MIAMI, Sept 17 (Reuters) - A Florida couple has been charged with running an alleged $300 million real estate Ponzi scheme only months after dodging a Securities and Exchange Commission lawsuit that was rejected when a U.S. federal judge ruled the five-year statute of limitations had expired before it was filed.
Fred Davis Clark, Jr, 56, and Cristal R. Clark, 41, former executives of Florida Keys-based Cay Clubs Resorts and Marinas, were charged on Tuesday with conspiracy to commit bank fraud, mail fraud and multiple counts of bank fraud for the alleged scheme that lasted from 2004-08, according to the U.S. Attorney’s Office.
Prosecutors said Cay Clubs attracted nearly 1,400 U.S. investors for 17 locations in Florida, Las Vegas and the Caribbean.
The company told investors it planned to refurbish aging properties into luxury hotels, guaranteeing a 15 percent to 20 percent return as well as future income via a rental program. Cay Clubs began paying older investors with newly attracted funds in 2007, according to the indictment.
Clark, along with two other Cay Clubs executives, “misappropriated more than $33 million either as exorbitant salaries or to fund personal expenses and business ventures,” according to the SEC’s 2013 lawsuit.
A lawyer for the Clarks did not respond to calls and emails seeking comment on Wednesday.
In the latest indictment, officials also alleged Fred Clark tried to obstruct SEC investigations, bilked money from a Cayman Islands pawn shop company, and transferred about $2 million to a Honduran bank to hide the funds from regulators.
Officials in Honduras froze nearly $1.7 million of their assets in mid-2013.
Fred and Cristal Clark fled to Panama and Honduras, respectively, but were both deported in June 2014. They are being held in Key West, Florida, awaiting trial in U.S. federal court in the Southern District of Florida later this year.
U.S. District Judge James King in a May 2014 ruling admonished the SEC for waiting too long to file the lawsuit that was ultimately dismissed.
“The agency whose principal mission is to protect investors and the markets by investigating potential violations of the federal securities laws failed to meet its serious duty to timely bring this enforcement action,” he wrote. (Editing by David Adams and G Crosse)