LOS ANGELES — A group of property owners are facing a $62 million lawsuit for alleged price gouging in the aftermath of January's wildfires and violating short-term rental laws, Los Angeles City Attorney Hydee Feldstein Soto announced Thursday.

The City Attorney's Office filed a civil enforcement action against several individuals and their related companies that allegedly operated a sprawling illegal multimillion-dollar rental property scheme. Feldstein Soto is seeking a permanent injunction barring the defendants from engaging in short-term rental activity in the city, restitution to tenants impacted and tens of million of dollars in civil penalties.

"The scale of the alleged activity — the illegal short-term rentals and the wildfire-related price gouging — is outrageous," Feldstein Soto said in a statement. "The defendants not only exacerbated a severe housing shortage but took advantage of Angelenos at their most vulnerable time."

The complaint names Akiva Nourollah, Micah Hiller, Haim Amran Zrihen, and Rachel Florence Saadat as defendants, as well their companies Hiller Hospitality LLC, Hiller Hospitality Group LLC, 1070 Bedford LLC, and Red Rock 70 LLC and Coastal CHarm LLC, which are based in Nevada and registered with the California Secretary of State to do business in California.

Feldstein Soto's complaint accused the group of advertising and offering short-term rental of dozens of properties for thousands of nights without the required permits. This also included rent-stabilized units which cannot be legally used as short-term rentals under the city regulations.

Defendants allegedly increased rent for some of their properties up to 113% higher before the wildfires.

The defendants allegedly also used deceptive tactics such as using fake IDs and falsely advertised proprieties outside of Los Angeles.

Elected officials approved the short-term rental ordinance in 2018. It went into effect July 2019 and prohibits any person from offering, advertising or booking in short-term activity that does not comply with the ordinance.

Under the ordinances, property owners can only offer their primary residence for short-term rentals and may only operate one short-term rental property at a time. In addition, units that are subject to the city's Rent Stabilization Ordinance are not eligible for short-term rentals. 

Property owners must submit an application, pay an application fee and obtain a registration number from Department of City Planning before engaging in short-term rentals. All advertisements for short-term rentals must clearly list the host's city-issued home sharing rental number. Hosts must pay a tax to the city, as well.

According to the complaint, the defendants have allegedly violated the city's regulations since at least April 2022.

After the Palisades and Eaton fires broke out on Jan. 7, Defendants allegedly expanded their illegal operation, offering and booking long-term rentals in violation of the anti price-gouging law, including for some of those same properties.

California lawmakers approved the anti-gouging law following the Northridge Earthquake in 1994. In response to the wildfires, Gov. Gavin Newsom declared a state of emergency, triggering the law in the L.A. region. It is illegal to increase the price of essential good and housing by more than 10% while the declaration is still enacted.

The city attorney is asking for potential victims to come forward and submit a complaint form or by calling 311. Reports can be filled anonymously.