Two Utah men get prison for fitness scam

The executives of a now defunct American Fork-based charity that had promised hundreds of school districts "free" fitness equipment in what turned out to be a Ponzi scheme, were ordered to pay $39.1 million in restitution and serve lengthy prison terms, a federal judge in Minneapolis ruled on Friday.

U.S. District Judge Joan E. Ericksen sentenced Cameron J. Lewis, 36, of Highland, to 17 years in prison for his role as mastermind, and his father, J. Tyron Lewis, 65, of Monticello, to more than five years for running an illegal pyramid scheme that defrauded more than 350 school districts nationwide, and dozens of banks of more than $40 million.

The Lewises were each found guilty and convicted in December 2006 on five counts of mail fraud, nine counts of wire fraud, one count of bank fraud, one count of conspiracy to launder funds and 13 counts of money laundering. Cameron Lewis was also convicted on one additional count of money laundering.

Attorneys for the Lewises could not be reached for comment on the men's sentencing.

Former CEO Cameron Lewis and his father, Tyron, who was chairman of the board of trustees, headed the National School Fitness Foundation from 1999 through 2004, until allegations emerged that it stopped making reimbursement payments for $77.5 million in fitness equipment it placed in 600 schools in 20 states.

A total of 131 schools in Utah bought into the foundation's program, which required the schools to buy the fitness program with the expectation that the money would eventually be reimbursed by the foundation through government grants and private donations. Instead, the foundation received little in grants, and the school districts that got in early were repaid with funds from those that got in later, making it a Ponzi type scheme.

On Monday, Paul Murphy of the Utah Attorney General's Office said none of the 131 Utah schools that put money in the bankrupt foundation have asked the state to file criminal charges against the foundation. He couldn't specify immediately if the office has plans to do so at this point.

When the foundation filed for bankruptcy in 2004, Alpine School District was stuck with a $1.7 million debt, which it has since paid off. Granite, Box Elder, Cache County and Davis school districts had all obtained financing from banks to buy the equipment and program.

The Lewises failed to disclose to the school districts that they personally profited from the foundation through payments from vendors and failed to reveal the foundation's lackluster fundraising and its precarious financial condition.

Trial evidence also showed that Cameron and Tyron Lewis paid themselves $1.4 million on the eve of the company's collapse in 2004, before repaying school districts and banks. The evidence also showed that the duo conspired to launder hundreds of thousands of dollars in proceeds from their fraud by making lulling payments to school districts and using funds to remodel their homes.

In June 2004, the Utah Division of Consumer Protection pulled the foundation's charitable solicitation license after conducting an investigation.

Cameron Lewis' sister, Shanna L. Black, 28, of Lehi, pleaded guilty in February 2006 to a misdemeanor charge in connection to the foundation's operation. The company's former chief financial officer, Marion H. Markle, 45, of Highland pleaded guilty in April 2006 to a felony related to the scheme to defraud, and testified for the government at trial.

In a related case, Joseph Mont Beardall, president of School Fitness Systems LLC, which provided the equipment to the National School Fitness Foundation, pleaded guilty in 2004 to defrauding financial institutions and Minnesota school districts of more than $1 million.

As part of his plea agreement, Beardall agreed to pay restitution to victims by selling all his personal and real property and having School Fitness Systems surrender its assets, including inventory and bank accounts valued at about $2.6 million to be paid toward restitution.

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