Condo owners allege HOA fraud at DTLA tower run by Barry Shy

While Barry Shy and his son Rommy have moved cash out of California and into Texas, the landlords are facing a new legal battle at home.

A group of condo owners at a Downtown Los Angeles tower owned by Barry Shy and his family have filed a lawsuit, alleging the Shys conspired to funnel money out of the tower’s homeowners association fund and haven’t addressed a number of defects at the building. 

The Shys “failed to comply with their duties” under the condo’s bylaws, “favoring themselves and/or their entities over plaintiffs and engaging in self-dealing,” the complaint alleges. 

The suit added that the Shy-controlled board has repeatedly ignored complaints of water leaks, water pressure, a fire in the trash chute, mold, broken gym equipment and cockroach nests. 

Through limited liability companies, Barry and his sons, Rommy and Eric, built the condo tower at 315 West 5th Street in 2005, according to the lawsuit. 

Over the course of 15 years, records show, the Shys sold off a number of condos at the tower, but kept more than half to rent as apartments. Given they held onto the majority of units, the Shy family consequently made up the majority of the homeowners association board, according to Malice Kheir, one of the condo owners who filed the suit. 

As of October, Barry, Rommy, Barry’s wife Isabella Tan and Eric all sat on the building’s HOA board, along with Kheir. 

In the lawsuit, the condo owners allege the Shys often transferred money from HOA funds to 1200 Management, a property manager controlled by the Shys. 

“Since at least 2020 and continuing to present, the HOA has made numerous large and unexplained payments to unidentified payees that do not appear to match any of its executed contracts, invoices or vendor proposals,” the complaint said. 

The plaintiffs said the Shys have refused to hand over financials for the HOA, but continue to charge “special assessments,” allegedly to pay for repairs at the building. 

Between 2021 and 2023, the HOA board disclosed to condo owners that it had approved three separate special assessments, totaling about $600,000. Each time, the Shy-controlled board said the extra cash was needed for elevator and cooling tower repairs — two things that had been out of service since 2021, the complaint notes. 

The HOA board, the complaint alleges, could not show that it had used the cash from the special assessments to repair the elevator and cooling tower. 

The group of condo owners also alleges that the Shy-controlled HOA board failed to hold regular meetings and distribute annual budget reports to its members. 

Kheir and the plaintiff group first attempted to resolve issues with the Shys and their entities in early 2023, with attorneys serving a demand for an alternative dispute resolution. The HOA board never responded to the original demand, or a follow-up, according to the complaint. 

The suit is not the first time Barry Shy-controlled entities have faced a lawsuit claiming neglect. 

In 2022, Orange County-based investment firm Laguna Point Properties sued five limited liability companies, and later Barry Shy, claiming violations of city fire codes and a slew of faults and defects across five buildings it acquired from the Shy-controlled entities — everything from faulty lobby doors and an “inoperable” circulating pump to a damaged cooling tower.