Financial Advisor Gets 20 Year Prison Time for Misappropriating Investor’s Funds to Pay for Hindu Religious Ceremonies Among Other Things

Former financial advisor and radio talkshow host Dawn Bennett (56) of Chevy Chase, MD was sentenced today to 20 years in federal prison for misappropriating investors’ funds, including using them to pay a puja website operator to arrange for priests in India to perform religious ceremonies to ward off federal Investigators.

The ponzi scheme orchestrated by financial advisor Dawn Bennett involved over 20 million dollar investment fund solicited from 46 clients for her Internet luxury sportswear clothing business.

Instead of returning the invested funds to clients with the promised 15% interest rate, the fund was used to pay:

  • $720,000 to arrange for Hindu priests in India to perform Hindu religious ceremonies to ward off federal investigation related troubles
  • $7,250 to five Hindu priests to perform “yagya” rituals for 29 consecutive days
  • Fund payments to the earlier investors through funds obtained through new investors
  • Personal benefit including a luxury suite at a football stadium

According to the information and evidence presented at the nine-day trial in Ocotber, 2018:

….Bennett is the owner and operator of DJB Holdings, LLC, d/b/a, an Internet retail website for luxury sportswear.

….between December 2014 and April 2017, Bennett solicited individuals to invest money in her Internet clothing business, offering an annual interest rate of 15% via convertible or promissory notes.

….In order to entice individuals to invest, Bennett made false and misleading statements, including: the risks of investing in DJB Holdings; how investors’ funds would be used; and that the loans were liquid and guaranteed by DJB Holdings’ inventory and assets, and by Bennett herself. Witnesses testified that Bennett concealed the true financial condition of her companies from investors. Bennett convinced several investors to withdraw a significant portion of their retirement accounts to invest in, and loan money to, her companies.

…The evidence showed that Bennett misappropriated investor funds, using them to fund a lavish lifestyle, pay her personal legal expenses, and repay previous investors with funds she received from new investors. This is consistent with a Ponzi scheme–a fraudulent investment scheme where the operator of the scheme solicits investors by promising high rates of return with little risk. The scheme operator then funds payments to the earlier investors through funds obtained through new investors. Typically, the operator of the scheme will use investment funds for purposes other than what was conveyed to the investors.

….over the course of the scheme, Bennett obtained more than $20 million from 46 investors, many of them elderly clients who knew of Bennett from a radio show she hosted. Some of those funds were used to pay earlier investors and the rest was used for her personal benefit, including: a luxury suite at a football stadium; to pay a website operator to arrange for priests in India to perform religious ceremonies to ward off federal investigators; to purchase astrological gems; and for cosmetic medical procedures.

….in May 2015, DJB Holdings, LLC also obtained a $750,000 line of credit, with Bennett as guarantor.

…according to witness testimony, in support of this line of credit, Bennett made false statements to the bank, including that she had a brokerage account with a net portfolio value of over $4 million. In reality, Bennett’s net portfolio value for that same account was only $35. The loan proceeds were to be used solely for business operations, but Bennett used the funds to pay off investors and to pay her personal expenses. In February 2016, the lender declared the loan in default. Bennett told the lender that she was unaware of the default because she had been in China for the preceding eight months. According to trial evidence, there was not any international travel for Bennett during the time in which she claimed to be in China, and her personal American Express card showed numerous transactions during that time in the Chevy Chase, Maryland and Washington, D.C. area.

Financial advisor Dawn Bennett was convicted by a federal jury October 18, 2018 on 17 federal charges.

The 17 federal charges against the financial advisor Dawn Bennett include:

  • Conspiracy
  • Securities fraud
  • Wire fraud
  • Bank fraud
  • Making false statements on a loan application

In addition to the 20 year prison term, financial advisor Dawn Bennett was also sentenced to five years of supervised release and must pay restitution of $14,504,290 and forfeiture of $14,306,842.

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