It wasn't the first time the Leawood, Kansas based developer was in trouble with the law. In the late 80's Schlup was indicted for "conspiracy to commit loan application fraud" later serving time in prison and in 2009 condominiums he developed in Missouri were condemned by the Mid County fire department for being unsafe which ended in a civil case by the victims which settled for $11 million in 2013.
Schlup is developing the 250,000 square foot sporting goods store for Scheels in Johnstown's 2534 development near the southeast corner of I-25 and Highway 34. While the new development has received extensive local press coverage no attention has been paid to the criminal history of the developer who will be the custodian of literally tens of millions of public dollars to construct the sporting goods store and shopping center he will own and lease back to Scheels thanks to Johnstown authorizing public bonds for the project.
Schlup's trouble, in one case, began when an undocumented worker, Apolinar Sandoval Mendoza, fell to his death on a Schlup construction site in Missouri. The victim's family sued Schlup and according to the Missouri press spent $40,000 seeking some compensation for the death. After the settlement, state officials began looking into Schlup's business practices and accused him of hiring as many as 30 undocumented workers who were being paid under the table to avoid payroll taxes and insurance premiums.
An ominous note posted in a news blog for Schlup's hometown of Leawood, Kansas by someone using the dead man's first name states,
"I died at the scene of michael schlups condos. i fell from a 4th floor balcony and now i will continue to haunt the establishment. my presence will be always felt at the plaza gardens condos."
Do Johnstown Officials Know?
Earlier this month, Johnstown's Town Council voted unanimously to create a new Metro District to raise $90 million in public debt to pay for the development which Schlup's Carson Development will own and operate including management of the metro district. The Town Council voted to amend the town's sales tax for the development allowing the developer to collect a "fee" much like Centerra's tif to repay the public bonds which will be issued under the authority of Johnstown's local government.
Yes, they do know according to internal sources who say Schlup's criminal past was even a topic of conversation by the current property owner and other stake holders of the deal in a closed-door meeting with Scheels Chairman Steve Scheels. According to the same sources, Scheels demanded Schlup be the developer even threatening to pull-out if they insisted he find a developer "without a long wrap sheet."
According to one source close to the deal who asked to remain anonymous, even Johnstown officials pleaded with Steve Scheels to find a more reputable developer for his project in their town. Given Schlup's criminal record of tax evasion town officials feared Colorado's State Attorney General might be tipped-off by Missouri law enforcement officials and stop the public bond issuance.
Incredibly, Schlup's staff have referred Johnstown officials to an anonymous website (presumably posted by the developer himself) which they claim exonerates him from any past wrong doing. That website, www.whole-truth.com, argues the plea bargain was an "Alford" plea in which Schlup pleaded guilty but never admitted guilt. What the website doesn't explain is that a judge cannot accept an "Alford plea" unless he or she believes there is ample evidence to obtain a criminal conviction against the defendant.
The website also attempts to explain the fatally injured worker and the other illegals as "borrowed" from another contractor so apparently not Schlup's responsibility either. In fact, according to the website Schlup is an outstanding businessman with 38 years of development experience. Local developers are suspicious of Steve Scheels' loyalty to Schlup and have wondered aloud if there isn't more to the transaction maybe Johnstown officials don't know. Schlup is already the owner and developer of a Scheels sporting goods store in his hometwon of Leawood, Kansas.
Schlup's Connection to Scheels
Overland is the second most populated city in Kansas and largely a suburb of neighboring Kansas City. According to an article in Wikipedia, Schlup purchased a development out of bankruptcy in Overland in 2011 named Corbin Park where he is now developing a store for Scheels.
"Developer Mike Schlup completed purchase of the Corbin Park development for $8.1 million on November 29, 2011, rescuing the 1.1 million-square-foot development out of bankruptcy. In December, Schlup announced that Corbin Park would be renamed Aspen Square and Copaken Brooks would be brought on as a development consultant. The Aspen Square name change never came to fruition, and when development resumed later in 2012, the Corbin Park name remained in place. In October 2012, Copaken Brooks was replaced by Block & Co. to handle leasing and marketing of Corbin Park. In December 2012, Scheels All Sports announced that it would open a 222,000-square-foot flagship store in Corbin Park."
According to Schlup's Carson Development projections, the publicly financed shopping center in Overland was to cost an estimated $20 million including "soft costs" which is an industry term for any expenses not directly related to the construction itself like land acquisition, engineering and permits. see local overland blog regarding project subsidy
Curiously, the estimates made available by the City of Overland submitted by Schlup in 2011 indicate the TDD (Transportation Development District) public money contribution to his development "eligible TDD costs cannot be determined until completed." In other words, the public's contribution (of which TDD is only part) cannot even be known until after the project is complete. Loveland's original subsidy agreements with McWhinney to build Centerra prohibited the developer from co-mingling private and public funding in the same development but was later removed as an amendment to the agreement.
Auditors often contend the co-mingling of funds from different sources to a single contractor for both the "public" and "private" portions of a project cannot be properly audited later. Like Overland, Kansas, Loveland officials are unable to answer direct questions regarding the use of public versus private funds by McWhinney's Centerra following their amendment to the agreement which allows the same developer drawing on both accounts to construct both improvements in parallel.
In 2013 a Kansas City Biz Journal reporter did inquire to Schlup about his then ongoing lawsuit over the condemned condominiums he constructed in Missouri as that case was nearing the trial date. Schlup argued the building defect was the architect's fault and not his company which owned and developed the condominiums. He added that development had nothing to do with his work for Scheels in Corbin Park.
Locally, LovelandPolitics was unable to find any questions or reporting by Colorado media into Scheels or Schlup regarding his past felony convictions and whether that is compatible with being the custodian of public funds. In one Loveland Reporter-Herald article, a family member of Schlup working for his Carson Development was interviewed in a puff piece written about the development by staff reporter Craig Young.
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14 Time Felon To Manage $90 Million Subsidy For Johnstown's Scheels