Arnel Management illegally withheld security deposits, attorney general alleges

Arnel Management Co. has agreed to settle allegations it illegally withheld security deposits, the California attorney general announced Friday.

The move came nearly eight years after a Times story detailed reports from tenants who alleged that the major Orange County landlord deducted hundreds of dollars for unneeded cleaning and repairs even when residents left their units spotless.

“For many renters, especially those from lower-income backgrounds, affording a security deposit entails a great deal of sacrifice,” Atty. Gen. Rob Bonta said in a statement. “We are holding Arnel accountable.”

Arnel has 19 apartment complexes in Southern California, with all but one in Orange County. The other is in Los Angeles County.

In 2016, the company — then owned by billionaire political power broker George Argyros — was the fifth-largest landlord in Orange County.

It’s unclear what Argyros’ current role is with Arnel. The company and its attorney did not return messages seeking comment.

Under California law, landlords cannot withhold a deposit to clean an apartment left in the same condition as when a tenant moved in, or to pay for fixing ordinary wear and tear.

According to the attorney general, Arnel charged for unneeded cleaning and repairs and treated part of its tenant’s security deposit as nonrefundable no matter the condition of the apartment.

The announcement Friday wasn’t the first time Arnel has faced similar allegations. In addition to tenants The Times spoke with in 2016, Arnel settled allegations it illegally withheld security deposits in 2001.

The state office took over that case after Orange County Dist. Atty. Tony Rackauckas — who had accepted campaign cash from Arnel — was widely criticized for taking a personal role in his office’s investigation.

That settlement paved the way for Argyros to become ambassador to Spain, an appointment that had stalled amid the controversy.

As part of the new settlement, Arnel must pay $1.15 million, with $650,000 going to legal aid organizations in Orange and Los Angeles counties. The attorney general’s office also said Arnel would be “subject to more stringent injunctive terms to deter future misconduct.”

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