Frontier Communications is being sued by the 95-year-old retired CEO of its predecessor company, who claims Frontier is $17.7 million short in covering premiums and related tax payments for life insurance policies the company awarded him heading into his 2004 retirement — with benefits of those policies totaling more than $95 million.
Leonard Tow filed suit this month in Connecticut Superior Court, asking a judge to issue a preemptive ruling for Frontier to pay any amounts ordered by an independent arbitrator. Tow wants to garnish Frontier assets or otherwise create a legal attachment for unspecified assets, which would bar the company from any transfer of those assets before paying him the amount he claims he is owed.
According to Tow’s complaint, Frontier’s costs to support premiums and related payments on the life insurance policies would total $9.3 million in the 2023 tax year, swelling to more than $20 million by 2026.
Frontier has asked for proof from Tow that he actually made the tax payments he is claiming in court, according to Calvin Woo, an attorney for Frontier in the Westport office of Verrill. A Frontier spokesperson declined further immediate comment on specifics of the case, with the company having asked a Connecticut judge to seal details of the separation agreement that are included in court documents.
A Tow attorney in the Stamford office of Robinson+Cole could not be reached separately Monday for details of the arbitration case, and why Tow felt compelled to seek a preemptive judicial order in advance of any decision by the American Arbitration Association on his case. Tow’s court action alleges that Frontier did not pay $6.1 million last year he claims was due.
“Frontier refused to pay it,” Tow’s attorneys stated in a court document. “The only claimed basis for its failure to pay was that its obligations under the agreements have become too expensive.”
A cable TV entrepreneur in the early 1970s based in New Canaan, starting in 1990 Tow transformed an all-purpose utilities company with operations in select states into Citizens Communications, basing it in Stamford. Citizens acquired the Frontier name in 2001 from then-bankrupt Global Crossing, then swapped out the Citizens moniker in favor of Frontier in 2008.
In court documents, Tow’s attorneys state that he chose to take retirement in 2004 rather than seeking a possible sale of the company or major recapitalization otherwise that would shake up the ownership structure. Tow negotiated the separation package that includes the life insurance policies now at issue nearly 20 years later in the arbitration dispute.
Under Tow’s successor CEO Maggie Wilderotter, Frontier went on an acquisition spree itself, purchasing its Connecticut operations from AT&T in 2014 and Verizon Communications territories in a number of states. After Wilderotter stepped down in April 2015, Frontier took big losses in the runup to a 2020 bankruptcy proceeding to wipe out debt it had taken on for the Verizon buys.
Listing its headquarters office in Norwalk today, Frontier is the eighth largest broadband provider in the United States, according to the Durham, N.H.-based Leichtman Research Group. Over 12 months through this past April, Frontier reported $444 million in profits.
When Tow stepped down as CEO in 2004, he held more than 11.5 million shares of Frontier stock which traded that year between $11.37 and $14.80, for a portfolio value ranging between $130 million and $170 million at the time.
The family-run Tow Foundation listed assets of $435 million at the close of 2021, with beneficiaries that year including Norwalk Hospital which received $330,000 for a pulmonary fellowship program; and Memorial Sloan-Kettering Cancer Center which received $2.5 million to support the Tow Center for Developmental Oncology and other initiatives.
In remarks delivered in 2019 during a Carnegie Medal of Philanthropy event recognizing the charitable work by he and his late spouse Claire, Tow said the two had come from “a rather humble background” in a Brooklyn immigrant neighborhood.
“When we arrived at a point where we recognized that the accumulation of resources went far beyond not only our expectations but our needs, we came to the conclusion that there was something that we didn’t understand out there that was directing us to do something constructive with these funds,” Tow said at the Carnegie Medal of Philanthropy event held in New York City. “We determined early on to return them to the community.”
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