March 10, 2011
Federal Court in North Carolina Orders Dennis Todd Hagemann and Yellowstone Partners, Inc. to Pay More than $1.6 Million for Defrauding Investors in a Foreign Currency Ponzi Scheme
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained a federal default judgment order requiring defendants Dennis Todd Hagemann and his company, Yellowstone Partners, Inc. (Yellowstone), both of Raleigh, N.C., to pay more than $1.6 million in restitution and civil monetary penalties for defrauding investors in a foreign currency (forex) Ponzi scheme (see CFTC Press Release 5795-10, March 15, 2010).
The order, entered by Chief U.S. District Judge Louise W. Flanagan of the U.S. District Court for the Eastern District of North Carolina, requires Hagemann and Yellowstone jointly and severally to pay restitution of $827,779 and a civil monetary penalty of $827,779. The order also permanently prohibits defendants from engaging in any commodity-related activity and from registering with the CFTC in any capacity.
The order finds that, from at least September 2009 through March 9, 2010, Yellowstone Partners fraudulently solicited and received $1,505,000 from at least 25 pool participants. The order further finds that Hagemann was running a Ponzi scheme and misappropriated approximately $1.3 million of customer funds. Hagemann fraudulently solicited pool participants through personal solicitations during which he falsely claimed to have experience and success in forex trading, promised profits of 100 percent to 300 percent and stated that he had well-placed contacts who could help his investments and had $500 million under his control, the order finds.
The CFTC appreciates the assistance of the North Carolina Department of the Secretary of State, Securities Division. Hagmann was arrested on March 10, 2010, by North Carolina authorities based on charges by the North Carolina Securities Division.
Yellowstone Partners, Inc. is not related to Yellowstone Partners, LLC, an SEC-registered Investment Adviser in Idaho Falls, Idaho.
CFTC staff members responsible for this case are George Malas, Jason Mahoney, John Dunfee, Paul Hayeck and Joan Manley.
Last Updated: March 21, 2011