Mpls. landlord accused of fraud in tenants' housing court trial

Attorneys from a prominent Minneapolis law firm said on Wednesday that they would no longer represent one of the city's biggest landlords in a lawsuit brought by some of his tenants after the landlord was accused of submitting phony leases to a Hennepin County housing court.

Two lawyers with Fredrikson & Byron announced that they were withdrawing as counsel to landlord Stephen Frenz, shortly before Frenz was scheduled to resume his testimony in the case. The trial was suspended for two weeks, with a hearing on the fraud allegations set for March 29.

Frenz is accused of operating a rundown apartment building in south Minneapolis that is plagued with roaches, mice and other problems and of not making timely repairs.

In Wednesday's dramatic legal move, Fredrikson & Byron attorneys Kyle Ubl and Sten-Erik Hoidal, representing Frenz, announced that they were withdrawing from the case. Hoidal also submitted a letter to the court withdrawing three leases and other documents from the public record that they had filed earlier on behalf of Frenz.

Lawyers for the tenants, from Faegre Baker Daniels, offered evidence that Frenz may have tried to exaggerate the number of tenants in the building in the 3000 block of 14th Avenue S. to get the case dismissed. He claimed in an affidavit he had 11 occupied units, but based on documents filed Wednesday, there may have only been eight or nine.

"We believe these were false leases, ginned up to defeat our clients," said Michael Cockson, a Faegre attorney, in court.

Under state law, a neighborhood organization cannot sue on behalf of tenants of an apartment building unless it represents a majority of them. The organization Inquilinxs Unidxs por Justicia, United Renters for Justice, is the group supporting the suit.

At the start of the case, Frenz's lawyers argued that the tenants group lacked the support of a majority of tenants. Housing Court referee Jason Hutchison said it was a sufficient number to go forward.

As Frenz left the courtroom on Wednesday, he did not respond to questions about the fraud allegations.

Attorneys for both sides declined to comment.

Joseph Daly, an emeritus professor at Mitchell-Hamline School of Law, said a lawyer cannot perpetrate fraud upon a court and that "if the lawyer thinks a fraud has been perpetrated, his obligation is to convince his client to tell the truth or for the lawyer to withdraw." However, Daly said there could be other reasons to withdraw, such as not getting paid or being fired by a client.

Cockson, the tenants' lead attorney, also asked Hutchison Wednesday to allow a forensic firm to go into Frenz's companies — the Apartment Shop and Equity Residential Holdings — to copy documents and electronic filings so they are not destroyed. Cockson said he's convinced Fredrikson & Byron lawyers were unaware that the filings were false.

Frenz owns upward of 50 properties with more than 1,200 units. City records analyzed by the Star Tribune show that he has accumulated more housing violations than any other landlord of large apartment buildings in Minneapolis over the past three years.

He purchased many of the properties from Spiros Zorbalas, who was forced to sell after the city threatened to revoke his licenses. Zorbalas had racked up more than 2,100 housing violations.

Cockson said the fake tenants listed on the empty units are tenants in Frenz's other apartment buildings. He said others working for or hired by Frenz's companies may have been involved in a possible "civil conspiracy."

He said that if fraud were proven, it could have implications for past evictions of tenants by Frenz's company based on similar documents. "How far back does this go?" Cockson said in court, later adding: "I want to understand the depth of this fraud."

Hutchison had yet to make decisions on the allegations by Cockson but indicated that he would have more to say by the March 29 court date when he expected that Frenz would have new legal representation.

Randy Furst • 612-673-4224

Twitter: @randyfurst