U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23999 / December 4, 2017
Securities and Exchange Commission v. Dawn J. Bennett, DJB Holdings, LLC, and Bradley C. Mascho, No. 17-cv-2453 (D. Md. filed Dec. 1, 2017)
SEC Files Amended Complaint Charging Financial Adviser with Aiding and Abetting Offering Fraud
The Securities and Exchange Commission announced today that it has charged Bradley C. Mascho, a Maryland-based financial adviser and the onetime CFO of DJB Holdings, LLC, with aiding and abetting an offering fraud involving the sale of over $20 million in convertible and promissory notes.
On August 25, 2017, the SEC filed a complaint charging Dawn J. Bennett and her company, DJB Holdings, LLC, with fraud in connection with their sale of notes backed by the company. According to the complaint, Bennett repeatedly misled investors regarding the financial condition of DJB Holdings, LLC and her plan to divert millions of dollars in investor funds to personal use. The complaint also alleged that Bennett perpetuated her fraud by, among other things, lying to regulators and repaying investors with loan proceeds obtained through loan applications that substantially overstated her net worth. Today, the SEC amended its complaint to add Mascho as a defendant. The amended complaint alleges that Mascho aided and abetted Bennett's fraud by various means, including preparing false financial statements and related offering materials, lying to regulators and to his employer regarding his knowledge of and role in the sale of notes, facilitating Bennett's efforts to target his firm's brokerage customers, and attempting to disguise certain note sales by creating new, "backdated" notes as well as false affidavits misrepresenting the details of the note offering.
In a parallel case, the U.S. Attorney's Office for the District of Maryland unsealed criminal charges against Mascho.
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 often are 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 amended complaint charges Mascho with violating Section 5(a) and (c) of the Securities Act of 1933, and with aiding and abetting Bennett and DJB Holdings, LLC's violations of Section 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 civil penalties.
The SEC's 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.
For additional information, see Litigation Release No. 23922 (Aug. 28, 2017).