Ohio State filed a lawsuit against School Fitness Systems LLC (SFS), the for-profit group National School Fitness Foundation (NSFF) created, and Ohio-based All-Starr Sports, as well as other related companies and their principals. The 10-count complaint includes claim on fraud, conspiracy and neglect of charitable duties.
Ohio Attorney General Jim Petro filed a complaint that the NSFF/SFS created a scheme offering schools free fitness equipment and fitness programs in exchange for the schools’ agreement to collect monthly data on school children using the equipment. Approximately 100 schools in Ohio agreed to participate in the program.
NSFF/SFS purchased an estimated $67,000 in fitness equipment. All-Starr Sports and All-Starr Sports fitness program, under the name L.I.F.T. American Fitness System, made presentations to schools for the purchase of that equipment. In Ohio, this package sold from $150,00 to $318,000. According to the release, the equipment received by the schools was valued at approximately $55,000.
The agreement was that schools would secure a three-year loan from a financial institution to cover the price of the program. The bank would then pay the NSFF/SFS directly. Schools were promised that as long as they supplied a monthly report for each program participant to the NSFF/SFS, the program would be paid for because each monthly payment would be kicked back to the school in the form of a charitable donation from NSFF.
The release goes on to state that All-Starr Sports told schools the NSFF/SFS had secured millions of dollars in donations and corporate backing for such reimbursements – that financial base never materialized. The money that was reimbursed to schools came solely from money generated in sales to new schools.
Petro is asking that all Ohio Schools be reimbursed and that the court prevent the groups involved to continue in any further fraudulent or deceptive business practices.
In September, Club Industry’s Fitness Business Pro reported that School Fitness Systems LLC owner Joseph Mont Beardall of Highland, Utah, pled guilty to two counts of bank fraud, one count of mail fraud and one count of wire fraud for mismanagement of money from fitness equipment to schools across Minnesota. The foundation is in bankruptcy proceedings in Utah.