Editor’s Note: This is part of CapRadio’s series, “Cultivating Fines,” investigating Northern California homeowners who have received significant penalties from the city of Sacramento after their tenants were caught growing illegal cannabis. The landlords claim innocence and say they had no idea about the pot grows, yet in many cases receive six-figure fines. You can read our full investigation at CapRadio.org/CultivatingFines.
Seventy-year-old Thao Vo survives off the income from her rental property in Sacramento. But when a tenant turned it into an illegal cannabis grow without her knowledge last year, the city of Sacramento hit her with a fine for $269,000.
So, her family lawyered-up and challenged the city in court. Several weeks ago, a judge threw out the penalty after finding Sacramento violated her rights and relied on flimsy evidence.
“She was victimized by the city,” said attorney Alan Donato, who represents for Vo. “[The judge] found blatant disregard for our client’s rights.”
Homeowners have filed more than 50 similar legal actions against Sacramento in the last 18 months, challenging millions of dollars’ worth of fines for illegal residential cannabis grows. Many own rental properties and say rogue tenants operated the grows. The legal challenges argue the penalties are unconstitutionally excessive and that the city’s quick, informal appeal hearings violate their right to due process.
Since the ruling in the Vo case, Sacramento has scrambled to get rid of at least 10 penalties against rental property owners who took the city to court. The move is an about-face: Until now, the city has staunchly defended its aggressive enforcement efforts.
Some defense attorneys claim the sudden shift in strategy is an effort to keep judges from issuing more unfavorable rulings, which could jeopardize the city’s lucrative enforcement program: The city has issued hundreds of fines against property owners since 2017, totaling about $94 million. The penalties typically range from $100,000 to $500,000, and some exceed $1 million.
“They’re going to get rid of any cases that could potentially wipe out their scheme,” said Sam Berns, an attorney who has represented multiple property owners in legal actions against the city.
Property owners have challenged more than $50 million worth of those penalties, claiming they’re innocent. As a result, the city has collected only about $6 million from those fines as cases continue to wind their way through the city’s appeal process and the court system.
City Attorney Susanna Alcala Wood previously told CapRadio that due process is an essential part of Sacramento’s cannabis enforcement program. But the city declined to comment on the recent ruling that identified due process violations.
“The City remains committed to enforcing its laws and to protecting the community from illicit activity that damages the health and safety of residents, neighborhoods and businesses,” city of Sacramento spokesperson Tim Swanson wrote in an emailed statement.
Sacramento ramped up its efforts to curb illegal cannabis cultivation about two years ago, when it passed an ordinance that prohibited cultivation of more than six plants in a single residence. The new law came with a steep fine: $500 for each plant over the six-plant residential limit. City code holds property owners liable, even if they can prove they acted responsibly. That means a landlord — while not charged with a crime — faces massive penalties if their tenant operates an illegal grow without their knowledge.
Landlord advocates say the debilitating fines are a misguided effort to solve the underlying problem of illegal cannabis cultivation in Sacramento.
“When I hear the city has issued over $94 million in fines against property owners in only two years, that sure seems excessive,” Jim Lofgren, senior vice president at the California Apartment Association, wrote in an email. “I am concerned that the focus of the city seems to be holding rental owners accountable instead of persons who committed the crime.”
City Councilman Jay Schenirer has been a strong advocate of the illegal cultivation enforcement program, claiming it helps sustain a healthy legal industry and improves neighborhood safety.
He declined to comment on the specifics of the legal actions against the city, but says he’s willing to revisit local enforcement laws to explore possible improvements.
“I think if there’s discussions we need to have with defense attorneys and with our City Attorney to make sure we’re doing it the right way, that’s fine, we should do that,” Schenirer said.
‘A Systematic Abuse’
Vo purchased an investment property on Tierra Wood Way in southeast Sacramento about 10 years ago. She’s had several tenants over the years, and in 2018 rented the home to a man named Rong Ai Li, according to court documents. The lease agreement prohibited violating any laws or creating any nuisances, though it did not specifically discuss cannabis cultivation.
Vo didn’t register the property with the city’s rental housing inspection program, which conducts periodic visits to rental properties, but she inspected the home annually.
Sacramento police began investigating the house after receiving information from the Sacramento Municipal Utility District, according to court records.
Spokesperson Chris Capra says “SMUD provides information to a law enforcement agency when a law enforcement agency requests it.”
But an affidavit from the officer who investigated the home states SMUD proactively sends the Sacramento Police Department lists of residences with unusually high electricity usage. The officer used this information to initiate his investigation into the home on Tierra Wood Way.
A search warrant application and sworn testimony from another case also indicate SMUD sends information to law enforcement about residences.
Police raided Vo’s property in August 2018 and found 544 cannabis plants inside — well above the legal limit. The city issued a fine for $269,000. The home itself is valued at about $280,000.
Li, the tenant who allegedly grew the cannabis, was caught at the property during the raid, but was not charged with a crime, according to court records.
