SEC Charges Dawn Bennett with Running $20 Million Ponzi Scheme
The Securities and Exchange Commission has charged former financial adviser Dawn Bennett with defrauding investors and spending their money on herself and to make Ponzi-like payments to earlier investors.
Bennett, a former radio show host and top ranked financial advisor by Barron’s, was barred by the SEC last year and ordered to pay more than $4 million in fines and disgorgement for misleading clients on the performance of her firm, Bennett Group Financial Services.
The SEC’s latest complaint alleges that Bennett and her luxury sports apparel firm DJB Holdings LLC raised more than $20 million by selling notes issued by the company.
Bennett allegedly targeted elderly and financially unsophisticated investors by misrepresenting DJB Holdings’ profitability and exaggerating the safety of the notes and success of her firm, touting it as a profitable business able to pay annual returns as high as 15 percent.
In addition to paying earlier investors in the Ponzi-like scheme, she allegedly spent investor proceeds on jewelry, high-end clothing, mystics, and a $500,000 annual lease for a luxury suite at AT&T Stadium in Dallas.
The SEC claims that Bennett took steps to conceal and continue the alleged scheme, including lying to regulators about the note sales, repaying investors with loans she obtained by inflating her net worth, and replacing existing convertible notes with sham promissory notes.
In a parallel case, the U.S. Attorney’s Office for the District of Maryland unsealed criminal charges against Bennett.
The SEC is seeking a permanent injunction, disgorgement plus interest, and penalties.
