In a new lawsuit that could upend relations between tenants and owners of one of the largest landlords in Minneapolis, a local law firm representing tenants has asked Hennepin County District Court to put 62 apartments in receivership and return millions of dollars of income to tenants.
A legal team from Faegre Baker Daniels sued the owners Stephen Frenz and Spiros Zorbalas with their wives and companies, claiming that the two men engaged in "deceptive and flagrant legal violations trade practices." They are seeking a class action.
Frenz owns and oversees about 1,400 units in Minneapolis and in a recent civil trial in housing court, it is disclosed that Zorbalas still has ownership interest in its properties. The city ordered Zorbalas to shed all of his rental properties in 2012 because of a history of housing violations that led to some license revocations.
Frenz admitted continued participation of Zorbalas when he testified in the case brought by low-income tenants of an apartment building south of Minneapolis that was in disrepair.
Judge Jason Hutchison ruled earlier this month in favor of the tenants and said Frenz had misled the court in a failed attempt to get the lawsuit dismissed.
In the new lawsuit filed by attorney Michael Cockson, he alleged Zorbalas was involved in a sham sale of their property to Frenz, using a network of shell companies to hide his continued interest in the properties. Frenz lied to the city about the agreement and continued to collect rent from thousands of tenants living in inferior, unsafe and unhealthy conditions in many of its apartment buildings, the lawsuit alleges.
In a period of four years, they collected $ 40 million [for rent] and we are asking all the same to return to tenants. The new lawsuit is seeking a court order to have a receiver appointed by the 62 buildings owned by Frenz and Zorbalas. The receiver collects rents, fixes buildings, and keeps the money on deposit.
Noah Schuchman, director of Minneapolis regulation services, sent a letter to Frenz on September 16, demanding he disclose the names of all partners and shareholders in its 62 properties, including any financial or legal interest of Zorbalas in the buildings. Frenz has until Monday, October 31, to comply with the request, which Schuchman explained in a letter to Mayor Betsy Hodges and the City that could lead to the revocation of licenses for Frenz's rentals.
Hutchison has yet to rule on whether to issue sanctions against Frenz in the case of housing court. Hutchison has also asked Cockson to refer the case to the Hennepin County Prosecutor's Office to investigate Frenz's perjury during the housing trial.
This means hope and justice for residents living in the Apartment Shop buildings in Corcoran as it would be an alternative to avoid displacement of families of Corcoran.
For media on Frenz and the lawsuits, go to http://www.corcoranneighborhood.org/corcoran_residents_continue_to_fight_displacement.