Court Of Appeals Upholds Convictions And Sentence In Extensive Investment Scheme
Jacksonville, FL - United States Attorney A. Lee Bentley, III announces that the United States Court of Appeals for the Eleventh Circuit yesterday affirmed the convictions and sentence of Lydia Cladek (70, St. Augustine). On January 26, 2012, a federal jury found Cladek guilty of conspiracy to commit mail and wire fraud, and multiple counts of substantive mail and wire fraud related to a fraudulent investment scheme that resulted in more than $50 million in losses to her victims. Cladek was sentenced on September 20, 2012, to 30 years and four months’ imprisonment.
The evidence presented at trial established that Cladek had encouraged investors, many of whom she cultivated from her church and other social organizations, to invest with her company, Lydia Cladek, Inc. (LCI). Cladek had represented that investments were fully secured by viable collateral, in the form of car loan notes, and that monies invested would be used to purchase additional car loan notes. Instead, Cladek used the investors’ money to purchase high-end properties for herself and to maintain her own lavish lifestyle. She paid interest to existing investors, not with proceeds from car loans, but with the money invested by new investors. Although most of LCI’s employees had been unwitting pawns in her scheme, Cladek’s lead accountant had known that investors were being misled, and she had agreed with Cladek to keep them in the dark.
Cladek appealed her conspiracy conviction and her sentence to the Court of Appeals. She argued that the evidence was insufficient to establish that she had conspired with her lead accountant to defraud investors, and that the District Court had incorrectly determined that she had been an organizer or leader in an extensive criminal activity. Cladek also argued that the Court had overestimated the amount of loss her victims had suffered as a result of her malfeasance. After hearing oral argument, the Court of Appeals rejected Cladek’s argument, stating that there was “more than enough evidence” to support her conspiracy conviction, that it “[could not] fathom how such a scheme could be labeled as anything other than extensive,” and that the District Court “did not err—much less clearly err” in its loss determination.
This case was investigated by the Federal Bureau of Investigation, with the assistance of the Florida Department of Insurance Fraud. It was prosecuted in the District Court by Assistant United States Attorney Jay Taylor. This appeal was handled by Assistant United States Attorney Susan H. Rothstein-Youakim.