Carlton J. Hagmaier Got a Prison Sentence and Steven T. Jones Got His Final Chapter

BY STEVEN T. JONES

Editor's note: New Times staff writer Steven T. Jones has been writing about financial criminal Carl Hagmaier for nearly three years, chronicling the slow process that last week resulted in a prison sentence of nearly five years.

Jones' work on Hagmaier won a national journalism award. But he felt little sense of accomplishment until justice was served, inversely linking the interests of the two men.

So we sent Jones down to Los Angeles to witness the final chapter in the Hagmaier saga and to bid farewell to the Hagmaier story. The following are his notes from that trip:

Monday, 10:30 p.m.

Econo Lodge Wilshire, Room 215

I'm tired of writing about Carl Hagmaier, or rather, of having to write about Carl Hagmaier. I'm tired of waiting for justice from a system that doesn't process white-collar criminals with nearly the vigor or efficiency that it reserves for violent offenders or druggies or petty thieves.

But tomorrow my wait will be over. Tomorrow Hagmaier will be sentenced, finally brought to justice for what he has done, what was so obvious he had done when I first looked at the evidence against him nearly three years ago.

I was a journalist of five years who had only recently caught the investigative reporting bug. Oh, I had done some exhaustive stories, stories that required research and lots of interviews, but not the kind of Columbo investigations it takes to truly learn about what's going on in the life of someone like Carl Hagmaier.

Digging through his detailed personal financial records, laid open by Carl's default on a bank loan, I saw Hagmaier the Young Millionaire. Interviewing all the little people surrounding Carl Hagmaier, which from Hagmaier's perspective were most people, I came to know Hagmaier the Man.

Carl loved to live large and spend a lot of money, even if it wasn't his own money. In his early 30s, he lived the dream of the übercapitalist: shuttling around in his private jet, building expensive office buildings, living in a monogrammed country-club house, rubbing elbows with SLO's social elite, buying a $40,000 bottle of wine.

The more I learned about Hagmaier, the more I dug, and the more complete became my portrait of Carlton John Hagmaier, who is now 36 years old. He was greedy and shady from way back; both his college roommate and college girlfriend say he stole from them and lied about his family and background.

After graduating from Cal Poly, he hooked up with Matt Kokkonen to sell insurance for Guardian Life Insurance, parlaying his early success into a takeover that ousted Kokkonen. As before, lies fueled his climb, lies like claiming he was a certified financial planner, a lie he even backed up with a forged certificate hung on his office wall.

Over the next several years, Hagmaier would regularly forge a variety of documents and his clients' signatures to steal their money, perhaps more than $3 million in all, making him perhaps the biggest white-collar criminal in SLO County history.

I read all the many lawsuits against him. I studied his forged documents. I read his early incriminating deposition, and those of many of his victims, and spoke with many more victims, many of whom were once Carl's friends.

The victims. Victims of Carl Hagmaier. Victims who tell tales of Hagmaier's particular blend of charm and pathology. He was slick, credible-seeming, and convincing. They had been lied to, again and again, having no reason not to believe. Hagmaier was believable. It was his stock in trade, the thing that gave him his career and his taste of the good life, a taste that would fuel his crimes.

I've often wondered what was going through Hagmaier's head at the time, about how he was able to justify his behavior to himself. More than that, how he could have possibly thought he would never get caught.

Then I would come to those points in my thick Hagmaier file where I could see precisely what he was doing, watch him rob one victim for precisely the amount he had just promised another, just trying to stay ahead of the game. He stole to cover past thefts.

If you take a half-million dollars instead of using it to set up a pension plan, don't you think someone, someday, is going to notice that? But for a long time, nobody did. And for an even longer time, after Hagmaier's game was exposed by civil suits and the press, he continued to play it.

Carl Hagmaier didn't lose his license to sell insurance until after he had pleaded guilty to his crimes, two and a half years after the first New Times cover story about him, 10 years after Taco Works founder Ty Bayly reported discovering Hagmaier had forged his signature to steal money from his life insurance policies.

But tomorrow Hagmaier will face a judge who will send him to prison. For how long I don't know yet. Even though he faced a possible sentence of 53 years for the charges, and those were for just a fraction of his actual crimes, the plea-bargain guidelines call for a maximum sentence of 57 months.

He could have gotten another year if he didn't "admit responsibility" for his crimes. Hagmaier ostensibly did that when he pleaded guilty in December, then turned around and proclaimed his innocence to his one-time friends and supporters, hoping they would write letters saying nice things to Judge J. Spencer Letts.

I can't read those letters; they aren't part of the public record, if any letters exist.

One prominent SLO resident who proclaimed Hagmaier's innocence was Keith Gurney of RRM Design, from whom Hagmaier stole more than $200,000 in pension funds, even though Hagmaier's wife worked there. I called Keith last week to ask whether he still believed in Hagmaier's innocence. He told me, "I have no comment."

Tuesday, 10:15 a.m.

Los Angeles Federal Court

The courthouse is located in downtown Los Angeles right next to U.S. 101, connecting the building–and what was going on inside–back to San Luis Obispo.

Just to ensure that connection, the hearing is being attended by some of Hagmaier's SLO County victims and by FBI agent Ed Miller, who did most of the case's investigation out of his Santa Maria office. Representing other regulatory interests are representatives from the California departments of labor and insurance.

