This one belongs in the “truth is stranger than fiction” category. By now, you are probably familiar with the exploits of Dawn Bennett, former hostess of her radio show, “Financial Myth Busting.” She was the one who the SEC permanently barred last year after she elected not to appear at her administrative hearing (after her efforts to get the matter heard in federal court, rather than before an SEC ALJ, proved unsuccessful).  Well, earlier this week, the SEC brought a new case against her, and this time, she got her wish, as it was, in fact, filed in federal court in Maryland.

That case is not particularly remarkable. It contains the usual collection of allegations one sees in Ponzi scheme cases, i.e., money collected from naïve, often elderly investors who were promised outrageous returns, which was then diverted to support an extravagant lifestyle, including $1.45 million to the Dallas Cowboys for back-rent on a luxury suite, and at least $500,000 on “high-end, luxury clothing, jewelry, and other personal items.”  Lots and lots of shoes, apparently.  What is remarkable, however, is the companion criminal case filed against her by the United States alleging wire fraud, bank fraud and making false statements related to a loan and credit application.  Why is it remarkable?  Consider the affidavit of an FBI agent filed in support of the complaint to demonstrate Ms. Bennett’s “consciousness of guilt.”

According to that FBI agent, an August 2 search of Ms. Bennett’s penthouse in Maryland revealed, according to the New York Times’s description of the event, “two freezers containing sealed Mason jars bearing the initials of U.S. Securities and Exchange Commission lawyers, on whom Bennett may have hoped to cast a ‘hoodoo spell.’” In addition, agents found instructions for a “Beef Tongue Shut Up Hoodoo Spell,” which, according to the affidavit, “suggest[ed] that Bennett had many times cast a ‘hoodoo spell’ in hopes of paranormally silencing the SEC attorneys investigating Bennett.”

I have been representing respondents and defendants in securities cases for a long time, and, candidly, I am forced to admit that this defense never occurred to me. There are often occasions during hearings when I might wish that the particular Enforcement attorney prosecuting my client would simply sit down and shut up, but, beyond wishing for that, I have never taken matters into my own hands in an attempt actually to make it happen.  Live and learn!

Are there any lessons to be gleaned from Ms. Bennett’s circumstances, beyond the obvious – which is don’t lie to customers and don’t lie to regulators? Perhaps this:  no matter how much you may disagree with the case that the regulators have brought, it is necessary at all times to maintain some sense of decorum, and treat the other side, both examiners and attorneys, as well as the factfinder, of course, with respect.  It can be easy to forget that these people are human beings, and, as such, tend to react to certain things in predictable ways, even if that reaction is sub- or unconscious.  Judges and juries, for example, theoretically work hard to decide cases based solely on the relevant facts and the pertinent law; at least they try to do so.  But, it is humanly impossible to ignore certain dramatic facts that create strong impressions, regardless of whether those facts are relevant, and develop a visceral response to them.  That is why the rules of evidence allow even relevant facts that are “unduly prejudicial” to be excluded, because they might overshadow everything else in the case, and result in decisions based on emotion, not logic.

It seems clear here, at least based on what I have read, that the SEC simply has it out for Ms. Bennett. She has already been barred, yet, here we go again.  Arguably, that is a function, or perhaps partially a function, of the fact that Ms. Bennett has seemingly taken every opportunity possible to poke the SEC in the eye.  And, on some level, the SEC simply doesn’t like that.  At all.  And it has reacted in a predictable, human way.  So, if presented with the chance to bring yet another Enforcement action, it will.

In short, it is one thing to put on a spirited defense; indeed, the Canons of Ethics governing the conduct of lawyers demand the “zealous” representation of clients. But, it is quite another actually to summon the spirits themselves.