Yellowstone Hedge Fund Manager Admits Fraud

Jul 19 2011 | 12:49pm ET

A North Carolina man has pleaded guilty to running a nearly $1 million hedge fund Ponzi scheme.

Dennis Hagemann of Raleigh pleaded guilty to 12 counts of securities fraud in North Carolina state court on Friday. According to prosecutors, he never invested a dime of the $980,000 that at least 10 clients entrusted to his Yellowstone Partners, instead using the proceeds from new investors to repay old ones—and himself.

Hagemann promised those investors huge returns, including at least one instance of claiming that he'd doubled investors' money every week. The Securities and Exchange Commission, which won a $1.6 million judgment against him earlier this year, accused Hagemann of promising 300% returns and claiming connections to luminaries including late former Russian President Boris Yeltsin.

Hagemann faces at least 12 years in prison.

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