Bradley Carl Mascho, of Frederick, Maryland, a stockbroker formerly employed with Western International Securities, Inc., has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity by consenting to findings that he failed to testify in a FINRA investigation into accusations of Mascho’s possible fraudulent conduct, private securities transactions and outside business activities. Letter of Acceptance, Waiver and Consent, No. 2015047682403 (Jan. 12, 2018).
According to the AWC, FINRA sent Mascho a letter on December 14, 2017, where Mascho was asked to provide recorded testimony in regard to his possible infractions of securities laws. The AWC stated that Mascho corresponded with FINRA on December 14, 2017, stating that FINRA’s request had indeed been received by him but that he would not be making any appearance before FINRA staff to provide testimony. FINRA found that Mascho violated FINRA Rules 2010 and 8210 by failing to cooperate.
Mascho has been charged by Securities and Exchange Commission (SEC) in a Complaint alleging that Mascho, as Chief Financial Officer of DJB Holdings, LLC, aided and abetted a fraudulent scheme effected by the company’s founder, Dawn J. Bennett. Securities and Exchange Commission v. Dawn J. Bennett, Bradley C. Mascho, and DJB Holdings, LLC, Civil Action No. 17-cv-02453 (Dec. 1, 2017).
According to the Complaint, between December of 2014 and July of 2017, at least $20,000,000.00 had been raised, in part by Mascho, from forty-six investors through an unregistered securities offering of DJBennett promissory and convertible notes. Apparently, misrepresentations and omissions had been made to the investors with respect to the risks of investing, DJBennett’s intended use of investors’ funds, as well as the operating performance and financial status of DJBennett.
The Complaint alleged that unsophisticated and elderly investors were often victims to Mascho’s fraudulent sales of the DJBennett promissory and convertible notes. Particularly, Mascho made misrepresentations to customers relating to DJBennett’s ability to generate profits, touting the company’s potential to generate fifteen percent annual returns for investors. Apparently, lies were also told to investors about the major liabilities incurred by DJBennett, wherein those liabilities directly affected the risks that investors would incur. Moreover, the Complaint alleged that investors were kept in the dark about their funds having been utilized to pay prior investors in a Ponzi-scheme manner, as well as pay for Dawn J. Bennett’s expensive clothing, jewelry, and a $500,000.00 annual payment for a suite at AT&T Stadium – home of the Dallas Cowboys.
The Complaint alleged that Mascho also utilized a fraudulent scheme to bypass surveillance systems utilized by Western International Securities as a way to prevent the discovery of promissory and convertible notes having been sold to customers without the broker-dealers’ consent. Apparently, Mascho also procured loans through submitting bogus brokerage statements which inflated the assets of Dawn J. Bennett, enabling Mascho to retrieve funds to make redemptions and interest payments to investors.
The Complaint further alleged that Mascho eventually discovered that he and Bennett were subject of an investigation into their improper convertible notes sales, which led to new short-term promissory notes having been executed by investors at Mascho’s direction. Apparently, Mascho fraudulently backdated the new notes to reflect the date in which the original notes had been purchased in an attempt to conceal their prior fraudulent conduct in the convertible notes sales.
SEC alleged that Mascho’s conduct was violative of Securities Act of 1933 Sections 5(a) and 5(c), and that he aided and abetted DJBennett’s and Dawn J. Bennett’s violations of Securities Exchange Act of 1933 Section 17(a) as well as Securities Exchange Act of 1934 Section 10(b) and SEC Rule 10b-5.
FINRA Public Disclosure reveals that a customer initiated investment related arbitration claim involving Mascho’s conduct was settled for $137,500.00 in damages based upon allegations that unsuitable stock recommendations had been made to the customer. FINRA Arbitration No. 15-00343 (Apr. 1, 2016).
Mascho’s registration with Western International Securities, Inc. was terminated on December 5, 2017, based upon accusations cited by the SEC of his fraudulent activities.
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