Warrants: Raleigh man bilked couple to pay back other fraud victim
Posted March 12, 2010 12:24 p.m. EST
Updated May 2, 2016 2:56 p.m. EDT
Raleigh, N.C. — Dennis Todd Hagemann took money from a Raleigh couple to pay off a worthless check he wrote to another man, according to search warrants unsealed Friday.
Hagemann, 41, was arrested Wednesday on two felony counts of securities fraud and one felony count of obtaining property by false pretenses. He was placed in the Wake County under a $250,000 secured bond.
The affidavit for the warrants to search Hagemann's bank records alleges that he solicited Paul and Alice Groff, of Raleigh, for a $50,000 investment in his hedge fund company, Yellowstone Partners Inc. Instead, the warrants say, he used the couple's money to pay back another investor and settle a charge of passing a worthless check.
The warrant says that in mid-2008, Hagemann got a $70,000 investment from his friend, Jeffrey Waters of Emerald Isle, and "guaranteed Waters would not lose his initial investment." Instead, Hagemann lost all the money. When the check he wrote to repay the debt bounced, Waters reported Hagemann to authorities.
Last August, Hagemann approached the Groffs at their children's soccer game and asked for a $50,000 investment. He claimed that he "trades for one hour every day and produces high-percentage returns," the warrant says.
According to the warrants, the Groffs gave him a check on Sept 2, 2009. He cashed it the next day, and the following day, reached a settlement with Waters, leading to the worthless-check charge being dropped.
The Groffs, however, found out about the charge and told Hagemann to return their money. The warrants, though, say that he didn't, so the couple filed a complaint with the Wake County Sheriff's Office, which involved the North Carolina Secretary of State Securities Division.
Securities investigators determined that Hagemann told investors that he used a complicated series of money transfers – involving at least two banks and three companies – to invest their money but, instead, deposited it in his personal account. In the case of the Groffs, investigators believe, the money ended up with Market Ventures, a holding company that Waters owns.
Investigators also talked with Jennifer Champion, vice-president of business banking at First Citizens Bank. She told them that Hagemann and another man, Rodney Scott Spangler, tried to solicit $50,000 from her.
Hagemann drove up in an Aston Martin and promised Champion a deal that "would rock her world" and "make her a lot of money," the warrant says. He promised he could turn her $50,000 to $115,000 in one month. She did not invest with them.
At one point, Hagemann also told investigators that he is not a licensed trader. His company, Yellowstone, filed for exemptions from registering with state and federal authorities.
Yellowstone was founded in 2006 by Robert L. Brumbaugh, who turned it over to Hagemann in November 2009, according to the warrants.