The Yellow Medicine School District is waiting to hear if it will receive restitution from two Utah men who were convicted in a scheme that promised free fitness equipment to hundreds of school districts across the country but bilked them out of millions of dollars instead.
YME is one of 19 Minnesota school districts that participated in the program promoted by Cameron J. Lewis, 36, of Highland, Utah, and his father, J. Tyron Lewis, 65, of Monticello, Utah.
A jury returned guilty verdicts Monday against the Lewises after a day and a half of deliberation following 17 days of trial before U.S. District Judge Joan N. Ericksen in Minneapolis.
The evidence showed that the men defrauded more than 600 schools and dozens of banks out of more than $60 million, federal prosecutors said.
YME Superintendent Dwayne Strand said he knew the trial was being held, but he did not know what restitution amount would be tied to it. He said he's seeking more information from the Minnesota Attorney General's Office.
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"We haven't heard any word yet about what we will receive because of their guilty verdict,'' he said Tuesday.
The Lewises were each found guilty of 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. Also, the son was convicted on an additional money laundering count.
They operated the National School Fitness Foundation of American Fork, Utah, which promised school districts could receive free fitness equipment if the foundation was successful in getting grants for its anti-obesity efforts.
But prosecutors said the foundation received little in grants and that the money that it paid out to some districts actually came from others, making it a Ponzi-type scheme. The foundation went bankrupt in 2004.
Sentencing dates have not been set. The father and son 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 said.
Two co-defendants pleaded guilty in April to one count of mail fraud.
In a related case, Joseph M. Beardall, president of School Fitness Systems, 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, he agreed to pay restitution.
Strand said YME received a $40,000 partial restitution payment from Beardall.
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Strand said the district lost $600,000 in the scheme, but renegotiated the amount down to $500,000 with the bank. He said YME will make the final payment on an interest-free loan in June 2007.
The New London-Spicer School District had considered a contract with the National School Fitness Foundation, but NLS cancelled the contracts once allegations of fraud were raised about the operation.
