This is an archived article that was published on sltrib.com in 2007, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
Correction: A story in Tuesday's Tribune about the settlement of a lawsuit involving the bankrupt National School Fitness Foundation cited a bankruptcy trustee's allegation of wrongdoing by businessmen Dale Holt and Marc Jenson. While that allegation appeared in a complaint filed on July 5, 2005, the trustee removed the allegation from an amended complaint filed on April 20, 2006.
One lawsuit spawned by the bankruptcy of a Utah company accused of fraudulently selling exercise equipment to more than 600 schools has been resolved in an out-of-court settlement.
In a document filed Friday in U.S. Bankruptcy Court for Utah, the court-appointed trustee for the bankrupt National School Fitness Foundation and attorneys for Salt Lake County businessmen Dale Holt and Marc Jenson said a settlement had been reached, eliminating the need for a trial that had been scheduled to begin March 30.
Terms were not disclosed in the court document. Attorneys for trustee R. Kimball Mosier and Holt declined to comment. But Jenson's attorney, Mark James, said the businessmen agreed to pay $130,000 of the $350,000 sought by the trustee. He declined to say how much each defendant paid.
Mosier had sued to collect the money on behalf of the American Fork-based foundation, which sold fitness programs and equipment to schools in Utah and 19 other states.
Foundation officials told participating schools they would be repaid with funds from federal grants and corporate donations. But after many repayments were not made, the Minnesota Attorney General's Office launched an investigation. The probe resulted in felony charges against foundation founder Cameron Lewis and his father, former San Juan County Commissioner Ty Lewis, and the bankruptcy of the foundation.
Last December, a federal jury in Minnesota convicted the Lewises of 29 felony counts of fraud and money laundering for operating a Ponzi-type investment scheme.
The case resolved on Friday involved a series of financial transactions involving Holt, Jenson, the foundation and a company (Taylor'd Systems) that the trustee claims was controlled by Cameron Lewis. The trustee contended the foundation received "no value or consideration" for the $350,000 it laid out in these transactions, and sought reimbursements.
Attorney James said his client, Jenson, loaned money and received a payment in return.
"My client feels good to have it resolved and doesn't feel like it was a particularly fair settlement," James said Monday. "When you loan someone $300,000 and get back what you loaned them and have to give up part of that in a settlement, it doesn't seem like a good settlement. But when you factor in the costs of litigation and the risks of litigation, yes, we feel good to have it resolved."
Jenson, a key figure in the plan to turn bankrupt Elk Meadows ski area outside of Beaver into an exclusive private resort, still faces more litigation.
His criminal attorney, Rebecca Hyde, filed a motion in 3rd District Court for Utah last Wednesday to overturn Judge Joseph Fratto's decision in December to bind Jenson over for trial on five counts of securities fraud and a sixth count of racketeering. All are second-degree felonies.
The Utah Attorney General's Office filed those charges in August 2005, alleging Jenson provided misinformation to three Salt Lake County businessmen who invested money in Jenson's business ventures in 2000 and 2001.
Jenson also allegedly failed to disclose to the investors that he had been sentenced to federal prison in 1991 and served time for failing to file a federal income tax return, had declared bankruptcy at least twice, had faced federal and state tax liens and had been the defendant in several civil suits filed by former business associates.
Assistant Attorney General Charlene Barlow has until April 7 to respond to the motion to overturn Fratto's decision, which was based on a two-day preliminary hearing.