Did you hear?… Ponzi scheme to sell fitness equipment to schools earns federal convictions

How desperate can people be to use the dire need for fitness and workout equipment in schools to make themselves millions?

So must have been Cameron J. Lewis, 36, of Highland, Utah; his father, J. Tyron Lewis, 65, of Monticello, Utah; founders of National School Fitness Foundation; and Joseph M. Beardall, 51, president of an affiliated group, School Fitness Systems, of American Fork, Utah.

Both son and father Lewis have filed motions for a new trial and acquittal a week after they were convicted Dec. 4 by a federal court of a laundry list of charges that boil down to one thing: bilking hundreds of schools across the country from Texas to Minnesota of millions of dollars while allegedly spending five years spending freely on personal home construction projects, hunting trips, scuba lessons, and an airplane.

A jury deliberated nearly two days after a trial in the U.S. District Court, Minnesota, that lasted a couple of weeks stemming from an indictment against the two in October 2004.

After the case made headlines in 2004, and the pair and their associates were finally indicted, they were so reviled that they made it onto a website called “The Make Money Fast Hall of Humiliation” at www.mmfhoh.org. To see their write-up, click here.

In sum: The Lewis duo founded the NSFF in 1999. It was promoted as a way for schools to get fitness equipment, which was supplied by School Fitness Systems, a company the father and son set up with Beardall. How convenient. The equipment was promised free if NSFF won grants. But in reality the schools paid the group for the equipment and were promised to have their money reimbursed. The money paid back to schools was apparently money the group got from other schools that bought in, creating a huge Ponzi scheme.

The convictions were on five counts of mail fraud, nine counts of wire fraud, one count of bank fraud, 13 counts of money laundering and one count of conspiracy to launder funds. The younger Lewis also received another separate conviction of money laundering. The evidence showed that the men defrauded over 600 schools and dozens of banks out of more than $60 million, federal prosecutors said during the trial. State Attorney General offices around the country had been called in and were investigating the case prior to the indictments brought against the Lewis duo.

The NSFF had filed for Chapter 11 bankruptcy reorganization in 2004, while Beardall in late 2004 pleaded guilty to defrauding financial institutions and Minnesota school districts of more than $1 million. As part of his plea agreement, he agreed to pay restitution.

For the Lewis father and son, five years of shenanigans could mean multiple times that in prison. Although sentencing dates have not been set, they both face a maximum potential penalty of 30 years in prison and a $1 million fine on each count of mail fraud, wire fraud, bank fraud and conspiracy, and up to 20 years in prison and a $250,000 fine on each count of money laundering, the U.S. attorney’s office has said.

SNEWS® View: Where can we spit on these guys? At least a few schools got equipment that they now are able to keep.