Court Allows Conn. Landlady’s Suit Against Rogue Insurance Executive Frankel For House Damage

A federal judge ruled in favor of a Greenwich, Conn., woman trying to collect more than $2 million for back rent and damage to a home occupied by rogue financier Martin R. Frankel.

Judge Ellen Bree Burns rejected a request by prosecutors and liquidators of insurance companies looted by Frankel to dismiss the claim by Cheryl Lacoff.

Lacoff won a $2 million judgment against Frankel in 1999 in state housing court on claims that Frankel trashed a Greenwich home she rented to him in 1995.

Lacoff claimed that much of the damage resulted from unauthorized alterations Frankel made when converting the leased residence into office space. “He made holes in the roof for satellite dishes, tore open walls to install wires and cables,” Howard Wolfe, Lacoff’s attorney, said in 1999.

Frankel, who was re-sentenced in 2006 to nearly 17 years in prison, was convicted of looting insurance companies of more than $200 million in Arkansas, Mississippi, Oklahoma, Missouri and Tennessee. He fled the country in May 1999 after meeting with Mississippi regulators, who questioned his management of several insurers. He was arrested in Germany four months later and pleaded guilty in 2002.

Lacoff attached a lien on one of the houses Frankel owned on the same street where he rented from her. But prosecutors and insurers filed a forfeiture complaint on the properties to obtain assets.

Prosecutors argued that Lacoff did not qualify as an innocent owner because she learned of Frankel’s illegal activity in the media before she acquired an interest in the property. But Lacoff said she only had to prove that she did not know about the illegal activity when it took place. Burns agreed with Lacoff, sending the dispute to trial.