Seller of school gym equipment is guilty of fraud

The president of School Fitness Systems — the company that supplied the scandal-ridden National School Fitness Foundation with gym equipment — pleaded guilty Monday to charges he defrauded Minnesota financial institutions and school districts of more than $1 million.

The company's president and owner, Joseph Mont Beardall of Highland, pleaded guilty in a Minneapolis U.S. District Court to two counts of bank fraud and one count each of mail and wire fraud. He also agreed to cooperate with the government's ongoing investigation into the American Fork-based foundation.

Foundation officials, led by ousted charity chief Cameron Lewis, allegedly told some 600 schools the charity would reimburse the costs of purchasing a full set of exercise equipment by raising donations and seeking federal grants.

But only $38 million of the $77.5 million price tag for all the equipment was ever paid back. That prompted an investigation by Minnesota Attorney General Mike Hatch, who called the foundation a Ponzi scheme.

Now, the foundation is facing a bankruptcy court proceeding in Utah, as well as a civil case filed by the U.S. Attorney's Office in Minnesota.

Many of the 125 Utah schools that received equipment were hit hard when the foundation announced its bankruptcy.

Granite School District is stuck with a $2 million debt. Box Elder School District owes nearly $250,000; Cache County School District owes $300,000; Davis owes more than $400,000; and Alpine has about a $1.7 million tab.

As part of the plea agreement, Beardall will sell his $1 million home in Highland and liquidate his interest in a family trust, valued at about $99,000, as well as an IRA account valued at about $51,000. The money from these assets will be paid as restitution to victims prior to Beardall's sentencing.

Also, School Fitness Systems entered into a plea agreement. A representative pleaded guilty on behalf of the company to one count each of mail fraud and money laundering. The company will also surrender its assets, including approximately $2.6 million now in its bank accounts.