CFO in Dawn Bennett Ponzi scheme sentenced to 30 months
The top lieutenant in former advisor and radio personality Dawn Bennett's long-running alleged Ponzi scheme is heading to prison.
Bradley Mascho, formerly an advisor at Bennett Group Financial Services, last week received a 30-month sentence to be followed by three years of supervised release. In addition, U.S. District Judge Paula Xinis ordered him to make restitution payments of $4.8 million.
Mascho pleaded guilty in June 2018 to conspiracy to commit securities fraud and making a false statement.
His attorney, Stuart Berman of Maryland-based law firm Lerch, Early & Brewer, declined to comment on the sentencing.
Mascho's professional association with Bennett dates back to 2008, when he worked at her RIA as an investment advisor representative, according to SEC records.
He would come to serve as the on-again/off-again CFO of Bennett’s legal entity, DJB Holdings, and played a key role in a ploy to convince clients to invest in that company through a series of false and misleading statements that prosecutors characterized as "consistent with a Ponzi scheme."
Bennett ran afoul of the SEC and federal prosecutors, who say that she maintained a high profile, hosting a financial advice radio show, authoring magazine columns and spending hundreds of thousands of dollars of what would turn out to be her clients' money on luxury items, including a suite at the AT&T stadium where the Dallas Cowboys play. She also launched an online luxury sportswear brand, DJBennett.com, organized under DJB Holdings.
From December 2014 through April 2017, Bennett and Mascho enticed investors, including some clients of Bennett's RIA, with convertible or promissory notes, offering a 15% annual interest rate, according to prosecutors. Many of the victims were older investors, some of whom were persuaded to hand over substantial portions of their retirement savings to invest in DJB Holdings.
All told, Bennett and Mascho convinced more than 40 investors to put more than $20 million toward Bennett's company. To win those investments, the pair made a series of false or misleading representations about how the money would be used, the risks of investing, and the financial health of the struggling DJB Holdings, according to federal prosecutors.
"The evidence showed that Bennett, and to a lesser extent Mascho, misappropriated investor funds, using them to pay their personal expenses and to repay previous investors with funds received from new investors," the Justice Department said in the statement announcing Mascho's sentence.
Mascho compounded his legal troubles in June 2017, when he lied under oath to SEC investigators looking into the convertible notes that Bennett was issuing to investors, according to the federal prosecutors.
"Mascho admitted that before the deposition, he spoke with Dawn Bennett extensively about his testimony and that his false statements to the SEC were all made under Bennett's direction and at her insistence," the statement reads.
Bennett, who had been found guilty of 17 charges relating to the Ponzi scheme last October, was sentenced in July to 20 years in prison and ordered to pay $14.5 million in restitution and $14.3 million in forfeiture.
She appealed her conviction in August.