Raleigh, N.C. – Dennis Todd Hagemann, 41, was arrested on March 10, 2010, following charges of operating a Ponzi scheme that defrauded at least nine individuals out of $700,000, according to the U.S. Commodity Futures Trading Commission (CFTC).
Hagemann, along with his firm Yellowstone Partners, Inc., allegedly solicited funds from investors with false promises of high returns in foreign currency (forex) trading. The CFTC complaint alleges that from at least September 2009, Hagemann falsely claimed extensive experience and success in forex trading, promising returns of 100 to 300 percent “every couple of months.” He also allegedly misrepresented the size of assets under his control, claiming $500 million, and falsely stated he had registered employees with the National Futures Association (NFA) when he did not.
The CFTC filing details that only approximately $200,000 of the $700,000 collected from investors was actually used for forex trading, and nearly all of that was lost. By November 2009, Hagemann allegedly ceased trading with investor funds and began misappropriating the remaining $500,000 for personal use and to make payments to earlier investors—a classic hallmark of a Ponzi scheme.
On March 9, 2010, the CFTC filed an enforcement action under seal, and on March 10, Chief Judge Louise Flanagan of the U.S. District Court for the Eastern District of North Carolina issued an emergency order freezing the defendants’ assets and requiring them to account for all assets. Hagemann was taken into custody by North Carolina criminal authorities on charges brought by the North Carolina Securities Division.
The CFTC worked in conjunction with the North Carolina Department of the Secretary of State, Securities Division, in this investigation. Penalties and restitution amounts will be determined by the court. As of April 2, 2010, the case remains ongoing.
Source: CFTC.gov
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