Herrera sues City-contracted SRO hotel owners for rampant housing violations, false claims

Pervasive code violations, musical rooms, defrauding taxpayers to house city-assisted clients lead to lawsuit about ‘aggressively protecting our most vulnerable residents’

SAN FRANCISCO (May 12, 2014) — City Attorney Dennis Herrera today sued the owners and operators of at least 15 single room occupancy hotels, or SROs, for pervasive violations of state and local laws intended to protect residents’ health, safety and tenancy rights. The defendants, all members of the Thakor family and their array of business affiliates, include SRO hotels whose City contracts obligate them to provide “clean, safe, habitable conditions” for tenants in publicly-funded transitional housing. As a result, Herrera’s litigation seeks to exact the treble damages authorized by California’s False Claims Act for defrauding San Francisco taxpayers — on top of the already significant civil penalties, fees and disgorgement of illegally-obtained profits that unlawful business practices typically entail.

SRO hotels offer housing of last resort for significant numbers of economically vulnerable San Franciscans, according to the complaint filed in San Francisco Superior Court this morning, including seniors, persons with disabilities, and others on low- or fixed-incomes. The residential hotels owned or controlled by Balvantsinh, Kiransinh, Bahavasinh and Lataben B. Thakor account for some 880 residential rooms in the Tenderloin, SOMA, mid-Market and Mission District neighborhoods. They include the Admiral Hotel, Aldrich Hotel, Auburn Hotel, Balboa Hotel, Best Inn, Bristol Hotel, Budget Inn, Civic Center Hotel, Hotel Krupa, Jalaram Hotel, Kean Hotel, Kiran Hotel, Page Hotel, Warfield Hotel, and Winton Hotel.

“San Francisco’s response to our affordable housing crisis must include aggressively protecting our most vulnerable residents — and that’s exactly what this case is about,” said Herrera. “The Thakor family has exploited low-income residents by denying them tenancy rights. They’ve defiantly thumbed their noses at city inspectors over pervasive code violations, which endanger residents and neighbors alike. And they’ve billed taxpayers for providing clients of city programs with ‘clean, safe, habitable’ housing, when it was anything but clean, safe, or habitable. These defendants have demonstrated an appalling pattern of illegal conduct on multiple fronts, and the lawsuit we’ve filed today should demonstrate our resolve to put an end to it. This case is one of several involving housing-related matters being reviewed by my office, and I’m grateful to the city departments and community advocates who are working with the City Attorney’s Office to help us pursue these kinds of scofflaws. I encourage tenants and neighbors to report housing-related wrongdoing online to my office through our Up2Code.org website or the Up2Code app, or by calling our Code Enforcement Hotline at (415) 554-3977.”

Violations detailed in Herrera’s complaint include denying rights of tenancy by forcing occupants to vacate their rooms before they can accumulate 30 consecutive days of residency — preventing them from gaining such tenancy rights as rent control and stronger legal protections from certain kinds of evictions. The practice known as “musical rooms,” which seeks to maintain San Francisco’s most economically vulnerable residents as transients indefinitely, is illegal under both state and local law, and represents a form of “tenant harassment” that is additionally barred under the city’s Rent Ordinance.

The Thakors have also systematically defied repeated demands by multiple city agencies to address substandard housing conditions that pervade their SRO hotels, according to Herrera’s civil action, creating intolerable public nuisances. Health and safety code violations detailed in the complaint include: rampant bedbug, cockroach and rodent infestations; severe mold and mildew in residential rooms and bathrooms; inadequate fire protection and safety, including insufficient smoke detectors and defective and missing fire sprinklers; extreme hoarding and cluttering causing additional fire hazards; inoperable elevators and inadequate bathroom facilities; inadequate electrical service and defective wiring; damaged floors, walls and stairs; inadequate heat, security, and trash facilities; plumbing disrepair and raw sewage leaks; and hazardous dispersal of lead paint chips and dust during unlicensed construction work. Additionally, to the extent the Thakor family engages in repair and maintenance work, it is frequently performed without required permits, and without licensed contractors qualified to do the work, according to the complaint.

Herrera’s civil action relies on two key state laws that could potentially maximize civil penalties and injunctions on the Thakors for their rampant violations of laws that protect residents’ health, safety and tenancy rights. The California Unfair Competition Law, which protects consumers as well as law-abiding competing businesses, could result in civil penalties of up to $2,500 for each unlawful business act; and disgorgement of ill-gotten profits. In addition, California’s False Claims Act, which protects state and local governments from being defrauded by public contractors, could allow San Francisco to recover treble damages for each submission of a false claim for payment in which the Thakors represented they were abiding by the terms of their city contracts. The City also could recover its attorneys fees in bringing this action under both the State Housing Law and the local Rent Ordinance.

The case is: City and County of San Francisco and People of the State of California v. Balvantsinh “Bill” Thakor, et al., San Francisco Superior Court No. 539230, filed May 12, 2014. A copy of the complaint from the case is available on the City Attorney’s website at: https://www.sfcityattorney.org/. Copies of full exhibits provided on request.


PDF iconPDF of the Thakor SRO Presskit (May 12, 2014)