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Samaad","description":"","imageLarge":"https://secure.gravatar.com/avatar/f16d6fc2845f417ea0e93a3f2b6cd37d?s=136&d=mm&r=g","webUrl":"/author/profile/michelle-a-samaad/"}],"publication":"Credit Union Times","kicker":"News","kickerNode":[{"name":"News","slug":"news-kicker","uri":"/news/","sectionName":"News"}],"prettyDate":"January 30, 2013","pubDate":"2013-01-30 09:34:00:000","modifiedDate":"","isDownload":"false","primaryCategory":{"channelName":"","sectionName":"","name":"","uri":"","slug":"","channelUri":""},"tags":[],"image":{"uri":"","width":"","height":""},"embed1":"","embed2":"","summary":"Instead of using investor funds to develop resort properties, SEC said, Cay Clubs executives used new investor deposits to pay leaseback returns to earlier investors.","categories":[{"name":"","uri":"","channelName":"Topics"},{"name":"Regulatory & Compliance","uri":"/regulatory-compliance/","channelName":"Topics"},{"name":"Lending","uri":"/lending/","channelName":"Topics"}],"bodyArray":["<p xmlns:i=\"incisive-repository\" xmlns=\"http://www.w3.org/1999/xhtml\">The SEC on Wednesday charged five former real estate executives\nwho allegedly defrauded investors into believing they were funding\nthe development of five-star destination resorts in Florida and Las\nVegas when they were actually buying into a Ponzi scheme.</p>\n<p xmlns:i=\"incisive-repository\" xmlns=\"http://www.w3.org/1999/xhtml\">According to the SEC complaint filed in U.S. District Court for\nthe Southern District of Florida, Cay Clubs Resorts and Marinas\nraised more than $300 million from nearly 1,400 investors\nnationwide through a network of hundreds of sales agents, marketing\nseminars and podcasts that touted the profitability of purchasing\nunits at Cay Clubs resort locations.</p>\n<p xmlns:i=\"incisive-repository\" xmlns=\"http://www.w3.org/1999/xhtml\">Investors were promised immediate income from a guaranteed 15%\nreturn and a future income stream through a rental program that Cay\nClubs managed, the SEC said.</p>\n<p xmlns:i=\"incisive-repository\" xmlns=\"http://www.w3.org/1999/xhtml\">Instead of using investor funds to develop resort properties and\nunits, the Cay Clubs executives used new investor deposits to pay\nleaseback returns to earlier investors.</p>\n<p xmlns:i=\"incisive-repository\" xmlns=\"http://www.w3.org/1999/xhtml\">The SEC said the Cay Clubs executives paid themselves exorbitant\nsalaries and commissions totaling more than $30 million, and\ninvestor funds also were misused to buy airplanes and boats.</p>\n<p xmlns:i=\"incisive-repository\" xmlns=\"http://www.w3.org/1999/xhtml\">While still advertising itself as a profitable venture, Cay\nClubs eventually abandoned its operations and many investors'\nproperties went into foreclosure, according to the SEC\ncomplaint.</p>\n<p xmlns:i=\"incisive-repository\" xmlns=\"http://www.w3.org/1999/xhtml\">The SEC charged the following former Cay Clubs executives: Fred\nDavis Clark Jr., president/CEO, David W. Schwarz, chief accounting\nofficer; Cristal R. Coleman, manager and sales agent; Barry J.\nGraham, sales director; and Ricky Lynn Stokes, sales director.</p>\n<p xmlns:i=\"incisive-repository\" xmlns=\"http://www.w3.org/1999/xhtml\">According to the SEC's complaint, the scheme began in 2004 with\nClark, Coleman, Graham, and Stokes soliciting investors with\npromises of guaranteed income, instant equity in undervalued\nproperties, historic appreciation, and at least $30,000 in upgrades\nto the units they purchased at Cay Clubs resort locations in\nFlorida and Las Vegas.</p>\n<p xmlns:i=\"incisive-repository\" xmlns=\"http://www.w3.org/1999/xhtml\">The SEC alleged that Cay Clubs continued to solicit new\ninvestors despite the fact that the company's financial condition\nhad deteriorated so significantly that it did not have sufficient\nfunds to make the guaranteed leaseback or rental payments to\ninvestors.</p>\n<p xmlns:i=\"incisive-repository\" xmlns=\"http://www.w3.org/1999/xhtml\">Clark, Coleman and Schwarz misappropriated millions of dollars\nin investor funds using the multitude of bank accounts they\ncontrolled, the SEC said. Besides purchasing airplanes and boats,\nthey misused investor money for unrelated business ventures\nincluding investments in precious metals and a liquor distillery\nthat produced Pirate's Choice Rum.