Fred D. “Dave” Clark Jr., founder of the failed Cay Clubs Resorts and Marinas firm in the Keys, was sentenced Monday to 40 years in federal prison.
At the federal courthouse in Key West, U.S. District Court Judge Jose E. Martinez imposed the 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.
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 told KeysInfoNet 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.”
Key Largo business owner Mark Wheaton spoke on Clark’s behalf during Monday’s sentencing hearing. The gallery also included several buyers of Cay Clubs units who said the firm’s deceit caused them extreme economic hardship.
Former Cay Clubs executives Barry J. Graham and Ricky L. Stokes, both from Fort Myers, previously pleaded guilty to conspiracy to commit bank fraud. Both were given five-year federal sentences and ordered to pay $161.5 million in restitution to financial institutions and investors.