Ponzi scheme creator used voodoo to protect herself from investigators

Dawn Bennett used beef tongue in hoping to silence the tongues of authorities. Photo/Getty Images.

In Dawn Bennett's world, the American Dream is one in which people adorn themselves in $502 fishing boots, shred the slopes in $690 ski hats and hit the back nine toting $13,500 golf bags.

Bennett told business investors that her luxury sportswear company targeting those yearning for that dream was becoming a wildly profitable venture, one that would give Under Armour a run for its money.

But instead of netting millions in profits, DJBennett.com was a flop and a front, according to federal prosecutors. Rather than use her investors' money to buy inventory or expand the business, Bennett lied about its success and used the cash to "fund her extravagant lifestyle" that included $8,000 beauty treatments, two penthouses in the tony DC suburb of Chevy Chase, Md., and a $500,000 box suite at Dallas Cowboys Stadium, prosecutors contend.

And when federal investigators began to look into her business dealings, she turned to voodoo curses to try to ward off that threat — filling her freezer with jars labelled with the initials of Securities and Exchange Commission lawyers and turning to spells involving beef tongue — in hopes of silencing the tongues of authorities, the government said.

A federal jury in US District Court in Maryland is deliberating the case of the alleged Ponzi scheme, and Bennett, 56, is accused of several counts of bank, wire and securities fraud totalling US$20 million (NZ$30 million).

"She was telling these people what they needed to hear in order to keep this scheme going," Assistant US Attorney Erin Pulice told jurors over the two-week trial in Greenbelt.

Bennett's attorneys argued that she genuinely believed her sportswear company would succeed. She may have exaggerated some of that success, her attorney Dennis Edward Boyle said in court, but "there is a difference between a lie and a crime." Like many Internet start-ups, DJBennett.com wasn't showing a profit in its initial years because its main value was developing brand recognition and a wide customer base, Boyle said.

"This was an intent to build a business, and not a fraud," Boyle said.

Bennett's case captured national headlines when she was arrested last year after FBI agents conducting a search warrant on her home found instructions for a "Beef Tongue Shut Up Hoodoo Spell" along with thousands of dollars in luxury goods. The spell, authorities say, was an attempt to halt the federal investigation against her, including one being conducted by SEC officials.

"Consistent with the instructions on how to cast a 'hoodoo spell,' agents discovered in Bennett's residence two freezers containing dozens of sealed Mason jars with identifying information for the same SEC attorneys, suggesting Bennett had many times cast a 'hoodoo spell' in hopes of paranormally silencing the SEC attorneys investigating Bennett," the federal affidavit said.

Bennett used beef tongue in hoping to silence the tongues of authorities. Photo/Getty Images.

The spell, on her company's stationery, instructed the user to slit open an animal tongue and then say the name of the person who would be the target of the spell.

The spell would then be followed with the words "I cross and cover you[,] come under my command[.] I command you to hold your tongue," federal officials said in their filings.

The FBI affidavit included photos of Bennett's freezers that authorities say were packed with Mason jars with lids bearing the initials of SEC attorneys.

Although the affidavit for her arrest mentioned the spells, there was no testimony on those issues at trial, which focused on her financial activity.

Bennett was a licensed financial adviser and hosted a weekly radio talk show in the D.C. area. When she launched DJBennett.com, she began approaching clients from her brokerage business to invest in the sportswear company. She promised them a 15 per cent return on what victims understood to be a loan, prosecutors said, and said that if they needed the money returned at any point, she would repay them immediately.

"I had a 12-year relationship with her and believed that she was going to live up to her obligations," said Alan Grimaldi, a Maryland man who testified that he handed over $1.87 million to Bennett.

Grimaldi told jurors that he was hesitant at first but said that Bennett showed him phoney financial statements reflecting millions in profit when the company actually was facing mounting debt.

"Start small with your toe in the water. . . . This company is going to be something very special," she told him in an email read in court.

In the summer of 2017, Grimaldi asked for his money back because he needed funds for a down payment on a house, but Bennett balked, he testified, and told him summer was a bad time for business and that he could get his money back a few months later.

Grimaldi never was repaid.

Bennett made the same promises to Michael Fox, who had been one of her brokerage clients since 2003, according to Fox's testimony. With an ailing family member and his career drawing close to retirement, Fox continually turned down her offers, he said in court. The risk "would be devastating to us and at this stage of our lives and personal circumstances" should the investments fail, he testified, saying he told Bennett, "what you are managing is our sole security blanket."

The first Ponzi scheme was orchestrated by Charles Ponzi. Photo/Getty Images.

Fox said Bennett eventually persuaded him, telling him the funds he would invest were secured by a life insurance plan she had. Fox gave her nearly $1 million, half of his and his wife's retirement savings. The money vanished, he testified, and Bennett never paid him back.

Bennett's victims, according to the government, included a data-entry clerk, government employees and D.C. business executives. In one case, Bennett drove a woman to a bank to have her pull her retirement savings to invest, prosecutors said.

The "investments," according to the government, paid for her luxury box suite at Dallas Cowboys Stadium, two penthouses, high-end jewellery, cosmetic treatments, gemstones for astrology and ritual blessings.

After receiving a $600,000 infusion of funds from an investor, Bennett immediately paid off an American Express card, court filings stated. The filings said that the credit card payment of $159,399 in November 2016 covered personal expenses such as an $8,306 Anti-Aging & Weight Loss charge and $10,575 for Cenegenics Pharmacy, described as a form of age-management therapy.

Bradley Mascho, who worked as chief financial officer for Bennett, pleaded guilty to fraud in a related case this year.

Bennett and her attorneys argued that the government investigation disrupted her company as it was taking off. Revenue was increasing annually and had she been able to build the business without it being halted by a federal probe, it would have continued to thrive.

"Every year was better than the year before," Boyle said in court. "It was wildly successful by the standards of the industry."

Boyle noted that companies such as Amazon.com and Uber weren't profitable in their early years. During cross-examination, Bennett's attorney suggested that Grimaldi knew that he was making a risky investment and that a 15 per cent rate of return was unusual.

Boyle said that Bennett invested millions of her own into the business, a move she wouldn't have made if the company were a sham for investors. She had every intention of paying back the loans with 15 per cent interest, Boyle said.