A federal judge has sentenced former Greensboro nightclub owner Joey Medaloni to four years of probation and imposed a $50,000 fine for falsifying income reports to obtain loans.
US District Court Judge Carlton Tilley credited Medaloni’s contributions to the community, alluding to his role in revitalizing downtown Greensboro, and assistance to the federal government in the prosecution of staffing agency executive Greg Harrison in his remarks before handing down the sentence in federal court today in Greensboro.
Milton Kern, a downtown developer who worked with Medaloni in the late 1990s and early 2000s, attended the sentencing, as did former Mayor Keith Holliday.
Kern was one of several who submitted character letters to the judge on Medaloni’s behalf.
“Joey and I had worked together since 1997 redoing the downtown,” Kern said after the sentencing. “He had always been great to work with, always been totally honest. When I asked him for help with something he was always more than willing.”
Holliday declined to comment after the sentencing.
Medaloni has worked as a boat captain and airplane pilot since selling his Greensboro nightclubs the N Club and Much/Heaven in 2006 and 2007, respectively. His lawyer, Christopher Clifton, told Tilley that Medaloni is a talented pilot, adding that his client’s relationship with Harrison came about because Medaloni piloted planes for Harrison.
Harrison is awaiting sentencing following conviction for 63 counts of impeding the Internal Revenue Service and failing to pay payroll taxes. Assistant US Attorney Frank Chut, who prosecuted Medaloni, is also the lead prosecutor in Harrison’s case.
Clifton alluded to multiple continuances in the sentencing, telling the judge that the government had filed a 3553(e) motion, which reflects “a defendant’s substantial assistance in the investigation or prosecution of another person who has committed an offense.” The motion gives the court authority to impose a sentence below the statutory minimum.
Medaloni pleaded guilty to federal loan fraud in December 2010.
Tilley said during his sentencing that he was torn by two conflicting sentiments.
“What you did was very wrong,” the judge said. “You took positive steps to produce fraudulent documents in order to obtain loans for significant amounts. And at least three lending institutions did advance you substantial amounts of money.”
The government said Medaloni “suffered substantial business losses” in his operation of the N Club, the Red Room, Much and Heaven in 2003 and 2004, but by submitting falsified IRS tax returns he obtained a loan in August 2005 for $996,000 from Truliant Federal Credit Union. Medaloni reportedly used the proceeds of the loan to retire $782,230 in debt to another lending institution and kept the remaining $206,233.
“You do seem to be sincere when you say you are sorry,” the judge said. “The loans were repaid timely. You made contributions to the community as well as to yourself — and to the government. For those reasons I think probation is appropriate in this case.”
Medaloni expressed contrition before receiving his sentence.
“I’d like to tell you I’m absolutely embarrassed and I take full responsibility,” he told the judge. “I’m truly sorry. If I could go back I would never do it again, and I’ll never do it again.”
The judge asked Medaloni to consider what consequences his action might have had, had he been unable to repay the loans. “You did pay those loans in a timely fashion,” Tilley said. “But that’s because your businesses were successful. What position do you think the court would be in if the economy had bottomed out, as it did, leaving you unable to pay back those loans.”
Medaloni said he wished he could give an answer, but he could not. The judge said that was probably the best response he could have given.
Tilley agreed to break Medaloni’s $50,000 fine up into four equal installments to be paid over the next 12 months.
Medaloni did not speak to reporters after the sentencing.
Davis North, one of Medaloni’s lawyers, said his client is ready to move on.
“Joey’s been a great asset to Greensboro,” North said. “He made an error in judgment and is going on with his life. Most people would say Greensboro is a much better place because of the things that Joey did to develop downtown. It’s worse now when he’s out of it. It was better off when he was running things.”
Kern echoed those sentiments. “With bars you have a problem with people being served too much alcohol,” Kern said. “With the altercations he dealt with it in a mildmannered way. A lot of these people who came after him dealt with security by hiring huge bouncers, some who had criminal records, who dealt with it by beating the hell out of them. Some of them were worse than the drunks. Joey dealt with it by saying, ‘Hey, if you’re going to cause trouble we’re not going to let you in.’” During the hearing Clifton told the judge that Medaloni could lose his boat captain and airplane piloting licenses as a result of the conviction. Afterward the lawyer told reporters that Medaloni has been living in Greensboro and working for family members since he was indicted. Medaloni operates a wine bar on Chapman Street called the Tasting Room that is owned by his brother, Matthew. He has also leant his name to a line of wines, and is trying to establish a winery.
Clifton called his client a “serial entrepreneur.”