Former 24 Hour Fitness executive sentenced

January 8, 2010 1:57:40 PM PST
A former vice president of the parent company of 24 Hour Fitness and an advertising executive have been sentenced in federal court in San Jose to prison for defrauding the company of thousands of dollars through phony advertising invoices.

Susan Powell, 52, of San Jose, was sentenced by U.S. District Judge Jeremy Fogel on Thursday to one year and three months in prison.

Powell was previously a vice president of marketing for Fitness Holdings Worldwide, the former parent company of the workout facilities chain.

Michael Johnston, 44, of Los Gatos, the operator of an advertising graphic design company, was sentenced to five months in prison.

Fogel also ordered Powell and Johnston to pay joint restitution of $350,000 to the company.

The pair pleaded guilty in 2008 to defrauding the company of between $70,000 and $500,000 by having Johnston submit inflated advertising design invoices that were approved by Powell.

The two admitted in a written plea agreement that Johnston then gave kickbacks to Powell. The scheme operated from 1996 until January 2000.

Both pleaded guilty to a charge of conspiracy to commit mail fraud. Powell also pleaded guilty to a charge of tax evasion and Johnston pleaded guilty to a charge of aiding in the preparation of a false tax return.