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CITY OF SAN LEANDRO BUSINESS LICENSE REVOCATION APPEAL GREEN LEAF SPA Hearing Date: September 14, 2015 Appearing for Appellant Appearing for City Steve Ward, Representative Kris Kokotaylo, Assistant City Attorney Kenny Ma, Co -Owner David Baum, Finance Director This appeal came on for hearing after written notice in accord with San Leandro Municipal Code Section 2-2-450 and City Council Resolution No. 2015-143 before Valerie J. Armento, Esq. Sworn testimony was provided by Kenny Ma, David Baum, the undercover Detective and Lieutenant Robert McManus. Background A business license was applied for and granted (#4526) to Kenny Ma and Run He in July 2014 to operate Green Leaf Spa at 333 Estudillo Avenue, Suite A, San Leandro. Acting upon a third -party nuisance complaint regarding possible prostitution, San Leandro police detective personnel (a Sergeant and a Detective), went to 333 Estudillo Avenue on January 13, 2015. The plainclothes Detective entered the premises and was greeted by Run He. The Detective expressed interest in receiving a deep tissue massage, based upon a posted sign paid $40.00 for a 30 minute $35.00 massage and was told change would be available when the massage concluded. The Detective was lead to a small room, where he undressed and, lying face down on the massage table, covered himself with a towel. Zhenying Liu entered the room and provided massage services. When the Detective pointed to his genital area and asked "How much?" and held up 5 fingers to represent a willingness to pay $5.00, Liu became sexually aggressive. After several exchanges, Liu left the room; the Detective dressed and left the spa. Both the Detective and the Sergeant donned police vests and entered the premises. When the Sergeant asked to see a business license, Run He presented an expired license from the counter. Liu responded to the Detective's questions about her activities that she could not remember how many similar encounters she has had with customers and that she accepted whatever the customer left in terms of cash. (SL Police Report #2015-00002106) On June 4, 2015, a Notice of Hearing for a business license revocation proceeding was sent to owners Run He and Kenny Ma. A revocation hearing was held before Finance Director David Baum on June 17, 2015 and a Final Notice of Business License Revocation dated June 19, 2015 was sent to the owners. The revocation was based upon two grounds: false statements on the business license application and operating a house of prostitution in violation of state and local law.