Maui County has built a hefty case against California resident Stephanie Rager, who is accused of illegally renting out her four-bedroom Kihei home for several thousand dollars a week, The Maui News reported today.

It appears as though Maui County could hope to make an example out of Rager in its ongoing attempt to crack down on unpermitted transient vacation rentals while the County Council continues to work on new laws to regulate the controversial industry.

Rager faces a maximum possible fine of $214,000 for allegedly violating Maui County Code, which states that a TVR without a conditional use permit is not allowed in a residential district., the Maui News said.

The county's 4-inch thick file on Rager reveals a rare peek into how TVRs operate, and how the county Planning Department and Corporation Counsel go about investigating and prosecuting an illegal vacation rental.

County inspectors acted as determined detectives hunting for TVRs in cyberspace - where the units are often advertised - repeatedly confronting the owner, interviewing neighbors, collecting license plate numbers, and even tracking down former renters across the country by phone for statements and documentary evidence to build their case.

The county accuses Rager of continuing to operate and advertise her TVR even after she received multiple warnings and a cease-and-desist order 1 years ago. Officials called the proof against Rager overwhelming.

But Rager has pushed back, bringing her case before the county Board of Variances and Appeals.

"It's a landmark case in that it's the first to go to a hearing before the BVA (Board of Variances and Appeals)," said Deputy Corporation Counsel Madelyn D'Enbeau.

Rager argued that after she was told to stop using her home as a vacation rental, she stopped. After that, she said she was only providing a place to stay for friends and family. Rager also said she was cooperating with the county, and accused an inspector of prejudice and harassment.

When reached by telephone Friday, Rager declined to comment until the county administrative proceedings are complete.

Breaking the county zoning ordinances can cost up to $1,000 for the initial violation and up to $1,000 for each day that the violation persists, according to the county code. However, maximum fines are rarely, if ever, handed out.

Rager and the county Corporation Counsel are in negotiations for a settlement.

The overall TVR issue came to the fore after Mayor Charmaine Tavares said that the exponential expansion of unpermitted short-term rentals in recent years diminished an already taxed long-term rental housing market as well as damaged the character of neighborhoods. Under her administration, the Planning Department began cracking down on illegal TVRs, after years of no enforcement.

Meanwhile, the TVR industry and its supporters have responded that the vast majority of operators are responsible neighbors, and have encouraged the county to root out problem landlords. But without the legal ability to rent short term, the good ones are beginning to lose their homes and tourism-related businesses, they said.

Rager, of San Juan Capistrano, Calif., owns a four-bedroom, three-bathroom, 1,895- square-foot home at 2626 Mikoi Place, which she called "Hale Mikoi." Rager and her husband, Tim, bought the home in the Keonekai Heights subdivision in December 2005, and they also own a couple of other rental properties on Maui and the Big Island.

In February 2007, the county started receiving complaints from neighbors who said that the subdivision was being disrupted by loud late-night parties and lots of cars, according to records.

During an appeals hearing in January of this year, two neighbors and a county investigator testified that they approached several of the people occupying the house. The people told them that they were renting the home for a week or two at a time.

Rager said in an appeal filed in September 2007 that she stopped renting out the home as soon as she received the first warning on April 12, 2007, from the county Planning Department.

Rager also said she took down the Web site advertising her TVR two months before she got a second warning on June 29, 2007.

However, Zoning Inspector Charles Villalon wrote to Rager on July 2, 2007, "Evidence proves you are still conducting vacation rentals. Remove Web site and cease activities or be subject to fines."

Maui County attorneys allege that while Rager may have taken the main Web site down, she left another up and running and then lied about it to investigators.

Rager refutes the allegation. She also accuses Villalon of harassing her and abusing his authority.

Villalon wasn't the only person working the case. Planning Director Jeff Hunt, who could not be reached for comment Friday afternoon, and at least two other investigators and attorneys also met with Rager and witnesses.

County Corporation Counsel Investigator Frank Krau tracked down and interviewed Annette Pablo Chin of Seattle over the phone on May 16. Pablo Chin said her nine-member wedding party rented the home for $3,879.16 from Rager for seven nights starting on Aug. 1, 2007, almost five months after Rager received the county's cease-and-desist order.

That information came according to a receipt in the name of Rager's company, Old San Juan Properties, LP, that D'Enbeau and Deputy Corporation Counsel Mary Blaine Johnston filed with the appeals board. Pablo Chin also provided the county with a list of house rules signed by Rager, which included a request to respect neighbors maintain quiet time from 9 p.m. to 8 a.m. and a warning against large parties.

Pablo Chin told the investigator she discovered Rager's house at www.vrbo.com, the Vacation Rental By Owner Web site. The county found more ads for Hale Mikoi on www.mauiohmaui.com and www.renters.org.

Pablo Chin said that Rager also called her two days before she was about to arrive on Maui and told her that a new law had just passed about vacation rentals. Pablo Chin said Rager told her that if anyone asked who she was, she was supposed to say she was a friend of Rager's daughter, who apparently lives on Maui.

Johnston also spoke with Darlene Quintos-Cairns, who lives in Scottsdale, Ariz., but grew up on Maui. Quintos-Cairns said she found the house online in order to celebrate her 10th wedding anniversary with her family.

When they arrived on July 11, 2007, they found a "for sale" sign in the yard. Hale Mikoi is now listed as single-family home for sale for $895,000, according to the Century 21 Web site.

Rager told Quintos-Cairns that the house was for sale because she could no longer afford it, since vacation rentals were going to be shut down.

Quintos-Cairns said Rager also told her to say only that she was "staying" at the home if the neighbors or anyone else asked.

According to the minutes of the January board hearing, Rager sparred with one of her Kihei neighbors when Rager questioned the woman about how she could know that the people in the house were renters.

"Oh, come on," said the neighbor, who also testified that the house would only be empty for a few days at a time before a new group appeared. "They were coming and going. You couldn't have hundreds of friends and relatives there all the time."

Rager said she had a whole list of friends and family who were always using the house.

But Quintos-Cairns had a different view.

"In January, I received a letter and a 2008 calendar from Ms. Rager with information about her condominium in Kihei and a house on the Big Island and indicating that the Mikoi house was available to 'friends and family,' " Quintos-Cairns told Johnston. "I would not consider myself a 'friend' or 'family' to Ms. Rager; rather, I had a business transaction with her to rent her house."

The letter is part of the evidence against Rager.

"Hale Mikoi vacation house was off to a wonderful year, and then the County of Maui changed the rules in the middle of 2007," Rager wrote in the letter.

She went on to say that Tavares lied during her campaign by saying she would not enforce TVR laws on the books. But Rager added that since the issue could go before the courts, she would continue to welcome friends and family to make reservations.

In fact, according to interviews with The Maui News two years ago, Tavares said in her 2006 mayoral campaign that the county should crack down on unpermitted vacation rentals not within the hotel/resort districts.

In March 2007, a County Council committee recommended that existing laws restricting TVRs be enforced until a new set of compromise bills can be worked out. Those bills were sent to the County Council this spring.

Either way, county officials said Rager never complied with the rules, since she was always operating outside of the law by being in a residential neighborhood. In addition, the codes, covenants and restrictions in Rager's subdivision also prohibited TVRs. And Rager didn't have a TVR permit and never applied for a permit, according to the evidence.

The next BVA hearing for Rager is set for Aug. 24, when the potential settlement could be made public. Otherwise, further arguments would be heard before it goes to a board vote.

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