Bay Area resident Joseph Dougherty landed a new job in Los Angeles and needed an apartment fast. A small company out of West Covina called Prime Source Solutions said it had him covered.

For $200, Dougherty said the rental agency promised him a sweet deal: It would act like a broker, giving him lists of apartments for rent and then setting up appointments to view them.

If he didn’t find a home through Prime, Dougherty said the company vowed to refund most of the money. If he did, that amount would go toward his security deposit.

“Wow, this is a great deal,” the 24-year-old recalled thinking when he signed up in January. “They basically do all the work for you.”


It didn’t work out that way. Dougherty said he visited the handful of apartments he was told he could view the day he signed up, but “nobody ever showed” to let him in.

The Amtrak worker said he ended up finding a place on his own, and Prime Source denied his refund — despite its previous promise.

“It’s a big hit for me,” he said. “I’m living paycheck to paycheck.”

Prime Source’s manager denied the refund was owed and insisted that many customers have used the company successfully to find a home.


But in a region where apartments are in short supply and have never been more expensive, stories such as Dougherty’s are on the rise as desperate renters look for any help they can to secure housing.

This is just preying on people in a tight market, where people are being displaced left and right. Larry Gross, executive director of the Coalition for Economic Survival, a tenantsâ rights organization

While agencies with known track records like Westside Rentals do exist, authorities and consumer groups say a growing number of listing services are fly-by-night operators offering help that often never materializes or is marginal at best.

“This is just preying on people in a tight market, where people are being displaced left and right,” said Larry Gross, executive director of the Coalition for Economic Survival, a tenants’ rights organization.


Among other problems are fake landlords who persuade consumers to apply for a credit check, only to steal their personal information, said Steve McFarland, president of the Better Business Bureau of Los Angeles County and Silicon Valley.

“People are desperate,” said McFarland, who cautioned consumers to be wary of ads where rent seems “too good to be true.”

Prepaid rental listing services, in particular, have drawn complaints for decades, spurring action from the state Legislature and repeated investigations and sanctions by the California Bureau of Real Estate. Problems continue in part because bad actors rarely face significant criminal or civil penalties.

“If someone would get prosecuted, if someone finally got arrested and did the perp walk and [went] to court, it might send a message to the others to knock it off,” said Phillip Ihde, a deputy commissioner for the California Bureau of Real Estate, an agency that polices such schemes but has limited powers.


Consumers hire the services with the hope of quickly finding an apartment — usually a time-consuming, unwieldy process when scouring free online ads. The services typically charge $200 for a list of apartments that consumers often believe are exclusive.

In reality, the apartments do not exist or were not for rent in the first place, Ihde said. In other cases, listings are simply pulled from free-online websites and the companies don’t follow through on promises to set up showings or put a portion of the fee toward a security deposit. When consumers don’t find a home through the services, they often are denied refunds even though California law requires one.

The real estate bureau is investigating about a dozen such cases in Los Angeles, Orange and San Bernardino counties. But after it takes action to revoke a license or stop a service from operating without one, it can’t do much more.

In 2013, Gov. Jerry Brown signed a bill that boosted protections for consumers using rental listing services and made enforcement easier for the bureau. But Ihde said dubious rental services are on the rise because of the drum-tight rental market and lack of action from agencies other than his own.


“They just keep coming,” he said.

With little fear of reprisals, the people behind the schemes find ways of doing business.

For years, a company called Platinum Consulting has operated out of a Rosemead strip mall, racking up consumer complaints that repeatedly have drawn the attention of the state’s real estate bureau.

In 2010, the agency ordered Platinum to stop operating without a license.


In August 2014, after The Times published a story highlighting tenant complaints about the company, the agency accused Platinum Consulting — then operating under the license of real estate broker Carlos Martinez — of not giving requested refunds, even though apartments for which they provided lists did not exist or were not for rent.

Martinez denied those charges.

In the end, an administrative law judge found the bureau did not prove that Platinum improperly denied refunds or that it gave listings for apartments that did not exist or were not for rent.

The judge, however, ruled that Platinum’s refund policy did “not comply with the law.” That’s because it mandated that clients collect a certain number of listings for the entire 90-day contract and then turn them in — a practice that would require clients to keep using the business even after finding a place on their own or deciding not to move.


Martinez’s license was revoked, but he was allowed to apply for a restricted one, which would allow him to continue operating the company. He received it late last year.

The complaints, meanwhile, continue.

In July, Alexander Houston sued Platinum for $195 alleging “false advertisement.” In an interview, Houston said he was living at the Midnight Mission on skid row when the company promised to find him a place before his Section 8 voucher, which provides a monthly rent subsidy, expired.

“I only had like two weeks,” he said. “I was really desperate.”


Houston said Platinum gave him a handful of listings in February and then promised that the landlords would call him soon to set up appointments. None did, Houston said.

“I got screwed,” he said. “It was like throwing away $200. I can’t give away $200. I need it. I am broke.”

