photo by: Journal-World File Photos

Lawrence's Oread Hotel, left, and Eldridge Hotel, right, are pictured along with Thomas Fritzel, center.

Certain parts of Lawrence love a good Thomas Fritzel question. My phone started ringing after The Kansas City Star earlier this month published an article raising questions about the propriety of a $9 million federally backed, pandemic-related loan that was given to a little-known company tied to the Fritzel family.

I’ve been looking into the issue too. The Star’s article is definitely interesting, and the loan it focused on is certainly noteworthy. But perhaps more significant and not mentioned is $700,000 to $2 million worth of federal assistance that Fritzel entities have received through another program. Why is that smaller amount more interesting? One, because that money very well may end up being a federal grant, unlike the $9 million loan that will have to be repaid. And secondly, the companies involved in that federal program — the Paycheck Protection Program — create sharper questions about whether Fritzel received a federal subsidy he wasn’t entitled to.

Let’s sort through it. First, the $9 million loan. It went to a company called Warren L.C. The money was part of the Federal Reserve’s Main Street Lending Program, which is one of several federal programs designed to assist businesses during the pandemic.

The company was approved for the loan in August, which is the same month that Fritzel reported to federal prison to serve an approximately one-year sentence for felony convictions related to a tax scheme at The Oread hotel and illegal asbestos disposal at a Fritzel-owned country club.

Warren L.C. was mentioned in The Oread tax scheme case, but its role didn’t end up getting well-defined. Once the case shifted from civil court to criminal court, the focus turned more to acts specifically undertaken by Fritzel.

None of that matters a lot. What does matter is whether Fritzel has an ownership stake of 20% or more in Warren L.C. If he does, then there would be a lot of reasons to believe Fritzel was in hot water again with the feds. The company, under published regulations, seemingly would be ineligible if a recent felon owned at least 20% of the company.

But the record is pretty clear that Fritzel doesn’t own Warren L.C. His wife, Dru Fritzel, is listed as the sole owner of the company on documents filed with the Kansas secretary of state’s office. And that has been the case for years. Documents dating back to 2010 list Dru Fritzel as the sole owner, though those documents also made it clear that Thomas Fritzel had played a management role in the company.

For some people, the real question is what the heck does Warren L.C. do that it should get $9 million from the federal government? Dru Fritzel told the Star that Warren is a construction company. I don’t have any reason to dispute that. After covering Fritzel for years, it’s clear to me that he — like many developers — has a variety of corporate entities that he uses for different projects. There aren’t any signs that Warren has a bunch of employees; Dru Fritzel told the Star she was uncertain how many Warren had, but that isn’t particularly relevant to the Main Street Lending Program. Unlike the Paycheck Protection Program, it wasn’t really tied to the number of jobs a company would be saving. The Main Street program was just meant to provide financing to companies that might otherwise have a hard time getting it during the pandemic.

Also, unlike the Paycheck Protection Program, the Main Street program is a true loan. There aren’t conditions that can be met that will allow the federal government to forgive the $9 million loan to Warren. It will have to be repaid at an interest rate of 3.16% within five years.

But as I mentioned earlier, that’s not the only pandemic-related money that companies tied to Thomas Fritzel have received. Two Fritzel-related entities have received Paycheck Protection Program dollars. The PPP, just like the Main Street program, has the same prohibition on companies with felon owners receiving the federal dollars.

It is less clear whether Thomas Fritzel has an unallowable ownership stake in the two companies that received PPP dollars. Both Gene Fritzel Construction Services Inc. and The Olivia Collection L.C. received PPP dollars, we reported in July. Both received money totaling between $350,000 and $1 million. (The feds don’t release specific amounts but rather give out ranges.) If both companies show they have saved a certain number of jobs, they likely won’t have to repay that money.

The Olivia Company’s 2019 annual report — the latest one on file on the secretary of state’s website — lists Thomas Fritzel as an owner of the company, which is involved in the operation of The Eldridge and The Oread hotels. But the documents don’t make it clear whether Fritzel owns at least 20% of the company. The annual report lists all owners of at least 5% of the company. However, the report doesn’t require the specific ownership amount to be disclosed. In other words, the documents won’t tell us whether Fritzel owns 5% or 55% of the company, for example.

The situation also is murky with Gene Fritzel Construction Services Inc. The 2019 annual report is the latest on file with the secretary of state’s office. This particular type of corporation is required to give even less ownership information. It must list only the officers and board of directors for the company. Thomas Fritzel isn’t listed in either category, but 2019 was the first year he hadn’t been listed as a director of the company in more than a decade.

Have Fritzel’s felony convictions caused him to divest from the construction company founded by his father years ago? I can’t tell. I’ve put a call in to Tim Fritzel, who is the president of Gene Fritzel Construction Services and a brother to Thomas, to ask if Thomas Fritzel has a 20% ownership stake or more in the company. I haven’t received a response. I also asked Tim Fritzel about Thomas’ ownership stake in The Olivia Collection. Tim Fritzel is listed as an owner of that company too.

As near as I can tell, state law doesn’t give the public much chance to learn the specifics about the ownership status of companies. In other words, I don’t think there is a document I can get my hands on to show whether Thomas Fritzel owns more or less than 20% in any of the companies.

However, it is worth noting the PPP loans must go through a bank, and presumably those institutions do have access to the ownership information to determine a company’s eligibility. Sunflower Bank was the lender for the Gene Fritzel Construction Services loan, while Commerce Bank handled the loan for The Olivia Collection. For what it is worth, the Main Street Lending Program also requires bank approval. Silver Lake Bank handled the $9 million loan for Warren L.C.

While Thomas Fritzel’s past makes all of this fair game for examination, no evidence of impropriety has emerged. If that changes, we will let you know. Otherwise, the most interesting thing to watch might be how Fritzel’s businesses continue to chug along despite his incarceration.

He has sold some property in town. The relatively new 168-unit apartment complex at 1525 Birdie Way, near the Jayhawk Club, has been sold to a California-based real estate company, Bridge Partners. But it is not clear that sale was related to Fritzel’s legal situation. It is not unusual for a developer to sell an apartment complex in this market.

There also don’t appear to be any obvious changes in ownership to his more prominent holdings, the Jayhawk Club, The Oread and The Eldridge Hotel. People have been asking whether the KU Endowment Association was poised to take an ownership interest in some of those properties, most specifically the Jayhawk Club and The Oread, which is on the edge of the KU campus. I’ve got a question in to the endowment association about whether it has taken any type of ownership position in those properties, but haven’t heard back. But I haven’t seen any records that indicate that it has, other than that a KU Endowment entity — KUGC LLC — does own the property at the Jayhawk Club that houses the practice facility building and driving range that are used by the KU golf teams. UPDATE: I have heard from a KU Endowment spokeswoman, who confirmed the association does not have any ownership interests in the Jayhawk Club or The Oread hotel. She also confirmed that the purchase of the practice facility, which includes about 30 acres of land, was completed in April. Endowment now leases the facility to KU Athletics to ensure “the men’s and women’s golf teams at KU will have a state-of-the-art practice facility for years to come.”

Such questions come about likely because KU Endowment is in partnership with a Fritzel entity on the Rock Chalk Park project in northwest Lawrence. That one I am still trying to get more information about in regard to how that unique arrangement is working now that Fritzel has been convicted on fraud charges. I will let you know when I get new information on that.