From KEYSINFONET

Two principals in the former Key Largo-based Cay Clubs Resorts and Marinas, which the U.S. Securities and Exchange Commission says was a $300 million Ponzi scheme that bilked 1,400 investors, have been arrested in Central America and returned to the Keys to face federal charges.

Cay Clubs went belly-up in 2007, and former executives Dave Clark and Cristal Coleman Clark quickly moved out of the U.S.

Cay Clubs was founded in the Keys and executives maintained a huge public presence here — sponsoring sporting and music events and making appearances at public forums like School Board and city council meetings. The company even sponsored a NASCAR team in the Busch racing series.

But not one of the dozens of mostly waterfront properties Cay Clubs bought in Monroe County during the real estate boom was ever developed. The company collapsed in 2007, putting hundreds of Keys people out of work.

Cay Clubs also left a trail of disgruntled investors and unfinished properties in Clearwater and Las Vegas.

The U.S. Attorney’s Office in Miami said Friday that Clark, 56, and Coleman Clark, 41, “engaged in conduct aimed at concealing the location of assets under their control, and Fred Davis Clark gave false and misleading testimony to the SEC in connection with its investigation.

“Furthermore, after the collapse of Cay Clubs, [Clark and Coleman Clark, Clark’s wife], initiated another venture to operate pawn shops in the Caribbean. According to the indictment, using the same bank accounts and shell companies based in Key Largo that they controlled during their Cay Clubs activities, Fred Davis Clark and Cristal Clark engaged in fraud and theft of funds from CMZ Group LTD, a Cayman Islands company that operated pawn shops in the Caribbean.

“According to the indictment, Fred Davis Clark and Cristal Clark obtained money and property from CMZ Group LTD by siphoning off funds from the business operations of CMZ Group so that the defendants could lead a lavish lifestyle.

“Furthermore, in or around January 2013, shortly before an action was brought by the SEC alleging that they committed securities fraud, the indictment alleges, Fred Davis Clark and Cristal Clark caused the transfer of nearly $2 million to a bank account they controlled in Honduras for the purpose of preventing the SEC from learning the source, nature, location and control of these monies.”

The SEC dropped its case against Clark, Coleman Clark and others in the spring.

Clark was Cay Clubs’ president. Coleman Clark was a manager and sales agent. Also named in the SEC complaint were sales directors Barry Graham and Ricky Stokes, and chief accounting officer David Schwarz.

In January, the SEC said “investors were promised immediate income from a guaranteed 15 percent return and a future income stream through a rental program that Cay Clubs managed. But instead of using investor funds to develop resort properties and units, the Cay Clubs executives used new investor deposits to pay leaseback returns to earlier investors.

“Meanwhile they paid themselves exorbitant salaries and commissions totaling more than $30 million, and investor funds also were misused to buy airplanes and boats. While still advertising itself as a profitable venture, Cay Clubs eventually abandoned its operations. Many investors’ properties went into foreclosure.”

Clark was apprehended while traveling from Honduras to Panama, and Coleman Clark was apprehended in Honduras. Both were returned to the United States with the assistance of the U.S. Marshal’s Service.

IMAGE: Cay Clubs once operated Sombrero Resort in Marathon. KEYSINFONET

For more on this story go to: http://www.keysnet.com/2014/06/22/497426/two-former-cay-clubs-executives.html

EDITOR: Only recently Cayman Islands-based CMZ Group, whose operations include pawn shops throughout the Caribbean, has accused its former managing director and 50% owner, Dave Clark, of swindling it out of approximately $7.5 million.

See also iNews Cayman story published March 6 2013 “More red flags regarding Cayman-based CMZ financial group” at: http://www.ieyenews.com/wordpress/more-red-flags-regarding-cayman-based-cmz-financial-group/