An 86-year-old former California attorney was sentenced to five years probation and ordered to pay almost $14 million after admitting to carrying out a multimillion-dollar crypto Ponzi scheme.
In an Oct. 8 judgment filed by Las Vegas Federal Court Judge Gloria Navarro, David Kagel was sentenced on one count of conspiracy to commit commodity fraud after pleading guilty in May.
Kagel is currently in hospice care at a seniors facility in Las Vegas due to ailing health. He will serve out his probation there unless he is able to leave, in which case he will be required to wear a monitoring device.
Government prosecutors who charged Kagel last year said that from December 2017 to around June 2022, Kagel and two accomplices lured victims into investing in a fraudulent crypto bot trading scheme, promising high returns and no risk.
Prosecutors say Kagel helped defraud people through a Bitcoin Ponzi scheme. Source: CourtListener
Over this time, the trio “fraudulently promoted and solicited investments and obtained at least approximately $15 million in victim-investor funds for various cryptocurrency trading programs,” prosecutors said.
Kagel helped promote the crypto scam by drafting letters on his law firm’s letterhead, which were sent to victims.
The official letterheads helped create trust, prosecutors said.
Victims were under the impression they were investing in a legitimate scheme that used trading bots to invest in crypto markets.
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The scheme “guaranteed” to repay the principal investment and profit of 20% to 100% of the principal investment within 30 days.
In January 2018, Kagel claimed to have 1,000 Bitcoin (BTC) worth $11 million held in escrow to guarantee investments. He also falsely stated that he had invested in crypto before to help broker trust.
In 2023, the California Supreme Court revoked Kagel’s law license for failing to respond to disciplinary charges, saying he had misappropriated $25,000 in client funds.
Previously, his law license had been suspended twice, in 1997 and 2012.
Both of Kagel’s alleged accomplices, David Saffron and Vincent Mazzotta, pleaded not guilty and await trial in a Los Angeles federal court next April.
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