Former Housing Manager Investigated at City-Owned, Taxpayer-Funded Facility: SDPD

Housing management firm forced to "check out" of Hotel Sanford

The former manager of a taxpayer funded affordable housing complex in San Diego is the subject of an embezzlement investigation, according to the San Diego Police Department.

Royal Property Management (RPM) lost the property management contract at Hotel Sandford this month after the San Diego Housing Commission and SDPD were alerted to possible cases of embezzlement at the complex. RPM was awarded the property management contract last October by the San Diego Housing Commission.

The San Diego Housing Commission owns and is in charge of overseeing the building’s operations for the 130-room complex located downtown. In 2010 the city bought the former hotel and converted the building into housing units for seniors.

The Commission is governed by the San Diego Housing Authority, an administrative body that includes all nine San Diego City Council members.

The owners of RPM said they hired Michael Shew to run the day-to-day operations of the housing complex when they were awarded the property management contract. According to the owners, when they first took control of the housing complex, the converted hotel, built in 1914, was in poor condition after a fire on the building’s third floor last year brought not only fire but flooding damage to the building.

RPM’s owners said the company and Shew fixed all of this; they even added a computer center for seniors living at the complex. According to them, everything was going smoothly, until last month. That is when, they say, they were first alerted that rent checks, made payable to the Hotel Sandford, were not being cashed into the hotel’s accounts.

When RPM brought this to the attention of Shew, the owners said, he submitted his resignation the next day, citing personal health issues.

The owners said they then alerted the San Diego Housing Commission and handed over all of Hotel Sandford’s financial records to Commission members. RPM owners also said, after they learned of the problems with the rent checks, they filed a police report with the SDPD’s Economic Crimes Division.

SDPD Spokesman, Lt. Scott Wahl, confirmed to NBC 7 Investigates an investigation into Shew is ongoing but could not comment further because it is in the preliminary stages.

At this time, no charges have been filed against Michael Shew or RPM’s owners.

NBC 7 Investigates reached out to Shew via email. He responded Friday night, writing "This is certainly interesting news and the first I have heard of it. Clearly I will offer no comment at this time until speak with an attorney."

RPM owners told NBC 7 Investigates they hope the actions of one person will not impact the years of hard work they dedicated to Hotel Sandford’s residents and other San Diegans living at their facilities. RPM manages rental properties across the county from Escondido to downtown.

NBC 7 Investigates learned the San Diego Housing Commission began an internal audit of Hotel Sandford’s records in April.

RPM was removed from managing the Hotel Sandford in early May. Residents at the complex told NBC 7 Investigates they received a written notice in the mail on May 7. It said the San Diego Housing Commission would be taking over management duties until further notice.

Sanford’s residents say they’ve noticed the recent management change and rarely see Housing Commission management on site.

NBC 7 Investigates reached out to the San Diego Housing Commission regarding the recent change in management and the preliminary results of the internal audit performed last month.

In response to these questions, the Housing Commission’s Senior Vice President of Communications Maria Velasquez said in an email, “the Hotel Sandford is now under the management of the San Diego Housing Commission. At this time, we can only confirm that we are conducting an operational and fiscal audit of the project and its operation."

We reached out to all nine city council members about the Hotel Sandford audit and investigation.

In an email to NBC 7 Investigates, Councilmember Lorie Zapf said she was unaware of the pending investigation but is concerned with the allegations. Councilmember Marti Emerald said she plans on meeting with the Housing Commission and SDPD to get more details about the investigation. All other councilmembers who responded said they were unaware of the investigation and unable to comment on it at this time. Council President Sherri Lightner and Councilmember Myrtle Cole have yet to respond.

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