Lawyer Denies Firm Broke Rental Laws

The lawyer for a property management firm accused of illegally withholding refundable security deposits from hundreds of Orange County renters flatly denied Monday that his clients violated any laws.

Nevertheless, attorney Arthur P. Morello acknowledged that he and prosecutors with the Orange County district attorney’s office are negotiating a proposed preliminary injunction that would require Elerding Properties of Garden Grove to refund security deposits according to law.

Landlords are required to return rental deposits--less reasonable damages--within two weeks of the termination of a renter’s lease.

“The proposed agreement does not require Elerding Properties to admit any wrongdoing, nor does it require a payment of any fines or penalties for any alleged violation,” Morello said.

“If this proposed agreement takes effect and is filed, it will expressly leave for future court resolution whether Elerding Properties has violated the statutes as alleged by the district attorney, an allegation which Elerding Properties denies.”

Deputy Dist. Atty. Christopher Kralick said, however, that he intends to file civil charges against the firm and seek penalties and restitution for former renters whose security deposits have not been returned as required by state law.

Last month, The Times reported that at least 113 renters had filed suits against Elerding Properties, claiming that their deposits were illegally withheld. It also reported that the Marine Corps had taken the extraordinary step of removing the firm’s 10 Orange County and two Los Angeles County complexes from its approved-housing list.

Although investigators in the district attorney’s Consumer and Environmental Protection Unit are still gathering evidence for the proposed suit, Kralick said, “the allegations against the company (are among) the most aggravated situations the unit has been confronted with in the last five to 10 years.”

Morello said Monday that if prosecutors file suit over the security deposits, a Superior Court will have to decide if the firm violated any statutes. “We will be challenging them,” he said.