Retrial of Cay Clubs fraud defendant is just weeks away

Attorneys are battling over admissible evidence in filings leading to the second bank-fraud trial for Cay Clubs Resorts and Marinas founder Fred "Dave" Clark.

The case has a calendar-call hearing Monday at the Miami federal courthouse in preparation for a scheduled Nov. 9 jury trial in Key West. Clark founded the Tavernier-based Cay Clubs in 2004.

U.S. Attorney's Office prosecutors filed a motion this week that seeks to block testimony or arguments involving several matters, including "reference to the prior trial or the acquittal of Cristal Clark" in August.

That jury cleared Cristal Coleman Clark, Dave Clark's wife, of fraud and failed to reach a verdict on her husband.

"The case was not easy for jurors to grasp, which was clearly indicated by one of the jurors giving up on the third day after a nervous breakdown," defense attorney Valentin Rodriguez wrote in a motion. "...The government could not prove its case, despite four weeks of agonizing testimony."

Cay Clubs claimed it would convert existing resorts in the Keys, Clearwater and Las Vegas into luxury condo-hotels. By 2008, the firm failed under pressure to meet financial commitments to unit buyers and the inability to perform promised renovations.

Banks and about 1,400 investors lost a total of $300 million, prosecutors estimate. It became a Ponzi scheme when Cay Clubs executives realized by mid-2005 that Cay Clubs "was not the successful business [the Clarks and salesmen] claimed it was," prosecutors said.

In this week's filing, prosecutors asked the judge to "preclude the defense or any witness from referencing the prior trial or outcome of that trial. Judgments of acquittal are hearsay and excludable."

Defense attorneys countered in a Thursday filing that they may be required to challenge witnesses if they answer a question differently than when asked the same question in the first trial.

"The new jury is entitled to know that the gravity of the issues at the first trial was no less than at the second," defense attorney Warren Zimmerman wrote in the response.

Prosecutors also asked U.S. District Judge Jose E. Martinez to prevent Clark's team from contending that he relied on his corporate lawyers' advice, or saying that banks that issued mortgages at Cay Clubs properties failed to verify the worth of the condo-hotel units.

Clark's trial lawyers argue "the government [is] forgetting about the real possibility that it was actually the banks who were misleading the borrowers by drafting sloppy loan applications and disregarding common standards of underwriting, all for the sake of getting loans closed...."

Undisclosed insider sales between company executives created a bogus record of skyrocketing property value, prosecutors argue. Two former sales managers have admitted filing falsified mortgage applications and agreed to five-year prison sentences.

Dave Clark also is charged with skimming money from a Cayman Islands pawn-shop chain firm by funneling payments for precious metals through an Upper Keys bank account.