The CFTC announced that it charged Dennis Todd Hagemann andYellowstone Partners, Inc., both of Raleigh, N.C., with operating a Ponzi scheme involving the fraudulent solicitation of at least $700,000 from at least nine individuals to trade foreign currency futures managed accounts and/or a pooled investment. Defendants also allegedly attempted to solicit funds from at least one other individual.

The complaint charges that Hagemann falsely claimed experience and success in trading forex and lured customers with false promises of quick and large profits, including that Yellowstone Partners was returning 100 to 300 percent to customers “every couple of months.” He also created the impression of being a well established forex trader by falsely representing that 1) he had $500 million of investments under his control at all times, 2) his forex trading system made money even when markets dropped and 3) his Russian contacts could help his investments, according to the complaint. Hagemann also claimed to be registered with the National Futures Association and to have employees registered with the NFA when, in fact, he is not registered with the NFA and does not have any employees registered with the NFA in any capacity.

According to the complaint, only $200,000 of the approximately $700,000 solicited from customers was deposited into forex trading accounts, and the defendants lost nearly all of that money trading forex. By November, 2009, as alleged, Hagemann stopped trading the Yellowstone accounts and misappropriated the remaining $500,000 in customer funds for personal use or to make purported profit payments or return customers’ principal in a manner similar to a Ponzi scheme.