Maryland Ponzi scheme suspect allegedly paid $720K for prayers, cast 'hoodoo' spells to ward off investigation
By Michael Kunzelman
Oct 12, 2018 at 1:45 PM
GREENBELT, MD. — An investment adviser charged with orchestrating a multimillion-dollar Ponzi scheme spent nearly three-quarters of a million dollars on prayers by Hindu priests in India to ward off a federal investigation and save her failing business, according to testimony at her trial this week.
Using investors' money, Dawn Bennett paid a man in Washington state approximately $720,000 between 2015 and 2017 to arrange for the priests to perform religious ceremonies meant to ease her troubles, said a Justice Department prosecutor and the man Bennett paid. For one of these "yagya" rituals, Bennett spent $7,250 for five priests to pray for her across 29 consecutive days.
"I am in a very very tough fight going against my enemies and I need all the help I can get," Bennett wrote in an email to Puja.net website operator Benjamin Collins.
Six-figure payments for prayers didn't spare Bennett from a 17-count federal indictment on fraud charges. Neither did the "hoodoo" spells that investigators suspected her of casting to stymie federal investigators, a claim fueled by a peculiar discovery during an FBI search of her home.
Collins, a government witness at Bennett's trial, testified on Tuesday that he sincerely believed the religious rituals would help Bennett, whose payments accounted for roughly half of his website's income.
Kevin Merrill was arrested Tuesday at his $1.06 million home in Towson. He and his business partner, Jay Ledford, 54, of Texas and Nevada, have been indicted on federal charges of wire fraud, identity theft and money laundering. Both men face more than 200 years in federal prison.
"We don't necessarily pray with a guaranteed outcome," he added.
Bennett, 56, raised more than $20 million from at least 46 investors in her luxury sportswear company, often preying on elderly clients who knew her from a radio show she hosted in the Washington, D.C., area, authorities have said. They said she used investors' money for her personal benefit, including jewelry purchases, cosmetic medical procedures and a $500,000 annual lease for a luxury suite at the Dallas Cowboys' home stadium.
Bennett told U.S. District Judge Paula Xinis on Thursday that she doesn't intend to testify at her trial. One of her trial lawyers, Dennis Boyle, said Bennett invested $13 million of her own money into the fledgling apparel business, selling assets and mortgaging homes to generate cash.
"She clearly believes that this is a legitimate company," he said. "It catered to only the most discerning people."
But her apparel business, DJBennett, never made a profit and had at least $15.6 million in liabilities and only $550,000 in revenue by December 2016, according to a complaint filed by the U.S. Securities and Exchange Commission.
The indictment says she also used money from some investors to pay others, but many lost everything they paid Bennett.
Joan Barney, a retired travel agent whose husband has Parkinson's disease and dementia, said she invested a total of $200,000 in Bennett's business. Barney testified Wednesday that she had known Bennett for more than 25 years and believed her promise that she could get her money back, plus 15 percent interest, whenever she needed it. She said Bennett sent her a business plan that purportedly showed the company was profitable.
"I trusted Dawn," said Barney, who added that Bennett "knew that this was the only money that I had to care for my husband and his illness."
Barney received a $37,500 return on her investment but lost the rest. Another investor, Diane Keefe, fought back tears when she testified that she hasn't recovered any of the $816,805 she paid Bennett.
Keefe said Bennett had told her the online apparel company was thriving.
"And I believed her," she said.
The FBI's investigation of Bennett began in December 2015 after the SEC formally accused her of defrauding investors by inflating the amount of assets she managed and exaggerating the returns on her customers' investments. The SEC cited statements that Bennett made on her paid weekly radio show, "Financial Myth Busting With Dawn Bennett."
Bennett's financial advisory business was losing clients and incurring millions of dollars in losses before she turned to the fraudulent sale of promissory notes to "tap a new income stream," the SEC said in its complaint.
"As her financial condition rapidly deteriorated, Bennett began accumulating a variety of personal financial obligations, but nonetheless continued to spend considerable sums to fund her extravagant lifestyle," the complaint said.
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When FBI agents searched Bennett's home in Chevy Chase, Maryland, last year, they found instructions for placing people under a "Beef Tongue Shut Up Hoodoo Spell" and biographical information for at least three government attorneys working on the SEC investigation of Bennett, according to an agent's affidavit.
FBI agents also found the initials of SEC attorneys written on the lids of Mason jars stored in Bennett's freezers, suggesting she had cast spells in hopes of "paranormally silencing" the SEC attorneys, the agent wrote.
Bennett's attorneys argued that any such "hoodoo" practices are irrelevant and their mention by prosecutors only serves to smear her. Boyle also objected to testimony about the "substance" of the prayers she commissioned in India.
"The fact that she prays to a different God or has a different faith shouldn't matter," he said.
Bennett's trial in Greenbelt started Oct. 2 and is expected to stretch into next week. Bennett initially was freed after her August 2017 arrest in Santa Fe, N.M., but a magistrate judge later ordered her detained for violating the terms of her pretrial release.
Bradley Mascho, who worked as the chief financial officer for one of Bennett's companies, was indicted on related charges. He pleaded guilty in June to conspiring to commit securities fraud and awaits a sentencing hearing.