Can Raising the Rent Be a Crime in California?
How Recent Court Decisions Expand Business Liability
"I've been cheated!" It's a common complaint when a customer feels that a business misled or cheated them out of money in the purchase of a product or a service. Normally, such disputes are resolved through negotiations, refunds, or potentially a civil contract claim. But recent California court decisions have taken a surprising turn: what might look like an ordinary business dispute can sometimes be treated as a form of theft. As a result, businesses may now face triple damages, legal fees, and civil liability under a criminal statute if they are found to have obtained money under false pretenses.
When Civil Disputes Cross into Criminal Territory
In 2022, the California Supreme Court in Siry Investment, L.P. v. Farkhondehpour1 confirmed that Penal Code section 496 ' traditionally applied to receiving stolen property ' can also apply to business dealings where money is obtained by fraud or misrepresentation.2 In that case it was alleged that the real property manager charged non-partnership expenses and improperly diverted rental income from the owning partnership. The Court upheld treble (triple) damages and attorney's fees against the property managing company that had wrongfully withheld distributions. This was a wake-up call: even in ordinary business relationships, wrongful conduct can be punished far more severely than most would expect.
Importantly, the Court clarified that not every contract dispute becomes a theft. Honest mistakes or innocent errors won't trigger such expanded liability. But where there is intentional deception involving "careful...
