It has been about eight years since a luxury real estate venture in Clearwater and other locations across the state was outed as a Ponzi scheme, but another executive has now been indicted for his role, accused of defrauding investors.
Former Cay Clubs Resorts and Marinas vice president David Schwarz was indicted last week on eight counts of bank fraud, conspiracy, interference with Internal Revenue laws and making false statements in connection with a federal loan.
Schwarz's partner in the business, Fred Davis Clark Jr., was sentenced in February to 40 years in prison for masterminding the $300 million scheme that promised investors they would receive steady rental income and upfront "lease-back'' payments of up to 20 percent of the purchase price of their condos.
Schwarz is accused of creating numerous bank accounts under the Cay Clubs name and using family members as straw borrowers for loans to purchase condo units, according to the indictment filed in U.S. District Court for the Southern District of Florida. The loan applications would also include false claims of employment, wages and assets for the fraudulent borrowers.
The proceeds of the fraudulently obtained mortgage loans were deposited into Cay Clubs accounts controlled by Schwarz and Clark, according to the indictment.
The Cay Clubs venture in Clearwater promised to turn the run-down Grand Venezia condos near Belleair Road and U.S. 19 into a luxury resort with everything from a waterslide to a spa.
However, no development was ever started, and residents today in the 336 units still pay an assessment to pay off the accumulated debt.
Safety Harbor lawyer Bruce Barnes, on behalf of the homeowners' association, filed a motion to dissolve the community development district that collects the assessment based on the premise it no longer meets the definition of a CDD. Judge Walter L. Schafer denied the motion last week, but legal arguments continue.
As of 2007, Schwarz and Clark obtained more than $28 million in proceeds from Cay Clubs Resorts, which had 17 locations in Florida, Las Vegas and the Caribbean.
Contact Tracey McManus at email@example.com or (727) 445-4151. Follow @TroMcManus.