Last week, Mr Wagner was arrested and taken to jail, according to Salt Lake City's prison inmate lookup.
"The department of justice (DoJ) unsealed a complaint that had been filed the previous day alleging wire fraud. As per the complaint, Mr Wagner diverted funds raised from an investor that was supposed to be used to build certain restaurants to instead purchase a private plane. We are glad to see the DoJ take swift action and hope these steps help maximize recovery for any of Mr Wagner's aggrieved investors," the report says.
Following outreach from multiple whistleblowers who reported how he had misrepresented his investment performance, falsified financial records, and illicitly skimmed investor assets, Hindenburg in August 2023, began researching Mr Wagner and his Wags Capital.
Wags Capital is an investment firm founded by Aaron Wagner who also serves as its chief executive officer (CEO). In an interview in October 2021, he mentioned Wags Capital's business consisted of 40%-50% real estate, 40% food and beverage and 10% other investments and syndications.
"Mr Wagner accumulated 380,000 Instagram followers, fueling the public's perception of him as a successful businessman. He had 380,000 followers on his recently-deleted Instagram account," the report says, adding, "He posted about his lifestyle, including his use of private planes and sports cars, all fueled by his apparent business success."
According to Hindenburg, Mr Wagner's inspirational origin story is centred on how he set a goal in high school to play in the Rose Bowl, a goal he shared on his website and in numerous interviews. In May 2022, he gave a public speech vividly describing the tear-filled moment he reached his dream of playing in the Rose Bowl game.
"Reality? Mr Wagner never played in the Rose Bowl, as evidenced by checks of official game rosters and discussions with a former coach and teammate. Mr Wagner's origin story appears to be a brazen lie," the report says.
Hindenburg says Mr Wagner's investment offerings seem to be in brazen violation of securities laws and he used to tell investors that he is not getting paid till investors are paid.
"Wags Capital claims to have $1 billion "under management", but the firm is not registered with the Securities and Exchange Commission (SEC) in any capacity, in seeming open violation of the law. Mr Wagner's website repeatedly made clear that it solicited investors, and therefore conducted unregistered securities offerings," the short-seller says.
According to Hindenburg, Mr Wagner has been doing 'whatever it takes' to stay afloat, including fabricating or exaggerating most of the stories behind his apparent success and progress while misleading investors and violating securities laws. "We strongly suspect that behind the scenes, Mr Wagner has misappropriated significant investor capital, using it to pay off other investors and to support his lavish lifestyle."
"As a procedural matter, the US government has thus far only filed a complaint. A complaint will generally be followed within 30 days by an indictment if a grand jury determines that probable cause exists to file charges. Once these charges are filed, we expect we will see a lot more information on the Mr Wagner case and the full scope of the issues uncovered by the government," the short-seller says.