SEC charges adviser in Dawn Bennett fraud case

Regulator says Bradley Mascho abetted scheme involving $20 million in convertible and promissory notes

Dec 5, 2017 @ 1:55 pm

By InvestmentNews

In connection with its fraud case against Dawn J. Bennett, the Securities and Exchange Commission has charged Bradley C. Mascho, a Maryland-based financial adviser and the onetime chief financial officer of DJB Holdings, with aiding and abetting an offering fraud by Ms. Bennett's firm.

That scheme allegedly involved the sale of more than $20 million in convertible and promissory notes from at least 46 investors from December 2014 to July 2017. The SEC also amended a complaint filed in August, adding Mr. Mascho as a defendant. That complaint charged Dawn J. Bennett and her company, DJB Holdings, with fraud in connection with their sale of notes backed by the company.

According to the August complaint, Ms. Bennett repeatedly misled investors regarding the financial condition of DJB Holdings and her plan to divert millions of dollars in investor funds to personal use. The complaint also alleged that she perpetuated her fraud by, among other things, lying to regulators and repaying investors with loan proceeds obtained through loan applications that substantially overstated her net worth.

(More: Dawn Bennett's alleged Ponzi a sign of dark times.)

As amended, the complaint alleges that Mr. Mascho aided and abetted Bennett's fraud by various means, including preparing false financial statements and related offering materials, lying to regulators and to his employer regarding his knowledge of and role in the sale of notes, facilitating her efforts to target his firm's brokerage customers, and attempting to disguise certain note sales by creating new, "backdated" notes as well as false affidavits misrepresenting the details of the note offering.

According to Finra's BrokerCheck website, Mr. Mascho has been registered with Western International Securities since 2009.

In a parallel case, the U.S. Attorney's Office for the District of Maryland unsealed criminal charges against Mr. Mascho.

In recent years, Ms. Bennett repeatedly has been in trouble with the SEC, which charged her in September 2015 with inflating both the amount of assets under management by her firm Bennett Group Financial Services, and the investment returns obtained by the firm. After failing to appear last year at an SEC hearing before an administrative judge, she was barred from the securities industry this March. Several customer complaints against her are pending.


What do you think?

View comments

Recommended for you

Featured video


What investment tools should you add in 2018?

As you look ahead to 2018, what types of financial products would you like to add to your quiver? Financial advisers at the MarketCounsel Summit offered their perspective, but one thing is clear "choice is power."

Video Spotlight

Help Clients Be Prepared, Not Surprised

Sponsored by Prudential

Recommended Video

Path to growth

Latest news & opinion

RIAs struggle to keep clients grounded amid stock market euphoria

With equities at record levels, financial advisers are confronted with realities of greed and fear.

Regulators showing renewed interest in cracking down on investment fees

SEC, Finra targeting high-fee share classes, 12b-1 fees and failure to give sales load discounts and waivers to investors.

Tax update: Brady says sales tax deduction in final bill

Taxpayers will be able to deduct state income taxes or state sales taxes in addition to property levies — up to a $10,000 cap.

Complexity of new indexed annuities causing concern

Insurers are using 'hybrid' indices as a way to differentiate themselves, but critics contend the products are less transparent, more confusing and don't add financial benefit.

Critics say regulation hasn't curbed overly rosy projections for indexed universal life insurance

They say rule didn't go far enough and more stringent measures may be necessary.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print