The FBI had monitored the Stonewall Inn during its three-year existence under the control of the Mafia, and learned in December 1968 according to a Bureau report "that a singing group called 'The Group Scene' is living in an apartment rent free, above the Stonewall Club located on Christopher Street and Seventh Avenue, New York City." The FBI memo aptly noted that "the Stonewall Club is an after hours club which caters to homosexuals," and "owned by MATTY IANIELLO." Query whether the boys in The Group Scene were required to trade in exchange for their rent-free apartment! An August 1969 FBI memo notes the closing of both the Stonewall Inn and the 123 Club at 123 University Place: "IANIELLO fag or queer club operations in the Lower East Side have been virtually closed down in the last month by the NYCPD. He lost two main after hours clubs, The Stonewall and The 123 Club were closed for illegal sale of alcohol."
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Further reading that may be of interest: