When FBI agents raided the Chevy Chase, Maryland, penthouse of glamorous financial advisor Dawn Bennett, a radio host and owner of the luxury sportswear site DJBennett.com, in August 2017, they found a closet stuffed to the gills with racks of flashy shoes, belts and handbags.
They also found two freezers filled with dozens of sealed mason jars stuffed with what appeared to be beef tongues. On the jars were initials, which later turned out to belong to SEC attorneys who were investigating Bennett. Those attorneys, the FBI believed, were the unsuspecting targets of a “Beef Tongue Shut Up Hoodoo Spell” that agents found written on Bennett’s personal stationery. According to the spell, described in a federal affidavit, an animal tongue needed to be split open before an incantation was read aloud:
“I cross and cover you. Come under my command. I command you to hold your tongue.”
In July, the now 57-year-old Bennett was sentenced to 20 years in prison after a jury found her guilty of 17 federal charges including securities fraud, wire fraud and bank fraud. She had been responsible for running a textbook Ponzi scheme, prosecutors successfully argued, defrauding 46 investors in her clothing company, many of them elderly, out of more than $20 million in retirement savings and nest eggs.
At her trial, Bennett’s lawyers argued that DJBennett.com was a real company—complete with employees, business relationships and suppliers—that Bennett was convinced could be successful. “It was a company she believed in,” defense attorney Dennis Boyle argued at trial. “It was a company she poured her heart and soul into.” Bennett put “millions and millions” of her own dollars into the business, took out mortgages and sold artwork, he said, and sought outside funds only when she wasn’t able to continue financing the company herself.
But while she raked in her investors’ money and promised them a guaranteed 15% return, Bennett spent thousands of dollars at Saks Fifth Avenue and the Ritz-Carlton, South Beach. She leased a VIP box at the Dallas Cowboys’ AT&T Stadium for half a million dollars a year. She spent $141,000 on astrological gems—including a single charge of $29,715 to an Iowa gemstone merchant—and over $100,000 on cosmetic treatments. And she spent over $800,000, prosecutors alleged, on Hindu rituals, including to arrange for priests in India to perform ceremonies to ward off investigators. (“I am in a very, very tough fight going against my enemies and I need all the help I can get,” she wrote to a proprietor at Puja.net, according to news reports. )
Even with that, Bennett’s defense tried to argue that her Hindu religion was not only irrelevant to the charges against her but that the prayer costs were actually proof she was trying to make her company succeed.
Bennett started her brokerage career in 1987 at Wheat First Securities, according to FINRA records, and by 1996 was registered with Legg Mason Wood Walker, where she managed the accounts of some clients who stayed with her for decades and eventually became investors in DJBennett.com. She started her own investment firm, Bennett Group Financial Services, in 2006.
“Financial Myth Busting with Dawn Bennett” began airing on AM radio in Washington, D.C., and Maryland four years later. It was popular with the retired set and featured interviews with investment experts, authors, economic researchers, and CEOs on topics like “The Freer the Trade, the Better,” “America’s Leadership Deficit,” and “The Middle-Class Massacre.”
Peggy Thur, a former bridal consultant at Macy’s, said during her court testimony that she first learned about Dawn Bennett through her radio show, which aired from 11 a.m. to noon at the time, and later set up a meeting at Bennett’s Bethesda office. “Having listened to her radio program for well over a year … it was like meeting an old friend,” Thur recalled.
Eventually Bennett began soliciting her clients and friends for an investment in DJBennett.com, which sold clothes and accessories from luxury brands like Barbour, Arc’teryx and Porsche. According to prosecutors, she solicited these investments in the form of promissory or convertible notes for which she offered an interest rate of 15%, and promised her investors she would use their money only for the operation and development costs of the business.
Michael Fox, a museum director from Arizona in his 70s who was caring for his ill spouse, was hesitant to invest at first. According to court testimony, he had met Bennett in 2003 when he was looking for someone to help manage an employee retirement program for his museum. Bennett ended up managing his personal retirement savings as well, he testified, and she pitched him on DJBennett.com in March 2015, writing, “because of your need for safety and guarantee and liquidity you need to call me.”
“My wife is suffering more than ever (if imaginable!),” he had said, “and we simply have to manage matters without further risk these days not knowing what might be any increasing costs for her treatment and/or care.”
“What you are managing is our sole security blanket,” he wrote again a month later. “It would be a killer if for any reason an investment in your fine company would lead to any more losses than what our portfolio has experienced in the recent past.” Over the following year, he relented and eventually wired Bennett a total of $851,985, according to a federal affidavit. Fox testified that he even borrowed $75,000 against his life insurance plan in order to invest it with Bennett. At the time of the trial, he had not received any of his investment back.
Bennett also offered special benefits, promising one investor, a then-48-year-old man from Virginia who had already given her $3 million, preferential equity in 2016 in exchange for making an additional investment, according to a federal affidavit.
