Alleged Ponzi schemer in the Keys convicted in Cay Clubs case

Miami /
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


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