By Gustavo Arellano
By R. Scott Moxley
By Alfonso Delgado
By Courtney Hamilton
By Joel Beers
By Peter Maguire
By Charles Lam
By Charles Lam
Prosecutors have already found evidence that developer George Argyros operated what they called a massive "rip-off" scheme involving his apartment tenants' security deposits and cleaning charges. New documents obtained by the Weekly suggest there's more: Argyros, President George W. Bush's ambassador-designee to Spain, set up an unregulated utility company that billed those same tenants for gas and water at seemingly exhorbitant rates.
In one case, for example, a tenant in a 950-square-foot Argyros apartment in Westminster was billed $46 for gas in April; the tenant and his wife owned no gas appliances, have no children and were rarely home. By comparison, a family of five in a 3,200-square-foot Mission Viejo home with numerous gas appliances paid $41.
Dozens of Argyros tenants complained that the utilities bills were excessive but say their protests were ignored by Arnel Management Co., the firm that runs Argyros' 5,000 apartment units in Orange and Los Angeles counties.
"There is no way I used $46 worth of gas that month," said Thai Hoang, a frustrated former Argyros tenant. "Nothing in my tiny apartment used gas, except the shower. It is a ridiculous charge."
Lease terms Hoang and others agreed to at move-in allow Arnel to charge tenants for utilities, plus a nominal service fee of no more than $5 per month. Electric bills are mailed directly by the provider, Southern California Edison. But for gas and water, residents are billed by a seemingly independent company called Pacific Water and Power (PWP). PWP is ostensibly based in Stanford, California, but the Weekly traced the company's headquarters to a Costa Mesa suite in a building owned by Argyros. Secretary of state incorporation documents show that PWP's president is none other than Argyros. The company's registered agent is one of Argyros' top executives, Rudy Baldoni.
(Argyros failed to respond to requests for comment.)
The apparently exorbitant utility charges would seem to fit a pattern first described by Orange County district attorney investigators in a bombshell December 2000 report. The DA's office documented thousands of cases in which Argyros apartment tenants were charged excessive, illegal amounts for cleaning and for entirely fictitious expenses in efforts to withhold security deposits. Current and former Argyros employees have told authorities they were not only ordered to vigorously resist returning tenants' security deposits but also told to pad move-out bills with other questionable charges.
Because of the close relationship between Argyros, a major Republican Party contributor, and Republican District Attorney Tony Rackauckas, the case was referred to the state attorney general for resolution. Three civil lawsuits are also pending.
The 64-year-old Argyros—former owner of Air Cal and the Seattle Mariners—has parlayed his real-estate interests into a fortune estimated at more than $600 million. He owns mansions in Newport Beach, Indian Wells and Idaho. He owns a yacht capable of long-distance cruises and a plush jet befitting a Saudi royal.
DA investigators assert that Argyros made millions of dollars through his "systematic" scheme to defraud poor, middle-class and immigrant tenants. The utility-billing practices may provide Argyros with another lucrative source of revenue. Because the bills are unitemized and their gas and water unmetered, tenants must trust that a landlord already accused of inflating and inventing charges on other items is treating them fairly on utilities.
"These utility bills are obviously not fair, and most tenants clearly think the bills are coming from a separate company," said Stephen Douglass, who recently retired from the DA's office, where he investigated Arnel. "It looks to me like Argyros is just trying to get every nickel out of his tenants that he can."
Though the local mainstream press has largely ignored the issue of excessive landlord utility charges, it is not a new one.
"We've had lots and lots of complaints about that issue," said Dave Levy, a housing-rights advocate at the Orange County Fair Housing Council. "We're definitely concerned about excessive utility charges. We've been referring people to the Public Utilities Commission [PUC]."
But PUC guidelines on this issue are unclear. While the state commission allows landlords to bill tenants for utilities under certain circumstances, it assumes that landlords would deliver water and gas at cost, plus a nominal fee.
Said former Argyros tenant Hoang, "I think it is obvious that there is something terribly wrong with those utility bills."