Before an expected final flurry of pardons and commutations from the White House, President Donald Trump issued a single commutation last week to the mastermind of a $300 million vacation rental fraud that operated in Clearwater and 16 other sites.
A federal judge in 2016 sentenced Fred Davis Clark Jr. to 40 years in prison for his role as CEO in Cay Clubs Resorts and Marina, which promised to turn dilapidated properties in Florida, Las Vegas and the Caribbean into luxury resorts. Beginning in 2004, Clark raised more than $300 million from 1,400 investors who were promised steady rental income and an upfront leaseback payment of 20 percent of the sales price of the units.
The operation was really a Ponzi scheme that used sales proceeds from new investors to pay overdue obligations to earlier participants, according to the U.S. Department of Justice.
Investors lost retirements and life savings. But prosecutors proved Clark, 62, used funds from his scheme to pay for a lavish lifestyle, including extracting $22 million, and buying a gold mine and a rum distillery for his personal benefit.
“I’m more disappointed for the investor victims and the dedicated public servants across the Securities and Exchange Commission and Department of Justice who put their hearts and souls into this prosecution and had the rug pulled out from under them,” said Bruce Barnes, a Safety Harbor attorney who filed a lawsuit in 2016 on behalf of the homeowners association of the Grand Venezia off U.S. 19 and Belleair Road, which is still levied assessments to pay off Clark’s debt.
Trump issued the commutation on Jan. 13, the first one of the year, which said: “The ends of justice do not require (Clark) to remain confined until his currently projected release date of August 14, 2048 and the safety of the community will not be compromised if he is released.”
Clark’s attorney, Claudia Pastorius, declined to answer questions about how his commutation was arranged, who got his case before Trump or whether he knows the president personally. Trump’s commutation did not wipe out the $179 million in restitution Clark is still obligated to pay, but Pastorius did not answer whether he intends to pay it.
“My client is grateful to be home with his family and appreciates President Trump’s showing of kindness and compassion,” Pastorius said in an email.
Trump’s pardons stem from a lucrative market of influence peddling, according to an investigation published Sunday by the New York Times. In the last weeks of Trump’s term, the president’s allies were “collecting fees from wealthy felons or their associates to push the White House for clemency,” according to the Times.
Trump did not commute the sentence of David Schwarz, Clark’s business partner who was also sentenced to 40 years in prison in 2017 for his role in the scheme. Schwarz was released on bond on Oct. 1 pending his appeal, according to court records.
Clark will live in Orlando under five years of supervised release, according to the Department of Justice.
The 40-year term had felt like justice to Kimball Pugmire, 71, who lost his life savings in the fraud.
“I thought well he will probably die in prison and he deserved it,” Pugmire said on Monday. “I was thinking that’s justice because now he can sit there the rest of his life contemplating what he’s done to other people.”
He said it’s hard to put a dollar figure on the devastation. He bought two units in Clearwater’s Grand Venezia and four in Las Vegas in 2006. When it became clear he was not going to receive leaseback payments, he had already begun developing a subdivision in Utah.
The lack of cash caused him to foreclose on his home, and lose the subdivision. He still works building homes, “a risky and hard way to make a living,” years after he dreamed of retiring.
When he received an email last week from the Department of Justice notifying him of Clark’s release, Pugmire said he was shocked. Pugmire had voted for Trump in 2016 and 2020 and supported his agenda. But he doesn’t understand how the president could wipe away the prison sentence “of a lifetime crook.”
“I had been trying to forget all this, but it makes you wonder, even being a Trump supporter, about his honesty,” Pugmire said.
Before his commutation, Clark had applied in May for bond pending his appeal, citing his risk of contracting COVID-19 at the prison where he was housed at the Federal Correctional Complex Coleman near Wildwood.
The judge denied bond on July 31, finding him to be a significant flight risk. After Clark was indicted in 2013, he “moved his family overnight from the Cayman Islands to Roatan, Honduras upon his belief that the Securities Exchange Commission could reach his assets in the Caymans,” the judge wrote.
When the Cay Clubs scheme began falling apart in 2006, Clark engaged in a serious of fraudulent mortgage transactions totaling more than $20 million of bank loans. Clark sold units to family members and insiders on paper while using proceeds of the loans for his own personal benefit, according to the Department of Justice.
The Securities and Exchange Commission began investigating but Clark thwarted their efforts, “including by concealing the location of assets under his control and providing false sworn testimony,” according to the Department of Justice.
Today, owners of the 336 units at Clearwater’s Grand Venezia still pay assessments to cover the $30 million in bonds Clark issued to build a water park, high-end retail, a spa, canals with gondoliers and other amenities around the existing apartments that were converted into condos — but the infrastructure was never built. And likely never will be.
“The conviction gave them a sense of relief and satisfaction that Clark didn’t get away with it because he was the mastermind,” said Barnes, the attorney representing the homeowners association.
“Somebody knows somebody, that’s for sure,” Barnes said.