The former CEO of a Keys-based vacation rental investment company has been sentenced to 40 years in federal prison on bank fraud and obstruction charges.
Fred Davis Clark Jr., known as "Dave," 57, was convicted in December of bank fraud, making a false statement to a financial institution and obstruction of the Securities and Exchange Commission.
"We have reason to believe that it was one of the largest frauds in the history of Monroe County," said Assistant U.S. Attorney Jerrob Duffy.
Cay Clubs operated from 2004 through 2008, eventually marketing vacation rental units in 17 locations in the Keys, Clearwater, Las Vegas and the Caribbean.
Prosecutors estimated the losses by investors and underwriters at more than $169 million. Meanwhile, they said Clark personally gained almost $40 million, money that he used to support a "lavish lifestyle" and make his own investments in enterprises like a gold mine and a rum distillery.
During pre-sentencing arguments, U.S. District Judge Jose Martinez said the Cay Clubs operation "sounds very much like a Ponzi scheme."
"The bottom line is it's using the money of later investors to pay earlier investors," Martinez said. "People were told that they were going to make money on these things. And they didn't. And not only didn't they make money, they got hosed."
About two dozen Cay Clubs investors traveled from all over the country to the sentencing in Key West.
Laurie McNulty, of Charleston, S.C., said the losses cost her much more than money.
"It has hurt my marriage. It's taken so much time away from my kids," McNulty said, recalling one particularly painful phone call from her husband about her daughter. "I missed her first steps because I was working overtime."
David Clark (no relation), an airline pilot from Monterey, Calif., said he and his wife lost $750,000 in cash on eight Cay Clubs properties — and are still coping with the financial effects of the loans from diminished credit scores to limiting their kids' college choices.
"We were cutting corners to save as much money as possible," he said. "We didn't give gifts to each other. Our 25th wedding anniversary was a card."
Fred "Dave" Clark did not testify, but his attorney said the underwriters who provided loans for Cay Clubs buyers bore much responsibility.
"Mr. Clark truly believed in the product. He paid mortgages," said Valentin Rodriguez. "He tried hard to keep his company going. ... We would not be here if the recession had not occurred. Everybody would be wealthy."
Assistant U.S. Attorney Thomas Watts-FitzGerald said he did not buy that argument.
"Bubbles always burst," he said. "The only people not hurt were [defendant] Dave Clark and his family."