SEC Bars Bradley Mascho for his part in $20 Million Ponzi Scheme with Former Celebrity Financial Advisor Dawn BennettFriday, February 7, 2020
On January 7, 2020, the Securities and Exchange Commission (SEC) permanently enjoined registered representative Bradley Mascho from committing future violations of securities industry rules after helping former celebrity financial Dawn Bennett conduct a $20 million Ponzi scheme.
Mascho was a registered representative at Western International Securities, Inc. in Frederick, Maryland from October 2009 to December 2017. In December 2017, the SEC brought a civil suit claiming that Mascho offered a fraud orchestrated by Dawn Bennett, the owner of DJB Holdings, LLC (“DJBennett”), a retail sports apparel business based in Washington D.C.
Between December 2014 and July 2017, Mascho, who was DJBennett’s Chief Financial Officer, and Bennett allegedly raised over $20 million from at least 46 investors through the unregistered offering of convertible promissory notes and misrepresenting and omitting material facts to investors regarding DJBennett’s financial and operating performance and the intended use of investor funds. According to the SEC, from the outset of the offering, Bennett had lost a significant portion of her financial advisory clientele but continued to spend money to support her extravagant lifestyle. As her personal financial situation declined, she and Mascho allegedly targeted elderly and financially unsophisticated investors, representing that investor funds would be used for corporate purposes. Rather, Bennett used the funds in a Ponzi-like scheme to finance expensive jewelry, designer clothing, religious rituals, astrological gems and other luxuries.
When Mascho and Bennett discovered a regulator was investigating their sale of long-term convertible notes, the SEC claims Bennett and Mascho directed investors to execute new short-term promissory notes. Bennett and Mascho then allegedly backdated the new notes to the date of the investors’ original convertible note investment, allowing them to corroborate lies they told to the investigators about their involvement in the sale of the original convertible notes. In December 2017, Mascho agreed to permanent injunction and the Sec ordered him to pay $37,700 in disgorgement and other monetary penalties and fines.
The SEC and FINRA have since barred Mascho from registering as a securities representative, including associating with any broker-dealer, advisor, municipal securities dealer, municipal advisor, transfer agent, nationally recognized statistical rating organization, and from participating in any penny stock offering. He was also sentenced to 30 months in prison, three years of supervised release and ordered to pay $4.8 million in restitution by a U.S. District Court in Greenbelt, Maryland. Bennett was sentenced to 20 years in prison for fraud.
Mascho currently has numerous pending customer disputes related to this misconduct that allege unsuitable recommendations, misrepresentations and omissions of material fact, fraud and breach of fiduciary duty.
If you invested and lost money in the DJBennett Ponzi scheme at the advice of Bradley Mascho, Dawn Bennett, or another broker, attorney, insurance agent, financial advisor, or CPA, you may be able to recover your losses. Since 1998, the experienced attorneys at ChapmanAlbin LLC have been fighting for victims of investment fraud and broker misconduct. Call us today at 1-877-410-8172 for a free consultation.