A North Carolina man entered guilty pleas to twelve state charges of securities fraud in connection with a foreign currency trading Ponzi scheme with estimated losses of nearly $1 million. Dennis T. Hagemann, of Raleigh, North Carolina, faces a maximum state prison sentence of twelve years when he is sentenced at a later date.
According to the Commodity Futures Trading Commission, which originally filed charges in connection with the scheme in March 2010, Hagemann operated Yellowstone Trading Partners, Inc. that falsely represented to prospective investors that it profitably traded foreign currency pools. Investors were lured with the promise that they could easily double their money over the course of a few months, that Hagemann had over $500 million under management, and that he was registered with the National Futures Association. From September 2009 until March 2010, at least nine individuals invested nearly $1 million with Hagemann. All of these representations were false. Instead, Hagemann invested only $200,000 in currency trades, and lost nearly the entire amount. The remaining funds were used to make interest payments or return principal investments to existing investors.
Hagemann was ordered to pay $1.6 million in restitution and civil monetary penalties by the CFTC in March.
A copy of the filed CFTC complaint is here.