Cayman residents accused of US ponzi scheme

| 31/01/2013

(CNS): Two residents of Cayman who were allegedly involved in a major real estate Ponzi scheme have been charged by the Securities and Exchange Commission along with three other American defendants. Fred Davis Clark, 54, of Grand Cayman, who was the former president and CEO of Cay Clubs, and his wife Cristal Coleman, 39, who was a manager and sales agent along with Barry Graham, 57, of Marathon, Fla; David W. Schwarz, 56, of Orlando, and Ricky Lynn Stokes, 53, of Fort Myers, have all been charged with defrauding nearly 1,400 investors of more than $300 million. According to the SEC complaint Clark and Schwarz launched Cay Clubs in 2004 the venture eventually entailed a web of more than 100 companies and 150 bank accounts.

The scheme involved a network of hundreds of sales agents, marketing seminars and podcasts to promote the purported opportunities of investing in units at Cay Clubs resorts, the SEC claim, in a report in the Miami Herald.

In classic Ponzi scheme fashion, instead of using the investor funds to develop resort properties and units, the Cay Club executives used new investor funds to pay returns to other investors, the SEC alleges. The agency said executives received “exorbitant salaries and commissions’’ totalling more than $30 million and siphoned off investor funds to buy airplanes and boats.

After Cay Clubs closed, Clark and his wife Coleman moved to the Cayman Islands and funnelled at least $2 million to offshore accounts, according to the SEC – funds the agency now plans to fight to get back in court.

Jeffrey L. Cox, a Boca Raton attorney representing Fred Davis Clark, said: “We intend to vigorously defend these allegations in court.’’

The SEC report said Clark is currently co-chairman of CMZ Group Ltd, a Cayman firm that includes a Caribbean pawn shop network and a spirits business, among other ventures.

Clarification: According to CMZ Group Ltd, Fred Clark is no longer affiliated with the company, having separated from it on 29 January, the day before the SEC complaint was filed (30 January).

Read more here.

Category: Crime

Comments (44)

Trackback URL | Comments RSS Feed

  1. Anonymous says:

    So sad that Cayman gets sullied by things like this. The article boldly states "Cayman residents accused of US ponzi scheme". Why didn't it read "Americans damage Cayman's reputation via ponzi scheme".

  2. Anonymous says:

    The accusations are false.  So sad that the interpretations of the news headlines "allegeds" determines guilt.  1st of all, Cay Clubs was a legitimate real estate development that crumbled with the unexpected crash of the USA real estate market.   Along with so many others, nationwide, who put their life savings/retirement plans into the real estate market, Dave Clark lost everything except his family.  Since then, Mr. Clark has put his expertise into working hard with groups of investors to develop needed businesses that enabled win/win situations for each and every person involved.  There are obviously still angry USA real estate investors that are hopeful to gain something from Mr. Clarks new successes.  They have asked the SEC to investigate what they (investors) claim as fraudulent activity in the hopes of winning back some of their losses.  These real estate investors have nothing else to lose.  Mr. Clark, his family, and Grand Cayman stand to suffer unjustly.

  3. St Peter says:

    Sounds like they are going to have to pawn the pawn shops…

  4. Anonymous says:

    Bring in the finger printing system & revoke status & permanent residence people who commit certain crimes like rape, murder etc! 

    • Anonymous says:

      Agreed – with a country as small as ours it is silly for us not to have a more extensive and inclusive fingerprint and DNA database. With so many crimes such as home invasions, burglaries, robberies and even assaults going unsolved on island surely the rate of arrests made in connection with these ever increasing crimes be also increased if we implemented a fingerprinting system in prep/high school. Make it a field trip for the children to come in, see how the RCIPS does their jobs and get fingerprinted on their way out – it would provide an insight into how policing works on island, get our younger generation more involved, increase the size of our database and possibly deter individuals from committing crimes if they knew that their fingerprints were already on record.

    • Oompa Loompa says:

      The proposed finger printing laws would be an illegal breach of the right to privacy.

  5. SKEPTICAL says:

    First questions for the Cayman authorities – ” Who did the Due Diligence on the Beneficial Owners, Directors, Officers, and Authorised Signatories of CMZ Group Ltd..” Who holds the Registered Office – are there local Shareholders and/or Directors. What enquiries were made to verify the source of Funds introduced, to ensure they were not tainted.
    Assuming it was incorporated after the closure presumably under a bit of a cloud, of Cay Clubs in America, the names of at least some of these people must have been on somebody’s database – was a facility such as WorldCheck used to see if there were any red flags. Somebody approved their application for a Trade & Business Licence.
    This stuff is all COMPLIANCE 1.01.

