On a Saturday night at Club Cobra in North Hollywood, a drag queen dressed as Miley Cyrus lip-synched to the Cranberries’ “Zombie,” complete with Halloween decor and disco balls hanging from the ceiling. Muscular go-go dancers danced in a cloud of rainbow fog while patrons grooved to hits by Selena and Bad Bunny.

It hasn’t been easy for the popular LGBTQ+ Latin nightclub to rebuild to this level of live entertainment after nearly closing its doors due to the COVID-19 pandemic.

The public health crisis shut down operations for 18 months and left its owners hundreds of thousands of dollars in debt. Worse, the U.S. Small Business Administration has repeatedly rejected Club Cobra’s request for financial assistance to combat COVID-19, alleging that the establishment offered services of a “lascivious sexual nature.”

For Marty Sokol, 56, owner of Club Cobra, the lack of government assistance has been frustrating and surprising.

“We’re the good guys in this town,” Sokol said over the phone. “We are where you have your birthday party. We are where you bring your tía. … It’s beyond insulting.” (Tía means aunt in Spanish.)

Sokol is one of several business owners who say they have been unfairly denied money from the federal government’s Shuttered Venue Operators Grant program. in 2021 to provide financial support of up to $10 million to arts and entertainment venues and promoters decimated by the pandemic.

Some have filed a lawsuit against the SBA. And although courts have repeatedly sided with business owners, Sokol and others are still fighting for financial relief.

“We really feel wronged,” Sokol said. “Without our community, we would have no chance of surviving. »

The problem is not limited to nightclubs. The Times also spoke with a North Carolina-based movie theater chain and a Tennessee concert promoter who have had trouble securing grants. Landmark cases — including a dispute between the SBA and the exhibition basketball team, the Harlem Globetrotters, over a $10 million grant — have drawn attention to these issues. (The court dismissed the Globetrotters’ complaint against the SBA last October.)

The SBA has also been criticized for awarding more than $200 million in SVOG to companies with rich and famous owners — like Post Malone, Chris Brown and Lil Wayne — while refusing to help others, according to a report of Business Insider.

“The main complaint is the lack of transparency in the SBA’s decision-making process,” said James Sammataro, a partner at the Miami law firm Pryor Cashman, who has represented entertainment companies in other SVOG cases.

“What (critics have) basically said is that it’s too subjective. … Its application is uneven and the SBA has established – intentionally or not – a hierarchy between those who are most entitled to the subsidy.”

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

The SVOG controversy is a reminder of the lingering consequences of COVID-19, years after the pandemic wreaked havoc on the economy and justice system. Just as entertainment businesses have been disrupted by the global health crisis, so have courts, Sammataro said, compounding the typical boredom.

“There’s no shipping applied to these types of cases, even though you’re literally dealing with companies (whose) lifeline may be on the line,” Sammataro said.

Marty Sokol at Club Cobra in North Hollywood.

(Michael Blackshire/Los Angeles Times)

Club Cobra has been serving drinks, DJ sets and live performances to the local LGBTQ+ community for over a decade. Its sister establishment, Club Chico in Montebello, will soon celebrate its 25th anniversary.

During the COVID-19 shutdowns, Sokol and his team kept their business alive. by broadcasting a socially distanced drag and go-go show on the OnlyFans subscription platform. The revenue was not enough to get Club Cobra out of debt, so Sokol applied for a grant of $486,762 in April 2021.

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

After some prodding, Sokol received an email from the SBA on November 3, 2021 explaining that Sokol’s application had been denied “at least in part” because Club Cobra “featured live performances of a lascivious sexual nature” or shooting significant income “through the sale of products or services, or the presentation of any representation or display, of a lascivious sexual nature. In official documents regarding the SVOG program, the SBA describes prurience as grounds for disqualification.

The SBA took issue with images of Club Cobra dancers in “apparently sexualized” poses and “revealing” outfits posted on the company’s social media platforms. He also disapproved of the virtual drag and go-go shows that Club Cobra was streaming on OnlyFans, calling them “erotic dance shows.”

