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Pickerington Central involved in Athletic Charity Ponzi Scheme

Investigation uncovers possible Fraud, Schools hold the bag

Schools stuck with unpaid bills for fitness equipment
Charity foundation promised free gear, but now says it can’t afford to keep paying
Saturday, May 15, 2004
Paul Foy
ASSOCIATED PRESS

Cameron J. Lewis of the Utah-based National School Fitness Foundation had a deal for public schools across the country, including 17 in central Ohio: If they would buy a full set of fitness equipment, he promised his charity would reimburse them later with money from private donations or government grants.

If that sounds too good to be true, it’s turning out that way. Lewis says he can no longer afford to reimburse about 600 schools in 20 states that bought $77.5 million worth of weight machines, treadmills and other equipment.

Chris Essman, treasurer for Bexley City Schools, said the school district has received $70,000 in reimbursements since joining the program last year. It still owes $140,000 in lease payments on the equipment.

"It’s one of those things that sounded too good to be true," Essman said. "I was disappointed more than shocked."

More than 100 schools in Ohio have deals to receive equipment through the foundation, the foundation’s spokesman said in 2003.

Minnesota Attorney General Mike Hatch has accused Lewis of operating a pyramid scheme by using money from newly enlisted schools — not grants or donations — to make token reimbursements to schools that signed up early to buy or lease the equipment.

Many of the schools were left unable to pay off bank loans or satisfy leasing terms.

"Usually a Ponzi scheme involves little old ladies," Hatch said earlier this month. "To be able to take that kind of money out of government agencies is stunning."

School officials learned nearly two weeks ago that the foundation could no longer make the payments.

Groveport Madison Superintendent Timm Mackley said the equipment is essential to physical education and fitness program at the district’s freshman school and has been an asset for all students, especially the athletic teams.

Mackley said the district, which has participated in the program since March 2003, had ordered a second set of equipment.

He said the district now has a monthly bill of $6,000 that was once paid by the foundation.

"We just have to figure out how to pay the bill," Mackley said.

"It’s good equipment. It’s good for the kids so we’re not sorry we did it. But now that the foundation is not paying the bill, it’s not the most economical way to do it. If we were going to pay for it, it would have been easier to buy it or lease it instead of with a bank loan."

Lewis has had a string of failed businesses, a history of personal bankruptcy and he used his nonprofit foundation to give himself a salary of more than $300,000, an Associated Press investigation found.

Lewis, 33, did not dispute those findings, but denied any impropriety — blaming Hatch’s investigation for the collapse of his Utah-based charity.

"We’re not obligated to make those contributions. We have willingly done so for as long as we can," Lewis said.

"We were trying to do a good thing, and we’re getting killed for it."

Tax returns for the National School Fitness Foundation show Lewis is collecting a $317,358 salary, but he says that salary covered the foundation’s first two years. He said he’s now pulling down $185,000.

Francine Giani, director of Utah’s Consumer Protection Division, is helping Minnesota investigate Lewis’ charity but doubts it will come to anything.

There is no evidence Lewis used deceptive sales practices, Giani said. And, the foundation appears to have protected itself legally by carefully writing contracts with school districts, saying the districts are responsible for paying off the cost of the exercise equipment if the foundation is unable to raise enough money to reimburse schools, Giani said.

Dispatch reporter Tiffany Y. Latta contributed to this story.

Fairfield County High Schools involved

Bloom-Carrol
Liberty Union
Pickerington Central

National School Fitness Foundation Web Site

National School Fitness Foundation Web Site