  6. Shock and Awe says:

    Leave Cayman out of it … in the good 'ol USA ENRON was a ponzi scheme, so was the Savings And Loan scam. So are numerous others. Wall St. runs ponzis all day long and no one has been to jail. These guys got caught. The only difference is….they did not have the right connections in government and didn't hire lobbyists.

  7. Kato says:

    The sad part about this is our politicians gave them residency and the red carpet to open a ton of business and likely without paying any fees….now cayman gets a bad rap for poor decisions made by our short sighted immigration laws.

    Talk about due diligence by our immigration offices!

    • Anonymous says:

      They do NOT have residency in that sense. You poor people – so much is misunderstood in these forums and CNS does NOTHING to provide the proper details. They are using the words "reside/residency" in its ordinary meaning – IN OTHER WORDS THEY LIVE HERE! That's it – such legal eagles you all are.

      SMH … CMZ is part of Enterprise City. Did they do any due diligence?

      Also, they would have needed local lawyers to incorporate etc. – what did they do except collect a pay cheque?

      This proves that compliance is only about document collection and nothing else as far as I'm concerned.

  8. Anonymous says:

    Good luck having anybody store any gold in the storage vault they were building now..  lol

  9. Anonymous says:

    Take some time to review this link and check the portfolio of companies of CMZ http://www.cmzltd.com/portfolio-companies.php. Look forward to hearing about the April 1st, 2013 opening of the new $2.5 million dollar Argentum refinery located in the heart of Georgetown. April Fools Day!

    • Kimmy West says:

      Ah, yes!  And if you look at the list of "companies" at the bottom of this page:

       

      http://www.cmzltd.com/global-team.php

      you'll see who the M and Z of CMZ are.

       

      You'll also see that there are only hyperlinks to the "CMZ" companies.  If you google these people and the companies listed, there's a Pandora's box that will unfold before your very eyes.

       

       

  10. Anonymous says:

    Any pictures of the charged suspects?

  11. Anonymous says:

    Lemme guess, they were 5-foot 10-inches tall, dark complexion, slim build?

  12. Anonymous says:

    I just drove by Cashwiz and there is NO police tape on it yet.

  13. Anonymous says:

    Now we understand the business model of a pawn shop that only bought and never sold anything.

    • Whodatis says:

      Lol!!

      Took the words right outta brain, poster!

      Yep … this is going to be a very interesting case indeed.

      Just a few weeks ago I was involved in a discussion regarding certain entities and a number of things just weren't adding up.

      Anyway … not my business – quite literally.

  14. Anonymous says:

    Sounds very much like our private Pension scheme.

  15. Anonymous says:

    Expats taking advantage of the welcoming nature of Cayman and in the end only serving to damage the reputation of the Cayman Islands further.

    The local government must find a way to keep abreast of investment claims and offers coming out of the Cayman Islands in order to verify the validity of such investments. Two more of these type of situations, and outside investors will find it very hard to invest in Cayman.

    Also, CMZ Group Ltd. must immidiately be denied further operation on Cayman shores and investigated by the proper authorities.

    • Anonymous says:

      Honestly guys, no-one can harm your reputation because the Caymans name is mud already.  Once you are known as tax dodging parasites, there is not much further to go in the current environment.  By the way I know you do not like being called the Caymans, but that it what we call you. 

      • Anonymous says:

        It's a bit difficult to dodge tax here, primarily because we don't pay any, we pay plenty of duty and fees, but no 'tax'. So to call us tax dodging parasites would be incorrect.  If there is any dodging going on it's likely to be your brethren doing it, take your mis-guided anger out on some closer to home!

      • Anonymass says:

        Sigh. Go read the original article. All of the activity occurred in the US-of-A. It was only after they closed thescheme that they moved to Cayman. With their heretofore legal money. But of course that doesn't make as good copy nor play in to your pre-conceived notions.

        Now, if the litigants can prove it was not legal, they can get what's left of it back. Just like any other failed bussiness. But first, they have to prove it was illegal and not just bad management. Thats why it goes to court and we have legal agreements with the US to cover these sorts of things. But first they have to prove in the US that the US nationals defrauded other US nationals within the US. Leave your anti-Cayman bias out of it.

      • Anonymous says:

        As we have no direct taxes in this jurisdiction we are not the tax dodging parasites, rather it is your fellow citizens and mega corporations (Starbucks anyone!!!??) who take advantage of the large holes in your tax codes who are the parasites. Further you call us the Caymans because your "1st world" arrogance dictates that you do not have to learn basic geography.

