By Mary O’KEEFE

The State of California and County of Los Angeles are continuing their prosecution and investigation into reports of price gouging in regard to the Eaton and Palisades fires in January 2025. 

On July 9, California Attorney General Rob Bonta announced the sentencing of real estate agent Mike Kobeissi for false advertising arising out of an attempt to price gouge a couple who lost their home in the Los Angeles Eaton Fire. 

Announcement of the charges being filed was initially made on Jan. 22, 2025. At the time, Kobeissi stated the rent hike was a “misunderstanding;” however, in the end, the State’s case prevailed.  

Kobeissi’s sentence includes 12 months of probation, 100 hours of community service and a mandatory professional ethics course through the National Association of Realtors. Additionally, he must pay $20,000 to a disaster relief fund and submit a letter of apology to the victims, according to the statement from the office of the California Attorney General.

“As I have said repeatedly, price gouging during a state of emergency is illegal,” said Attorney General Bonta. “May this announcement serve as a stern warning to those who would seek to further victimize those who have lost everything. My office is aggressively and relentlessly pursuing those who are trying to make a quick buck off someone else’s pain.”

The California Dept. of Justice (DOJ) filed charges against Kobeissi following an investigation spurred by a consumer complaint sent to the DOJ by the evacuated couple, which detailed their attempt to rent a home after the Governor’s Emergency Order took effect. The Emergency Order explicitly prohibited the price gouging of wildfire victims. The investigation revealed that the couple applied to rent a home listed by real estate agent Kobeissi but after the application was received they were informed that the price had increased by 38%. They decided not to rent the house due to the price increase.

California law – specifically Penal Code section 396 – generally prohibits charging a price that exceeds by more than 10% the price a seller charged for an item before a state or local declaration of emergency. For items that a seller only began selling after an emergency declaration, the law generally prohibits charging a price that exceeds the seller’s cost of the item by more than 50%. This law applies to those who sell food, emergency supplies, medical supplies, building materials and gasoline. The law also applies to repair or reconstruction services, emergency cleanup services, transportation, freight and storage services, hotel accommodations and long- and short-term rental housing. Exceptions to this prohibition exist if, for example, the price of labor, goods or materials has increased for the business.

In another case of price gouging that was prosecuted by the District Attorney of Los Angeles, the Langham Hotels Pacific Corporation will pay $320,000 to settle a consumer protection civil lawsuit brought by the Los Angeles County District Attorney’s Office and Los Angeles County Counsel’s Office alleging the company price gouged wildfire victims and other guests who stayed at its Pasadena hotel during the January 2025 wildfires and resulting state of emergency.

“It is reprehensible to overcharge and take advantage of wildfire victims who were in desperate need of housing as they fled their homes from raging fires last year,” Los Angeles County District Attorney Nathan J. Hochman said. “During a time when our community was meant to come together to help those in need, Langham Hotels Pacific Corporation profited from other people’s tragedies. Since the devastating fires, my office has been working closely with our law enforcement and consumer agency partners to combat price gouging, looting, unlicensed contracting and other crimes of opportunity in disaster zones. I’m grateful for our Consumer Protection Division, particularly Head Deputy District Attorney Alex Karkanen and Assistant Head Deputy District Attorney Steven Wang and our partners at the Los Angeles County Counsel’s Office for achieving this important victory for wildfire victims.”

“My office values our partnership with the District Attorney’s Office on consumer protection enforcement, and we are committed to preventing price gouging in the County,” said Los Angeles County Counsel Dawyn R. Harrison. “This settlement provides full refunds of the illegal overcharges to consumers who were price gouged during a horrifying wildfire emergency and sends a message to other businesses to comply with the law.”

On Jan. 7, 2025, the day the wildfires broke out, California Governor Gavin Newsom issued a Proclamation of a State of Emergency for Los Angeles and Ventura counties. This proclamation triggered California’s price gouging protections under California Penal Code section 396, which were extended through July 1, 2025. The Los Angeles County Board of Supervisors also passed a series of motions extending price gouging protections for hotel guests in Los Angeles County from Jan. 7, 2025 to March 29, 2026.

Langham’s Pasadena hotel, Langham Huntington Pasadena, offered 379 hotel rooms, 26 suites and eight cottages for rent in Pasadena through its website and third-party websites. The lawsuit alleged that Langham violated California’s anti-price gouging law and therefore the state’s unfair competition law by charging its Pasadena hotel guests more than 10% above the hotel’s regular rates as advertised immediately prior to the proclamation or declaration of emergency.

Under the judgment, Langham will pay $300,000 in civil penalties and $20,000 in investigative costs to the Los Angeles County District Attorney’s Office and Los Angeles County Counsel’s Office. 

In addition, according to the Los Angeles County District Attorney’s Office Langham must pay restitution and issue refunds to eligible hotel guests who stayed at its Pasadena hotel between Jan. 7, 2025 and March 29, 2026 for all amounts paid above the maximum allowable hotel rate. The parties have calculated the total refund amount due to hotel guests at $216,795 between January and April 2025 alone.

Langham must pay the Los Angeles County Dept. of Consumer and Business Affairs any refund amounts that remain undeliverable after reasonable efforts to locate and refund all eligible hotel guests.

Further, Langham must modify any automated, algorithmic or other pricing systems to ensure prices are not unlawfully increased during a declared state of emergency.

Langham cooperated with the investigation and did not admit liability.