the maximum amount, as part of the more $600 million in grants administered through the quasi-public Massachusetts Growth Capital Corporation and awarded by the Baker administration.

With $668 million in available funding, the state’s grant programs have been in high demand, with roughly 19,000 businesses applying and 13,300 so far getting help. While applicants had to attest that their taxes were current or undergo various “fraud checks” among other requirements, state officials indicated they did not take past COVID-19 violations into account beyond ensuring the businesses’ various licenses were active when their application was processed.

But in some cases, that may have been a matter of days. A Lawrence restaurant called Xavier’s Place was handed a 30-day liquor license suspension on Dec. 14 after ABCC investigators found staff and customers repeatedly not wearing masks. Forty-five days later, the business was listed among those receiving a $75,000 grant, the maximum the state allows.

In nearly every case, the ABCC restored the business’s license after receiving an approved reopening plan, records show.

A spokesman for Mike Kennealy, Baker’s secretary of housing and economic development and the MGCC’s chairman, said he was not available for an interview. But he defended the program, touting it as the largest of its kind in the country to provide direct aid to businesses, including women- and minority-owned businesses.

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“All businesses met eligibility requirements when applying for MGCC grants, and MGCC expects all businesses to adhere to all applicable safety protocols in place to minimize transmission of this virus,” said Michael Verseckes, the spokesman for Kennealy. “The MGCC does not condone any behavior that would result in any sort of violation of [the] state’s COVID restrictions.”

Those who’ve run afoul of the rules argue that they, too, need state aid.

Those receiving $75,000 max grants include Mardi Gras, a Springfield strip club that had its license suspended by the ABCC in October after investigators found customers standing around the bar without face coverings and a pair of unmasked dancers giving two men lap dances on a couch nearby during an August inspection. (Their license was restored eight days later.)

The Taylor Street club was also raided by the FBI and IRS in the fall of 2019 as part of what officials at the time called a federal investigation. An FBI spokeswoman declined comment this week, citing the ongoing investigation.

“Given the nature of who they are, there’s a bullseye on their back” from inspectors, said Daniel D. Kelly, an attorney for Mardi Gras, which he said has passed other ABCC inspections since. “They’re just trying to run their business and stay alive.”

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The Colonial Hotel in Gardner also was awarded a $75,000 grant months after it was fined thousands of dollars for breaking COVID protocols for hosting a 240-person wedding and another for 185 people over one weekend in August, when gatherings were capped at 100 people. The latter event was the wedding of the son of the hotel’s general manager.

At the time, Baker cited the hotel in announcing he was lowering the limits on gatherings even further to 50 people, lamenting that “people are simply not being responsible.”

Nicole Moorshead, the Colonial’s general manager, said Wednesday that it was “inappropriate” for the ABCC to pull the hotel’s liquor license in the first place, arguing that Baker’s guidance was vague and that no violations were intentional. The hotel had no previous violations with the ABCC before last year.

“I don’t believe we did anything wrong. What we were met with were fines and ridiculousness,” Moorshead said. The grant, she said, “was the difference between keeping our doors open and people employed.”

In other cases, ABCC investigators described various breaches of protocols. At The Greatest Bar, in Boston, which received a $75,000 grant, investigators on a Saturday night in September found at least 19 people drinking with no masks at a private party, where they saw “little to no food service” despite rules requiring food be served with alcohol.

Some parts were so crowded that investigators had “difficulty walking through the bar,” they wrote. A message left with the bar’s general manager this week was not returned.

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When investigators inspected K C’s Pub and Grill in Weymouth in mid-August, they reported staff not wearing masks, at least eight people seated at the bar despite rules against it, and five tables of customers “with no indication of food service.”

“I think coronavirus is a bunch of [expletive]. I thought we were past all of this,” Nick Akoury, the bar’s owner, told investigators. “No government is going to tell me how to run my business.”

The bar later received a $70,000 grant from the state. Akoury did not respond to a message left at the bar.

State Treasurer Deborah B. Goldberg, whose office oversees the ABCC, told state lawmakers this month that its investigators had inspected more than 21,000 licensed establishments since August and 98 percent were in compliance.

Nonetheless, two of every five disciplined by the ABCC also received taxpayer-funded help.

Other business owners and advocates said they had mixed feelings on rule-breaking businesses getting aid while others have not, recognizing the toll of the pandemic may have pushed some restaurants to the edge.

“There’s a difference being 100 percent brazen and turning your back on the virus, and just pure desperation,” said Erik Hynes, the owner of several restaurants on the South Shore, including those that have received grants. “It’s not the employees’ fault that the owners chose to skirt the rules.”


Matt Stout can be reached at matt.stout@globe.com. Follow him on Twitter @mattpstout.