Former financial advisor Dawn Bennett was convicted in a federal court in Maryland of charges she defrauded investors out of millions of dollars.
According to reports from The Baltimore Sun, a federal jury deliberated for roughly four hours over two days before convicting Bennett of all 17 counts in her indictment, including charges of securities fraud, wire fraud and bank fraud.
According to InvestmentNews, Bennett 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 for securities fraud conspiracy; a maximum of 20 years for each of four counts of securities fraud; and a maximum of 30 years each for bank fraud and for false statements on a loan application.
The judge did not immediately set a sentencing date, the Sun reports.
Bennett, the host of the weekly radio program “Financial Myth Busting with Dawn Bennett” on Sunday mornings, used money that people had invested in her luxury sportswear company to finance her lifestyle, including six-figure expenditures on astrological gems, and cosmetic medical procedures.
She also used some of these funds to pay more than $800,000 for prayers by Hindu priests in India to ward off federal investigators.
“Jurors heard testimony that Bennett paid a man in Washington state to arrange for Hindu priests to pray for her while her business was collapsing and she faced a Ponzi scheme investigation by the U.S. Securities and Exchange Commission,” The Sun reports.
According to reports, an FBI affidavit that accompanied her arrest last year shows that FBI agents also found evidence in Bennett’s home that she tried to silence SEC investigators by casting “hoodoo” spells.
The Sun reports that agents found instructions for placing people under a “Beef Tongue Shut Up Hoodoo Spell” and found the initials of SEC attorneys written on the lids of Mason jars stored in Bennett’s freezers.
The FBI started investigating Bennett in 2015 after the SEC accused her of defrauding investors by “grossly inflating” the amount of assets she managed on her radio talk show and overhyping the returns on her clients’ investments.
Then, in 2017, the SEC charged Bennett for defrauding investors in a promissory note scheme and then spending their money on herself or for Ponzi-like payments, which coincided with criminal charges in a parallel case.
According to the SEC and other reports, Bennett used promissory notes to raise more than $20 million from at least 46 investors in her company, DJBennett.com, promising them a 15% return on their investment.
Many of the investors lost their life savings or retirement funds when they gave their money to Bennett, according to reports.
Bennett has an extensive regulatory record, including 17 disclosures over her 28-year career with five firms.
FINRA Bars Broker for an Unsuitable Recommendation Resulting in Hefty Commissions
The Financial Industry Regulatory Authority barred Bernard McGee, a broker who last worked at Independent Financial Group, from association with any FINRA member.
The regulator also ordered McGee to pay $237,643, plus interest, in restitution to a customer.
According to FINRA’s report of Disciplinary and Other FINRA Actions for October, McGee willfully failed to inform a customer of the more than $59,000 in commissions that he received in connection with the customer’s purchase of a charitable gift annuity.
The findings stated that McGee made an unsuitable recommendation to the customer when he proposed the customer surrender variable annuities and purchase the charitable gift annuity.
The findings also stated that McGee engaged in undisclosed outside business activities, failed to timely update his Uniform Application for Securities Industry Registration or Transfer (Form U4) and made misrepresentations on his member firm’s annual compliance questionnaires.
SEC Charges Lawyer and Her Husband in EB-5 Fraud
The SEC charged a California-based immigration attorney and her husband in a fraudulent scheme that generated millions of dollars of undisclosed compensation from foreign investors seeking permanent U.S. residency through the EB-5 Immigrant Investor Program.
The SEC’s complaint alleges that Jean Danhong Chen, Tony Jianyun Ye, and Law Offices of Jean D. Chen, with the assistance of a personal friend, Kuansheng Chen, secured more than $10 million in undisclosed commissions by selling EB-5 securities to hundreds of Chen’s legal clients.
The complaint also alleges that Jean Chen and Ye secretly acquired and operated an EB-5 regional center, Golden State Regional Center LLC, and later advised clients to invest in the center’s projects without disclosing their ownership interest. According to the complaint, Kai Hao Robinson assisted in the scheme by posing as the sole manager in control of Golden State when she was in fact merely a figurehead controlled by Jean Chen and Ye.
After learning of the SEC’s investigation, Jean Chen and Ye allegedly backdated documents and scrubbed other business records to conceal their role in the alleged scheme.
The SEC’s complaint seeks permanent injunctions, disgorgement, prejudgment interest, civil penalties, and the appointment of a receiver.
SEC Halts Sham Real Estate Investment Offering Fraud
The SEC filed an emergency action to halt an ongoing offering fraud perpetrated by Susan Werth, aka Susan Worth, and several companies she controlled — Corporate Mystic LLC, Commercial Exchange Solutions Inc., and Exchange Solutions Co.
According to the SEC’s complaint, Werth and her companies raised more than $26 million, promising investors to use their money to fund short-term, high-interest rate loans in connection with tax-deferred real estate projects. In fact, they used those funds to make Ponzi payments to other investors, and to pay Werth’s numerous personal expenses.
The SEC’s complaint alleges that Werth and her companies did not fund any of the promised real estate projects and instead misused investor funds. Werth used forged bank statements to fraudulently assure investors that her companies had assets sufficient to guarantee the payments to investors, and she also concealed her criminal history and previous lawsuits against her for fraud.
The SEC is seeking injunctions against future securities laws violations, disgorgement of the defendants’ ill-gotten gains, and civil penalties.
SEC Charges eBay’s Former Director of SEC Reporting With Insider Trading
The SEC charged a former eBay Inc. executive with insider trading ahead of Xoom Corp.’s acquisition by PayPal Holdings, which at the time was owned by eBay.
The SEC’s complaint alleges that Bryan Long, a CPA who was employed as eBay’s director of SEC reporting, obtained material nonpublic information about PayPal’s impending acquisition of Xoom in the course of his work preparing PayPal’s SEC filings.
According to the complaint, Long purchased Xoom call options in late May 2015 shortly after PayPal made its initial acquisition offer. Approximately one month later, after learning that the deal was moving forward and could be announced in “early July,” Long allegedly engaged in a second round of illegal trades, purchasing additional Xoom call options that were due to expire in less than a month.
Long reaped almost $36,000 in ill-gotten gains by selling all of the options after PayPal announced it was acquiring Xoom on July 1, 2015.
The SEC’s complaint seeks a permanent injunction, disgorgement of ill-gotten gains, pre-judgment interest and civil monetary penalties.
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