An 86-year-old former attorney from California, David Kagel, has received a sentence of five years of probation for orchestrating a multimillion-dollar crypto Ponzi scheme.
In addition to probation, Kagel must pay his victims nearly $14 million in restitution. The sentencing took place on October 8 in a Las Vegas federal court under the authority of U.S. District Judge Gloria Navarro.
In May, Kagel pleaded guilty to one count of conspiracy to commit commodity fraud, acknowledging his role in the fraudulent activities.
David Kagel Faces Probation After Defrauding Investors in A Scam
Former California lawyer David Kagel has received a five-year sentence for his involvement in a $14 million crypto scam.
According to their charges, Kagel conspired with two others between December 2017 and June 2022 to mislead numerous victims into investing in a fake crypto bot trading scheme that promised high returns.
The trio promoted the scheme with promises of high returns and zero risk, preying on individuals who hoped to make easy profits. The fraudulent scheme promised that investors would regain their principal investments and profits ranging from 20% to 100% within 30 days.
Through the fake promises and schemes, the trio gathered nearly $15 million in investment from unsuspecting investors. Later, they started using new investors’ funds to pay off earlier ones, resulting in significant losses for many.
This scheme ultimately resulted in substantial financial losses for those who believed in the false assurances provided by Kagel and his associates.
The Fall of an Attorney-Turned Crypto Conman
According to prosecutors, Kagel played a crucial role in gaining the victims’ trust by leveraging his professional status as an attorney. He made the scheme appear legitimate by forging letters using his law firm’s letterhead and sending them to investors.
To build trust, David Kagel falsely claimed that he had 1,000 Bitcoins, worth $11 million, in January 2018 as a guarantee for the investments. He also lied about his prior experience with cryptocurrency investing, further convincing victims of the scheme’s legitimacy.
In 2023, Kagel faced severe legal consequences when the California Supreme Court revoked his law license. This happened after he failed to respond to disciplinary charges for misappropriating $25,000 in client funds.
Moreover, authorities have suspended his license twice before, in 1997 and 2012, due to other violations.
The case against Kagel was initiated by government prosecutors last year, who detailed his fraudulent activities. His advanced age and current health situation add a poignant context to the legal proceedings.
Kagel is currently receiving hospice care at a senior living facility in Las Vegas because of his declining health. He will serve his five-year probation at this location, provided he remains there.
If he decides to leave the facility for any reason, he must wear a monitoring device. That way, the authorities can ensure that he complies with the terms of his probation.
Meanwhile, Kagel’s two alleged accomplices, David Saffron and Vincent Mazzota, have pleaded not guilty. They are awaiting trial in Los Angeles federal court for next April.
