Alleged Ponzi schemer in the Keys convicted in Cay Clubs case

US attorney says David W. Schwarz and majority owner used $30M in proceeds for themselves

Mar.March 08, 2017 04:30 PM

The former finance officer and minority partner of the Cay Clubs Resorts and Marinas was just convicted of bank fraud and conspiracy, among other counts.

A federal jury in Miami convicted David W. Schwarz on four of eight counts. He will face sentencing, which could total 93 years, on May 1 for his role in what prosecutors are calling a Ponzi scheme, the Miami Herald reported.

Cay Clubs, founded in 2004 in the Florida Keys, raised more than $300 million from 1,400 buyers of condo hotel units at properties in the Keys, Clearwater, Las Vegas and the Caribbean. The resort company collapsed four years later after federal authorities discovered Cays Clubs was using that money to pay lease-back fees owed to earlier buyers.

Schwarz owned a third of Cay Clubs, which employed more than 1,000 people. He’s the fourth executive to be convicted or plead guilt to charges related to the case. Fred “Dave” Clark, founder and majority partner, is currently serving a 40-year sentence for bank fraud and obstruction, the Herald reported.

Clark “began Cay Clubs in 2004 with fraudulent sales of Cay Clubs units to insiders, using money from Cay Clubs bank accounts to fund the cash to close for purchases, while obtaining mortgage financing from lending institutions,” according to a statement from the office of acting South Florida U.S. Attorney Benjamin G. Greenberg.

The statement continued, adding that Schwarz and Clark “diverted more than $30 million in proceeds for themselves, including millions of dollars in cash transfers that was used to purchase property and other businesses, including a gold mine, a rum distillery, aircraft, and a coal-reclamation business.” [Miami Herald] – Katherine Kallergis

Related Articles

Shoma Group CEO Masoud Shojaee and a rendering of Ten30 South Beach

Shoma nabs $18M construction loan for condos near Lincoln Road

A photo illustration of Key West (Credit: iStock)

All hotels and short-term rentals to shut down in Florida Keys

Rendering of Wynwood 28 and Laurent Morali 

Kushner lands $18M loan for Wynwood projects

Matt Rieger and a rendering of Paradise Lake Apartments

Developer scores financing for West Kendall affordable housing project

94100 Overseas Highway (Credit: Compass Florida)

13-acre Florida Keys estate hits the market for $25M

Wynwood 25 and Wynwood Annex with Jon Paul Perez and Jonathon Yormak (Credit: East End Capital/Related Group)

Related, East End score $136M refi of Wynwood projects

John Gallant and the Florida Keys

Engel & Völkers expands to the Florida Keys

These real estate power players are involved in 2019’s juiciest lawsuits (Credit: Getty Images)

Here are South Florida’s juiciest lawsuits of 2019