Ex-Financial Adviser Dawn Bennett Faces SEC and Criminal Charges Over Alleged $20M Investor Fraud

The US Securities and Exchange Commission has filed charges against ex-financial adviser Dawn Bennett accusing her of bilking investors, making Ponzi-like payments, and spending clients’ funds on herself. According to the regulator, Bennett and her DJB Holdings LLC raised over $200M through the sale of notes issued to at least 46 investors by the luxury sports apparel company. Many of her victims were unsophisticated and older investors.

During the sales, Bennett allegedly claimed that the notes were safer than they actually were, as well as that her firm could pay yearly returns of up to 15%. Investors were purportedly told that their money would go toward company use but instead she paid back earlier investors in a Ponzi-like manner and used some of the funds to pay for her expenses. Meantime, contends the SEC’s complaint, Bennett hid the alleged fraud, lied to regulators, used sham promissory notes instead of actual convertible notes, and inflated her net worth.

Now, the Commission has charged Bennett and her company with violations of the Securities Act of 1933, the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The regulator wants disgorgement, interest, and penalties for the alleged senior financial fraud.

Bennett is not only a former registered representative who had her own financial advisory business, but also, she used to host the radio show Financial Myth Busting with Dawn Bennett. By the time of this alleged fraud, notes the SEC’s complaint, Bennett had lost most of her financial advisory clients yet continued to maintain an “extravagant lifestyle.” Among her expenses were a costly wardrobe, a $500K yearly lease for a luxury suite at the AT & T stadium in Dallas, Texas, as well as payments to mystics, whom she is accused of hiring to cast a spell in the hopes of stopping the SEC’s probe against her.

Prosecutors File Criminal Charges Against Bennett, Too
In a parallel criminal financial fraud case brought against her, Bennett is accused of many of the similar allegations brought by the SEC. Prosecutors also disclosed that a search of her Maryland penthouse led to the discovery of two freezers with sealed Mason jars that had the initials of SEC lawyers on them as part of the purported spell casting. She is criminally charged with bank fraud, wire fraud, and making false statements involving a loan and credit application.

SEC Filed Fraud Charges Against Bennett in 2015
It was in 2015 that the SEC brought fraud charges against Bennett and her Bennett Group Financial Services over allegations that she grossly inflated the quantity of assets that she actually managed while exaggerating the investment returns that her firm had supposedly made for customers. She even spoke about these allegedly exaggerated figures on her radio show. Last year, the regulator barred her for her numerous alleged valuations.

Bennett Losses Gold ETF Fraud Case
Earlier this year, Bennett lost a $1M gold exchange-traded fund fraud case brought by former client Steven Santagati to the Financial Industry Regulatory Authority. Santagati claimed that Bennet leveraged his account while investing in high risk investments and in the process took advantage of his lack of understanding regarding the investments. The SRO awarded him $746K.

At Shepherd Smith Edwards and Kantas, LTD LLP, our senior financial fraud lawyers can help you determine whether you have grounds for a securities claim.

The SEC’s Latest Complaint Against Bennett (PDF)

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