Area schools may be victims of suspected 'Ponzi scheme'

5/15/2004

SALT LAKE CITY - Cameron J. Lewis had a deal for public schools across the country: 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. Mr. Lewis says he no longer can afford to reimburse about 600 schools in 20 states that bought $77.5 million worth of weight machines, treadmills, and other equipment.

Minnesota Attorney General Mike Hatch has accused Mr. 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," Mr. Hatch said earlier this month. "To be able to take that kind of money out of government agencies is stunning."

Rossford schools Superintendent Luci Gernot, whose district is among those that acquired fitness equipment from the Utah-based charity, the National School Fitness Foundation, said last night she was contacted by a foundation representative yesterday who promised that a "package of information" would be sent to affected districts next week.

She said she did not know immediately how much reimbursement Rossford had been due under the agreement.

Other area schools participating in the program include Cardinal Stritch, Ayersville, Clyde, Patrick Henry, Defiance, Clay, Genoa, Pike-Delta-York, and Bedford.

Elsewhere in Ohio, Chris Essman, treasurer for Bexley City Schools, said the school district has received $70,000 in reimbursements.

It still owes $140,000 in lease payments on the equipment.

"It's one of those things that sounded too good to be true," Mr. Essman said.

"I was disappointed more than shocked," he said.

An investigation by the Associated Press reveals Mr. Lewis has had a string of failed businesses, a history of personal bankruptcy, and used his nonprofit foundation to give himself a $317,358 salary.

Mr. Lewis, 33, did not dispute those findings, but denied any impropriety.

He blamed Mr. 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," Mr. Lewis said. "We were trying to do a good thing, and we're getting killed for it."