Houston was denied a refund. In a letter, Platinum explained that he had failed to collect twice-weekly rental listings for his entire 90-day contract and then turn the listings in — the same refund requirements that the administrative judge previously ruled did not comply with the law.

Martinez did not return calls seeking comment. Shortly before Houston and Platinum were scheduled to appear in court, Houston said he got a refund check in the mail for $135. He eventually found a rental in South Los Angeles on his own.


Sometimes the services change their names and pop up in different locations, Ihde said.

In 2014, the bureau ordered Valley to Valley Rentals to stop operating without a license. The agency said the Covina company acted in “bad faith” when it denied a client a refund after giving the person listings that failed to meet certain criteria, including the “availability of the property.”

Among those who ran the company was Frank Bennett, who was listed as a manager in a 2013 filing with the California secretary of state.

A year after the bureau first took action against the company, complaints begun appearing on Yelp for a firm just down the road called Prime Source Solutions — also managed by Bennett.


Six customers told The Times about a host of problems, including the inability to reach Prime to get more listings or set up appointments, promised viewings where no one showed up and landlords who had never heard of Prime and were offering their units at a different rent than what Prime had advertised.

Only two customers — after complaints to the Better Business Bureau, multiple follow-up calls and initial pushback — said they got a refund. All said the services they paid for were useless.

Jezreel Escobar, who was denied a refund, said the listings were sometimes a complete joke.

“The last time they sent me a listing, they sent a senior center,” the 27-year-old said.


In late September, the real estate bureau ordered Bennett and two other individuals, Julio Segovia and Henry Chen, to stop operating Prime Source without a licensee. The agency said that all three also had run Valley to Valley and that Prime failed to provide clients with listings or appointments and then didn’t give requested refunds.

“Every company is going to have unsatisfied clients,” Bennett said in an interview before the complaint was filed.

Bennett said the two companies were unrelated. He said he came across a Craigslist ad for the Prime Source management job after Valley to Valley went out of business.

He declined to name the owners of either company.


Chen, who is listed as Prime’s owner on its business license, could not be reached for comment.

Segovia, a real estate agent, disputed allegations that he was involved. He said he tried to partner with Bennett at both Valley to Valley and Prime Source to offer property management services, but the deal never went through.

“I got sucked into this,” Segovia said. “I urged them to shut down.”

Bennett did not return multiple requests for comment after the complaint was filed.


In Dougherty’s and Escobar’s cases, Bennett had earlier said the customers failed to provide sufficient proof that they didn’t find an apartment with Prime’s help. Bennett also said that Dougherty didn’t turn in his listings when asking for a refund and that if no one showed up to apartments that Dougherty went to, it was probably because he didn’t confirm appointments.

Under state law, prepaid rental listing services may keep only $50 if renters do not find an apartment through the company, according to the real estate bureau. The remainder must be refunded if requested within 10 days of the contract’s expiration.

Consumers also must provide “reasonable documentation” that they found an apartment on their own or never moved — or sign a statement, under the penalty of perjury, that those circumstances are true.

Bennett argued that Prime Source didn’t need a prepaid rental listing license because it was a credit check agency and that its listings are “complimentary” — a stance Ihde said companies often take to argue that they aren’t bound by state rules for listing services.


Still, Bennett insisted that many Prime clients come away pleased. He passed along contacts for three people he identified as “happy customers” who “had a great time with our service and were satisfied with the outcome.”

One did not return a call seeking comment. Ming Ye, a 40-year-old software engineer, described his experience this way: “It is what it is. It’s OK.” He said he didn’t ask Prime Source to set up any appointments for listings it gave him because he didn’t like the apartments and is a “very laid-back person.”

He said Prime did set up an appointment for an Alhambra apartment that he found on his own.

The third individual, Jhoana Horta, said the $200 she paid Prime seemed like a “waste of money.”


The 32-year-old said Prime promised to give her exclusive listings and set up appointments to view apartments. But Horta said Prime was hard to reach and never could schedule an appointment. She said she found the apartments she was referred to advertised on free rental websites.

She eventually found an apartment in the Inland Empire on her own and applied for a refund. Horta said Prime told her one would be coming, but only after her contract expired in late August.

By the end of September, no money had come. Instead, Horta said she got a letter that explained Prime would need additional documents from her before it approved a refund.

“I hope I get it back,” she said.


Bennett did not respond to multiple requests to comment on Horta’s experience.

On a recent weekday, shortly after the real estate bureau ordered Prime to stop operating without a license, the company’s second-floor home in a drab West Covina office park was locked. A note in the window said Prime was down for “maintenance issues.”

In the meantime, Prime urged clients to call or email so the company could help find them a home. “We still have appointments that can be sent, and listings that can be emailed.”

Times staff writer Natalie Kitroeff contributed to this report.


andrew.khouri@latimes.com

Follow me @khouriandrew on Twitter

ALSO

Who oversees data brokers selling your personal info? No one


Some Californians see health premiums rise sharply as Obamacare enrollment nears

FDA faults UCLA, Cedars-Sinai and Huntington hospitals for not disclosing safety problems with medical devices