SEC charges real estate executives with $300 million investment scheme

The Securities and Exchange Commission on Wednesday charged five former real estate executives who allegedly defrauded investors into believing they were funding development of five-star destination resorts in Las Vegas and Florida.

Authorities claim investors were actually buying into a Ponzi scheme.

According to the complaint, Cay Clubs Resort and Marinas raised more than $300 million from nearly 1,400 investors nationwide through a network of sales agents, marketing seminar and podcasts that touted the profitability of purchasing units at Cay Clubs resort locations.

But instead of using investor funds to develop resort properties and units, the Cay Club executives used the new money to pay leaseback returns to earlier investors. The complaint alleges company executives earned more than $30 million.

Investors were also promised an immediate 15 percent return through a leaseback agreement with Cay Clubs. In 2008, Cay Clubs abandoned its operations, forcing many of its investors' properties into foreclosures.

Cay Club executives charged in the 23-page complaint were Fred Davis Clark Jr., president and CEO, David W. Schwarz, chief accounting officer, Cristal R. Colman, manager and sales agent, and sales directors Barry J. Graham and Ricky Lynn Stokes.

The SEC's complaint was filed in U.S. District Court in Miami and seeks unspecified monetary damages .