The SEC on Wednesday charged five former real estate executiveswho allegedly defrauded investors into believing they were fundingthe development of five-star destination resorts in Florida and LasVegas when they were actually buying into a Ponzi scheme.

According to the SEC complaint filed in U.S. District Court forthe Southern District of Florida, Cay Clubs Resorts and Marinasraised more than $300 million from nearly 1,400 investorsnationwide through a network of hundreds of sales agents, marketingseminars and podcasts that touted the profitability of purchasingunits at Cay Clubs resort locations.

Investors were promised immediate income from a guaranteed 15%return and a future income stream through a rental program that CayClubs managed, the SEC said.

Instead of using investor funds to develop resort properties andunits, the Cay Clubs executives used new investor deposits to payleaseback returns to earlier investors.

The SEC said the Cay Clubs executives paid themselves exorbitantsalaries and commissions totaling more than $30 million, andinvestor funds also were misused to buy airplanes and boats.

While still advertising itself as a profitable venture, CayClubs eventually abandoned its operations and many investors'properties went into foreclosure, according to the SECcomplaint.

The SEC charged the following former Cay Clubs executives: FredDavis Clark Jr., president/CEO, David W. Schwarz, chief accountingofficer; Cristal R. Coleman, manager and sales agent; Barry J.Graham, sales director; and Ricky Lynn Stokes, sales director.

According to the SEC's complaint, the scheme began in 2004 withClark, Coleman, Graham, and Stokes soliciting investors withpromises of guaranteed income, instant equity in undervaluedproperties, historic appreciation, and at least $30,000 in upgradesto the units they purchased at Cay Clubs resort locations inFlorida and Las Vegas.

The SEC alleged that Cay Clubs continued to solicit newinvestors despite the fact that the company's financial conditionhad deteriorated so significantly that it did not have sufficientfunds to make the guaranteed leaseback or rental payments toinvestors.

Clark, Coleman and Schwarz misappropriated millions of dollarsin investor funds using the multitude of bank accounts theycontrolled, the SEC said. Besides purchasing airplanes and boats,they misused investor money for unrelated business venturesincluding investments in precious metals and a liquor distillerythat produced Pirate's Choice Rum.

After Cay Clubs abandoned its operations in 2008, Clark andColeman, who are now husband and wife, moved to the Cayman Islandsand continued to dissipate assets and funnel at least $2 million tooffshore accounts, according to the SEC.

The SEC's complaint seeks financial penalties from Clark,Coleman and Stokes and the disgorgement of ill-gotten gains plusprejudgment interest by all five executives. The complaint alsoseeks injunctive relief to enjoin them from future violations ofthe federal securities laws as well as an accounting and an orderto repatriate investor assets.