Losing at fraud, winning the house in Boca?

After five years in the clink, a convicted fraudster and his fitness-instructor partner could walk away with a foreclosed mansion in Boca Raton. The court case over a lingering contract dispute is testing the Florida statute of limitations, the Palm Beach Post reported.

Palm Beach County foreclosure judge Rodger Colton ruled last month in favor of one-time condo king Bill Lilly and former fitness instructor Valerie Kaan, allowing them to keep their estate in the Sanctuary section of Boca Raton. The judge ruled that a Florida law places a five-year statute of limitations on pursuing a contract dispute. The matter to date had stayed out of foreclosure cases, the Post said.

Kaan rebuilt a real estate empire while her husband served five years in prison for bank fraud. She bought an 8,500-square-foot home in the 700 block of Sanctuary Drive in 1999 for $3.6 million. The feds filed a civil suit alleging Lilly was avoiding paying the money, the newspaper said.

A foreclosure on the estate was filed against Kaan in 2008. The bank took a voluntary dismissal at a trail last month because of a legal misstep. The statute of limitations prevents the case from being refiled. Now the bank is attempting to the reopen the case, the newspaper said.

“I hate the ‘free house’ story,” Matt Weidner, a St. Petersburg foreclosure defense attorney, told the Palm Beach Post. “There is no free house, largely.” [Palm Beach Post] — Mark Maurer