Huyen Le, Vo’s son-in-law who helped her manage the property, told CapRadio he was baffled by the city’s decision to let the tenant go and instead punish a 70-year-old woman.
“The guy who did it didn’t get a penalty,” said Le. “But we got a fine for it. That’s not right.”
Le works in construction and his wife operates a nail salon. He said the enormous fine threatened to financially upend his family.
Vo challenged the penalty through the city’s appeal process, but it was upheld. So, she filed a court challenge. Several months later, a judge vacated the penalty.
Swanson with the city of Sacramento declined to comment on specifics in the ruling, but noted “the court’s commendation of [the] City’s efforts to eradicate illegal cannabis cultivation.”
In her ruling, Judge Laurie M. Earl spent three sentences commending the city for its efforts to curb illegal cannabis cultivation. By contrast, she devoted half-a-dozen pages to describing how the city violated Vo’s rights and used faulty evidence in its efforts to achieve that goal.
Earl noted that the city cited the wrong code violation on the penalty. Essential to due process, she writes, is the idea of “notice” — that is, making someone aware of the exact crime or civil penalty being charged. A person cannot defend themselves against an allegation if he or she does not know what it is. This is especially true in cases with non-English speaking defendants, such as Vo.
The judge also determined that attorneys for the city presented flawed evidence, which lead the hearing examiner to arrive at conclusions with little or no basis during the prior administrative appeal.
An attorney for the city, for example, made vague allegations that Vo was tied to organized crime because the tenant, Li, moved from New York.
“We have an issue with organized crime and New York people here, and so I think [Vo] was extremely negligent in how she … managed her property. At worse, she was involved or willfully blind,” the attorney said.
The judge dismissed this notion outright.
“The Court hopes it goes without saying that there is absolutely no evidence in this case that Vo is involved with organized crime from New York,” she wrote in her ruling.
The hearing examiner listed seven findings to uphold the penalty, including that Vo made inconsistent statements and did not adequately inspect the property. Earl rejected each conclusion.
“The factual findings on which the penalty was based are not supported by the evidence or the law and/or are irrelevant,” she wrote.
The city didn’t argue against the judge’s ruling, making it final.
According to attorney Donato, Vo survives off the income from her rental homes in Sacramento. She considered selling the home on Tierra Wood Way to pay the penalty, which could have been financially devastating.
And Donato says the city is targeting many others in the same position.
“They’re fear-mongering,” he said. “It’s a systematic abuse.”
Wiping Out Penalties
A week before the ruling in Vo’s case, another judge identified potential due process violations in a separate proceeding.
The city issued rental homeowner Tien Lam a $201,000 penalty in 2018 for a cannabis grow operated by his tenant. Lam challenged the penalty in court after the fine was upheld during the city’s appeal hearing process.
Attorneys for the city describe the appeal process as “quick” and “loose,” in part to allow hearing examiners — who are not judges and until recently had no background in law — to get through a dozen or more in one sitting, according to court records.
This raised concerns for the judge.
“A quick, informal hearing, in which the rules of evidence are not followed, resulting in an enormous penalty … does not strike [me] as meeting the minimal requirements of due process,” wrote Judge Thadd A. Blizzard in his decision to grant Lam a new hearing.
But the city didn’t move ahead with a new hearing. Instead, it offered a settlement that would reduce the penalty to zero dollars.
CapRadio has confirmed at least 10 cases with active legal challenges where the city has proactively moved to wipe out the penalties through settlements. According to several attorneys, who spoke on background because negotiations are ongoing, the settlements would clear the penalty but would allow the city to use the incident as evidence if a future grow was discovered.
Todd Leras, who has several pending cases against the city but has not received a settlement offer in any of them, isn’t surprised to city is rushing to vacate penalties with pending court cases.
“The city doesn’t want to get more rulings on these cases, because it knows it’s going to lose,” he said.
Defense attorneys agree that more unfavorable rulings — especially if they come from higher courts — could dismantle Sacramento’s cannabis cultivation enforcement program, which currently promises to generate tens of millions of dollars in fine revenue for the city.
Le said the ruling in his family’s case, and the subsequent clearing of other penalties, has helped restore his faith in the justice system.
“We believe in the law again,” he said. “The law is justified.”
But property owners who have their penalties cleared don’t break even.
Many spend tens of thousands of dollars on renovations. Vo’s family, for example, spent about $40,000 to rehab the house on Tierra Wood Way due to the damage caused by her tenants’ illegal cannabis grow.
And the cost of legal representation can be significant. According to Malcolm Segal, an area defense attorney and former federal prosecutor who has handled several of these cases, retaining counsel for the city’s appeal hearing process can cost up to $5,000.
A fully litigated case in court “could cost anywhere from $25,000 to $100,000,” he said.
Have you been affected by the city's cannabis fines? Contact reporter Scott Rodd at [email protected].
