Dawn Bennett carried out a fairly standard Ponzi scheme…except for the elaborate voodoo rituals targeting SEC attorneys.
SEC enforcement attorneys can no doubt breathe a sigh of relief now that financial advisor and radio host Dawn Bennett has been sentenced to 20 years in prison for 17 federal charges including conspiracy, securities fraud, wire fraud, bank fraud, and making false statements on a loan application. In a truly outlandish case, Bennett allegedly attempted to "paranormally silence" three specific SEC attorneys with "hoodoo spells" and paid religious priests in India to conduct ceremonies to ward off federal investigators. However, her oddball efforts were to no avail. In addition to the prison time, she was ordered to pay restitution of $14.5 million and forfeiture of $14.3 million.
"Dawn Bennett knowingly defrauded retirees of their life’s savings—most of which she used for her own personal benefit," said U.S. Attorney Robert K. Hur. "She’s been held accountable for her lies and theft and will now spend years in federal prison."
Ponzi scheme. According to the DOJ announcement, between December 2014 and April 2017, Bennett enticed individuals to invest money in her Internet clothing business at an annual interest rate of 15 percent via convertible or promissory notes. Bennett obtained more than $20 million from 46 investors, many of them retirees who knew of her from a radio show she hosted. As typical for a Ponzi scheme, Bennett misappropriated investor funds and used them to fund a lavish lifestyle, pay her personal legal expenses, and repay previous investors with funds she received from new investors. Some retirees lost their life savings.
Paranormal activities. But in addition to typical Ponzi scheme splurges like extravagant shopping sprees, strange mystical elements set the case apart. Bennett used investor funds to buy "astrological gems" and to pay a website operator to arrange for priests in India to perform religious ceremonies to fend off federal investigators.
And, according to an FBI affidavit, a search of Bennett’s residence revealed two freezers containing dozens of sealed Mason jars labeled with biographical information of three SEC attorneys who were investigating her case, and instructions called "Beef Tongue Shut Up Hoodoo Spell." The instructions included directions such as slitting open an animal tongue, stating the name of the individual on whom to cast the spell followed by "I cross and cover you, come under my command. I command you to hold your tongue."
Enforcement. Undeterred by the malevolent supplications, the DOJ and SEC conducted parallel investigations. In an SEC administrative proceeding, Bennett was found liable in March 2017 for antifraud violations. The SEC also filed a complaint in federal district court in August 2017. Although Bennett joined the tide of SEC respondents who challenged the constitutionality of the SEC’s administrative law judge regime, her appeal was dismissed for lack of prosecution, and the SEC ultimately issued an order stating that the March 2017 order was final for all purposes.
After five hours of deliberation, Bennett was convicted by a jury in October 2018 of 17 federal charges including securities fraud. The July 31 sentencing order resolves those charges.
The case is No. 8:17-cr-00472-PX.
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