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Wednesday
Oct172018

Convicted Ponzi Schemer Tried Buying Prayers, Casting Spells On SEC Attorneys 

The federal trial of a Maryland woman accused of a $20 million trial not only ended this week with a jury taking five hours to convict her of all charges but came after revelations that the woman had spent hundreds of thousands of dollars to buy prayers and allegedly cast "hoodoo spells" on government attorneys investigating the scheme.  Dawn Bennett, 56, was convicted of seventeen charges including conspiracy, securities fraud, wire fraud, and bank fraud.  She will face potentially dozens of years in federal prison at sentencing.

Bennett, a former financial advisor who once hosted a radio show called "Financial Myth Busting with Dawn Bennett," was the owner of DJB Holdings LLC ("DJB").  DJB was a retail sports apparel business that had never turned a profit since its inception in 2010 and by December 2014 had incurred millions of dollars in expenses and outstanding liabilities.  As her financial advisory income significantly dropped, Bennett began soliciting former and current clients to invest in DJB in exchange for a 36-month convertible note promising a 15% interest rate.  Bennett later switched to selling short-term promissory notes following regulatory scrutiny, and ultimately raised over $20 million from dozens of affluent investors - many who were customers of her broker dealer. 

However, the representations regarding DJB's financial status and viability were significantly overstated.  According to an August 2017 action filed against Bennett by the SEC, the year end 2015 financial information provided to investors contained the folllwing misrepresentations:

  • Overstated sales by over $3.8 million, or 424%;
  • Overstated gross profit by nearly $2.5 million, or 3,382%;
  • Understated expenses by over $3.6 million, or 73%; and 
  • Overstated net income by over $6.1 million, or 124%, and again inaccurately reflected a profit of $1.1 million rather than the actual net loss of nearly $5 million.

Investors were also not told that Bennett used factoring arrangements in which she sold future company revenues to non-bank lenders who had direct and priority access to DJB bank accounts and made significant withdrawals to repay their advances.  According to the SEC, Bennett used over $10 million of the $20 million raised from investors for improper and undisclosed purposes including over $3 million in payments to earlier investors, $2.1 million for unrelated legal expenses, and nearly $1.5 million to the Dallas Cowboys for back rent on a luxury suite Bennett personally leased.  

After learning she was under investigation, Bennett used investor funds to finance a highly untraditional response.  According to testimony at her recent trial, Bennett paid a man in Washington over $700,000 to arrange for Hindu priests to perform religious ceremonies aimed at easing her troubles - including a "yagya" ritual costing over $7,000 in which five priests purportedly prayed for her for 29 consecutive days.  The trial featured an email Bennett wrote to the Washington man in which she indicated:

I am in a very very tough fight going against my enemies and I need all the help I can get.

 That purveyor of Hindu religious ceremonies was an unlikely witness at Bennett's trial, defending his practices and testifying that "we don't necessarily pray with a guaranteed outcome."

FBI agents executing a search warrant at Bennett's Maryland home last year also made an unlikely discovery when they found instructions for placing people under a "Beef Tongue Shut Up Hoodoo Spell" along with personal information of several SEC attorneys working on Bennett's case.  Those agents also found lids of Mason jars in Bennett's freezer that contained the initials of those SEC attorneys, as evidenced by a picture taken from the affidavit provided by one of the FBI agents.  That affidavit also stated that handwritten notes on "Dawn J. Bennett-styled stationary" contained directions "such as slitting open animal tongue, the instructions called on the spell-caster to state the name of the individual on whom to cast the spell followed by "I cross and cover you[,] come under my command[.] I command you to hold your tongue."

Bennett will be sentenced at a future date after the U.S. Probation Office prepares a Presentence Investigation Report containing a recommended (but not binding) sentencing range.

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