photo by: Nick Krug

Defendant Thomas S. Fritzel leaves the Frank Carlson Federal Courthouse in Topeka, Kan. on Tuesday, Aug. 14, 2018.

TOPEKA — Lawrence developer Thomas Fritzel and his bookkeeper are tentatively set to go on trial in January 2020 on charges that they conspired to defraud the City of Lawrence of hundreds of thousands of dollars.

Fritzel and the bookkeeper, Keela Lam, are charged with scheming to use a special tax district set up for Lawrence’s Oread hotel to collect more than $400,000 in fraudulent tax refunds from the city.

During a hearing Thursday, U.S. District Judge Daniel Crabtree accepted a request from the defendants to declare the case a “complex case” under federal law. The “complex” designation pushes back the normal speedy trial deadlines, which typically require that a trial begin within 70 days of the first appearance.

Crabtree said he was persuaded that the case qualified as complex but that he wanted to be thoughtful regarding the speedy trial rules. He said he wanted to be sure the period of delay, which would be about 1.5 years, was appropriate.

Attorney Edward Novak, who is representing Fritzel, told Crabtree that disclosures in the case included more than 20,000 pages of documents and more than 18 hours of audio, most of which he said had not yet been transcribed. Novak also said that tax issues and redevelopment districts were challenging to understand and would require review from experts. Novak also noted a separate ongoing federal case against Fritzel, the trial for which is scheduled to begin in July 2019. That trial involves charges of illegally handling asbestos.

A proposed case schedule filed by the defendants Sept. 25 states that the government’s initial disclosures include 24 audio and video files that require transcription and 6.5 gigabits of data, comprising approximately 29,474 pages of investigative reports, agreements, emails and receipts. The motion states the audio and video files comprise nearly 18 hours of interviews. It also states that the defendants have identified at least 50 witnesses, the majority requiring defense interviews.

In further support of the proposed case schedule, the motion states that the defense anticipates filing a number of pretrial motions, including motions to suppress statements, motions concerning the admissibility of evidence and possible motions to dismiss.

Assistant U.S. Attorney Richard Hathaway told Crabtree he had no objection to the defendants’ request for a complex case designation or to a trial in January 2020. Hathaway also noted the “vast number of documents” related to the case. When Crabtree asked for an estimated trial time, Hathaway estimated the government would need up to 10 trial days to prove its case.

Ultimately, Crabtree said he was persuaded that the length of the continuance was warranted. He noted that it’s the defendants’ interests that the speedy trial act protects, and he confirmed directly with Fritzel and Lam that they agreed to the schedule. Both Fritzel and Lam responded to Crabtree, stating only “yes, your honor.”

Fritzel and Lam, both of Lawrence, are each charged with one count of conspiracy to defraud the city and one count of interstate transportation of stolen funds. If convicted on all counts, Fritzel and Lam could be sentenced to as much as 15 years in prison and be fined up to $500,000 each. Also named as defendants are companies controlled by Fritzel, including Oread Construction LC, Oread Wholesale LC, Oread Inn LC and R6 LC.

The indictment alleges that Fritzel and Lam conspired to defraud the city by seeking reimbursement for hundreds of transactions that were not generated within the redevelopment district. The indictment alleges that the defendants fraudulently sought refunds for taxes paid on furniture and appliances, work on houses Fritzel owned in Lawrence and Colorado, landscaping materials, party tent rentals, car batteries, equipment for a car wash and other items.

Fritzel and the City of Lawrence reached a settlement in a civil suit in 2017 regarding the tax fraud allegations. The settlement involved Fritzel entities paying the city $650,000 in damages. However, the city is still obligated to provide millions of dollars in incentives to The Oread project.

According to the settlement, the hotel is still eligible to receive $8.5 million in tax refunds to reimburse the project for infrastructure expenses, and the city has the right to audit and must approve management positions at The Oread.

In separate indictments that were filed the same day as the one involving conspiracy to commit tax fraud, Fritzel is charged, along with his son Tucker Fritzel and business associates Casey Stewart and Wesley Lynch, with violating the federal Clean Air Act by improperly removing and disposing of asbestos during the remodeling of the Alvamar Country Club, now known as the Jayhawk Club. The trial in that case has tentatively been set for July 24, 2019.