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Justice News

Department of Justice
U.S. Attorney’s Office
District of Kansas

Thursday, January 9, 2020

Lawrence Contractor Pleads Guilty To Conspiracy in Oread Hotel Tax Case

TOPEKA, KAN. – A Kansas building contractor pleaded guilty today to conspiring to deprive the city of Lawrence of sales tax revenues in connection with the development of a seven-story hotel adjacent to the University of Kansas campus.

          Thomas S. Fritzel, 54, Lawrence, Kan., pleaded guilty to one count of criminal conspiracy. Fritzel, part owner and manager of Oread Inn LC, was a party to an agreement with the city to finance the more than $40 million hotel project, including $11 million worth of street repairs and a public parking garage.

Oread Inn LC was to pay all costs up front and to be repaid $11 million for public improvements. The money to repay Oread Inn LC was to come from an incremental increase in property tax, a sales tax and an additional 1 percent tax on sales within a portion of the redevelopment district.

          In his plea, Fritzel admitted that he and others caused false monthly Kansas sales tax returns to be submitted to the state of Kansas. The reports classified certain sales as occurring within the redevelopment district when in fact they occurred outside the district. As a result, the city of Lawrence lost a portion of sales taxes it was due.

          The city of Lawrence filed a civil lawsuit against Fritzel seeking the lost revenue and the parties settled that case in 2017.

          Sentencing in the criminal case is set for May 4. Both parties have agreed to recommend a sentence of 12 months and a day in federal prison and a fine up to $250,000. The FBI and the Lawrence Police Department investigated. Assistant U.S. Attorney Rich Hathaway prosecuted.

Financial Fraud
Updated January 9, 2020