Former Sky Lodge owner fined $10,000 without jail time after pleading no contest to theft

Main & Sky, formerly known as Sky Lodge, is located on the corner of Heber Avenue and Main Street in Old Town.
Tanzi Propst/Park Record

Kenneth J. Abdalla, former owner of the Sky Lodge in Park City, now Main & Sky, pleaded guilty and was sentenced to a $10,000 fine with no jail time if he stays good for two years.

He was investigated by the Park City Police Department for theft and unlawful handling of property by a fiduciary in connection with the operation of The Sky Lodge. Abdalla entered the plea June 14 in Third District Court in Summit County.

The terms of the settlement agreed to by Abdalla and the Summit County Attorney’s Office:

Plea of guilt without appeal to a charge of second-degree theft.
Consideration of the appeal will be stayed for a period of 24 months.
The condition of his suspension is good behavior and payment of a $10,000 fine.
If successful during the probation period, the conviction will be entered as a Class B misdemeanor – Theft.

The court accepted Mr. Abdalla’s application and issued a judgment to which the parties agreed.

“I express my gratitude for the tireless dedication and efforts of our detectives and prosecutors in investigating Mr. Abdalla. Their unwavering commitment to investigating this egregious crime is a testament to the exceptional qualities of the individuals representing the Park City Police Department and the Summit County Prosecutor’s Office,” said Park City Police Chief Wade Carpenter. “Our thoughts are with the victims in this case and we believe this resolution will, in some small way, assist them in seeking justice.”

According to charging documents, in May 2022:

A Park City Police Department detective received a report of theft or fraud involving the Sky Lodge condo homeowners association. The project has been the subject of several lawsuits since 2017. During the legal proceedings, an independent officer appointed by the court discovered evidence of criminal activity, court documents state.

Sky Lodge was originally marketed and advertised as a luxury boutique property with 22 residential units and six commercial units, according to court documents. Each residential unit was divided into eight fractional shares. The owner of each unit has the right to use it for 45 days per year and can choose to live in it or rent it out through a rental management program separate from the property owners association, Union Square Owners Association Inc.

There are 176 total share units, which represent a 69% percentage interest in the Sky Lodge project, according to court documents. Each share unit owner is a member of the owners association and must pay dues or fees, depending on the percentage of units they own.

According to settlement documents, the commercial units make up 31% of the project’s percentage stake. 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 that was originally a bakery, a spa, the hotel lobby and a fourth-floor space that was originally the Sky-Blue Lodge.

Around March 2012, Abdalla and his then-wife, Kay Carol Stoneburner, purchased all six commercial units through separate entities, as well as 53 units with a common interest. The couple then appointed three people as directors of the commercial units, including Stoneburner, who served in that role for most of the time from 2012 to 2018, according to court documents.

The district attorney alleged that in 2012, Abdalla took control of Sky Lodge’s rental management program through his entity, Malibu Companies LLC. The company would help common-interest landlords rent out their properties, and in return, it would keep 50 percent of the nightly rental income, with the other half going to the landlord. If a common-interest landlord fell behind on its dues, any rental income owed would be transferred through Malibu Companies and applied to the delinquent amount.

According to court documents, Abdalla and his business entities acquired additional joint-ownership units between March 2012 and January 2015. That year, Abdalla and Stoneburner allegedly used their voting rights to appoint a majority of the members of the management committee. Malibu Property Management, Abdalla’s company, was hired as the association’s property manager in exchange for $10,000 per month.

According to the district attorney’s office, in 2017, Abdalla and Stoneburner elected all seven members of the management committee.

“In short, over the course of several years, Mr. Abdalla and Ms. Stoneburner took control of the management committee, the rental program and property management,” court documents stated.

According to accounting documents, between 2015 and 2017, assessments for co-share units increased by more than 281%, while assessments for commercial units were lowered during the same period. While assessments for commercial units were lowered by more than 20% in 2016, the management committee increased the number of joint expenses for co-share unit owners.

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

The district attorney said that although the budget increased by more than 163%, services and facilities at Sky Lodge quickly fell into disrepair. Many condominium owners were allegedly forced or coerced to abandon their properties or transfer them to one of Abdalla’s business entities, court documents said.

A civil action was filed on behalf of nearly 40 unit owners to select a third party to appoint as the owners association and obtain financial records. An evidentiary hearing was held in August 2019 in the Third District Court, and the following month the court declared that there were accounting irregularities in the payroll and that the association was in danger of insolvency, allegedly exacerbated by Abdalla’s failure to pay dues and rental income owed to the owners association.

According to court documents, there was also evidence of mismanagement by the owners association, including failure to use reserve funds to cover operating expenses, failure to create reserve funds — and no plan to do so — and failure to document some transactions. The owners association allegedly had inaccurate records from mid-2017 to April 2019, and no board meetings were held during that time. The association allegedly did not invoice dues, and bills were not paid when they were due, charging documents said.

Based on the court’s findings, an administrator — a designated official 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 administrator was ordered to “audit the books and records going back 12 months and, if there was a reasonable basis, additional periods beyond the 12-month period.”

The recipient determined that “significant commercial and personal expenses of Abdalla or entities owned or controlled by him were paid by the association for several years.” Court documents allege that the commercial entities included Malibu Companies and Coal and Lumber LLC, which the recipient said operated a 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 state. “For example, Mr. Abdalla wrote checks on the association’s account to pay for food and alcohol that Coal and Lumber sold to its customers.”

The district attorney’s office said the forensic audit report included a highly detailed analysis of the association’s budgets, fees and expenses, as well as amounts owed under the rent management program compared to the association’s funds spent.

Abdalla and his affiliates owe the homeowners association more than $4.1 million, according to court documents. More than $3.7 million of that amount was spent on non-homeowners association expenses, such as food and liquor licensing and paying Abdalla’s personal chef and nanny, court documents allege. The recipient estimated that Abdalla misappropriated more than $3.7 million over a four-year period, and $142,645.35 of that misappropriation occurred on or after May 2, 2018.

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