Finally, some 1,400 people who were severely damaged by the $300 million Ponzi scheme known as Cay Clubs Resorts and Marinas can have some closure, even if their financial lives were damaged or even ruined.
Cay Clubs, you might recall, was the high-flying company that was buying resorts up and down the Keys in the mid-2000s promising investors high returns on their investments. The Cay Clubs pitch: Buy condo-hotel units that will be renovated, then rent them out for steady streams of income.
They certainly bought from the Tavernier-based companies, then found out they were duped around 2008, when Cay Clubs collapsed and founder Fred “Dave” Clark Davis and his wife Cristal Clark Coleman fled to Central America with millions of their ill-gotten gains in the bank. Turns out Cay Clubs was paying back old investors with new investors’ money, a classic Ponzi situation.
The Clarks were caught by U.S. marshals in 2014, Fred while in transit from Honduras to Panama and Cristal in Honduras. They were brought back to face justice in federal courts.
Prior to that, Cay Clubs didn’t only sell bogus investment, it marketed itself heavily to do so. Among other things, it sponsored a NASCAR racing team and at Tampa Bay Rays baseball games at Tropicana Field, it had a huge billboard behind home plate so every time a batter came to the plate, it was featured on television.
Friday, a federal jury convicted Orlando resident David Schwarz of four felony counts, including two counts of bank fraud, stemming from his Cay Clubs actions. He could get up to 90 years in prison though he will surely appeal.
Previously convicted were Fred Clark, who’s serving 40 years and appealing. The judge also ordered him to pay back more than $300 million. And previously, former Cay Clubs executives Barry Graham, 59, and Ricky Lynn Stokes, 54, both formerly of Fort Myers, pleaded guilty to conspiracy to commit bank fraud and were sentenced to 60 month, and 30 months, respectively.
Crystal Clark, who was in sales, was acquitted of all charges.
Everyone knew long before Cay Clubs, which sold units in the Keys, Clearwater and Las Vegas, collapsed that it was collapsing. Nearly every day in the late 2000s, this newspaper was getting calls from people who worked at Cay Clubs resorts saying another group had just been laid off, that more musicians were having their gigs canceled.
At what was then Sombrero Resort in Marathon, the residents saw what was happening and demanded a meeting with Cay Clubs executives and invited a reporter from this newspaper. When he showed up, he had the door shut in his face, not by the residents but by the executives.
Lots of scammers come through the Keys but Dave Clark, Schwarz, Graham and Stokes were scam royalty. Since they’vee been toppled from their thrones, perhaps those they preyed upon can feel at least some sense of satisfaction, even if their bank and retirement accounts don’t..