Two Former Brokers Sentenced in Multimillion-Dollar Ponzi Frauds

Dawn Bennett, an ex-financial advisor and broker, is sentenced to 20 years in prison for operating a $20M Ponzi scam that involved 46 investors. She also must pay $14.5M in restitution and forfeit another $14M.

Many of Bennett’s victims were retirees who heard about her because she hosted a radio show. In 2018, Bennett was convicted by a jury on federal charges of conspiracy, bank fraud, securities fraud, wire fraud, and making false statements on a loan application.

According to evidence given at trial, Bennett solicited investors for her online clothing business DJB Holdings, LLC, also known as DJBennett.com, touting a 15% yearly interest rate through promissory and convertible notes.

Bennett is accused of making false and misleading statements about the way investors’ funds would be utilized, as well as regarding the risks involved in investing in DJB Holdings. She also reportedly told them that the loans were guaranteed and liquid while hiding the actual financial state of her company. Several of the investors she defrauded took a substantive chunk of funds out of their retirement accounts at her recommendation.

The evidence at trial demonstrated that Bennett used investor funds on her expensive lifestyle, including plastic surgery procedures and to buy astrological gems, to pay earlier investors in Ponzi-like fashion, as well as cover other expenses, including hiring priests in India to conduct ceremonies to keep federal investigators away. She also allegedly made false statements to a bank to secure a $750K credit line for her business. Among the misrepresentations Bennett is accused of making is that she owned a brokerage account whose portfolio’s value was more than $4M, when it was only worth $35.

Bennett’s BrokerCheck record notes that she worked in the securities industry for nearly three decades, during which time she has been a registered broker with Western International Securities, Royal Alliance Associates, Inc., Citigroup Global Markets, Leg Mason Wood Walker, and Wheat First Securities. Bennett has been named in about three dozen customer disputes, with many of them either settled or pending. Allegations in these disputes are numerous and include fraud, unsuitable recommendations, breach of fiduciary duty, negligence, and other claims.

In 2017, the US Securities and Exchange Commission filed a parallel civil fraud case against Bennett.

Ex-Investment Advisory Firm Head Pleads Guilty
Bennett is not the only investment adviser to receive a prison term for operating a Ponzi scam. Hector May, the ex-president of Executive Compensation Planners, Inc. received a 13-year sentence for defrauding firm clients of more than $11M. He pleaded guilty to conspiracy to commit wire fraud.

May admitted that going as far back as 1995, he stole from 15 clients to conceal business losses, cover his family’s own lavish expenses, and issue Ponzi-like payments to his victims. Prosecutors are accusing him of running his Ponzi fraud for over 20 years. Now, he must pay $8.4M in restitution.

In addition to heading up his investment advisory firm, May also was a registered broker. His BrokerCheck record shows more than four decades working in the industry, during which time he has been registered broker with Securities America, Prime Capital Services, Equico Securities, and The Equitable Life Assurance Society of the United States. There have been at least three customer disputes against him, with the latest, brought in February, requesting $18M in damages. That case is still pending.

Earlier this year, the SEC barred May.

Also now indicted in her own criminal case related to the charges against May is his daughter Vania May Bell, who was the controller of Executive Compensation Planners. She has since been arraigned.

Investor Fraud Claims
Regardless of whether a criminal case is brought against the broker or financial adviser who defrauded you, it is important that you considering filing your own civil claim to recover your losses. Contact Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) today, and we can help you explore your legal options.