Cay Clubs Founder Convicted of Operating $300 Million Ponzi Scheme

The founder of Cay Clubs, a timeshare-leasing venture that government officials said was really a $300 million real estate Ponzi scheme, has been found guilty of bank fraud, making false statements to a financial institution and obstruction of an official investigation by a federal jury in Key West, Florida.

Fred Davis Clark, also known as Dave Clark, was convicted as the chief executive officer and founder of Cay Clubs, which sold shares in luxury resorts. According to federal prosecutors, Clark raised over $300 million from investors to refurbish resort properties in Florida, Las Vegas and the Caribbean with promises of a 15-20 percent return and future income from leasing the properties as timeshares.

Prosecutors said that Clark never developed the properties and used the proceeds of sales from new investors to pay earlier investors as well as for his own personal use. Cay Clubs ceased operations in July 2008 an the Securities and Exchange Commission filed suit against Clark and four other Cay Clubs executives in 2013. In 2014, a federal judge dismissed the suit as time barred.

In June 2014, Clark and his wife Cristal were arrested in Central America and extradited to the U.S. to face criminal charges. The trial ended in a mistrial for Dave Clark; Cristal Clark was cleared of all charges.

At a retrial on a superseding indictment that Clark artificially inflated unit prices and defrauded financial institutions, prosecutors said that Clark used family members to pose as “straw” borrowers for loans used to purchase Cay Clubs units. The straw borrowers created fraudulent loan applications and made false representations in order to qualify for loans.

Clark was convicted of bank fraud, making false statements to a financial institution and obstruction of an official investigation. Sentencing is set for February 2016.

Whether you are facing a serious federal white-collar prosecution, a state murder charge, or misdemeanor charges, The Cogdell Law Firm has the experience, knowledge and reputation you want for your legal team. When results matter most, contact Dan Cogdell at (713) 426-2244 or dan@cogdell-law.com.

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