For a few heady years, Fred Davis Clark Jr. enjoyed the perks of an ill-gotten success — aircraft, yachts, waterfront homes.
But now Clark likely will spend the rest of his life behind bars for masterminding a $300 million fraud scheme involving condos in Clearwater and other vacation spots.
A federal judge in Key West this week sentenced Clark, in his late 50s, to 40 years in prison. Clark was also hit with judgments totaling $307.1 million for bank fraud and obstructing a Securities and Exchange Commission investigation.
Clark was convicted in December on three counts each of bank fraud and making a false statement to a financial institution. The charges stemmed from his role as CEO of Cay Clubs Resorts and Marinas, a company that said it would turn Clearwater's run-down Grand Venezia condos and 16 other tired properties in Florida, Las Vegas and the Caribbean into luxurious "hotel condos.''
Cay Clubs promised investors who bought the condo units that they would receive steady rental income and upfront "lease-back'' payments of up to 20 percent of the purchase price at the time of closing. Federal investigators said the company raised more than $300 million from buyers but the operation turned into an illegal Ponzi scheme when it began using money from new buyers to pay the lease-back fees to earlier ones.
In an attempt to meet his obligations, Clark engaged in an elaborate series of fraudulent mortgage transactions that drove up the sales prices of units. He also extracted $22 million from Cay Clubs operations for his personal use, investigators found.
Cay Clubs, which never completed the renovations, collapsed in 2008.
The fraud "cost me my retirement, cost me my life savings, cost me all the sacrifices I made in 30 years of traveling the road to support my family,'' said Kimball Pugmore of Utah, one of several victims who went to Key West to testify at Clark's sentencing Monday.
Laurie McNulty of Charleston, S.C., paid $669,000 in 2005 for a condo in the Grand Venezia, which had views of Old Tampa Bay but was just a few hundred yards from congested U.S. 19. She and others were told that a water park and high-end shopping complex would soon be built nearby, transforming the area into a classy resort.
"This has affected my life so much over the last 10 years,'' McNulty, a pharmacist, said in court. "It has hurt my marriage. It's taken so much time away from my kids.''
McNulty's unit went into foreclosure after the promised amenities failed to materialize and was sold by the bank in 2008 for $175,500.
In related cases, two other Cay Clubs executives pleaded guilty last year to bank fraud charges. Each was sentenced to five years in prison and ordered to pay $161.5 million to victims, both individuals and financial institutions.
Information from the Florida Keys Keynoter was used in this report. Contact Susan Taylor Martin at firstname.lastname@example.org or (727) 893-8642. Follow @susanskate.