Fred D. "Dave" Clark Jr., founder of the failed Cay Clubs Resorts and Marinas firm in the Keys, received a 40-year sentence in federal prison Monday -- but not before a judge allowed people he was convicted of ripping off had a chance to speak.
At the federal courthouse on Simonton Street in Key West, U.S. District Court Judge Jose E. Martinez imposed the lengthy sentence after Clark's December conviction on three counts each of bank fraud and making a false statement to a financial institution.
Martinez also imposed a judgment of $303.8 million on Clark for the bank fraud and $3.3 million for obstructing a Securities and Exchange Commission investigation. In addition, he has to forfeit $2.6 million in overseas assets.
"We have had bad credit because of" investing in Cay Clubs property. "I should be retired. I'm 72, but I'm still working. It's been a very hard and stressful 10 years," Patricia Sugar of Sebastian, Fla., told the judge.
"We're hearing so much about the money. But this has affected my life so much over the last 10 years," said Laurie McNulty of Charleston, S.C. "It has hurt my marriage. It's taken so much time away from my kids."
Kimball Pugmore came from Utah. She testified, "Cost me my retirement, cost me my life savings, cost me all the sacrifices I made in 30 years of traveling the road to support my family."
Monterey, Calif., airline pilot David Clark (no relation to Fred Clark) said the convicted felon "needs to spend the rest of his living life in prison."
But one of the convicted Clark's friends, Mark Wheaton, owner of Wheaton's Service Center (auto repair) in Key Largo, told the judge, "The guy had a big heart. I think he just got in over his head and tried to make everybody happy."
Cay Clubs was founded in 2004 in the Florida Keys and went on to offer condo-hotel units on 17 properties in the Keys, Clearwater, Las Vegas and the Caribbean. Many of the 1,400 buyers say they were misled by promises of steady income from unit rentals.
Federal authorities say Cay Clubs raised more than $300 million from unit buyers but the operation turned into an illegal Ponzi scheme when the firm began using new buyers' money to pay lease-back fees owed to earlier buyers. Cay Clubs collapsed in 2008.
It was the second trial for Clark; a jury that acquitted his wife Cristal in August 2015 failed to reach a verdict for him.
In the second trial, the U.S. Attorney's Office focused on "a series of fraudulent mortgage transactions totaling more than $20 million worth of bank loans," prosecutors said
"According to documents and testimony introduced at trial, during these sham transactions Clark sold units Cay Clubs had acquired to himself while increasing the sales price. On paper, Clark sold the units to family members and certain insiders while causing various lending institutions to fund the transactions."
Defense attorney Valentin Rodriguez repeatedly contended that Clark was following advice from his attorneys and bank loan officers who were eager for commissions on the sales.
Rodriguez said in December that he expects to appeal based on the judge's ruling to ban expert witnesses who would tell "the truth ... of what really was happening between the banks, borrowers and Cay Clubs during the 2004 to 2007 time frame."
Former Cay Clubs executives Barry J. Graham and Ricky L. Stokes, both from Fort Myers, previously pleaded guilty to conspiracy to commit back fraud. Both were given five-year federal sentences and ordered to pay $161.5 million in restitution to financial institutions and investors.
This report was supplemented with information from Nancy Klingener from WLRN.