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The same month, Zorbalas fired Cody Forester, a handyman who'd worked for his company for more than a year and who'd repeatedly complained about not having his taxes withheld from his paycheck. Forester filed a lawsuit for wrongful termination and accused Zorbalas of illegally keeping him off the books for tax purposes. Zorbalas quickly settled the case on confidential terms.
"I don't comment on employees," Zorbalas says.
Even as he mistreated tenants, eluded creditors, and shortchanged his workers, Zorbalas presented a clean-cut image when he went before St. Paul city leaders asking for taxpayers' money. After teaming with two other developers in downtown St. Paul to construct The Aberdeen—a 57-unit luxury condo building—in the spring of 2004, Zorbalas moved ahead with plans to erect a 259-unit luxury eight-story building on Jackson Street. Even though his project allowed for a mere 12 units of affordable housing—a stated city priority—Zorbalas hooked city leaders on it. In July 2004, St. Paul's Housing and Redevelopment Authority, which is made up of members of the City Council, voted to grant Zorbalas $3.99 million in forgivable loans for the project.
But in fall 2004, with evidence of a coming downturn in the market mounting, Zorbalas pulled the plug on the Jackson Street Lofts, as he'd dubbed them.
IN NOVEMBER 2004, POLICE WERE called to 3121 Cedar Avenue, a rundown three-story building owned by Zorbalas. Inside an apartment on the third floor, a pair of officers found a bedraggled, stringy-haired man who told them he'd been smoking crack there for two days straight. The police department sent a certified letter to Zorbalas warning him to straighten up the building or risk losing his rental license.
The letter was returned unopened. Twice more in the following weeks, cops showed up at the same apartment complex, each time to serve search warrants on khat dealers working out of the building. After each incident, the city mailed letters to Zorbalas's office demanding that he take action to rid the property of drug dealers. Each time, the letters were returned unopened.
When the city finally revoked Zorbalas's rental license, he cried foul, insisting the city hadn't given him proper notice. After more than a year of unsuccessful appeals, during which Zobalas explained that he'd instructed employees not to accept any mail for him, he gave up and sold the building.
At about the same time, Family and Children's Service, a nonprofit social services agency in south Minneapolis, began a push to organize Zorbalas's tenants. Two of the agency's workers went door to door, talking to tenants and drawing up a sobering list of complaints.
One of the buildings organized was 3100 Bloomington Ave., where Angelina Ardid lived with her husband and two-year-old son, Manases Ruiz. On September 14, 2004, as Ardid carried young Manases in her arms, she tripped on a loose plastic runner on the hallway stairs. The toddler took the brunt of the fall, suffering a broken right leg. The family, which lacked health insurance, sued. A year and a half later, long after Zorbalas had agreed to settle, it took the county sheriff to get him to cough up the $15,000 he owed.
In April 2005, dozens of tenants from 13 buildings sent Zorbalas a letter demanding that he fix their apartments within two weeks. They invited him to attend a community meeting. Zorbalas didn't show, instead sending a form letter that made it clear who was in charge: "It is important to understand that your eating habits may cause some of your problems with pests," he wrote, adding that "you have a responsibility to keep your place clean, which includes not throwing trash outside." The letter also announced that he would no longer give advance warning of any work he chose to do inside of apartments. "You have given us notice that you want us inside your apartment. That is the only notice we need."
He closed in a conciliatory tone. "Again, thank you for your letter and your willingness to work with us to keep you happy tenants!"
Despite his high-handedness, the organizing effort did achieve some success. In the fall of 2005, after a couple of embarrassing stories about terrible living conditions aired on Fox 9 News, Zorabalas sold 15 of his properties, including five of the 13 where tenants had organized against him.
"That had nothing to do with it," Zorbalas counters. "It was a good time to sell."
Family and Children's Service claimed a landmark victory. But with Zorbalas still owning another 40 buildings, the celebration was premature.
LAST FALL, 23-YEAR-OLD COLLEGE student Chris Standiford moved into a Zorbalas-owned one-bedroom apartment on Stevens Square. It didn't take long for things to go wrong. First the kitchen ceiling sprung a leak, which soaked the floor. When Standiford called his landlord's emergency number, he was told that reporting the problem would cost $50.
Two weeks later, after the smell of mold had settled in, a handyman finally showed up and plugged the hole. A couple of days after that, Standiford noticed buckling in his bathroom ceiling. Again, he called Zorbalas's company. "We'll get to it when we can," he recalls being told. A few minutes later, as Standiford was washing his hands at his bathroom sink, chunks of the ceiling fell on him.