Ponzi scheme sus­pect paid US$720K for prayers amid SEC probe

Winnipeg Free Press - - BUSINESS - MICHAEL KUNZELMAN

GREENBELT, Md. — An in­vest­ment ad­viser charged with or­ches­trat­ing a mul­ti­mil­lion-dol­lar Ponzi scheme spent nearly three-quar­ters of a mil­lion dol­lars on prayers by Hindu priests in In­dia to ward off a fed­eral in­ves­ti­ga­tion and save her fail­ing busi­ness, ac­cord­ing to tes­ti­mony at her trial this week.

Us­ing in­vestors’ money, Dawn Ben­nett paid a man in Wash­ing­ton state ap­prox­i­mately US$720,000 be­tween 2015 and 2017 to ar­range for the priests to per­form re­li­gious cer­e­monies meant to ease her trou­bles, a Jus­tice De­part­ment prose­cu­tor and the man Ben­nett paid said. For one of these “yagya” rit­u­als, Ben­nett spent US$7,250 for five priests to pray for her across 29 con­sec­u­tive days.

Six-fig­ure pay­ments for prayers didn’t spare Ben­nett from a 17-count in­dict­ment on fraud charges. Nei­ther did the “hoodoo” spells that in­ves­ti­ga­tors sus­pected her of cast­ing to stymie fed­eral in­ves­ti­ga­tors, a claim fu­elled by a pe­cu­liar dis­cov­ery dur­ing an FBI search of her home.

Ben­nett, 56, raised more than US$20 mil­lion from at least 46 in­vestors in her lux­ury sports­wear com­pany, of­ten prey­ing on el­derly clients who knew her from a ra­dio show she hosted in the Wash­ing­ton, D.C., area, au­thor­i­ties have said. They said she used in­vestors’ money for her per­sonal ben­e­fit, in­clud­ing jew­elry pur­chases, cos­metic med­i­cal pro­ce­dures and a US$500,000 an­nual lease for a lux­ury suite at the Dal­las Cow­boys’ home sta­dium.

Ben­nett told U.S. Dis­trict Judge Paula Xi­nis on Thurs­day that she doesn’t in­tend to tes­tify at her trial. One of her trial lawyers, Den­nis Boyle, said Ben­nett in­vested US$13 mil­lion of her own money into the fledg­ling ap­parel busi­ness, sell­ing as­sets and mort­gag­ing homes to gen­er­ate cash.

“She clearly be­lieves that this is a le­git­i­mate com­pany,” he said. “It catered to only the most dis­cern­ing peo­ple.”

But her ap­parel busi­ness, DJBen­nett, never made a profit and had at least

US$15.6 mil­lion in li­a­bil­i­ties and only

US$550,000 in rev­enue by De­cem­ber

2016, ac­cord­ing to a com­plaint filed by the U.S. Se­cu­ri­ties and Ex­change Com­mis­sion.

The in­dict­ment says she also used money from some in­vestors to pay oth­ers, but many lost ev­ery­thing they paid Ben­nett.

The FBI’s in­ves­ti­ga­tion of Ben­nett be­gan in De­cem­ber 2015 af­ter the SEC for­mally ac­cused her of de­fraud­ing in­vestors by in­flat­ing the amount of as­sets she man­aged and ex­ag­ger­at­ing the re­turns on her cus­tomers’ in­vest­ments. The SEC cited state­ments that Ben­nett made on her paid weekly ra­dio show, Fi­nan­cial Myth Bust­ing With Dawn Ben­nett.

Ben­nett’s fi­nan­cial ad­vi­sory busi­ness was los­ing clients and in­cur­ring mil­lions of dol­lars in losses be­fore she turned to the fraud­u­lent sale of prom­is­sory notes to “tap a new in­come stream,” the SEC said in its com­plaint.

“As her fi­nan­cial con­di­tion rapidly de­te­ri­o­rated, Ben­nett be­gan ac­cu­mu­lat­ing a va­ri­ety of per­sonal fi­nan­cial obli­ga­tions, but none­the­less con­tin­ued to spend con­sid­er­able sums to fund her ex­trav­a­gant lifestyle,” the com­plaint said.

When FBI agents searched Ben­nett’s home in Chevy Chase, Md., last year, they found in­struc­tions for plac­ing peo­ple un­der a “Beef Tongue Shut Up Hoodoo Spell” and bi­o­graph­i­cal in­for­ma­tion for at least three gov­ern­ment lawyers work­ing on the SEC in­ves­ti­ga­tion of Ben­nett, ac­cord­ing to an agent’s af­fi­davit.

FBI agents also found the ini­tials of SEC lawyers writ­ten on the lids of Ma­son jars stored in Ben­nett’s freez­ers, sug­gest­ing she had cast spells in hopes of “para­nor­mally si­lenc­ing” the SEC lawyers, the agent wrote.

Ben­nett’s lawyers ar­gued that any such “hoodoo” prac­tices are ir­rel­e­vant and their men­tion by pros­e­cu­tors only serves to smear her. Boyle also ob­jected to tes­ti­mony about the “sub­stance” of the prayers she com­mis­sioned in In­dia.

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