On Monday, August 28, 2017, the Securities and Exchange Commission announced it had charged a former financial adviser with defrauding investors. It is alleged that the defendant spent the investors’ money on herself and to make Ponzi-like payment to other investors. The SEC alleges that Dawn J. Bennett and DJB Holdings LLC raised over $20 million by selling notes issued by the company, which is a luxury sports apparel firm based out of Washington D.C.
The complaint claims that Bennett exaggerated the safety of the notes, as well as the success of her firm. Bennett is accused of claiming the business was profitable and able to make annual returns as high as 15 percent. The SEC claims that Bennett told investors their funds would be used for corporate purposes, but was actually spent on personal expenses and to repay earlier investors.
Bennett is accused of taking steps to conceal and carry on the alleged scheme. She is accused of lying to regulators about the note sales and repaying investors with loans she acquired by inflating her overall net worth. It is also accused that Bennett replaced existing convertible notes with sham promissory notes.
The U.S. Attorney’s Office for the District of Maryland has also unsealed criminal charges against the defendant. The SEC’s complaint has been filed with the federal court in Greenbelt, Maryland.