Former prominent Main Street businessman charged with 3 felonies |

Former prominent Main Street businessman charged with 3 felonies

Kenneth Abdalla faces a criminal case over allegations of mismanaging property owners’ association funds

The Main & Sky building, which was once known as the Sky Lodge, is located at a corner of Heber Avenue and Main Street in Old Town. Kenneth Abdalla, who was once a prominent Main Street businessman, is facing three felony charges tied to allegations stemming from his role at the property.
David Jackson/Park Record

A former prominent Main Street businessman with a long history of civil legal action against him now faces criminal charges from the Summit County Attorney’s Office.

Kenneth Abdalla faces three second-degree felony counts, including unlawful dealing of property by fiduciary, theft and pattern of unlawful activity, according to court documents. The charges stem from Abdalla’s involvement with several properties in the Main Street core like the former Sky Lodge condominium hotel. Prosecutors allege he used millions of dollars in proceeds to pay for personal and commercial expenses.

According to the charging documents, a detective with the Park City Police Department received a theft or fraud report involving the homeowners association at Sky Lodge condominiums. There have been several lawsuits regarding the Sky Lodge project since 2017. During the litigation, a third-party officer appointed by the court discovered evidence of criminal activity, court documents said.

Sky Lodge was originally marketed and sold as a luxury boutique property consisting of 22 residential units and six commercial units, according to court documents. Each residential unit is divided into eight fractional interests, which are called shared interest units. The owner of each unit is entitled to use it for 45 days of the year and can choose to live there or rent it out through a rental management program independent of the association of property owners, the Union Square Owners Association, Inc.

There are 176 shared interest units in total, which account for approximately 69% of the percentage interests in the Sky Lodge project, according to court documents. Each shared interest unit owner is a member of the owners association and must pay assessments, or dues, based on the percentage of units they own.

According to the charging documents, the commercial units account for 31% of the project’s percentage interests. They include the historic Depot Building, which previously housed Robert Redford’s Zoom restaurant, the Lumber Building, which also served as various restaurants and bars, a barbershop, which was originally a bakery, a spa, the hotel’s lobby and space on the fourth floor, which was originally the Sky-Blue Lodge.

Like the shared interest unit owners, every commercial unit owner is also a member of the owners association and must pay dues to the association for commercial unit expenses and common expenses. A management committee governs the association and includes members elected by the owners.

The committee is responsible for adopting an annual budget, levying shared interest, commercial, and common assessments to pay for expenses for the owners association, according to court documents. Expenses related to shared interest units, like refurbishing the interior, can only be paid for by shared interest assessments. Likewise, commercial assessments can only be used for commercial units. Common assessments can be used to pay for expenses related to both shared interest and commercial units, such as roof repairs of HVAC maintenance.

During the period of allegations, the management committee consisted of four shared interest directors elected by the shared unit owners and three commercial unit directors elected by the commercial unit owners.

Around March 2012, Abdalla and his then-wife, Kay Carol Stoneburner, purchased all six commercial units through various entities as well as 53 shared interest units. The couple then appointed three individuals to become commercial unit directors, including Stoneburner, who served as one for much of the time between 2012 and 2018, according to court documents.

The county attorney alleges that in 2012, Abdalla assumed control of the rental management program at Sky Lodge through his entity, Malibu Companies, LLC. The company was supposed to help shared interest unit owners rent out their property, and in return, it would keep 50% of the income from nightly rentals and the other half went to the unit owner. If a shared interest unit owner was delinquent in paying their assessments, any rental income due was remitted by Malibu Companies and credited to the amount overdue.

According to court documents, Abdalla and his business entities acquired additional shared interest units between March 2012 and January 2015. That year, Abdalla and Stoneburner allegedly used their voting power to appoint most of the management committee members. Malibu Property Management, Abdalla’s company, was brought on to serve as the association’s property manager in exchange for $10,000 a month.

By 2017, Abdalla and Stoneburner elected all seven management committee members, according to the County Attorney’s Office.

“In short, over the span of a few years Mr. Abdalla and Ms. Stoneburner gained control of the management committee, the rental program, and the property management,” court documents stated.

Between 2015 and 2017, the shared interest unit assessments were increased by more than 281% while the commercial unit assessments were decreased over the same time, according to charging documents. While the commercial unit assessments were decreased by more than 20% in 2016, the management committee increased the number of common expenses to the shared interest unit owners.

Court documents state that the budget for 2015, which was prepared by the management committee in 2014, before the couple took majority control, allocated 76% of the budget to shared interest unit owners. Their share of the budget increased to 86% in 2017 and almost 90% in 2018. In 2015, the overall owners association budget was $1.5 million and it increased to $3.9 million in 2017.

The county attorney said that although the budget increased by more than 163%, the services and amenities at Sky Lodge quickly fell into severe disrepair. Many shared interest unit owners were allegedly forced or coerced into abandoning their properties or transferring them to one of the Abdalla business entities, court documents said.

Civil action was initiated on behalf of nearly 40 shared interest unit owners to choose a third party to be appointed over the owners association and obtain financial records. An evidentiary hearing was held at the Third District Court in August 2019 and the following month, the court announced there were accounting irregularities in the payroll and the association was at risk of insolvency, which was allegedly exacerbated by Abdalla’s failure to pay assessments and rental income owed to the owners association.

According to court documents, there was also evidence of mismanagement of the owners association, including reserve funds not being used to pay operating expenses, that the reserve funds had not been built up – and there was no plan to do so – and certain transactions lacked documentation. The owners association allegedly had inaccurate records from mid-2017 to April 2019 and no board meetings were held in that time. The association allegedly did not invoice for assessments, and bills were not paid when they became due, charging documents said.

Based on the court’s findings, a receiver – the appointed officer who has custody of certain assets and can liquidate them and distribute the proceeds – was assigned to the owners association. According to court documents, the receiver was ordered to “audit the books and records going back 12 months and if a reasonable basis existed, for additional time periods beyond the 12-month time period.”

The receiver determined that “significant commercial and personal expenses of Abdalla or entities owned or controlled by him were paid by the association over several years.” Court documents allege the commercial entities included Malibu Companies and Coal and Lumber, LLC, which the receiver said operated the former restaurant on the property.

“It also appears that Mr. Abdalla caused these expenses to be paid by the association to or on behalf of the Abdalla Entities,” court documents stated. “For example, Mr. Abdalla wrote checks on the association’s account to pay for the food and liquor Coal and Lumber sold to its patrons.”

The County Attorney’s Office said the forensic audit report contains a highly detailed analysis of the association’s budgets, assessments and expenses as well as amounts due from the rental management program compared to the association funds expended.

Abdalla and his related entities owe the owners association more than $4.1 million, according to court documents. More than $3.7 million of that amount was spent on non-association expenses like food and liquor licensing as well as paying Abdalla’s personal chef and nanny, court documents allege. The receiver estimated that Abdalla misappropriated over $3.7 million over four years, and $142,645.35 of the misappropriation occurred on or after May 2, 2018.

Under state law, a second-degree felony conviction can result in between one and 15 years in prison and a $10,000 fine.

No attorney was listed for Abdalla on court documents. A previous attorney for Abdalla, Joe Wrona, said he’s retiring from practicing law and no longer represents him.

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