Ex-exec gets 40 years' prison in $300M vacation resort scam

[TexasTowelie]

KEY WEST, Fla. -- A former vacation resort executive has been sentenced to 40 years in prison for his role in what federal prosecutors called a $300 million scam.

A federal judge in Key West, Florida, imposed the sentence Thursday on 60-year-old David Schwarz. A jury previously found Schwarz guilty of conspiracy to commit bank fraud, bank fraud and Internal Revenue Service interference.

Schwarz was once chief financial officer and one-third owner of the Cay Clubs Resorts and Marinas, which operated resorts in the Florida Keys, Clearwater, Orlando and Las Vegas. Prosecutors say 1,400 investors who purchased units in Cay Clubs developments were defrauded.

The resort's former president, Fred Davis "Dave" Clark Jr., was sentenced last year to 40 years in federal prison. Two former sales executives were sentenced to five years in prison.

Read more here: http://www.miamiherald.com/news/article148613994.html#storylink=cpy

[nitpicker]

1. From the DoJ PR

https://www.justice.gov/usao-sdfl/pr/former-cay-clubs-chief-financial-officer-sentenced-40-years-prison-conspiracy-bank

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David W. Schwarz, 60, of Orlando, was previously convicted at trial of conspiracy to commit bank fraud, in violation of Title18 ,United States Code, Section 1349, two counts of bank fraud, in violation of Title 18, United States Code, Section1344, and one count of interference with the administration of the IRS, in violation of Title 26, United States Code, Section 7212(a). Chief U.S. District Judge K. Michael Moore, sitting in Key West, sentenced Schwarz to 40 years in prison. Judge Moore found that the criminal conduct resulted in $303 million in fraudulent proceeds and approximately $170 million in victim losses. A restitution hearing has been set for July 10, 2017, in Key West.

According to evidence at trial, Schwarz was the Vice President and Chief Financial Officer (CFO) of Cay Clubs, which operated purported luxury resorts in the Florida Keys, Clearwater, Orlando, Las Vegas, and elsewhere. Between 2004 and 2008, Cay Clubs grew to more than 1,000 employees and became one of the largest employers in the Florida Keys. Schwarz, who was the one-third owner, and Fred Davis Clark, Jr., a/k/a Dave Clark, who was the two-thirds owner, began Cay Clubs in 2004 with fraudulent sales of Cay Clubs units to insiders, using money from Cay Clubs bank accounts to fund the cash to close for purchases, while obtaining mortgage financing from lending institutions. These fraudulent sales were used in marketing materials to falsely show demand for Cay Clubs units and to inflate prices, as Cay Clubs was in reality purchasing units from itself. Proceeds of these sales were diverted to Schwarz and Clark.

Trial evidence established that Cay Clubs raised more than $300 million from approximately 1,400 investors, who purchased units in Cay Clubs developments. Schwarz and Clark failed to remodel the dilapidated properties as they promised investors, while taking millions of dollars out of the company for their own benefit. During the operation of Cay Clubs from 2004 through 2008, Schwarz and Clark diverted more than $30 million in proceeds for themselves, including millions of dollars in cash transfers that were used to purchase property and other businesses, including a gold mine, a rum distillery, aircraft, and a coal reclamation business.
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