A local LGBTQ+ nightclub was denied COVID-19 aid. Its owner is fighting back

As a small business owner who has been struggling to keep my head above water during these challenging times, I can’t help but empathize with both Bloemeke and Roddick. The COVID-19 pandemic has been a rollercoaster ride for many of us, and the struggle to secure much-needed funds from the SBA feels like trying to catch a greased pig at a county fair.

Every Saturday evening at Club Cobra in North Hollywood, a drag queen impersonating Miley Cyrus would lip-sync to “Zombie” by The Cranberries. The atmosphere was festive with Halloween decorations and disco balls hanging from above. Meanwhile, muscular go-go dancers danced amidst a mist of rainbow fog. People enjoyed the night’s energy, grooving to popular tunes by Selena and Bad Bunny.

Rebuilding the renowned LGBTQ+ nightclub, known for its lively entertainment, back to this level post-COVID-19 pandemic wasn’t a walk in the park. It almost faced closure due to the pandemic.

Due to the prolonged public health predicament, Club Cobra was forced to cease operations for 18 months and accumulated hundreds of thousands of dollars in debt. Unfortunately, their pleas for COVID-19 financial aid from the U.S. Small Business Administration have been rejected multiple times, as they claimed that the club provided services of an “explicitly sexual nature.

56-year-old Marty Sokol, proprietor of Club Cobra, found it both disheartening and unexpected that he hasn’t received any help from the government during this time.

Sokol stated over the phone, ‘We’re the reliable and welcoming folks in this town.’ He continued, ‘We’re the choice for hosting birthday celebrations, a place where you can bring your beloved aunt. … It’s more than disrespectful.'” (Tía is Spanish for aunt.)

Among several business owners, Sokol claims he was unfairly excluded from receiving funds through the Shuttered Venue Operators Grant scheme, a federal program initiated in 2021. This program aimed at offering financial aid, up to $10 million per recipient, to arts and entertainment venues and promoters who suffered significant losses due to the pandemic.

As a passionate cinephile, I’ve noticed that some entrepreneurs have found themselves embroiled in legal battles with the Small Business Administration (SBA). Despite the courts ruling in favor of these business owners on several occasions, Sokol and other advocates persistently continue their quest for financial assistance.

Sokol expressed a sense of deep injustice,” he stated. “Without the support of our community, we wouldn’t have made it through.

The problem isn’t exclusive to nightclubs; even a movie theater chain from North Carolina and a concert promoter from Tennessee have faced challenges in obtaining grants. High-profile cases, such as the disagreement between the Small Business Administration and the exhibition basketball team, the Harlem Globetrotters, over $10 million in grant money, have brought these issues to light. (The court dismissed the Globetrotters’ lawsuit against the SBA last October.)

Critics have raised questions about the Small Business Administration (SBA) after it granted over $200 million in Shuttered Venue Operators Grants (SVOGs) to businesses owned by wealthy celebrities like Post Malone, Chris Brown, and Lil Wayne. Meanwhile, help was not provided to other applicants, as reported by Business Insider.

As a passionate movie enthusiast, I’ve noticed a concerning issue: it seems that the Small Business Administration (SBA) isn’t being entirely open about their decision-making process when it comes to the Shuttered Venue Operators Grant (SVOG). This is based on my experience representing entertainment businesses in similar situations.

Essentially, the critique points out that the process is overly dependent on personal opinions, leading to inconsistencies. It seems as though, whether intentionally or not, the Small Business Administration (SBA) has established a system that favors certain individuals over others when it comes to receiving grant funds.

The SBA declined to comment, saying it “does not provide comment on pending litigation.”

As a supporter reflecting on the SVOG controversy, I can’t help but recall that it underscores the ongoing impacts of COVID-19, even years after it initially disrupted our economy and judicial system. Much like the entertainment industry felt the brunt of this global health crisis, our courts were not spared either, according to Sammataro, adding an extra layer of tedium to the usual proceedings.

In a situation like this, there’s no established approach that can be directly applied, as the well-being of these companies might actually hang in the balance, according to Sammataro.

For over a decade, Club Cobra has been providing the local LGBTQ+ community with beverages, DJ performances, and live shows. Meanwhile, its sibling venue, Club Chico in Montebello, is approaching its 25th birthday.

During the lockdowns due to COVID-19, Sokol and his colleagues managed to keep their business afloat by broadcasting a socially distanced drag and go-go performance on the subscription service OnlyFans. The income generated wasn’t sufficient to alleviate Club Cobra’s financial difficulties, so in April 2021, Sokol submitted an application for a $486,762 grant.

When the SBA rejected Club Cobra’s application, Sokol appealed.

Following some persistent inquiries, Sokol got an email from the Small Business Administration (SBA) on November 3, 2021. The email clarified that Sokol’s application was rejected, at least partially, due to the following reasons: Club Cobra hosted live performances or events of an explicitly sexual nature, or generates significant income through the sale of sexually explicit products or services, or by presenting any visual representations or displays of a suggestive sexual nature. The SBA’s guidelines for the SVOG program clearly state that prurience is a valid reason for disqualification.

