Buyers who lost money in the Cay Clubs Resorts and Marinas failure cheered Friday's criminal convictions of founder "Dave" Clark, which could result in a decades-long prison sentence.
Clark's defense attorney, however, pledged to file an appeal and predicted that Fred D. Clark Jr., 57, would win a new trial.
"We feel very clearly that there will be a new trial in this matter," attorney Valentin Rodriguez of West Palm Beach said Monday. "We feel we will be successful."
Rodriguez said U.S. District Court Judge Jose E. Martinez blocked the jury from hearing testimony from four defense witnesses -- two bank loan officers and two "recognized experts on bank fraud" -- who would have testified that Clark was following accepted loan practices during the overheated real-estate bubble.
The feds have called Cay Clubs, founded in 2004 and out of business in 2008, a $300 million Ponzi scheme. They say some 1,400 investors lost money.
Clark was convicted Friday in Miami on three counts of personally committing bank fraud and three counts of making false statements to secure a federally insured loan. Each count carries a maximum penalty of 30 years.
Those six counts all are linked to Clark creating "sham transactions" to purchase three units at the former Sombrero Resort in Marathon at inflated prices.
Prosecutors with the U.S. Attorney's Office say Clark "directed his administrative assistant and his bookkeeper to forge signatures on loan documents and falsely notarize mortgage paperwork to make it appear that family members, his significant other, and other insiders listed on paperwork, were in fact executing the documents. In reality, Clark was providing the deposits and down payments...."
That allowed Clark to pay about $640,000 in down payments on the three condo-hotel units but take in more than $1.75 million in loan proceeds, court documents say.
Rodriguez said Clark's excluded witnesses would have testified that banks encouraged such "straw-buyer" deals for real-estate contracts so the loans could be processed quickly.
"A bank officer authorized Mr. Clark to do the deals in the ways that he did," Rodriguez said.
"Cay Clubs would have been successful except for one thing," Rodriguez said. "The economy killed Cay Clubs. Dave Clark did nothing to bring it down."
Rodriguez contends that the one count for which Clark was acquitted -- conspiracy to commit bank fraud -- was the only charge directly related to the Cay Clubs failure.
Clark also was convicted on one count of obstruction during the Securities and Exchange Commission's investigation of the Cay Clubs collapse. That count has a maximum sentence of 20 years.
Cay Clubs was founded in 2004 in the Florida Keys and went onto offer condo-hotel units in 17 properties in the Keys, Clearwater and Las Vegas. Many of the buyers say they were mislead by promises of steady income from unit rentals and insider sales that artificially inflated unit prices.
Two top sales executives, former Fort Myers residents Barry J. Graham, 59, and Ricky Lynn Stokes, 54, pleaded guilty to conspiracy to commit bank fraud and are serving five-year federal sentences.
"As a result of the Cay Club scam, I also lost all of my savings and most of my [retirement] holdings," Kimball Pugmire, 66, of Utah wrote to the Keynoter. "I cannot ever retire now nor ever buy another home, unless some kind of miracle happens."
Pugmire, who calls the former executives "rats" and "scumbags," called for authorities to file additional charges and do more to recover lost money.
"People were financially ruined, long term and short term, by all this," said Bruce Barnes, a Safety Harbor attorney who represented several Cay Clubs buyers.
"These were salt-of-the-earth folks who worked hard and did everything the right way and wound up facing possible bankruptcy," Barnes said. "A lot were truly despondent."
Barnes commended prosecutors for sorting through the Cay Clubs morass.
"There were a lot of different tentacles in the way [Cay Clubs executives] pulled this off," he said. "It was hard for anyone to get their arms around it. I'm glad some people in the federal government and others were able to."