Cladek indicted -- Businesswoman sitting in jail after arrest in Fort Myers
Posted: November 24, 2010 - 12:23am
By Dana Treen
Lydia Cladek's promise to convert car loans to fast cash was still being touted on her website Tuesday even as the St. Augustine businesswoman was being indicted on 14 counts of using the business in a Ponzi scheme.
She was arrested Tuesday at her Fort Myers apartment and went before a federal judge there.
She is in federal custody and will be held until a detention hearing in Jacksonville next week, according to the FBI, which investigated the case.
Investors were bilked of at least $100 million by Cladek's scheme that promised high returns for those willing to buy car loans gathered from across the Southeast. The pitch was that the loans, bought at less than face value using investor money, would be serviced by Lydia Cladek Inc., and return profits of as much as 15 percent to 20 percent to those buying the paperwork.
Federal prosecutors instead said Cladek, 69, was enriching herself and have indicted her on counts of wire and mail fraud and conspiracy to commit fraud.
While investors reacted with a mix of satisfaction over the arrest and disbelief about the woman they once trusted, calls made to Cladek's St. Augustine Beach business number continued to be answered Tuesday. One person at the office said she did not know where Cladek was but said the business was still operating.
A website for Lydia Cladek Inc., says Cladek was buying and servicing loans from auto dealers in Florida, Georgia, Alabama, North Carolina and Tennessee.
The site offers testimonials from dealers across the Southeast.
Retired Ford Motor Co. engineer Barry Tuttle, 77, was an investor who lost $70,000 to Cladek since about 2007, he said. The St. Augustine Beach resident said Cladek was a well-known businesswoman around the community who had an upscale office along Florida A1A.
Cladek 'almost mousey'
She struck Tuttle as quiet and unassuming, "almost mousey," he said.
"She said that these monies that were loaned to her could be returned in a minimum of a week's time," he said.
Tuttle said the transactions were called loans and not investments, which would have required greater oversight. He said he had friends who worked for Cladek and said she kept tight control over the financial matters of the business.
"She kept her thumbs on everything that went on in terms of the business," he said.
For years Tuttle got a steady stream of interest checks of 15 percent "like clockwork" and all of a sudden they just stopped.
"A lot of people here in the town of St. Augustine Beach knew her," he said. "It's surprising how many had money with her."
He said she also seemed to have a lot of support in the community.
"She's just a frail little person," he said. "You just wouldn't think she would do something like this."
He said some investors want to keep Cladek's business open in the hopes of collecting on what is left of legitimate profits to be made.
FBI spokesman Jeff Westcott in Jacksonville would not comment specifically on the Cladek case but said it is not uncommon for investment schemes to rely on early participants using word-of-mouth to recruit new investors from among friends and business associates.
Jane Edney, 79, said Cladek first opened an office in north St. Augustine where desks were cobbled together using sawhorses and doors. Cladek became a regular at weekly gatherings in St. Augustine Beach, where she lived and recruited Edney and others.
"She was a friend," Edney said. "We all just thought she was the neatest thing."
Checks kept coming
Of 30 in the group, Edney said probably half invested with Cladek. Some were hammered financially when the checks stopped coming, she said.
Cladek opened the office in St. Augustine Beach and built a home in the upscale Sea Colony subdivision, Edney said. Signs Cladek may have been in distress financially came when art work vanished from her home and she asked her friends to invest in a CD-style loan in 2009. Payments on that loan eventually stopped coming and Cladek, too, vanished, Edney said.
About then, she and her friends realized they knew little about Cladek's past, where she was from, if she had children, even if she was married, though there seemed to be a man in her life.
Another in the group, Nancy Brantly, 76, said Cladek took special care to visit her when Brantly had breast cancer, which is now in remission.
"The woman was wonderful to me," she said, giving her gifts and writing poems.
"I had the highest respect for her," she said. "I think that is my biggest problem."
Brantly lost $50,000.
Cladek opened her business in 1998, according to the indictment that said the Ponzi scheme was running in 2003 and continued through March.
Instead of going to investors, money generated from investors went to Cladek's living expenses, to acquire property. Some was used to repay investors enough that the scheme would not be discovered.
Prosecutors are seeking $113.2 million in a judgment and also want to seize art work, vehicles, a Rolex Daytona watch and a baby grand piano. One item listed "Painting -- by Tony Curtis -- Marilyn Monroe" is among 17 paintings, four sculptures and other works of art.
Seeking BeBe's World
Among Cladek's assets is land in Madison County where 320 animals are cared for by the group Goliath and BeBe's World, a St. Johns County based no-kill animal shelter. Now, the shelter's operators are faced with trying to raise $197,000 to buy the land and facilities that Cladek was leasing to the group, said spokeswoman Fran Charlson.
"We're unsure of what our situation is going to be," Charlson said. She said 75 percent of the animals come from Duval and St. Johns counties. In the past, Cladek provided support to the group that is now faced with having to organize fund-raisers for the first time.
"Now they have to start," she said.
The group is among five nonprofits that now stand to lose assets to repay investors.
Cladek also faces a maximum penalty of 20 years in prison on each count and a $3.5 million fine, according to the U.S. Department of Justice.
No comments:
Post a Comment