Prosecutor Beth Abrahms assures all of the above that she will ask for the maximum and see what happens: "All I can do is make the argument; I'm not the judge."

U.S. Attorney George Cardona is also there. He was the prosecutor before Abrahms took over the case, the guy I regularly called throughout 1998 to harass about why no charges had been filed, why Hagmaier was able to keep victimizing people from his new office in Danville.

He sees me and his first comment is, "See, I told you we would get here eventually. It just takes time."

The hallway is filled with people who want to see Carl Hagmaier punished–victims, prosecutors, regulators, cops–when he suddenly appears, walking toward us.

It’s the first time in years some of us have seen Hagmaier, and here he is, looking tan and trim in his death-black suit and short haircut, walking with his lawyer, Eugene Moscovitch, and wife, LeeAnne, toward his day in court.

As he passes the group, his eyes stare straight ahead, ignoring the prying eyes of his accusers.

"Carl, are you sorry for what you've done?" I ask.

Hagmaier ignores the question, which doesn't even cause him to break stride.

"No comment," LeeAnne whispers in my ear as she passes, smiling sweetly, touching my arm in a surprisingly friendly way, although perhaps with a touch of condescension. Whatever it is, it will later turn to anger.

"I have instructed my client not to comment," Moscovitch then tells me. Hagmaier is apparently saving himself for his big performance, the statement to the judge that, if well-executed, might knock months or even years off his sentence. For this slick salesman, who talked his way out of trouble so many times before, this will be the biggest test of his abilities.

The trial starts about a half-hour late. Only a few times do glimmers of the defendant’s old arrogance cross his face, a disgust that he is having to go through this, always quickly concealed.

I’m a journalist and we aren’t supposed to have emotions. But I have to admit, here in print, after watching Carl defy his victims and justice for so long, after he labeled me a liar for the things I wrote, I do feel slightly vengeful toward Hagmaier. I want him punished.

Tuesday, 11:30 p.m.

Enter the Judge

From the opening comments by Judge J. Spencer Letts, it’s clear that Hagmaier will get the maximum sentence. It may not be clear to everyone, as evidenced by the successful side bet I make with Matt Kokkonen during a break before the sentence is pronounced.

But it seems clear to me. Judge Letts believes five years isn't enough and wants to give him more.

"Does the defendant want to do something different than the plea agreement suggests?" is the first thing the judge asks. "If I reopen on the plea agreement, two things will happen. We will vacate it entirely, and we will continue this hearing."

The judge seems to be goading Carl into giving up the agreement, his tone that of a salesman with a special, limited-time offer that is about to expire. Others would later share that observation, the impression that Letts wanted Hagmaier to roll the dice.

Hagmaier thinks about it, and talks briefly to his attorney, who announces that Mr. Hagmaier wants to stick by the plea agreement. Judge Letts smiles.

"I don't know that I agree with everything in it, so it was a wise choice," the judge tells Hagmaier.

Judge Letts explains his judicial style, saying he doesn't believe in handing down sentences outside those outlined in plea agreements, even though judges may and some do. He also explains that he doesn't berate or chastise defendants, even when it might feel appropriate.

"It's never my intention to be unnecessarily insulting to a criminal defendant," he says, seeming to say that if that was his style, he'd be letting Hagmaier have it about then.

Moscovitch then takes the podium, outlining all the factors that should earn Carl the low-end sentence of 48 months: no criminal record, a guilty plea that saved the court a long and complicated trial, Hagmaier's acceptance of responsibility, the shame and regret he feels for his actions.

"He's also done a good job at victimizing himself and destroying a promising career," Moscovitch says.

Judge Letts listens politely, then tells prosecutor Abrahms that she won't need to make a statement or allow any of the victims to testify. He has already heard enough.

Hagmaier then slowly steps to the podium.

"There's no way I can tell you how sorry I am," Hagmaier tells the judge, pouring on the emotions. "What I did was wrong, I knew it, and I was too darned afraid to do anything about it."

So, Hagmaier was afraid. It wasn't greed or arrogance, but fear that motivated him. But what was Hagmaier afraid of? Of getting caught? Or was he afraid of no longer being the rich big shot who could spend $40,000 on a bottle of wine?

"I know I'm going to spend the rest of my life trying to atone for this. In my heart, I know I can. At the same time, I know I can't," says Hagmaier, both he and Moscovitch appearing to be fighting back tears.

Even while accepting the blame, some of Carl's old arrogance does sneak into his comments, as he frets over how people won't trust him anymore.

"For someone like me who is fairly intelligent, it is a horrible price, but it is a fair price," he says.

He apologizes to the court, his family, and "the people who trusted me," and makes this final appeal: "If given a second chance, I will do right."

Judge Letts recesses the hearing for about 10 minutes while he reviews documents in the case file, particularly those in the presentencing report spelling out how much money Hagmaier stole.

He returns at 12:05, asks Hagmaier to stand at the podium. He does and the judge delivers the sentence: 57 months in prison, followed by five years of formal supervision. Hagmaier must surrender his freedom by June 11.

In addition, Letts surprises even prosecutors by ordering Carl to pay restitution of $3,212,837, a far higher figure than any court official or public document had discussed, even if it is something Carl can't pay and may never be able to pay.

It’s a stiff sentence, but the hearing also raises the question: If the U.S. Attorney's Office didn't make Carl such a generous offer, or if Carl had taken the judge's bait and abandoned the plea agreement, what would his sentence have been?