The owner of a former Kennewick gym accused of stealing money from his members lost his motion to get his case thrown out before it heads to trial next month.
Jason Ray Sleater, 35, is accused of pocketing money from 375 members of 509 Fitness when he charged a $19.60 "gym enhancement" fee to their credit or debit cards without authorization.
The fee was charged in February 2011. The gym at 540 N. Colorado St. shut down -- reportedly without notice to members -- on March 21, 2011.
Sleater, who now is living in Spokane, is charged in Benton County Superior Court with first-degree theft. His trial is set for June 11.
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Defense attorney Scott Johnson asked Judge Bruce Spanner to dismiss the case against his client because there was no evidence to support the criminal charge.
"I'm not standing here before the court to say the gym enhancement fee was maybe not the best business deal. ... There were maybe better ways to handle it," Johnson said in court Friday.
But, Johnson said, Sleater had contracts signed by his gym members that authorized him to charge "monthly dues and all other club charges" or "monthly dues, any unpaid past dues and any other fees, taxes or charges."
Those two clauses show the contracts allowed Sleater to charge the gym enhancement fees, Johnson said.
"This is a great civil case, I suppose, but it's not a great criminal case," he said. "There is nothing that prevented 509 Fitness from charging this fee, period."
Judge Spanner then asked, based on Johnson's argument, if Sleater could have withdrawn $1 million from everybody's account and call it "some other fee."
"No, I think it has to be reasonable," Johnson said. "A $1 million charge would not be reasonable. Charging a fee to upgrade some equipment is not unreasonable."
Deputy Prosecutor Terry Bloor, however, countered the defense's claim. He said Sleater knew he couldn't charge the fee because the third party billing company told him they wouldn't do it and his business partner also said it wasn't allowed.
But, Sleater did it anyway and received $7,350 from the fees, and then he tried to cover his tracks after members started complaining, Bloor said.
Sleater called ASF, the billing company, on Feb. 17, 2011, and requested they withdraw the gym enhancement fee, but ASF employees said the contracts didn't contain a provision that allowed that withdrawal, Bloor said.
ASF told Sleater to check with the state Attorney General's Office or his personal attorney, and Sleater apparently called back the next day saying he was given the OK by his attorney to make the charge, Bloor said.
ASF still refused, but employees did tell Sleater how he could levy the charge on members through his own computer.
Bloor said 509 Fitness was in financial trouble because Sleater had withdrawn more than $65,000 from the company for his own personal use. He said Sleater talked to his business partner, Jeremy Appleby, two months earlier about the fee and allegedly said they needed the money to pay the bills, court documents said.
After people started complaining, Sleater had front desk staff provide a letter to members that purportedly was written in December 2010, saying the gym enhancement fee would be imposed in February and was the company's "commitment to our members, to provide the best amenities, equipment and equipment maintenance possible," documents said.
509 Fitness closed on March 21, 2011, and Kennewick police began investigating the gym members' complaints, Bloor said. On March 30, Sleater and his attorney called ASF to try to get them to refund the $19.60 fee.
In the time after the fee was charged but before the gym closed, Sleater also started using new membership contracts that specifically included a provision for gym enhancement fees.
Johnson said Sleater's attempt to get the money back shows his client had no intent to deprive his members. He also noted that Sleater never had possession of the money because it was always held by ASF, then it eventually was refunded back to Appleby.
"The only person ever to make any profit from this gym enhancement fee is Mr. Appleby, who has never been charged by the state and is now the state's prime witness," Johnson said. "There just isn't intent here. It can never be proved."
Bloor, however, contends that Sleater only tried to get the money refunded when he learned police were investigating him and he "saw the heat was coming down."
"The issue isn't whether he ultimately tried to give them back their money. The prison is full of people who say 'I was going to return your money, but I didn't get around to it,' " Bloor said. "The issue is what was in his head when he used the debit and credit cards to charge $19.60."
There's clear evidence to support the criminal charge, and questions about intent are exactly what a jury should be deciding at trial, Bloor said.
Judge Spanner denied the defense's motion to dismiss the case, clearing the way for a jury to decide if the state can prove that Sleater wrongfully misappropriated money from members' accounts. Part of that determination will be based on how the contract is interpreted and what Sleater's intent was, he said.
Based on the material presented to the court, Spanner said a jury could conclude Sleater's intent was to take that money to use for his personal benefit, especially given that ASF and Appleby said they didn't believe the contract provisions allowed him to charge the fee, Spanner said.
Spanner also noted that Sleater used two documents to try to cover up what he was doing and told ASF his lawyer said it was OK, which that was not true.
"Then really, his attempt to give the money back really cuts in my mind the other way -- that could also show a guilty intent, a guilty knowledge on Mr. Sleater's part," Spanner said.