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A former San Carlos mayor allegedly embezzled more than $2 million from landlords across the Peninsula while operating his property management company, according to two lawsuits filed in San Mateo County Superior Court and obtained by The Almanac.
“I have been embezzling money from my clients. … I am so sorry,” former Councilmember Andrew “Andy” Klein allegedly wrote by hand after being confronted at a real estate agent’s office in Palo Alto on May 19 when his clients discovered missing mortgage and property tax payments.
The lawsuits allege Klein diverted rent, security deposits and other funds entrusted to him by property owners in Redwood City, Menlo Park, Palo Alto, Burlingame, San Mateo, Santa Clara and South San Francisco while operating Klein Property Management, a company he founded in 2023.
Klein did not respond to multiple requests for comment. According to court records, a criminal defense attorney representing the former mayor informed his clients that he was in rehab until June 30 for an undisclosed reason.
A lawsuit filed on June 8 by the owners of six real estate companies with more than 200 apartment units alleges Klein and his company stole at least $1.91 million while serving as their property manager. The owners accuse him of breach of contract, breach of fiduciary duty, financial elder abuse, and other claims. They have successfully obtained a court order allowing them to seek attachment of assets totaling nearly $2 million while the case proceeds.
We are bitterly disappointed to learn that you have been violating our trust all along.
Andrews-bloom investments llc in an email to klein
A separate lawsuit filed June 25 by Andrews-Bloom Investments LLC alleges Klein improperly withdrew an additional $226,000 from savings accounts holding money for three South San Francisco apartment properties, concealing the withdrawals by providing falsified financial records and altered bank statements.
The lawsuits do not specify whether Klein admitted to embezzlement from other properties not included in the suits.
Klein joined the San Carlos City Council in 2009 and was appointed mayor in June 2011 following the sudden death of his predecessor, Omar Ahmad. Just one month before becoming mayor, Klein was arrested on suspicion of DUI while returning home from Ahmad’s funeral. The San Mateo County District Attorney’s Office later declined to file charges after his blood alcohol level was found to be 0.07%, slightly below the legal limit of 0.08%.
Nearly a year later, in April 2012, Klein resigned from the City Council, citing an impending divorce and his struggle with alcoholism. Since then, Klein has remained active in the San Carlos community, currently serving as president of the board of the Museum of San Carlos History and previously serving as a volunteer at the Community Foundation of San Carlos.
Klein was caught driving under the influence in 2023 and pleaded no contest as part of a plea deal that ordered him to complete a first-time offenders program.
As a property manager, Klein was responsible for collecting income and paying expenses in trust accounts on behalf of property owners. Instead, the lawsuits say he diverted more than $2 million from those accounts while concealing the transfers through false accounting records, misleading owner statements and inaccurate financial reports.
The June 8 lawsuit says the alleged scheme began to unravel when Nikki Langendorf, whose father owns an apartment complex in Redwood City, discovered that a required $50,000 mortgage payment had not been made and that a property tax installment was delinquent. When she questioned Klein, the lawsuit alleges he initially blamed an assistant before later admitting he had been embezzling from clients.
Klein allegedly followed up the next day with an email acknowledging at least $238,885 in missing funds from Langendorf’s father’s property, while noting that his review was incomplete. Langendorf later identified another unexplained $100,000 transfer from the property’s accounts, according to the complaint.
The bank statements from several clients allegedly showed that funds were being directed into a U.S. Bank account. However, when the clients asked Klein to provide the statement for that account, he reportedly said doing so would send him to prison, according to the lawsuit.
In addition to the stolen funds, Klein’s mismanagement may expose the landlords to civil liability and create confusion for tenants, attorneys for the property owners said. California law requires that security deposits be returned within 21 days of tenants moving out.
Shabati Evan, one of the owners of a multifamily residential property in Santa Clara, described the issue in a sworn declaration.
“We have new tenants who have signed leases with (Klein) before we learned of his embezzlement, and those tenants are requesting to move into their leased premises, claiming they paid a security deposit, as well as the first month’s rent. We have no record of such funds being received; they are not accounted for,” Evan wrote in a sworn declaration. “We now must allow them to move in anyway or risk liability for not timely tendering possession to them.”
Judge Mark McCannon granted a request by the plaintiffs in the June 8 lawsuit to attach $1.9 million in Klein’s assets, which could be used to satisfy any future judgment. McCannon granted the request after finding that the plaintiffs were likely to succeed in the lawsuit and that there was a risk the assets could be hidden or destroyed.
The June 25 lawsuit brought by Portola Valley resident Janet Andrews Howes’ real estate company alleges that after Klein resigned on May 21, citing a “serious medical issue,” she learned he stole more than $200,000.
When the person who recommended Klein to Andrews Howes said that he admitted to stealing from his clients, she initially doubted Klein could have embezzled from her family-owned real estate company, Andrews Howes said in an interview.
“I had been watching closely, so I didn’t think that could happen to us,” Andrews Howes said. But when she brought copies of statements Klein had provided showing balances of more than $250,000, a bank vice president told her the account held only around $25,000.
“We are bitterly disappointed to learn that you have been violating our trust all along,” Andrews Howes’ family emailed Klein later that day after confirming the alleged fraud.
According to Andrews Howes’ sworn declaration, her bank was familiar with Klein. When she arrived, a Citizens Business Bank employee allegedly had a large, dedicated three-ring binder labeled “Klein Management.” The bank’s vice president also mentioned that the bank had to close 16 other accounts associated with Klein. Andrews Howes’ lawsuit alleges Citizens Business Bank should have known to inform Andrews Howes; Citizens Business Bank is not a party to the suit.
As of Thursday, July 2, the San Mateo County District Attorney’s Office had not received any case related to Klein’s alleged embezzlement, according to District Attorney Steve Wagstaffe. The lawsuits reference an ongoing criminal investigation by an unnamed agency. The San Mateo County Sheriff’s Office declined to comment and the Palo Alto Police Department said it had not received a complaint involving the allegations.
