Fred Davis Clark Jr., David W. Schwarz, Cristal R. Coleman, Barry J. Graham, and Ricky Lynn Stokes, all Miami, Florida real estate executives, were charged with fraud Wednesday in a civil complaint, Miami federal court records show. The executives are accused of duping investors out of money in order to pay back previous investors. It is unclear whether any of the defendants has been arrested. It is also unclear whether the defendants have acquired criminal defense attorneys.
According to reports, the defendants opened Cay Clubs Resorts and Marinas in 2004. The business purportedly offered the opportunity to invest in the restoration and renovations of abandoned or unfinished condominium projects in Central Florida, Las Vegas, and the Florida Keys. The defendants allegedly assured the investors a 15 percent return on their investment, as well as a continuing stream of money from rental earning on their properties, reports say. The defendants also promised the investors a two-year leaseback on their purchases, reports say.
To advertise their investment opportunities, detectives say the defendants hired numerous sale agents, hosted marketing seminars, and released podcasts. The alleged scheme lasted between 2004 and 2007, during which time the defendants funneled over $30 million from nearly 1,400 investors. However, detectives say the defendants did not use the funds to invest in the properties, as they had promised. Instead, the defendants allegedly operated a Ponzi scheme, using the investors' money to pay back other investors. The defendants also allegedly paid themselves "exorbitant salaries and commissions." Some of the money went towards the procurement of expensive boats and airplanes, reports say.
In 2008, the defendants reportedly closed down operations at the Cay Clubs business. Properties that the defendants had purchased using the investors' money went unmanaged and fell into foreclosure, sources say. Following the alleged scheme, detectives say Clark and his wife relocated to the Cayman Islands and transferred $2 million of their allegedly ill-gotten funds to offshore bank accounts.