After an exhaustive effort by agents of the Federal Bureau of Investigation, a “job well done” was recognized when a federal jury in Jacksonville found Lydia Cladek of St Augustine Beach “guilty” of conspiracy to commit mail and wire fraud, mail fraud, and wire fraud.
Cladek faces a maximum penalty of 20 years in federal prison for each of the fourteen counts.
FBI Special Agent in Charge of the Jacksonville Field Office, James Casey, told reporters after the verdict was announced, “We are pleased with the jury’s verdict, and hope that Ms. Cladek’s victims can take some comfort in the fact that she has been brought to justice.”
Cladek’s sentencing hearing will be scheduled for a future date, expected to be within the next 90 days.
According to testimony and evidence presented at trial, Cladek offered investors the opportunity to “loan” money to Lydia Cladek, Inc. in exchange for a promissory note from the corporation. The notes were secured by car notes that Lydia Cladek, Inc. had purchased in the past.
Cladek represented that the assigned notes were genuine and valid, had never been assigned before, and would not be assigned in the future. She also represented that she would use the funds that were loaned by the investors to purchase new car notes. All of these representations were false.
In some cases, the car notes attached as collateral to investor notes had previously been assigned to four or five investors in the past. In many cases, the car notes were then assigned to new victim investors, sometimes in as little as a week.
In addition to making false representations about the quality of the investors’ collateral, evidence also showed that Cladek used new investor funds to pay interest to old investors and to fund her lavish lifestyle.
By as early as 2003, Lydia Cladek, Inc. did not have sufficient car notes on hand to provide promised collateral to all investors. By 2005, Cladek had outstanding investor notes of approximately $58 million, but only had car notes on hand for approximately $38 million.
By March 31, 2010, the date on which the FBI served a search warrant on Lydia Cladek, Inc., the existing performing car notes owned by Cladek had dwindled to just under $4 million, while the outstanding loans to investors exceeded $90 million.
Cladek used money given to her from investors to maintain lavish real estate holdings, including three vacation homes in Captiva and Sanibel, Florida as well as a luxurious residence in St. Augustine Beach. Cladek maintained her own household “manager” who testified that she purchased much of the custom furnishings and accessories in the home for Lydia Cladek, including a set of sheets costing $2,000.
In order to invest, potential investors had to be friends of Cladek or be referred by an existing investor. Cladek obtained many of her investors from her church and other social organizations.
“This case represents personal greed at the highest level,” said U.S. Attorney Robert O’Neill. “We will continue to prosecute those who seek to deprive people of their hard-earned money. The conviction of Lydia Cladek should be a warning to those seeking to take advantage of a trusted business-client relationship, by engaging in fraudulent practices. And it should bring a greater awareness to those seeking to invest their dollars.”