The Securities and Exchange Commission (“SEC”) has charged 5 former executives of Florida-based Cay Clubs Resorts and Marinas (“Cay Clubs”) with perpetrating a $300 million Ponzi scheme. The Complaint filed by the SEC names as defendants Fred Clark, Jr. (president and CEO); David W. Schwarz (Chief Accounting Officer); Cristal Coleman (manager and sales agent); Barry Graham (sales director); and Ricky Lynn Stokes (sales director) (collectively “Defendants”.)
According to the SEC, since 2004, the Defendants solicited approximately 1,400 investors nationwide to invest in Cay Clubs with promises of a guaranteed 15% return, instant equity in real estate properties and upgrades in units they purchased in Florida and Las Vegas. The SEC alleged that Defendants made knowingly false statements to potential investors that the leaseback payments and profits were “guaranteed” and that Cay Clubs was “worth billions.”
The SEC claims that Defendants used later investors’ funds to pay earlier investors in true Ponzi fashion. In addition, the Complaint alleges that Clark, Coleman and Schwarz misappropriated millions of dollars in investors’ funds to purchase airplanes and boats and for unrelated business ventures.