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The Real Deal Los Angeles

Landlord sues property management for leasing to illegal pot growers

The suit alleges fraud, embezzlement and theft in Van Nuys
By Natalie Hoberman |
Research by Laura Hanrahan
August 08, 2018 11:15AM

Industrial site 15745 Stagg Street (Credit: Max Pixel, Pixabay)

The owner of a large industrial property in Van Nuys has filed a lawsuit against its property management for allegedly defrauding the landlord and leasing the site to illegal marijuana cultivators.

In the lawsuit filed in Superior Court on July 6, Kornland Building claims Kape Property Management and their unlicensed contractor, Francisco Beltran, routinely overbilled the firm for construction and maintenance fixes, later using the extra cash for their “personal piggy bank.”

Kape also allegedly hiked rents of long-term tenants as a way to lure them out, and then leased to unlicensed pot growers, who cultivated marijuana in the 162,000-square-foot industrial site. The illegal growers, the suit claims, were also paying large sums in cash to Kape and Beltran without ever signing leases.

Between 2015 and 2017, Kape paid thousands of dollars to Beltran, also known as “Poncho,” and his fictitious firm, VB Services, according to Kornland. Poncho also became acting manager at the property, negotiating rents and collecting $25,000 security deposit payments in cash without ever meeting with Kornland.

Kape, and its owners Allen and Judith Weinstock, who are also named as defendants, were hired to manage the property, found at Stagg and Arminta streets, in 1999. They were fired and replaced with another property management firm in April.

Kape did not respond to requests for comment. Beltran could not be reached.

Kornland is alleging fraud and embezzlement, and is seeking monetary damages of more than $5 million, according to the complaint. It’s also requesting that the court issue an injunction prohibiting the defendants from collecting more money.

Kape, based in the Mid-Wilshire neighborhood, claims on its website to be one of the largest privately-owned property management firms in Southern California. It offers rent collection, leasing and maintenance services across property classes, including multifamily, commercial, industrial and residential.