In wake of indictment, City of Lawrence seeks to strip contractor license from developer Thomas Fritzel

photo by: Nick Krug

Lawrence developer Thomas Fritzel watches a video presentation of a Rock Chalk Park proposal during the city commission meeting on Tuesday, Feb. 19, 2013, at City Hall.

Story updated at 2:45 p.m., Sept. 6

The City of Lawrence is seeking to strip the construction company of Lawrence developer Thomas Fritzel of its local license because of pending federal charges of improperly disposing of asbestos and repeatedly violating the city’s contractor licensing regulations.

The city recently filed a complaint with the Lawrence Contractor Licensing Board against DFC Company, Fritzel and other affiliates and is recommending that the board suspend the company’s license.

“The charged entities should not be permitted to continue to operate with disregard to proper construction practices, the laws of this country, to their benefit and to the detriment of the health, safety, and welfare of the community,” the complaint states.

Director of Planning and Development Services Scott McCullough said that a recommendation to suspend a contractor’s license is uncommon but that the city decided to take the step because of the severity of the allegations in the federal indictment. McCullough said if the board votes to revoke the license, none of the companies or individuals named in the complaint would be able to do construction work that requires a permit within the city limits.

In June, Fritzel and others were indicted on federal charges, carrying up to 12 years in prison, related to alleged improper disposal of asbestos for a project at the former Alvamar Country Club. The indictment charges Fritzel, Casey Stewart, Wesley Lynch and Tucker Fritzel with one count of conspiracy, one count of failing to notify the Environmental Protection Agency of the removal of asbestos materials, one count of failing to wet materials that contained asbestos during demolition and one count of failing to dispose of asbestos waste in leak-tight containers. The indictment alleges that the defendants conspired with Fritzel to violate federal laws for handling asbestos so Fritzel could save money on demolition and renovations at the country club. Also named as defendants are DFC Company of Lawrence, Eagle 1968 and R&R Supply Company.

In a separate indictment, Fritzel and Keela Lam were charged with scheming to collect more than $400,000 in fraudulent tax refunds from the City of Lawrence related to the Oread Hotel.

In the complaint, the city charges the companies DFC Company of Lawrence, Eagle 1968 and R&R Supply Company, including all their “principals, affiliates, and subsidiaries” as well as Fritzel, Stewart, Lynch and Tucker Fritzel with violating the city’s contractor regulations. Specifically, the companies and individuals are charged with “serious or repeated” violations of the regulations and a “failure to exercise regular, routine control and supervision over an on-going project.”

The complaint states that the charged entities’ failure to comply with federal, state and local laws regarding the removal and disposal of asbestos put construction workers and the general public at significant physical risk by exposure to asbestos. The complaint notes those put at risk include Kansas Department of Health and Environment and city employees who may have been at the building site for their duties.

According to the Environmental Protection Agency’s website, asbestos is a fibrous material often used as insulation and as a fire retardant. Exposure to the material can increase the risk of lung disease, which could take years to develop. The major adverse health effects connected to exposure to asbestos are lung cancer, mesothelioma and asbestosis, according to the EPA.

Apart from the alleged improper asbestos disposal, the city’s complaint lists 14 other instances, related to various projects dating back 13 years, when DFC Company violated the city’s contractor regulations or building codes. The indictment, and the city’s subsequent decision to file the complaint, followed a letter that the city sent to DFC Company in May regarding its many violations of contractor regulations. The letter warned that the city would pursue discipline if future violations occurred.

McCullough said that the city typically does not bring disciplinary matters to the contractor licensing board and instead has used other means such as the court system, stop-work orders or double fees. However, he said those methods have not been successful in the case of DFC Company, and he cited the severity of the alleged asbestos violation.

“Those other methods of gaining compliance don’t seem to be a deterrent for this contractor to consistently perform under the expectations of the contractor license standards,” McCullough said.

The complaint notes that though the current license suspension recommendation is because of the improper asbestos disposal alleged in the federal indictment, the history is provided so that the board may view the most recent allegations “in the proper perspective.”

The violations in the complaint date back to 2005 and include performing plumbing work without the proper license, beginning construction or renovation work without a building permit on three occasions, occupying a building without an occupancy permit on two occasions, as well other miscellaneous code violations. Those include the improper dismantling of the historic Varsity House and the installation of artificial turf at an apartment project.

