Lawrence developer Thomas Fritzel pleads guilty to criminal conspiracy in Oread tax fraud case

photo by: Nick Krug

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

Updated at 4:50 p.m. Thursday

Lawrence developer Thomas Fritzel pleaded guilty Thursday in a federal fraud case.

Fritzel pleaded guilty to one count of criminal conspiracy, according to a press release from the U.S. Attorney’s Office in Kansas. Fritzel admitted that he and others submitted false monthly sales tax returns to the state of Kansas related to the development of The Oread hotel, 1200 Oread Ave. in Lawrence, the release said.

Fritzel and his bookkeeper, Keela Lam, then 52 and 46 respectively, were indicted in June 2018 on charges of scheming to collect more than $400,000 in fraudulent tax refunds from the City of Lawrence. The case was set to go to trial Jan. 21, but Fritzel in December filed a notice of intent to change his plea.

Fritzel previously pleaded not guilty to felony conspiracy and tax fraud and has remained on release after posting a $50,000 bond.

As part of the plea, both parties agreed to recommend a sentence of 12 months and a day in federal prison and a fine up to $250,000, the release said. Sentencing is scheduled for May 4.

Fritzel was facing up to 15 years in prison and hundreds of thousands in fines related to the charges. Specifically, Fritzel and Lam faced five years in prison and a $250,000 fine for conspiracy to commit fraud and 10 years in prison and a $250,000 fine for transporting stolen funds through interstate commerce, as the Journal-World previously reported. The indictment also charges a number of corporate entities that Fritzel and Lam controlled, which could be fined up to $500,000 each for their role in transporting stolen funds in interstate commerce.

Jim Cross, spokesman for the U.S. Attorney’s Office in Kansas, said in an email to the Journal-World that the government is moving to dismiss the charges against Lam. When asked why, he responded that the government was dismissing certain charges “in the interest of justice.” He said that the charges against the corporate entities already have been dismissed. Cross said that his office had no further comment about Fritzel’s guilty plea and plea agreement.

One of Fritzel’s defense attorneys, Ed Novak, said in an email to the Journal-World that Fritzel and his legal representation had no comment regarding the guilty plea and the plea agreement.

Fritzel’s change of plea hearing was originally scheduled to take place at 4:45 p.m. Thursday. Sometime Thursday, the time of the hearing was changed to 2 p.m.

The fraud case is a separate case from Fritzel’s felony conviction last summer related to illegal asbestos disposal at the former Alvamar Country Club, now known as the Jayhawk Club. On July 30, a jury took about two hours to find Fritzel guilty on three counts related to the disposal of asbestos-containing material during remodeling work at Alvamar in 2016. Fritzel was found guilty of knowingly failing to notify environmental agencies prior to removing asbestos material, knowingly failing to wet asbestos before removing it from the construction site and knowingly failing to dispose of asbestos waste in leak-tight containers.

Fritzel is facing up to seven years in federal prison and a fine of up to $500,000 in relation to the three asbestos disposal charges. Fritzel is scheduled to be sentenced in that case on Feb. 20.

Recent coverage: Thomas Fritzel tax fraud case

● Dec. 18, 2019 — Lawrence developer Thomas Fritzel plans to withdraw not-guilty plea in federal fraud case

More coverage: Thomas Fritzel asbestos trial

● July 30, 2019 — Lawrence developer Thomas Fritzel found guilty of improperly disposing of asbestos

● July 29, 2019 — Witness: Purchase contract for Alvamar says site did not contain asbestos, indemnified Lawrence developer Thomas Fritzel

● July 26, 2019 — Witnesses say truckloads of debris were removed from Alvamar site after potential for asbestos was known

● July 25, 2019 — Witnesses say they tried to inform Lawrence developer Thomas Fritzel and others about asbestos ahead of demolition

● July 24, 2019 — Contrasting stories emerge as trial begins against Lawrence developer Thomas Fritzel on asbestos charges

Timeline: City of Lawrence tax dispute with Thomas Fritzel, Oread hotel

● 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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