A Hennepin County judge has revealed new details about how two major landlords tried to deceive the city of Minneapolis in a ruling that will allow more than 5,000 tenants to seek punitive damages.
Landlords Stephen Frenz and Spiros Zorbalas could be forced to pay tenants, many of them low income, up to $500 million in damages if the two men lose a class-action lawsuit under a court order issued Wednesday.
In blunt language, Judge Mary Vasaly wrote that Frenz lied to the city attorney's office by claiming that he alone owned rental properties, even as he had signed a secret deal in which Zorbalas remained an owner. Zorbalas had been banned by the City Council from owning rental property in the city in 2011.
Citing e-mails between the two not previously made public, Vasaly wrote that "Zorbalas also attempted to control Frenz by threatening to expose their scheme."
In 2013, Frenz was praised by city officials after he announced that he had purchased 63 apartment buildings from Zorbalas, who had been barred from renting property for five years for racking up hundreds of housing violations.
Repeatedly pressed by the city attorney's office, Frenz assured the lawyers that he and his wife, Jennifer Frenz, were the sole owners of the properties. "Zorbalas is not involved," he told Assistant City Attorney Lee Wolf, according to Vasaly.
Judge cites repeated lies
"Frenz lied to Wolf, telling him that he and his wife were the only shareholders of all the entities," wrote Vasaly. She said Frenz told Wolf that Zorbalas had been "removed from the equation" and the city should view it as a gift.
"All of Frenz's representations to the city about Zorbalas' removal from the rental business were false," wrote Vasaly.