When a financial advisor turned to hoodoo spells: by theothersarahh
the Chevy Chase, Maryland, penthouse of glamorous financial advisor Dawn Bennett, a radio host and owner of the luxury sportswear site DJBennett.com, in August 2017, they found a closet stuffed to the gills with racks of flashy shoes, belts and handbags.
But while she raked in her investors’ money and promised them a guaranteed 15% return, Bennett spent thousands of dollars at Saks Fifth Avenue and the Ritz-Carlton, South Beach. She leased a VIP box at the Dallas Cowboys’ AT&T Stadium for half a million dollars a year. She spent $141,000 on astrological gems—including a single charge of $29,715 to an Iowa gemstone merchant—and over $100,000 on cosmetic treatments.
Eventually Bennett began soliciting her clients and friends for an investment in DJBennett.com, which sold clothes and accessories from luxury brands like Barbour, Arc’teryx and Porsche. According to prosecutors, she solicited these investments in the form of promissory or convertible notes for which she offered an interest rate of 15%, and promised her investors she would use their money only for the operation and development costs of the business.
At her trial, prosecutors claimed Bennett provided her investors with false financial statements in order to make her company appear profitable, even though DJBennett.com was struggling and had begun to factor its receivables as early as 2013. Invoice factoring is a type of financing that allows a business to receive a cash advance on invoices it hasn’t received yet. A federal affidavit from an FBI white collar crime agent describes this practice as an “indicator of financial stress.
The bank looked into Bennett more closely and discovered she had been charged with fraud by the SEC in 2015 after wildly inflating her assets under management and investment returns on her radio show, falsely touting returns in the “top 1 percent” of firms worldwide, and claiming to manage more than $2 billion when, in reality, her firm managed about $400 million.
At least in this case, according to court documents, Bennett paid this investor back. But with funds from previous investors.
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