At her trial, prosecutors claimed Bennett provided her investors with false financial statements in order to make her company appear profitable, even though DJBennett.com was struggling and had begun to factor its receivables as early as 2013. Invoice factoring is a type of financing that allows a business to receive a cash advance on invoices it hasn’t received yet. A federal affidavit from an FBI white collar crime agent describes this practice as an “indicator of financial stress.”
Prosecutors at the trial alleged that Bennett overstated the success of DJBennett.com even while it was losing millions, while her defense argued that she “was not aiming for a profit” but rather was aiming to build market share. Defense attorneys suggested that Brad Mascho, Bennett’s chief financial officer, may have been behind certain false statements and that Bennett may not have been aware they were false, based on the lack of available evidence that Mascho and Bennett had conspired.
Mascho was sentenced to 30 months in federal prison in August on charges related to the scheme. He admitted that he had lied under oath to the SEC “under Bennett’s direction and at her insistence,” according to the Department of Justice. His lawyer declined to comment.
A Sharp-Eyed Bank Employee
According to a federal affidavit, the SEC was tipped off to Bennett’s scheme after a representative from Old Line Bank in Waldorf, Maryland, reported a suspicious incident. An 80-year-old woman wanted to wire more than $32,000 to a holding company controlled by Bennett as part of an investment in DJBennett.com, and after reading the disclosures the bank was concerned that the investment was too risky for a person that age.
“Having listened to her radio program for well over a year … it was like meeting an old friend,” one investor recalled.
The bank looked into Bennett more closely and discovered she had been charged with fraud by the SEC in 2015 after wildly inflating her assets under management and investment returns on her radio show, falsely touting returns in the “top 1 percent” of firms worldwide, and claiming to manage more than $2 billion when, in reality, her firm managed about $400 million. The SEC also alleged that Bennett misrepresented herself and her firm to Barron’s, which led to a number five ranking on the publication’s 2009 “Top 100 Women Financial Advisors” list and rankings on two subsequent lists.
According to Reuters, Bennett denied the allegations and skipped the SEC’s administrative enforcement hearing in protest of the agency’s use of in-house administrative proceedings. In March 2016, the SEC barred Bennett from the securities industry and ordered her to disgorge some $650,000.
It seemed that lying to banks and investors was an old habit for Bennett. One of the 17 charges that put her in prison was related to a $750,000 line of credit, issued in May 2015 and eventually maxed out, for which she was the guarantor. According to court documents, Bennett sent the bank false statements indicating that she had access to a brokerage account with a value of more than $4 million in order to secure the line of credit from the bank. The actual value of the account? $35.24. The next year, Bennett began paying the loan off with $199,000 sourced from an investor in Florida.
Not surprisingly, investors began to get angry when the returns Bennett promised them didn’t appear. “I want to reiterate that I am requesting a full return of the total of $775,000 that I invested in your company,” wrote the investor whose funds Bennett used for the 2015 loan, in August 2016. He grew more frustrated the next month, writing: “I do not want any further communication with you except notice that the funds have been deposited in my Wells Fargo account.”
At least in this case, according to court documents, Bennett paid this investor back. But with funds from previous investors.
In Bennett’s office, FBI agents found an “excuse list” to be fed to any disgruntled investor who called looking for their money. If anybody asked, Bennett was “out on business travel.”
But the calls from disgruntled clients apparently grew, and in Bennett’s office during the 2017 raid, agents also found an “excuse list” to be fed to any disgruntled investor who called looking for their money. If anybody asked, Bennett was “out on business travel.”
Bennett repeatedly lied about traveling to China when she failed to respond to emails from investors and creditors alike, federal prosecutors allege. According to court documents, the FBI could not locate any record of international travel during the periods she claimed to be abroad.
“Dawn, you ruined my life”
At her sentencing, a federal judge ordered that Bennett pay restitution of $14.5 million to her victims and forfeit $14.3 million. No restitution has been paid yet, according to a representative from the U.S. Attorney’s Office in the District of Maryland, and investors don’t seem to be holding their breath.
“How do you get blood out of a turnip?” one quipped.
Jean Dalmas, an investor in her 60s from Baltimore, and her husband had invested all of their retirement savings in Bennett’s brokerage, according to her testimony at Bennett’s trial. They transferred money from their retirement and other accounts to invest $150,000 in DJBennett.com, after Bennett advised them that the stock market was not very safe and that investing in her online business would be a better bet.
“She said the company was sound,” Dalmas testified, according to court transcripts. “She spoke of having millions of dollars in the company and that she was personally responsible to all of the people who held the promissory notes.”
“Dawn, you ruined my life,” Dalmas said at Bennett’s sentencing, according to the Associated Press. “I fear I may never get to retire.”
“She has betrayed my trust, the trust of my family,” said Mark Hale, an investor in his 60s who according to the AP said he lost some $200,000 to Bennett’s scheme and has delayed retirement. “We were victimized by her, and a lot of us can’t recover from that.”
At the end of August, Bennett’s lawyer filed notice of an appeal with the 4th U.S. Circuit Court of Appeals. He declined to comment about Bennett’s case.
Cover photograph by Jeffrey MacMillan.
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