         

         

      • Anonymous says:

         

        To the rude individual who posted the article with the heading “Honestly Guys, No One Can submitted Fri 2 Feb what total disrespect you are showing to the people of the Island that have allowed your sorry behind to be residing in these wonderful shores.   Just the typical mentality now arriving here on Island – negative, racist and condescending.  If you are not happy with the place you are calling home why don’t you take yourself, your family members and friends with the same mind frame and little brain cells back from whence you came from or the hole in which you came out of.  I pray the Caymanians as they are historically known as wake the hell up and start claiming back their rights to include birth rights and ensure that in the future that they will do thorough research into those arriving on island.  Hopefully this will then cleanse and purge the island of the bad karma that has been arriving. 

      • Anonymous says:

        We call you Troll…You might not like it but thats what we call you.

      • Another Anon says:

        TROLL! You obviously have no idea what you are talking about. I am assuming that you do not live here nor have you ever lived here and you have never even tried to open a bank account in the Cayman Islands. If you did, you would have known that transactions are scrutinised much more than they ever are in the beloved U S of A.

      • Mr Pibb says:

        They are not going to like that comment.  It is true.  But they ain't going to like it.

      • Anonymous says:

        It's unfair to slag off Cayman; those alleged criminals fled here; we can't stop that! US should've caught them first & stopped the crime rather than having some idiot blogger whining about Cayman 'cos some criminal fled here. Sort out your own backyard, Yankee.

      • Anonymous says:

        Excuse me, but we do not dodge taxes.  We have no taxes to dodge.  It is foreigners that have taxes that they choose to dodge which is why they come here, hiding from the tax man in thier native country.  

        Stop perpetuating the lies and untruths you see in movies about us.

        We have very robust tax related reporting in Cayman and have signed numerous tax information exchange agreements with almost every developed and developing nation.

         

        • Anonymous says:

          Right on!!! We only dodge import duties and health and pension payments for our low wage expat workers….

      • Anonymous says:

        You read the bit about hiow the Ponzi was perpertrated in the US, and it was only after the fraud closed that they moved to Cayman, right?  And the SEC came along after the fact (again)? So how exactly is the Cayman's implicated in this one?  As for tax dodging and corporate secrecy, places like Delaware already do a sterling job in that regard, particulalrly for Latin American hot money.  Butdon't let your blind prejudices get in the way, eh!  

      • Anonymous says:

        Oh dear. Cayman is not a "tax dodging parasite". It has its own indirect tax regime and merely provides a tax neutral platform for international business. Cayman does not owe the U.S. or any other country taxes so I don't see how it can be a tax dodger. If you are referring to your own citizens as "tax dodgers" Cayman has entered into some 30 bilateral tax information exchange agreements (the first one being with the U.S. back in 2001) so that tax information is available to the respective foreign tax authorities.

        Don't blame others for your failures to manage your own revenue base, close loopholes and attract international business.   

      • Dishonest says:

        Isn't it a crime to lie about your assets on the US tax form? Aren't all Americans honest law abiding citizens? If yes, then I do not understand the problem. If all Americans disclose all their assets on their tax form, how is anything being hidden by the Cayman Islands?

      • Anonymous says:

        Funny thing that is: your country says you must pay taxes, your citizens come here to hide money from your country, we don’t go to your country and take this money, your citizens willingly come here with it, BUT we are the scum.

      • Anonymous says:

        You are so right, and the responses below show how out of touch and myopic the people are in these place who drink the kool aid.  Anyway the'real world' has started the process of closing down places like the Caymans.  The views of a few thousand islanders are pretty irrelevant to the big picture anyway.

        • Anonymous says:

          Yes, we know that the facts and clear reasoning are irrelevant to you ideologues. You much prefer smear campaigns against small countries/territories whom you can bully.

    • Anonymous says:

      18.28 Are you nuts? This happens in most countries beacuse there are criminals everywhere. If there were none in Cayman, including Caymanians, then Northward would not be needed. XXXX People know what they are doing and especially if it is wrong. They just try to justify what they do to anyone who will listen.

       

      Some of the most regulated places in the world have issues-Madoff, Enron etc and it is normally greed that drives people to places that offer impossible returns on investments. If they sound impossible, they are impossible, history has shown that time and time again. People just need to curb their "get rich quick" desires..there is no such thing as a fast buck, not legally, anyway.

  16. Whodatis says:

    Reeeaaallly??!!!

    (Eyes wide open!!)

    Wow … life is a funny thing sometimes.

    A lot of dots have just been connected and many pieces of the puzzle found.

    This is gonna be a good one …