City’s lawsuit against Oread hotel moved to federal court

The lawsuit filed by the City of Lawrence alleging Oread hotel developer Thomas Fritzel committed a fraudulent tax scheme has been moved to federal court.

The request to remove the case from Douglas County District Court was made Thursday by Fritzel’s attorney. The motion also means that any trial that would be conducted as part of the case would be held in Kansas City rather than Lawrence.

The request to remove the case from district court was made because the case falls under the federal court’s jurisdiction owing to claims of racketeering made in the lawsuit, according to the removal notice.

On Nov. 16, the city filed a lawsuit against Fritzel, Oread Wholesale, Oread Inn, DFC Company of Lawrence, and other individuals who may have aided in the alleged scheme, referred to only as John Does 1-12. The lawsuit alleges personal purchases and faked retail sales as grounds to terminate the multimillion-dollar incentive agreement the city made with The Oread hotel, 1200 Oread Ave.

Among the claims of the lawsuit is that Fritzel deliberately defrauded the city and engaged in “a pattern of racketeering activity involving wire and mail fraud.” The lawsuit alleges that Oread Wholesale was a farce, created explicitly to create a false paper trail for purchases fraudulently given a sales tax rebate from the city.

The federal crime of racketeering covers a wide range of illegal activities done to make money. It was established under the RICO (Racketeer Influenced and Corrupt Organizations Act) Act of 1970 as a means to combat organized crime.

Fritzel has three weeks from the date he was served the lawsuit to file a response, but an extension for up to two weeks can be requested. A response or extension request would need to be filed by mid-December.

Attorneys representing both parties in the lawsuit did not immediately return calls Friday to comment on the case’s change.