Judge grants FTC contempt request against online rental housing company

SANTA ANA -- A federal judge has granted a Federal Trade Commission motion for civil contempt against an Orange County company barred from illegally advertising government-subsidized housing online.

Apartment Hunters Inc., will be fined $1,000 for each day the illegal content remains on the internet beyond 5 p.m. Thursday, under an order from U.S. District Judge Andrew J. Guilford.

Guilford determined the company and its owners, brothers Steven Shayan and Kevin Shayan, are violating a Sept. 13 temporary restraining order by continuing to falsely advertise its websites as portals to housing such as Section 8 and low-income rentals.

A complaint from the FTC argues Dana Point-based company and related entities operate several fee-based websites, including WeTakeSection8.com and ApartmentHunterz.com, that mislead consumers about the availability of government rentals and falsely claim the listings can't be found on free websites.

Guilford issued a preliminary injunction on Sept. 24. Three days later, FTC attorney Rhonda P. Perkins sought an order to show cause regarding contempt, saying the defendants were violating the restraining order "and continue to do so even after receiving a warning from the Court at the September 24, 2018 hearing."

Perkins said in a memorandum the Shayan brothers declined on Sept. 25 to answer deposition questions about how they were complying with the judge's order.

"Each time, Kevin and Steven Shayan's counsel instructed them not to answer in light of the Court's and counsel's comments with respect to possible contempt proceedings and that his clients may incriminate themselves and face possible jail," according to the memo.

The Shayans are represented by Jilbert Tahmazian of Tahmazian Law Firm P.C.. Federal Trade Commission v. Apartment Hunters, Inc., 18-CV01636 (C.D. Cal., filed Sept. 11, 2018).

Amanda R. Grier, an FTC attorney in Washington, D.C, told Guilford at a hearing Wednesday the defendants' refusal to comply is "blatant, knowing and goes on to this day."

She called the websites, which have generated hundreds of consumer complaints, a "waste of time and hope" the defendants don't want to kill because they don't want to refund $165,000 in consumer subscription fees.

"They're charging $59, $49 for fake listings," Grier said.

Tahmazian told Guilford his clients have changed their websites to be free of charge to comply with the order and can't control what search engines such as Google show consumers. He said their payment processor will close the sites and eliminate content not barred under Guilford's order if his clients remove the government housing content.

He asked Guilford allow time for the current members, who paid subscriptions prior to the lawsuit, "to ride out their term" and avoid forcing the business "from going under completely."

"We've had a lot of positive feedback from a lot of our members in the past few weeks about our services," Tahmazian said.

Grier said Tahmazian essentially argued "if the payment processor understands and becomes aware of their deception, ... that their other businesses might be harmed."

"That's not a legitimate private interest," Grier said.

Guilford issued the contempt order after Kevin Shayan testified.