Prosecutors ask Florida judge for $180M in restitution from convicted Cay Clubs executives

Miami /
Jun.June 26, 2017 03:45 PM

Prosecutors asked a Florida federal judge for $180 million in restitution from the four owners of the defunct Cay Clubs Resorts and Marinas in Key Largo.

Through the court order for restitution money filed last Thursday, investors who were duped and whose funds were stolen by Cay Clubs executives can begin to get their money back, according to Law360.

Cay Clubs Resort and Marinas’ alleged Ponzi scheme executives Fred Davis “Dave” Clark Jr., David W. Schwarz, Barry J. Graham, and Ricky Lynn Stokes have all been sentenced to time in prison after lying to banks and investors about falsely claiming to develop luxury resorts in the Florida Keys. The government is seeking to hold the executives jointly liable for $180 million.

The top executives, Clark and Schwartz, each face a 40-year prison sentence. Clark served as the firm’s CEO, and Schwartz served as its CFO. Fellow executives Stokes and Graham, who also face prison time, were previously ordered to pay $163 million in restitution money to victims of Cay Clubs investments. Law 360 reported that the restitution figure was arrived at through victim claims.

Miami Attorney Paul Petruzzi, who represents Barry Graham, talked to Law360, using an expletive to imply that prosecutors had lied about the restitution figure. Cases for all of the former Cay Clubs executives are in the United States District Court for the Southern District of Florida.

Cay Clubs allegedly took money from investors and banks from across the United States that totaled about $300 million since Clark and Schwartz founded Cay Clubs Resorts and Marinas in 2004. Earlier in 2017, a judge ordered Schwartz to forfeit the $300 million. However, restitution is a separate process and the court can seize assets in order to pay back the victims.

The firm promised investors that it would use the money build resorts and properties in Southern Florida and Nevada, but never actually did. Instead, the alleged Ponzi schemers gave themselves large salaries and used new investment money to pay off old investors. Clark was the majority two-thirds owner of Cay Clubs, and Schwartz was a one-third owner of the company.

Beginning in 2004, Cay Clubs made fraudulent pre-construction sales of units to insiders and family members. The Law360 report says all of the executives allegedly spent investor money on luxury items such as planes and boats. They also put the money into investments in unrelated industries such as precious metals and an alcohol distillery.

Cay Clubs went out of business in 2008, at which time ex-CEO Clark and ex-CFO Schwartz had collectively lined their pockets with $28 million. [Law360]  Grace Guarnieri


Related Articles

arrow_forward_ios
Nick Rojo and Jeff Burns (Affiliated, iStock)

Affiliated Development launches $125M workforce housing fund

Affiliated Development launches $125M workforce housing fund
20200 West Dixie Highway, Miami with Harry Dornbusch and Dr. Joshua Lampert (Google Maps)

Aventura office condo owners allege construction defects at Beacon Tower

Aventura office condo owners allege construction defects at Beacon Tower
Tom Cabrerizo and 6790-6880 Southwest 80th Street (Google Maps)

Developers score $15M construction loan for Miami townhouse development

Developers score $15M construction loan for Miami townhouse development
Triton Center (iStock)

Questions surround $50M in EB-5 investments tied to former INS building: lawsuit

Questions surround $50M in EB-5 investments tied to former INS building: lawsuit
Dina Goldentayer, Ryan Cohen and the Bal Bay Drive home (Credit: Kris Tamburello/Douglas Elliman)

Lawsuit alleges Harding Realty cut out of $24M Bal Harbour sale, reveals Chewy founder as alleged buyer

Lawsuit alleges Harding Realty cut out of $24M Bal Harbour sale, reveals Chewy founder as alleged buyer
Henry Torres, Roza Radkiewicz and Merrick Manor

Henry Torres and Astor Companies allegedly owe broker $1M-plus commission: lawsuit

Henry Torres and Astor Companies allegedly owe broker $1M-plus commission: lawsuit
ShareMD's John Bardis and Real Capital Partners' Otto Travieso with 7400 Southwest 87th Avenue, Miami (Linkedin, Google Maps)

Miami commercial brokerage alleges it was stiffed on medical office commission

Miami commercial brokerage alleges it was stiffed on medical office commission
Michael S. Liebowitz and Russell Galbut (Linkedin)

Russell Galbut and partner launch blank check company, plan to raise $100M

Russell Galbut and partner launch blank check company, plan to raise $100M
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...