SF Property owners pay city $2.25 million for Airbnb scam

SAN FRANCISCO (KGO) -- The San Francisco City Attorney secured a $2.25-million settlement from property owners for illegal Airbnb rentals.

In staging photos provided to ABC7 News from the San Francisco City Attorney's Office, food, garbage, and even damp towels could be seen carefully placed making it look to city investigators as though someone was living there all the time.

But in images off Air BNB advertising the same units as short-term rentals, the food and garbage are gone, the damp towels now dry.

"Vast amounts of deception and conduct to hide what the defendants the Lees were actually doing here," said San Francisco City Attorney Dennis Herrera.

Herrera says his office caught landlords Darren and Valerie Lee illegally renting out the units in 2014 after evicting tenants. They paid $276,000 in fines but did it again, violating a court injunction

"Unfortunately they violated the terms of that injunction before the ink was dry on the paper," said Herrera.

Herrera says the Lee's booked more than $900,000 in short-term rentals and pocketed more than $700,000 in illicit profits from 14 units.

"A lot of evil that we see when people are violating the law it's all about the money and that's what it appears was happening here," said Herrera.

The units in question were never registered with the Office of Short-Term Rentals.

As part of the new settlement, the couple is now paying $2.25 million in penalties and investigation costs.

"We have to make sure we have adequate amount of housing stock for our tenants," said Herrera.

The Lees are barred from short-term rentals on any of the 17 properties that they own or manage until May 2025.

The money from the settlement will cover the investigation costs, some will go to the planning department and some will fund future consumer protection work.

The buildings covered under the injunction are: 439 Broderick St., 645-647 Broderick St., 3073-3075 Clay St., 417-419 Clayton St., 1146-1148 Fell St., 1324-1328 Fell St., 1522-1524 Fell St., 140 Graystone Terrace, 150 Graystone Terrace, 1109-1123 Leavenworth St., 1925-1927 Lyon St., 822-828 Masonic Ave., 1145-1149 Mission St., 14 Surrey Ave., 543 Oak St., 831-833 San Jose Ave., and 1362-1364 Utah St.