As a devoted cinema enthusiast, I’ve got to express my concern over the content shared by Club Cobra on their social media and streaming platforms. The images they post of their dancers, often in poses that appear overtly sexualized and outfits that are quite revealing, don’t sit well with me. Additionally, their virtual drag and go-go shows streamed on OnlyFans, which I perceive as erotic dance shows, are not aligned with my personal beliefs regarding entertainment.

Sokol filed a lawsuit, alleging that the agency unjustifiably and impulsively denied Club Cobra’s grant money while giving SVOGs to comparable venues in Los Angeles – for instance, LGBTQ+ nightclub Reload Entertainment on Cahuenga and Silver Lake’s Los Globos. The Small Business Administration countered by stating that they had informally assessed other establishments and concluded that a further “review of indecency” was unnecessary.

Sokol urged the District Court in Washington, D.C., to make the Small Business Administration (SBA) reassess his application. The court found that the SBA did not offer a logical explanation as to why seemingly comparable competitors were handled differently.

According to Sokol, it was distressing to witness other nightclubs receiving emergency financial assistance, while Club Cobra was denied funds that could have helped with repairs, overdue rent, and other financial commitments.

According to Sokol, it didn’t make us envious seeing them effortlessly reconstruct things; instead, our wish was simply for fairness and equal opportunities.

In December 2022, the Small Business Administration (SBA) rejected Sokol’s application once more, offering explanations on five potential competitors who were deemed eligible for grants instead. The rationale given by the SBA was that these businesses primarily did not feature explicit images or regularly host sexually suggestive live shows.

Sokol filed another motion for summary judgment in May 2024. The court has yet to respond.

Competing with the Small Business Administration is Golden Ticket Cinemas, a movie theater chain located in North Carolina.

In the midst of the pandemic that hit the entertainment sector hard, John Bloemeke, President of Golden Ticket Cinemas, had already established his fifth and sixth venues.

In most of his locations, Bloemeke successfully obtained grants; however, two theaters located in DuBois, Pennsylvania, and Rapid City, South Dakota did not receive funding. When Bloemeke contested the Small Business Administration’s decision to exclude these theaters, the government agency proposed an offer to the business owner of approximately $500,000 – a significant reduction from the roughly $2.8 million he initially requested.

Bloemeke lodged grievances alleging that the Small Business Administration (SBA) had underpaid Golden Ticket Cinemas and subsequently failed to release the owed funds.

In response, the SBA argued that Golden Ticket Cinemas didn’t qualify for the complete SVOG amount they sought, as it was claimed that these cinemas had been in operation for a duration longer than what Bloemeke stated.

The court found that the Small Business Administration (SBA) wasn’t required by law to provide the funds. Yet, the court also determined that the SBA’s reasoning for giving a much smaller sum was faulty. Consequently, the court instructed the SBA to reconsider the application.

According to Bloemeke, the SBA has yet to heed the court’s ruling.

Bloemeke expressed her feelings, saying, “It was quite exasperating. To be honest, our nine-screen cinema is functioning with just five due to us still struggling to keep our heads above the challenges we’re facing.

Simultaneously in Nashville, Justin Roddick continues his pursuit to secure a grant for his company, Concert Investor. This enterprise is renowned for organizing tours for budding musicians. Over the last decade and a year, Concert Investor has played a significant role in kick-starting the careers of bands like Twenty One Pilots, Little Big Town, and Kelsea Ballerini, among others.

When acts stopped touring during the pandemic, Roddick’s business suffered.

Reflecting on a year post-COVID, it became clear that only a fresh start could move us forward. Hearing about the grant opportunity, I couldn’t help but feel energized with anticipation.

Initially, Roddick found himself disappointed as his appeal for approximately $5 million was rejected on numerous occasions. The Small Business Administration (SBA) determined that Concert Investor did not have sufficient control over its productions to be classified as an “operator of a performing arts organization.

The Concert Investor team claimed that the Small Business Administration (SBA) changed the definition and adjusted the requirements after the event, which they perceived as an unfair practice.

At first, the decision went in favor of the Small Business Administration (SBA) by the court. However, this decision was overturned by a higher court in May 2024.

As a movie critic putting pen to paper, I find myself in a peculiar predicament regarding the touring business of my beloved Roddick. According to Patrick Corcoran, a voice for the industry, the Small Business Administration (SBA) has been given until December 11th to make a new decision. If the agency fails to act promptly, it seems that we may need to wait for the next Ballerini or Twenty One Pilots to emerge before Roddick’s touring business sees a much-needed resurgence.

It’s disheartening to contribute to a system, expecting it to function in a particular manner, only to see no action taken. Frankly, it feels surreal to me. (Roddick)

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2024-10-29 13:36