The largest owner of property in Santa Monica, NMS Properties, Inc., is once again in the hot seat as the City and Rent Control Board has filed a lawsuit against the company and its affiliates alleging that they illegally evicted rent controlled tenants in a building now being used for unlawful rentals.
According to the complaint, the defendant owners bought the rent-controlled properties at 1238 and 1242 10th St in 2015 and undertook extensive and disruptive renovations to upgrade the units, during which several long-term tenants moved out. The lawsuit alleges the defendants then used the Ellis Act to evict the remaining three tenants after they refused to leave or be bought-out.
Although the Ellis Act can only be used when owners wish to remove their property from the rental market, the lawsuit further alleges the owners proceeded to advertise the building’s units as fully furnished and available for rent. The complaint also says that several units are utilized for vacation rentals, which regardless of the Ellis Act, is illegal in Santa Monica.
“The flagrant violations of the Ellis Act committed by NMS Properties are unconscionable,” said Rent Control Commissioner Caroline Torosis. “These corporate actors intentionally evicted tenants and then marketed furnished short term rentals in blatant violation of our Rent Control law. I look forward to justice being served.”
The complaint alleges that the defendants took unlawful steps, including lying to City staff and submitting false applications, to cover up unauthorized and unpermitted rental activity. Lastly, the complaint alleges that the defendants’ unlawful, fraudulent and deceptive acts violate the state’s Unfair Competition law.
This is not the first legal action the City has taken regarding rental activities at 1238 and 1242 10th St. The City is involved in a separate criminal case involving several of the same defendants, which was filed in January 2019 and is scheduled to have a pretrial hearing on Oct. 19.
The City charged Adam Shekhter, Saul Reuben Robin, Edward Jose Valentin and several affiliated companies with tenant harassment, maintaining a public nuisance and violating local zoning laws when upgrading and converting units at 1238 and 1242 10th St.
The criminal case alleges that defendants disobeyed repeated instructions from Code Enforcement, failed to fully pay for tenants to live elsewhere while the building was being renovated and used unlawful tactics — such as illegal buyout and eviction notices — in an attempt to evict tenants.
Defendant Adam Shekhter managed the buildings, which are branded as the NMS Swell Apartments. Adam is the son of NMS Properties CEO Neil Shekhter, who owns the buildings.
Gert Basson, a former rent controlled tenant at 1242 10th Street said Shekhter was allowed to hollow out the once shiny apple which was Santa Monica and said the recent case should come as no surprise given Shekhter’s recent legal history.
In an unrelated case regarding ownership of several buildings, a judge said Neil Shekhter had forged documents, destroyed evidence and submitted testimony that was not credible.
“So what can you expect from the likes of him and his myriad companies behind which he hides? Exactly what you got,” he said.
NMS Properties denies the allegations brought against the company in the City’s most recent lawsuit.
When asked for a comment Neil Shekhter’s legal representation provided the following statement on his behalf, “The complaint filed by the City of Santa Monica and the Santa Monica Rent Control Board against NMS Properties and the other named entities is both baseless and retaliatory; it is wrong on the facts and wrong on the law. This is just the latest chapter in the City’s targeting of these particular property owners, and a clear attempt to punish them for challenging the City’s illegal and unconstitutional conduct — including prior retaliatory actions — in both state and federal court.”