Schools Beware of 'Free Fitness Equipment' - Two Men Sentenced for Fraud
The old adage that if it sounds too good to be true, it probably is, was recently re-born when 131 Utah schools bought into a scheme to hand over money for fitness equipment that they believed would be reimbursed through government grants and private donations. Instead, the perpetrator 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 true Ponzi type scheme.
The executives of a now defunct American Fork-based charity that had promised the school districts "free" fitness equipment, were ordered to pay $39.1 million in restitution and serve lengthy prison terms, a federal judge in Minneapolis recently ruled.
Former CEO Cameron Lewis and his father, Tyron, who 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.
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 executives of a now defunct American Fork-based charity that had promised the school districts "free" fitness equipment, were ordered to pay $39.1 million in restitution and serve lengthy prison terms, a federal judge in Minneapolis recently ruled.
Former CEO Cameron Lewis and his father, Tyron, who 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.
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.
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