Former clients detail Hartman's financial dealings

When Kathleen Peden took the witness stand during the trial of Kip Hartman, a Bonners Ferry man accused of financial and elder exploitation crimes, she was straightforward.

“As far as I’m concerned [Kip Hartman] is innocent, of anything, of any wrongdoing,” said Peden, who was a client of Hartman’s during the time of his alleged crimes.

Despite Peden’s claims of Hartman’s innocence, details of her testimony gave credence to a few of the allegations against him.

Hartman, 35, faces nine charges stemming from the sale of annuities to Troy and Libby residents. Prosecutors allege Hartman is guilty of conducting insurance transactions without a license, transacting business as an investment advisor without a license, securities fraud, four counts of exploitation of an elderly person, tampering with witnesses and informants, and deceptive practices.

Peden, 70, told the jury Hartman began providing her with monthly payments of $2,500 in August of 2016. At the time, Peden was unemployed and her husband was suffering from an illness.

Peden said she stood to inherit an annuity worth roughly $2.14 million from her father and needed a source of income to support herself and her husband until she received the endowment. Hartman agreed to loan her money in monthly installments while she waited.

A year after Peden and Hartman began their arrangement, the two met with lawyers to finalize the agreement. Peden said Hartman provided her with an attorney to review the details of the deal. Peden admitted to Special Assistant Attorney Adam Duerk, one of the prosecutors in the Hartman trial, that the attorney Hartman provided her told her not to sign the document.

Some of the conditions of the loan agreement reviewed during the trial appeared to be inaccurate. The document read that Peden was not under economic duress when she signed it. Peden testified that she was worried about her finances at the time. Another condition said she was capable of other employment. She denied that this was true.

By the end of 2018, Peden said she received her inheritance and ended her deal with Hartman. Over the course of their agreement, Hartman lent her roughly $74,000. On top of this sum, Peden said she paid Hartman $200,000 in what she described as interest on the loan.

Duerk showed the loan agreement specified there was no interest associated with the deal. Peden maintained she considered the $200,000 payment as interest.

Diving further into the loan agreement, Duerk indicated that by signing the document Peden had put her inheritance up as collateral. If she defaulted on a term of the deal, Peden could have lost the entire $2.14 million to Hartman.

In addition to loaning Peden money while she waited for her inheritance, Hartman also helped her with legal fees. Peden said she needed funds to fight for her father’s estate. Hartman allegedly told her, after looking through documents that she received in the mail, that her father’s guardians were trying to take the annuity. Duerk asked Peden if Hartman told her the annuity was worth over $2.14 million.

“I was so nervous ... I hardly could concentrate on what the paperwork was at the time,” Peden said.

When Duerk asked her if Hartman had ever told her that she would have received the annuity if she had waited for her father to die, she said she guessed he might have.

Peden said Hartman originally asked for $40,000 for his help in dealing with the guardians. His fees, along with the money he loaned her and the payment Peden considered interest, however, allegedly reached approximately $734,000. Peden maintained that Hartman worked hard for the money.

She did not, however, receive any receipts from Hartman demonstrating how he spent the money.

Andrea Huisentruit, branch manager at the First Montana Bank in Troy, said the funds were transferred into Hartman’s personal checking account, not his business account.

Duerk alleged Hartman made more money by moving Peden’s father’s annuity into a new annuity. The transfer allegedly generated a commission of $143,000.

During cross examination, defense attorney Shandor Badaruddin focused on how Peden was treated by state investigators working on Hartman’s case. Peden described the agents, including Deputy Securities Commissioner Lynne Egan, who is a member of the prosecution, as pushy. Peden alleged the investigators told her to change her testimony.

“If I said what they told me to say I would be lying,” she said.

Peden admitted, however, there was still information she had not seen when state agents first contacted her.

When Badaruddin asked Peden if Hartman’s wife was the one who transferred her inheritance from one annuity to another, she said yes. Peden alleged that state agents told her she could get out of her contract with Hartman and be reimbursed the $734,000 she paid him.

Like Peden, Deanna Kamenzind, a Troy resident, said she valued Hartman’s work and said she liked him personally.

Beginning in 2016, Kamenzind said her father began suffering from dementia. Around that time, her mother also started needing care for health issues. In search of financial help for her parents, Kamenzind said she turned to Hartman who had worked on her parent’s taxes.

According to Kamenzind, Hartman said her father had an Individual Retirement Account, which could be cashed out. Lincoln County Attorney Marcia Boris alleged the IRA account was actually an annuity, or form of insurance.

Boris displayed two annuity applications for her father, one signed by Hartman, the other by Hartman’s wife. The document signed by Hartman indicated that it was filled out in Bonners Ferry. The one signed by his wife indicated it was filled out in Troy.

While Hartman did not have an active license to sell insurance in Montana at the time of transactions, he was licensed in Idaho. Viewed separately, the applications might not raise any flags. Close examination though showed both documents were signed on the same day in 2015.

Boris asked Kamenzind if she thought her father would have found it odd if he was asked to visit both Hartman’s office in Troy and Bonners Ferry on the same day to purchase two annuities.

“That would be out of the ordinary,” said Kamenzind. “He would have said ‘What the hell would I have to go to Idaho for?’”

In 2017, Kamenzind said she was working with Hartman to secure benefits for her father from the U.S. Department Veterans Affairs. Kamenzind said her father served during the Korean War. Hartman allegedly had Kamenzind’s father pay him $10,000 for assistance.

After learning that it was allegedly illegal for Hartman to charge her father for this work, Kamenzind said she confronted Hartman about the fee. Kamenzind said Hartman told her the charge was partially for assistance with the benefits and partially for putting her parent’s home in a trust.

“Is it your belief that [Hartman] did not intend to deprive you or your father,” Badaruddin asked during cross-examination.

Following an overruled objection from the prosecution, Kamenzind paused.

“My concern was over the $10,000 that we paid — my dad paid — and I feel like we did not get anything in return for that,” she said.

Kamenzind also said she later received instructions in the mail to pay Hartman another $10,000 for the assistance. She said she refused to make the payment.

Over the past week and a half, prosecutors called some of Hartman’s former clients to the stand. Many testified they had purchased annuities from Hartman in Montana and said they were unaware that Hartman lacked an active license in the state.

In some of these cases, Hartman’s wife was listed as the agent on the contracts. Clients denied doing business with Hartman’s wife. One even said he did not know Hartman’s wife from the man on the moon.

When it came time for Badaruddin to make his case, he called on some witnesses who alleged state investigators had attempted to badger them into falsely testifying that Hartman had sold them insurance.

Ben Baldwin, a former resident of the Yaak, said Hartman had helped with his taxes and that he purchased an annuity from Hartman’s wife in 2017. When he told state investigators, including Egan, that Hartman’s wife had sold him the annuity, Baldwin said he got the impression they were accusing him of perjury. Baldwin alleged the investigators offered him a deal to withdraw his annuity without penalty. According to Baldwin, the agents said other witnesses had taken this deal.

Convictions for conducting insurance transactions without a license, deceptive practices and tampering with witnesses and informants carry penalties of 10 years in state prison, a fine not to exceed $50,000 or both. Counts of exploitation of an older person are punishable by imprisonment for a term not to exceed 10 years, a fine not to exceed $10,000 or both.

Securities fraud and transacting business as an investment advisor without a license is punishable by 10 years in prison a fine not to exceed $5,000 or both.