Former Financial Advisor Charged With Fraud In An Alleged Ponzi Scheme
FOR IMMEDIATE RELEASE Contact ELIZABETH MORSE
www.justice.gov/usao/md at (410) 209-4885
Greenbelt, Maryland – On August 25, 2017, Dawn J. Bennett, age 55, of Chevy Chase, Maryland, was arrested in Santa Fe, New Mexico. In addition to a previously filed Securities and Exchange Commission (SEC) complaint, Bennett has also been charged in a criminal complaint with wire fraud, bank fraud, and false statements in relation to loan and credit applications.
The arrest was announced by Acting United States Attorney for the District of Maryland Stephen M. Schenning and Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office.
According to the criminal complaint, Bennett is the owner and operator of DJB Holding, LLC, d/b/a DJBennett.com. DJBennett.com is an internet retail website for luxury sportswear.
The criminal complaint alleges account activity consistent with a Ponzi scheme and misappropriation of investor funds. A Ponzi scheme is 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 older 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.
According to the criminal complaint, Bennett solicited individuals to invest money into her internet clothing business, offering an annual interest rate of 15% via convertible or promissory notes. For instance, between December 17, 2014 and October 29, 2015, 28 individuals made deposits of over $5 million into the DJBennett.com operating account. The complaint alleges that Bennett would repay investors with funds she received from new investors and used funds sourced from individual investors to fund her personal legal expenses, among other things.
The criminal complaint further alleges that in May 2015, DJB Holdings, LLC obtained a $750,000 line of credit secured by the inventory of DJB Holdings LLC/DJBennett.com. In support of this line of credit, one of Bennett’s employees provided the lender a brokerage statement in Bennett’s name that listed a net portfolio value of over $4 million. In reality, Bennett’s net portfolio value for that same account was only $35. In February 2016, the lender declared the loan in default. Bennett responded to the lender that she was unaware of the default and claimed she had been in China for the preceding eight months. A search of FBI databases was unable to firm 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 in the Chevy Chase, Maryland and Washington, D.C. area.
On August 25, 2017, the SEC filed a related action against Dawn J. Bennet and DJB Holdings, LLC d/b/a/ DJBennett and DJBennett.com alleging violations of the Securities Act of 1933 and the Securities Exchange Act of 1934.
Acting United States Attorney Stephen M. Schenning thanked the SEC and the FBI. Mr. Schenning praised Assistant U.S. Attorneys Erin Pulice and Thomas Windom who are prosecuting the case.