</p>\n<p xmlns:i=\"incisive-repository\" xmlns=\"http://www.w3.org/1999/xhtml\">After Cay Clubs abandoned its operations in 2008, Clark and\nColeman, who are now husband and wife, moved to the Cayman Islands\nand continued to dissipate assets and funnel at least $2 million to\noffshore accounts, according to the SEC.</p>\n<p xmlns:i=\"incisive-repository\" xmlns=\"http://www.w3.org/1999/xhtml\">The SEC's complaint seeks financial penalties from Clark,\nColeman and Stokes and the disgorgement of ill-gotten gains plus\nprejudgment interest by all five executives. The complaint also\nseeks injunctive relief to enjoin them from future violations of\nthe federal securities laws as well as an accounting and an order\nto repatriate investor assets.</p>\n<p xmlns:i=\"incisive-repository\" xmlns=\"http://www.w3.org/1999/xhtml\">\n"],"slides":[]},"articlePackages":[],"youmightlike":[{"uri":"/2024/04/18/ncua-board-looks-at-updating-records-retention-rule/","title":"NCUA Board Looks at Updating Records Retention Rule","byline":"Michael Ogden","prettyDate":"April 18, 2024","readtime":"2","image":{"uri":"https://images.cutimes.com/contrib/content/uploads/sites/413/2022/06/NCUA-Board-Room-Desk-e1655401750436.jpg","width":"620","height":"413"},"summary":"Officials state guidelines haven't been updated in years and may be having adverse effects on members."},{"uri":"/2024/04/18/improvements-needed-for-cus-in-data-privacy-legislation/","title":"Improvements Needed for CUs in Data Privacy Legislation","byline":"Michael Ogden","prettyDate":"April 18, 2024","readtime":"3","image":{"uri":"https://images.cutimes.com/contrib/content/uploads/sites/413/2018/06/data-security2-e1530306645770.jpg","width":"620","height":"414"},"summary":"America's Credit Unions asks lawmakers for adjustments to a proposed data privacy law."},{"uri":"/2024/04/17/small-business-lending-offers-potential-growth-avenue-for-credit-unions/","title":"Small Business Lending Offers Potential Growth Avenue for Credit Unions","byline":"Will Tumulty","prettyDate":"April 17, 2024","readtime":"4","image":{"uri":"https://images.cutimes.com/contrib/content/uploads/sites/413/2018/10/small-business-security-e1540218142852.jpg","width":"620","height":"414"},"summary":"Boomers and Gen Xers, who are likely to be existing CU members, own about 85% of U.S. small businesses."},{"uri":"/2024/04/17/does-the-safe-act-go-far-enough-why-legalization-of-cannabis-is-inevitable/","title":"Does the SAFE Act Go Far Enough? Why Legalization of Cannabis Is Inevitable","byline":"Henry Meier, Esq.","prettyDate":"April 17, 2024","readtime":"5","image":{"uri":"https://images.cutimes.com/contrib/content/uploads/sites/413/2024/04/marijuana-banking-e1713285880625.jpg","width":"620","height":"414"},"summary":"An industry can't grow into maturity unless it has the same access to the financial system as any other legal business."},{"uri":"/2024/04/16/nussle-to-lawmakers-cfpb-lacks-accountability/","title":"Nussle to Lawmakers: CFPB Lacks Accountability","byline":"Michael Ogden","prettyDate":"April 16, 2024","readtime":"3","image":{"uri":"https://images.cutimes.com/contrib/content/uploads/sites/413/2024/04/U.S.-Capitol-building-under-dark-sky-e1713279244473.jpg","width":"620","height":"414"},"summary":"Letter is issued to U.S. House Committee as lawmakers look at transparency issues within the CFPB."},{"uri":"/2024/04/11/ent-cu-sells-54-million-in-loans/","title":"Ent CU Sells $54 Million in Loans","byline":"Jim DuPlessis","prettyDate":"April 11, 2024","readtime":"3","image":{"uri":"https://images.cutimes.com/contrib/content/uploads/sites/413/2022/08/AdobeStock_516174786-e1698180495690.jpg","width":"620","height":"391"},"summary":"Also, Moody's is reviewing $9 million in auto-loan-backed securities for possible downgrade."}],"readnext":{"contents":[{"uri":"/2024/04/15/five-illinois-credit-unions-announce-proposed-plans-to-merge/","title":"Five Illinois Credit Unions Announce Proposed Plans to Merge","prettyDate":"April 17, 2024","kicker":"News","image":{"uri":"https://images.cutimes.com/contrib/content/uploads/sites/413/2024/04/Illinois-map-e1713208888260.jpg","width":"620","height":"414"},"primaryCategory":{"name":"","uri":"","channelName":"","channelUri":""}},{"uri":"/2024/04/16/hundreds-of-thousands-stolen-in-fake-id-scam-at-florida-cu/","title":"Hundreds of Thousands Stolen in Fake ID Scam at Florida 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