Former Main Street business owner facing possible prison time for theft and unlawful business dealings

Summit County charged Kenneth Abdalla with three second-degree felonies, including unlawful dealing of property by a fiduciary, theft and a pattern of unlawful activity. Photo: TownLift.

PARK CITY, Utah — Filed Monday May 2, 2022 by Summit County Attorney Margaret H. Olson, the State of Utah is charging Kenneth J. Abdalla on three counts of second degree felonies including: unlawful dealing of property by fiduciary, theft, and pattern of unlawful activity.

Based on the court filing, the State of Utah supported their statement of probable cause with a police report by Detective Alan Saway with the Park City Police Department regarding the Homeowners Association of Sky Lodge condominiums in Park City.  The condominiums are fractional ownership units consisting of 22 separate units where the owners are required to pay assessments to the association for expenses incurred throughout the year.

The building also included six commercial units such as: the historic Depot Building, the Lumber Building, a barbershop, a spa, the hotel lobby and a space that used to be the Sky-Blue Lounge. The commercial unit owners are all members of the association as well and required to pay assessments.

In approximately spring of 2012, Abdalla and his wife at the time, Kay Carol “Kitty” Stoneburner, had purchased all six of the commercial properties, as well as 53 (of the 176 available) “shared interest units”.  Because they owned all six commercial units, this allowed Abdalla and Stoneburner to appoint their own Commercial Unit Directors to make up part of the Management Committee of the association for the complex.  The “Abdalla Entities”, as they are referred to, were able to keep the leadership of their choosing for six years through 2018.

In 2012, Abdalla also obtained control of the rental management program at the condominiums through another one of his entities called Malibu Companies, LLC.  This entity was in charge of renting out the fractional ownerships like a hotel and therefore received 50% of the income. If a fractional owner did not pay their assessments, they would have to forfeit the money from renting out their units to pay off the assessment money that was due.

The court documents explained that for the next three years, the Abdalla Entities acquired more fractional units to gain larger voting power and were able to appoint a majority of the management committee members for the association.

By the year 2017, Abdalla and Stoneburner had control over the Management Committee, the rental program and the property management of the complex.  During this time, they had substantially increased the assessment dues of the fractional owners by over 281% (between the years 2015 and 2017).

At the same time, they had lowered the commercial ownership assessment dues, of which his entities owned all six, by 20%. These assessment increases brought the total budget of the association from $1.5 million in 2015 to $3.96 million in 2017.

According to the court documents, “despite the more than 163% increase, the services and amenities previously available to owners and hotel guests alike disappeared and the [building] quickly fell into severe disrepair”.

After an evidentiary hearing in August of 2019, the Third District Court, Silver Summit ruled that the association had accounting irregularities, Abdalla had failed to pay assessments and rental income to the association, and there was clear evidence that he had mismanaged the association.

A Forensic Audit Report determined that Abdalla and his entities had been utilizing the Association’s funds to pay personal and commercial expenses, including Abdalla’s personal chef and nanny.  By 2019, the audit determined that Abdalla owed the association $4.1 million and that in four years, $3.7 million was spent on non-association expenses.

An initial appearance in 3rd District Court has been scheduled for 9 a.m. on Monday, June 6.

To read the entire court filing click here.