Club goers enjoy each other’s company at Club Cobra in North Hollywood.

(Michael Blackshire/Los Angeles Times)

Sokol filed a lawsuit, accusing the agency of arbitrarily and capriciously denying Club Cobra’s grant while awarding SVOGs to similar establishments around Los Angeles – like the LGBTQ+ nightclub Reload Entertainment on Cahuenga and Los Globos de Silver Lake. The SBA argued that it conducted an informal review of other establishments and determined that additional “prurience review” was not necessary.

Sokol demanded that the U.S. District Court in Washington force the SBA to reconsider its request. The court concluded that the SBA failed to provide “a reasoned analysis explaining why these apparently similarly situated competitors were treated differently.”

Sokol said it was painful to see other nightclubs receive emergency aid while Club Cobra was denied money it could use to cover renovations, unpaid rent and other costs. other obligations.

“Watching them rebuild with great ease, we didn’t hold it against them,” Sokol said. “We just wanted equal treatment.”

In December 2022, the SBA vetoed Sokol’s application again, this time providing analyzes of five “alleged competitors” and explaining why they were eligible for grants. The SBA found that, for the most part, these establishments did not regularly post suggestive images or present lascivious live performances.

Sokol filed another motion for summary judgment in May 2024. The court has not yet responded.

Audry Cobra performs during a drag show at Club Cobra in North Hollywood.

(Michael Blackshire/Los Angeles Times)

Another company in conflict with the SBA is Golden Ticket Cinemas, a North Carolina-based movie theater chain. .

Golden Ticket Cinemas President John Bloemeke had opened its fifth and sixth locations when COVID-19 ravaged the entertainment industry

Bloemeke was able to get grants for most of its locations, but not for two based in DuBois, Pa., and Rapid City, SD. After Bloemeke challenged the SBA’s decision to avoid these theaters, the government agency offered the business owner about $500,000, a cut. of the approximately $2.8 million he requested.

Patrons dance together at Club Cobra in North Hollywood.

(Michael Blackshire/Los Angeles Times)

Bloemeke filed complaints accusing the SBA of defrauding Golden Ticket Cinemas and failing to disburse those funds.

The SBA countered that Golden Ticket Cinemas were not eligible for the full SVOG amount requested because these locations would have been operational longer than Bloemeke had indicated.

The court agreed with the SBA’s position that it was not legally required to disburse the funds. However, it also concluded that the agency’s logic in awarding a significantly lower amount was flawed and ordered the SBA to reevaluate the request.

According to Bloemeke, the ASB has not yet taken the court’s decision into account.

“It was very frustrating,” Bloemeke said. “I mean, we have a nineplex that only runs five screens because we’re still trying to get our heads above water a little bit with some of this stuff.”

A go-go dancer performs at Club Cobra in North Hollywood.

(Michael Blackshire/Los Angeles Times)

Meanwhile in Nashville, Justin Roddick is still trying to secure a grant for his company, Concert Investor, which produces tours for emerging musicians. Over the past 12 years, Concert Investor has helped launch the careers of Twenty One Pilots, Little Big Town, Kelsea Ballerini and other artists.

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

“A year after COVID, we found ourselves with no other option than to completely restart,” Roddick said. “So when I heard about the grant, I was very excited. »

Roddick soon became disillusioned. Its request for approximately $5 million was repeatedly denied as the SBA ruled that Concert Investor did not control enough aspects of its productions to “meet the definition of a performing arts organization operator “.

A clubgoer dances in the crowd at Club Cobra in North Hollywood.

(Michael Blackshire/Los Angeles Times)

. The Concert Investor team alleged that the SBA unfairly changed the definition and moved the goals after the fact.

Initially, the court ruled in favor of the SBA. But an appeals court overturned this decision in May 2024.

According to Patrick Corcoran, business representative, the SBA had until December 11 to issue a new decision. Depending on the agency’s reaction, Roddick may have to wait until the next Ballerini or Twenty One Pilots come along and restart his touring business.

“It’s devastating to pay into the system and believe that it works a certain way … and then do nothing,” Roddick said. “It’s a little unreal to me.”