St. Augustine Beach woman sentenced to more than 30 years for fraud

Published On: Sep 20 2012 04:27:02 PM EDT   Updated On: Sep 20 2012 05:56:07 PM EDT
JACKSONVILLE, Fla. -

A 67-year-old St. Augustine Beach woman was sentenced Thursday to more than 30 years in federal prison for conspiracy to commit mail and wire fraud, mail fraud and wire fraud.

The court also ordered Lydia Cladek to pay more than $34 million in restitution. Cladek was found guilty on Jan. 26.

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, Cladek used new investor funds to pay interest to old investors and to fund her lavish lifestyle, including three vacation homes. By March 31, 2010, the existing performing car notes owned by Cladek had dwindled to just under $4 million, while the outstanding loans to investors exceeded $90 million.