A federal judge in Minnesota on Friday sentenced two executives of an American Fork-based charity that offered free fitness equipment to hundreds of school districts — including several in Utah — but instead left them feeling the press of a $40 million debt.
U.S. District Judge Joan E. Ericksen sentenced Highland resident Cameron J. Lewis, 36, and his father, J. Tyron Lewis, 65, Monticello, in Minneapolis for operating a Ponzi-type scheme through National School Fitness Foundation, according to the U.S. Attorney's Office in Minnesota.
Cameron Lewis was sentenced to 17 years in prison, and Tyron Lewis was sentenced to more than five years. As part of their punishment, both men must pay approximately $39.1 million in restitution.
"You knew the system wasn't going to work," Ericksen told Cameron Lewis.
Cameron Lewis could not be reach for comment and Tyron Lewis declined to make any statement on the judge's ruling.
Both men were convicted in December 2006 by a federal jury on five charges 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.
More than 350 school districts and dozens of banks lost nearly $40 million in the scheme from 1999 to 2004. Alpine, Granite, Box Elder, Cache County and Davis school districts all had to come up with money to cover costs of fitness equipment that foundation officials said would be free.
"This sentence should serve as a warning for those who wish to commit fraud at the expense of our children," said U.S. Attorney for Minnesota Rachel K. Paulose. "The money laundering scheme against school districts across the county, which was prosecuted here was a complex, high-dollar enterprise, and we are pleased to see its perpetrators brought to justice."
Over a five-year period, Cameron Lewis and Tyron Lewis operated National School Fitness Foundation — an organization that marketed and sold fitness products to school districts. They promised school districts that the foundation would reimburse the cost of new fitness equipment with funds raised through government grants and private donations.
Instead, Cameron Lewis and Tyron Lewis repaid the first school districts to sign up with funds obtained from subsequent school districts.
Alpine Superintendent Vern Henshaw said the district, which had to come up with $1.7 million to cover the cost of the equipment, decided to make the best of the situation and found the money in the budget to pay for the fitness machines.
"It's a benefit for the students and the schools even though we thought there would be a grant," he said. "It certainly didn't turn out how it started."
5 Utah school districts owed money for equipment
Utah school districts that had to pay for fitness equipment that a now-defunct Utah County foundation promised them would be free:
• Alpine District owed $1.7 million
• Granite District owed $2 million
• Box Elder District owed nearly $250,000
• Cache County Distinct owed $300,000
• Davis District owed more than $400,000
Contributing: Tiffany Erickson
E-mail: jdana@desnews.com