City of St. Paul Destroys Evidence related to Real-Estate Racketeering Lawsuits

Three St. Paul landlords, Frank Steinhauser, Tom Gallagher, and Sandra Harrilal, are suing the City of St. Paul for selective and illegal housing-code enforcement under the RICO, Fair Housing, Civil Rights, Antitrust, Abuse of Process, and Tortious Interference with Contract and Business Expediency laws.

The complaints were first filed in U.S. District Court on May 5, 2004. The first discovery requests in these cases was made on November 2004. The detailed claims of abuse put the defendant - the City of St. Paul - on notice to require the defendants “to place a ‘litigation hold’ on normal document retention and destruction policies and to refrain from destroying relevant evidence.” The city’s normal policy is to retain documents for three years.

In March and April 2007, the plaintiff’s attorney learned from the defendant’s attorney that “certain relevant evidence was destroyed by Defendants during the course of this litigation ... including the City’s Truth in Sale of Housing reports for 2001, 2002, and 2003, and all emails and electronic communications between city officials, employees, non-government organizations, district councils, neighborhood groups, public housing agency and other entities and individuals for all time periods prior to December, 2005. Moreover, Defendants have failed to produce any documentation of the City’s ‘Cooperative agreements,’ ‘police service agreements’, and other agreements it has with the City’s public Housing Agency even though Plaintiffs have made proper and repeated requests for this evidence relevant to Plaintiffs’ claims.”

Certain information was delivered from an anonymous source after the close of discovery, too late to be of use in depositions of city inspectors. According to the complaint, “Many inspectors answered with the ‘I don’t recall line’ where, if Plaintiffs would have had the douments that were withheld, the inspectors would have been forced to recall the facts as recorded in the documents.”

The Plaintiffs are asking the court to sanction the city of St. Paul. The motion asks the “sanctions (to be) sufficient to punish and deter Defendant’s misconduct. The conduct of the defendants (the city of St. Paul) in destroying evidence and failing to disclose documents rises to the level of intentional spoliation of evidence and therefore the court should sanction them appropirately by finding judgment in favor of Plaintiffs, or, in the alternative, issue adverse inference instructions to the jury .... Defendants’ failure to insure the preservation of records after official notice of claim letters, the filing of the complaints, and requests for production of documents is the ‘willful’ behavior contemplated by the Court in EEOC (case law) to justify the default sanction.”

The Plaintiffs had requested that emails of city employees pertinent to the complaints be retained and produced. They had also requested “TISH” reports, “Problem Property 2000” documents, and “PHA” (Public Housing Authority) reports relating to the Plaintiffs’ claim of being inconsistently and unfairly targeted by St. Paul city inspectors.

Interestingly, among the documents delivered anonymously to a Plaintiff’s attorney was a memorandum which the head of the city’s housing department, Andy Dawkins, sent to code-enforcement inspectors regarding the discriminatory impact of code enforcement ... It is reasonably likely that this type of evidence would have been contained in the emails from 2002-2005, the time period in which Plaintiffs claim illegal code enforcement. However, all emails during Defendant Dawkins’ employment have been destroyed” - everything prior to December 2005.

The racketeering lawsuit against the city of St. Paul has been a long and expensive one. To date, it has focused upon the production of documents from the city and from key city employees which could be used to prove the Plaintiffs’ case. The city’s strategy seems to be a “scorched earth” policy of denying and destroying documents and, perhaps, of prolonging the process to the point that the Plaintiffs run out of money to pay their attorneys.

However, destruction of evidence requested in litigation is a serious matter. That issue has come to a head. We will see how the federal court handles this one.

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From Bob Johnson's St. Paul blog later in the day:

Hi All,

Here is a motion for change of venue from Nancy Lazaryans case against the city (of St. Paul). If you are new here you can find Nancys story a few topics down the list titled "Another Lawsuit Against code enforcement/more lies and skullduggery from the gestapo housing police force".

The motion is telling of what the RICO plaintiffs have been up against. The courts are FIXED! There is no justice for the citizens of Saint Paul unless you can get into federal court.


Nancy C. Lazaryan,
Victoria C. Marchetti, and
Evelyn C. Wallace,
and “Other Similarly Situated Persons”
all proceeding in propria persona, in summo jure


The City of St. Paul, a municipal corporation
Mike Kalis, individually and as a code enforcement officer
for the City of St. Paul,
Steve Magner, individually and as a supervisor for the
City of St. Paul department of
Neighborhood Housing and Improvement,
Robert (Bob) Kessler, individually and as director for
the City of St. Paul department of
Neighborhood Housing and Improvement,
ReMax Resources, of Stillwater, Minnesota,
Phad Rich, individually and as broker for ReMax Resources,
Thomas (Tom) Sawyer, individually and as agent for ReMax Resources,
Wells Fargo Mortgage, an Iowa corporation, doing business in the state of Minnesota,
Marcia Moermond, individually, and as Legislative Hearing officer for the City of St. Paul,

Defendants Case type: Civil Court file #______________
Plaintiffs hereby move the court for a CHANGE OF VENUE.

Plaintiffs are in possession of certain evidence that has been used in the federal RICO
against Defendant City of Saint Paul and the employees of said Defendant (also named in this case).

for Change of Venue

Said evidence proves that Defendant City of Saint Paul manipulated the Ramsey County
district court by meeting and conspiring with former Chief Judge Mott of the Ramsey County
district court. In said meetings with Judge Mott, the City of Saint Paul convinced Judge Mott to
assign only a certain judge and certain alternate judges to cases that concerned the City of Saint
Paul. Judge Mott also agreed that a list of particular judges would never be assigned to hear
cases involving the City of Saint Paul.

The City of Saint Paul then conducted private “seminars” with the “selected” judges, and
instructed said judges on how the judges would rule in the cases brought before them.
This so-stated evidence is currently on the public record in the federal RICO case that has
been brought against the City of Saint Paul.

Given the fact that the City of Saint Paul has effectively manipulated the Ramsey County
district court, Plaintiffs’ right to a fair and impartial trial would be violated by having Plaintiffs’
case heard in the Ramsey County district court.

As such, Plaintiffs move for a Change of Venue…preferably at a location that is very far
away from Saint Paul, Minnesota.

In the alternative, Plaintiffs ask that they can “choose a judge” from the list of judges that
the City of Saint Paul had agreed with Judge Mott, “would never hear a case concerning the City
of Saint Paul.”

Plaintiffs rest.
August_____, 2007
11:29 A

Note: The above information is taken from motions filed in U.S. District Court and in Minnesota District Court, Second Judicial District.

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