Jury finds Cay Clubs executive guilty in second bank fraud, conspiracy trial

SOUTH FLORIDA - One of the principals in a now infamous Florida Keys real estate criminal fraud case has been found guilty of two counts of bank fraud and one count of conspiracy to commit bank fraud.

A federal jury in Miami deliberated for less than a day on Oct. 19 before finding David Schwarz guilty in the Cay Clubs Resorts and Marinas real estate fraud case.

In 2020, the 11th Circuit Court of Appeals in Atlanta overturned Schwarz's conviction on charges of conspiracy and bank fraud.

The appeals court criticized trial Judge Michael Moore for not granting Schwarz continuances to postpone the trial in order to give his solo defense attorney more time to research the case and prepare his defense.

Cay Clubs was a major player in the Florida Keys real estate and resort industry for several years in the early 2000s.

Schwarz held a one-third ownership stake in and served as the chief financial officer of Cay Clubs from 2004 to 2007, according to court documents. His business partner, Fred Davis Clark Jr., held a two-thirds ownership interest and served as the chief executive officer.

Their purported goal was to develop multiple amenity-rich luxury resorts and to sell condominium units within those resorts to buyers. The business eventually employed more than 1,000 people, sold more than 1,100 condo units, amassed gross revenues between $700 million to $800 million, and was estimated to be worth $400 million, but it failed in 2008, according to court records.

In 2015, a jury found Clark guilty of bank fraud, making false statements in connection with federally insured loans and obstructing an official proceeding.

Prosecutors alleged that the conspirators made mortgage payments out of Cay Clubs accounts for at least some of the loans. The alleged victims of this fraud included JP Morgan Chase Bank, N.A. and Fifth Third Bank, N.A., according to court documents.

Meanwhile, according to federal prosecutors, Clark and Schwarz were funneling cash out of Cay Clubs for their personal gain. Clark and Schwarz attempted to conceal their ill-gotten gains by, among other things, paying Clark's salary to Clark's then-girlfriend, failing to report income from Cay Clubs on their tax returns and failing to file tax returns for Clark and Cay Clubs, prosecutors charged.

In 2020, former President Donald J. Trump commuted the Clark's remaining prison sentence after Clark served five years of a 40-year sentence.

Clark had been sentenced to federal prison for bank fraud in December 2015. Clark was also ordered to turn over about $304 million for bank fraud and $3.3 million for obstructing the U.S. Securities and Exchange Commission.

In addition, the judge ordered the forfeiture of specific overseas assets totaling about $2.6 million.

Clark's commutation was supported by Alan Dershowitz, Ken Starr, the Aleph Institute, his family and former business colleagues and investors, among others.