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September 01, 2017 at 06:35 AM
The Securities and Exchange Commission announced that it has charged a former financial advisor with defrauding investors and spending their money on herself and to make Ponzi-like payments to earlier investors in the alleged scheme.
The SEC’s complaint alleges that Dawn Bennett, the the former host of the radio show “Financial Myth Busting with Dawn Bennett,” and DJB Holdings LLC raised more than $20 million by selling notes issued by the company, a Washington, D.C., luxury sports apparel firm.
According to the complaint, Bennett exaggerated the safety of the notes and success of her firm, touting it as a profitable business able to pay annual returns as high as 15%.
While Bennett said investor funds would be used for corporate purposes, she spent some on personal expenses and used other funds to repay earlier investors, a hallmark of a Ponzi scheme.
According to the complaint, Bennett took steps to conceal and continue the alleged scheme, including lying to regulators about the note sales, repaying investors with loans she obtained by inflating her net worth, and replacing existing convertible notes with sham promissory notes.
The SEC seeks a permanent injunction, disgorgement plus interest, and penalties.
In a parallel case, the U.S. Attorney’s Office for the District of Maryland unsealed criminal charges against Bennett.
SEC Charges Broker With Bilking Elderly Customers
The SEC charged Leon Vaccarelli, a Connecticut-based broker representative and investment advisor, and his company with fraudulently persuading several elderly customers to invest with him. He then spent their money on his own living and business expenses, according to the SEC.
The SEC’s complaint alleges that instead of investing the customers’ money in such things as conventional brokerage accounts and so-called separately managed accounts as promised, Vaccarelli deposited customer funds into his personal and business bank accounts.
He allegedly commingled the funds with his own money and used them for his own purposes, and in some instances he used customer funds to pay returns to earlier investors.
According to the SEC’s complaint, Vaccarelli asked one customer to sign an agreement that she would not provide certain information to the Financial Industry Regulatory Authority or the SEC.
Vaccarelli allegedly sold more than $450,000 in securities that were held in trust for the care and maintenance of a beneficiary and used some of the proceeds to pay business and personal expenses.
The SEC alleges that Vaccarelli defrauded clients of more than $1 million, and the agency is seeking an asset freeze against Vaccarelli, individually and doing business as Lux Financial Services, and his company, LWLVACC, LLC.
The complaint seeks disgorgement of ill-gotten gains plus interest, penalties and permanent injunctive relief.
