Chevy Chase Financial Advisor Charged In Ponzi Scheme: Prosecutors

CHEVY CHASE, MD — A former financial advisor from Chevy Chase was arrested last week on federal charges alleging that she ran a Ponzi scheme that defrauded investors. Dawn J. Bennett, 55, was arrested Aug. 25 in Santa Fe, New Mexico, on a criminal complaint that charged her with wire fraud, bank fraud, and making false statements in relation to loan and credit applications.

According to the criminal complaint, Bennett is the owner and operator of DJB Holding, LLC, d/b/a DJBennett.com. DJBennett.com is an internet retail website for luxury sportswear. A Department of Justice news release says that Bennet had account activity consistent with a Ponzi scheme and misappropriation of investor funds. She reportedly solicited investors by promising high rates of return with little risk, and then sent payments to the older investors through money obtained from new investors. Typically, the operator of A Ponzi scheme will use investment funds for purposes other than what was explained to the investors.

Bennett reportedly solicited people to invest money into her internet clothing business, offering an annual interest rate of 15 percent on notes. Court records say that between Dec. 17, 2014, and Oct, 29, 2015, investors deposited more than $5 million into the DJBennett.com operating account. Bennett reportedly used that money to repay earlier investors and to pay for her personal legal expenses, among other things.

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Prosecutors say that in May 2015, DJB Holdings, LLC obtained a $750,000 line of credit secured by the inventory of DJB Holdings. In support of the line of credit, one of Bennett’s employees provided the lender a brokerage statement in Bennett’s name that listed a net portfolio value of over $4 million. In reality, Bennett’s net portfolio value for that same account was only $35.

In February 2016, the lender declared the loan in default. Bennett responded that she was unaware of the default and claimed she had been in China for the previous eight months; her personal American Express card showed numerous transactions in the Chevy Chase and Washington, D.C. area during those months, authorities say.

On August 25, the SEC filed a related action against Bennet and her companies alleging violations of the Securities Act of 1933 and the Securities Exchange Act of 1934.

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