In addition, the complaint has more than a page of violations related to the Alvamar project, now known as the Jayhawk Club, and includes apartments and other buildings. Among the violations are Stewart improperly using a city fire hydrant to dispense 900,000 gallons of water into a pond and multiple violations related to structures or uses not included in the approved plan, including a water slide, cabana, wellness center, and an outdoor grill and concessions building. Lastly, in April, city staff stopped work on the construction of a “multipurpose accessory structure” because work was not being done according to the approved development and building plans; work began without obtaining a building permit; and work that required inspections was completed and concealed without first obtaining inspections.

The Journal-World’s attempts to reach Fritzel for comment were not successful Thursday. A call to an attorney said to be representing Fritzel in the matter was not immediately returned.

The city is recommending that the Contractor Licensing Board suspend the companies’ and individuals’ contractor licenses for one year. If it’s decided that the companies and individuals are guilty of the federal charges, the complaint states that the city will seek a permanent revocation of the contractor licenses. The board will consider the city’s recommendation at its meeting Sept. 27.

Other recent stories about Thomas Fritzel

• Aug. 14, 2018 — Lawrence developer Thomas Fritzel, associates plead not guilty to federal fraud, environmental charges

• June 29, 2018 — KU gave unique rights deal to Fritzel despite fraud investigation being underway

• May 22, 2018 — Rock Chalk Park started as $39 million deal for KU; now it may top $100 million

Timeline: Oread tax district dispute

● June 27, 2018 — Lawrence developer Thomas Fritzel and others indicted for alleged tax fraud scheme, illegal disposal of asbestos

● May 10, 2017 — Judge officially dismisses city’s lawsuit against The Oread in wake of settlement

● April 28, 2017 — All parties sign settlement in city’s lawsuit against Oread hotel

● April 19, 2017 — City leaders approve Oread hotel settlement that reduces incentives, removes Fritzel from management

● April 14, 2017 — Tentative settlement would reduce incentives to Oread hotel by millions, require Fritzel to resign management duties

● March 29, 2017 — Judge orders conclusion of mediation in Oread hotel lawsuit

● March 6, 2017 — After 10 hours of mediation and executive session, no public update in city’s lawsuit against The Oread hotel

● March 3, 2017 — City leaders to take part in second court-ordered mediation Monday for lawsuit against Oread hotel

● Feb. 22, 2017 — Mediation session does not resolve city’s suit against The Oread hotel; judge orders second session

● Jan. 20, 2017 — Judge orders mediation in city’s lawsuit against Oread hotel

● Dec. 9, 2016 — City’s lawsuit against Oread hotel moved to federal court

● Dec. 4, 2016 — City: Oread hotel developer admitted to much of alleged tax scheme

● Nov. 16, 2016 — Lawsuit against Oread group cites personal purchases, faked sales in alleged scheme to defraud city

● June 9, 2016 — Auditors continue to review Oread sales tax documents; timeline for resolution uncertain

● April 19, 2016 — After Oread kerfuffle, city suggests adding right to audit into future incentive deals

● April 6, 2016 — City awaiting findings from Oread sales tax documents; Fritzel sends letter to community

● March 15, 2016 — Oread developers agree to comply with city demands

● Feb. 22, 2016 — Developer-commissioned analysis: Oread Inn owes fraction of what city says

● Feb. 17, 2016 — Oread group willing to comply with some city demands, asks for meeting ‘immediately’

● Feb. 11, 2016 — Lawrence declares Oread Inn in default of redevelopment agreement; developer says city is in default

● Feb. 10, 2016 — Oread Wholesale submits report about city-ordered audit; record not released

● Jan. 22, 2016 — As deadline passes, city mum about next move on Oread hotel tax dispute; new questions about Oread tenants emerge

● Jan. 19, 2016 — Oread group again contests city’s demands, accuses city of violating state law

● Jan. 6, 2016 — City mum on action against Oread Inn, waiting on last deadline to comply with demands

● Dec. 31, 2015 — Oread group pays nearly $500,000 to city ‘under protest’

● Dec. 30, 2015 — City seeking more than money from Oread group as deadline nears

● Dec. 29, 2015 — Oread group has not yet responded to city letter demanding $500,000; city has discussed issue with law enforcement

● Dec. 16, 2015 — City seeks more than $500,000 from Oread group after audit finds possible violations of state sales tax law

● Dec. 16, 2015 — City overpaid Oread hotel’s development group, mayor says

● Nov. 22, 2015 — Lawrence hires firm to evaluate Oread tax district


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