'Hoodoo' curse couldn't hide advisor's $20M Ponzi scheme
Even the dark arts couldn’t shroud it. Dawn Bennett, a former financial advisor and radio host who allegedly used “hoodoo” magic to evade investigators, was found guilty of defrauding investors in a $20 million Ponzi scheme, the Department of Justice said.
After deliberating for under five hours Wednesday, a federal jury convicted Bennett on 17 charges, including false statements on a loan application and three kinds of fraud: securities, bank and wire.
The case notably had some unusual elements for a securities fraud trial. FBI agents searching Bennett’s penthouse found evidence of voodoo-type witchcraft, specifically instructions for how to put people under a "Beef Tongue Shut Up Hoodoo Spell." The curse was allegedly intended to silence individuals.
In Bennett’s home, FBI agents found two freezers containing sealed Mason jars filled with SEC attorneys’ identifying information, suggesting that she had cast the “hoodoo spell” several times in order to “paranormally silence” those pursuing the case, according to an FBI affidavit submitted in court filings.
“Dawn Bennett’s greed knew no bounds as she knowingly defrauded elderly retirees of their life’s savings,” U.S. Attorney Robert K. Hur said in a statement. “This conviction — and the years in federal prison that she is facing — holds her accountable for her actions.”
An attorney representing Bennett, Dennis Boyle, could not be reached for immediate comment.
Bennett, 56, induced clients to invest in a sports apparel company she owned in addition to her advisory business, according to authorities. She in fact spent their funds on a luxurious lifestyle that featured jewelry, clothing, mystics, and a $500,000 annual lease on a luxury suite at the Dallas Cowboys’ stadium, according to the SEC which has pursued Bennett in a separate case.
Between 2014 and 2017, Bennett enticed investors, including some of her advisory clients, to invest in her apparel business, DJB Holdings, later renamed Province of the Dragon. Bennett promised investors annual returns of around 15%, according to an indictment filed in U.S. District Court in Maryland.
One victim, unnamed in court documents, put up half a million dollars in 2015. And in some cases, her advisory clients withdrew money from retirement accounts in order to invest in the apparel company, authorities said.
In total, she raised more than $20 million from over 40 investors, according to court documents.
To carry out the scheme, Bennett and a coworker, Bradley Mascho, intentionally overstated the apparel company’s sales and liabilities to their investors. After an on-site FINRA exam, Bennett and Mascho induced investors to replace the convertible notes they had been given with promissory notes in a bid to conceal their actions. Mascho pleaded guilty in June to conspiracy to commit securities fraud and to making a false statement.
Bennett also made misrepresentations to a bank that provided her a $750,000 loan, authorities said. She made false statements, including that she had a brokerage account with a net portfolio value of more than $4 million. “In fact, Bennett’s brokerage account had a net portfolio value of approximately $35,” the indictment says.
Bennett denied the charges at trial, which lasted nine days.
With her conviction, she faces a maximum of 20 years in prison for wire fraud conspiracy and for each of nine counts of wire fraud; a maximum of five years in prison for securities fraud conspiracy; a maximum of 20 years in prison for each of four counts of securities fraud; and a maximum of 30 years in prison each for bank fraud and for false statements on a loan application, according to the U.S. Attorney’s Office for the District of Maryland.
In addition to the criminal charges, Bennett has faced scrutiny from regulators. The SEC is pursuing separate charges against Bennett and FINRA suspended her for failing to cooperate with its investigation into allegations of misconduct, according to the regulator’s records.