Former owners of Cashwiz sued for malicious prosecution by business partner

(CMR) Cristal Coleman Clark is suing former Special Economic Zone company CMZ Group SEZC, now Sandstone Holdings Ltd, along with its directors Keith Miles and Andrew Joseph Zahn for what she claims is malicious prosecution. The parties were all involved in some aspects with the ownership of the Caribbean pawn shops, Cashwiz at varying times.

The lawsuit filed in Miami-Dade country claims that Miles and Zahn submitted false information to federal prosecutors and agents in Miami, Florida that eventually led to the arrest and trial of Clark and her husband, Fred Davis “Dave” Clark Jr. Clark was acquired but her husband is serving a lengthy jail sentence in an American jail.

The document states that Dave Clark started a successful pawnshop business in the Caribbean after his real estate development business failed and he relocated to the Caribbean and eventually the Cayman Islands. Whilst residing in Turks & Caicos he met and took on Keith Miles as a partner. Miles eventually introduced Zahn who became a minority owner in the company. The parties claim that Zahn owed Miles money and this arrangement was to ensure that Miles got repaid but that information was withheld from Clarke at the time.

At some point, Clark moved his entire family to the Cayman Islands and ran the operations for Cashwiz out of the South Church Street location. It was eventually set up as an SEZC company and moved into the HSBC Building.

The failure of Clark’s previous business led to the SEC seeking an enforcement order against him and as a result, his business partners in the CashWiz business convinced him to sell his shares in the company. The complaint states:

“MILES demanded that Mr. Clark sell CMZ his shares of the company to avoid any potential reputational harm to the company.”

He eventually agreed to sell his shares for $4.9M over a period of several years via a payment plan. Clark and his wife then left the jurisdiction and moved to Honduras. The original SEC action was found to be out of time and dismissed.

The complaint alleges that the two directors conspired to provide information to the SEC and Department of Justice on the Clarks in order to have them incarcerated to avoid repayment of the amount outstanding for the purchase of the company. The lawsuit claims:

“ZAHN and MILES met with the DOJ at the United States Attorney’s Office for the Southern District in Miami, Florida multiple times, appeared before the grand jury, and/or participated in interviews with government agents and prosecutors.”

Zahn was known to have an SEC decision against him that prevented him from being a director in any company as well as some “issues” with unfiled IRS tax returns for a number of years. It alleges that Zahn’s attempts to purposely assist the SEC and DOJ with a case against the Clarks also made him a target and he became a “subject” of the grand jury investigation.

Miles and Zahn claimed that the Clarks had embezzled funds from CMZ to pay for personal expenses and doctored financial records to support these accusations. It also asserts that they attempted to have a forensic audit prove their allegations but that it instead did not support their contention. The allegations is that these “false allegations” and “doctored evidence was solely undertaken in order to avoid paying the $2M still owed for the balance of Clark’s ownership in the company.

The accusations eventually lead to the prosecution of Mrs. Clark who spent 14 months in the Key West & Miami Detention centre separating her from her three minor children. Following a six week trial Clark was acquitted in August 2015. Clark also claims that they instituted a civil suit that they eventually lost and that a large volume of emails to support there was no embezzlement was found on an abandoned server.

The Plaintiff is seeking an award of compensatory damages for personal indignity, dishonor, humiliation, damage to her professional and personal reputation, mental anguish and distress, an award of loss of income, special and punitive damages, an award of prejudgment interest; and such additional or alternative relief as the jury and court may deem just and proper.

While there is no mention of it in the lawsuit Clark’s husband, Fred Davis Clark was convicted in December 2015 by a federal jury for connection with related bank fraud charges and obstruction of the SEC in relation to the collapse of Cay Clubs Resorts and Marinas. He was sentenced on February 21, 2016, to 40 years in prison by U.S. District Judge Jose E. Martinez. Several of his associates from that business venture were also incarcerated.

Federal Prosecutors claimed that Cay Clubs was a Ponzi scheme that cost investors $300 million with over 1,400 dupped investors and hundreds of employees eventually losing their jobs.

Also not contained in the documents is the pawnshop part of CMZ was eventually purchased and from Miles after he terminated his associate Zahn in July 2014. The company was purchased by a longtime personal friend and business acquaintance of the Clarks and relocated its headquarters to Orlando, Florida where Clark’s son-in-law Chad McGhee operated it.

It appears that Joe Zahn now lives in Brazil and Keith Miles remains in Turks and Caicos. Zahn continues to be embroiled in litigation in Brazil.