Lawrence developer pleads guilty to criminal conspiracy in Oread Hotel sales tax case
A developer from Lawrence has pleaded guilty to conspiring to deprive the city of sales tax revenues in connection to a multimillion-dollar hotel project, the U.S. Attorney’s Office for the District of Kansas said in a news release.
Thomas S. Fritzel, 54, pleaded guilty to one count of criminal conspiracy on Thursday in federal court. Fritzel, who owned and managed Oread Inn LC, signed an agreement with the city of Lawrence in 2008 to finance the hotel project that was estimated over $40 million, including $11 million worth of street repairs and public parking.
Prosecutors in a news release state Oread Inn LC was expected to pay the costs up front and be reimbursed for the $11 million through property tax, sales tax and an additional 1% tax on sales within part of the redevelopment district.
Fritzel admitted he and others had “caused false monthly Kansas sales tax returns” to be submitted to the state, prosecutors said.
“The reports classified certain sales as occurring within the redevelopment district when in fact they occurred outside the district,” prosecutors said in a statement. “As a result, the city of Lawrence lost a portion of sales taxes it was due.”
When Fritzel was indicted in June 2018, the U.S. Attorney’s Office alleged that the developer schemed to collect more than $400,000 in fraudulent tax returns from the city.
Prosecutors said the city, seeking the revenue it lost, ended up filing a civil lawsuit against the developer, and the case was settled in 2017.
A sentencing hearing for Fritzel is scheduled May 4.
According to prosecutors, both parties will recommend 12 months and a day in federal prison and a fine up to $250,000.
This story was originally published January 9, 2020 at 7:51 PM.
