U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23922 / August 28, 2017
Securities and Exchange Commission v. Dawn J. Bennett and DJB Holdings LLC, No. 17-cv-2453 (D. Md. filed Aug. 25, 2017)
Former Financial Adviser Charged With Defrauding Investors
The Securities and Exchange Commission today announced that it has charged a former financial adviser 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 J. 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 percent. The complaint alleges that 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.
In a parallel case, the U.S. Attorney's Office for the District of Maryland unsealed criminal charges against Bennett.
The SEC encourages investors to check the backgrounds of people selling them investments by using the SEC's investor.gov website to identify whether they are registered professionals and to search for any disciplinary history. Seniors are often targets of investment fraud. The SEC previously issued an alert warning seniors to look out for red flags of fraud when making an investment decision.
The SEC's complaint filed in federal court in Greenbelt, Maryland, charges Dawn J. Bennett and DJB Holdings LLC with violating Section 5(a) and (c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks a permanent injunction, disgorgement plus interest, and penalties.
The SEC's continuing investigation has been conducted by Kelly L. Gibson, Brendan P. McGlynn, Patricia A. Paw, Matthew B. Homberger, and Brian R. Higgins in the Philadelphia Regional Office. The SEC's litigation will be led by Jennifer C. Barry. The SEC appreciates the assistance of the FBI, the U.S. Attorney's Office for the District of Maryland and the Financial Industry Regulatory Authority.