SF fines couple $2.25M for illegally renting apartments on Airbnb

Nov. 6 (UPI) -- A San Francisco couple authorities say took advantage of the city's housing crisis, by renting apartments out on Airbnb, have been fined $2.25 million.

Darren and Valerie Lee owned 17 buildings and 45 units in San Francisco, many of which they posted for short-term rental on Airbnb, officials said.

"This is a win for San Francisco residents," City Attorney Dennis Herrera said in a statement Monday. "Whether you're a tenant or a landlord who has been following the law, this is a victory. This outcome frees up more homes for long-term tenants and stops unfair competition in the marketplace."

The penalty is meant as a deterrent, he said. The Lees were first caught running the scam in 2014, when they evicted residents from apartments and turned them into short-term rentals. They settled that case in 2015.

Officials said, though, the Lees went back to renting the units, booking more than $900,000 in short-term rentals and taking in $700,000 in profits.

The city spent two years investigating the couple, which culminated in a 2015 injunction and the $2.25 million fine.

"It sends a clear message to those looking to illegally profit off of San Francisco's housing crisis: Don't try it," Herrera said. "They have taken units off of the market that should have been reserved for long-term San Francisco residents. It is extremely gratifying to see them brought to account for their actions."

Officials also said all the Airbnb host accounts for the various properties came from the same IP address and same device. They were staged with friends, family and associates posing as straw tenants or Airbnb hosts to illegally advertise the rental units, they added. Also, they placed dirty dishes and damp towels in the units so they looked lived-in when city inspectors came by.

San Francisco requires all short-term rentals to be registered with the city. Landlords who own or rent a multi-unit building can only rent one unit for short-term rentals, and only if the landlord is a permanent resident of that unit.

"The rules are designed to prevent residential housing from being turned into a de facto hotels," Herrera said.