CHARLOTTE, N.C. — The former owner of Charlotte's Scorpio nightclub has pleaded guilty to executing a money laundering scheme involving his used car dealership and someone described as a known drug trafficker.
Court documents filed Wednesday and Thursday show that John Harvey Martin, who owned both the lounge and the iNetwork Auto dealership on Berryhill Road, was involved with three other individuals identified only by their initials. Prosecutors said since at least July 2017 and until around January 2021, Martin and the trafficker knowingly exchanged money to conceal the trafficker's own activity. Martin and a salesman at iNetwork sold about 20 cars to the trafficker and put the sales paperwork, titles and registrations of the cars in the names of "straw purchasers" - people other than the actual buyer and intended user. Martin and the salesman reportedly forged the signatures of these other people.
Prosecutors also said Martin notarized the documents and got cash payments for the cars from the trafficker with knowledge of his activities or being willfully blind to them. Often, the cash transactions exceeded $10,000 and should have had federal tax forms filed with them, but Martin reportedly did not fill out the forms intentionally.
Martin also used at least $200,000 of the cash he got from these transactions to pay for renovations to a building next to the dealership and another $100,000 to help buy the trafficker's interest in the Scorpio nightclub.
Court documents show that Martin gave the $100,000 in cash to a courier to drive it to the trafficker's source of supply in California, but that law enforcement seized the money from him. The trafficker then reportedly told the courier to claim the money as his own and that it was legally obtained from the Scorpio sale. Martin reportedly provided fraudulent documentation to support the false claim.
The federal government demanded the forfeiture of more than $200,000 in a money judgment. U.S. District Judge Robert J. Conrad sided with prosecutors in a default judgment after Martin pleaded guilty. The actual plea document is not yet viewable as of publication, but a factual basis document confirmed a plea agreement is set to be tendered and that both the defense and prosecution won't object to the information within it.
The maximum punishment that can be handed down includes up to 20 years in prison, a fine of up to $500,000 or twice the amount of laundered funds (whichever is greater), and a maximum of three years of supervised release after prison.
The Scorpio temporarily closed its operations at its long-running location on Freedom Drive in the fall of 2023. Lounge management at the time said it was because of development plans nearby. Scorpio most recently found a new home in the South End, acquiring the space owned by RSVP South End on Fairwood Avenue.
The Scorpio Lounge has served Charlotte's LGBTQ community for more than 55 years and is touted as the oldest-running nightclub in North Carolina.
WCNC Charlotte has contacted a member of Scorpio's ownership team to get more information. That person said he would first consult an attorney. This article will be updated once a statement is provided.