A former California attorney, named David Kagel aged 86 years old, has been sentenced to five years of probation and ordered to pay almost $14 million in restitution due to his involvement in a crypto Ponzi scheme that fetched millions of dollars of ill-gotten funds.
Kagel, who pled guilty to conspiracy to commit commodity fraud in May this year, received his sentencing on October 8 from Judge Gloria Navarro of the Las Vegas Federal Court.
Currently in hospice care at a senior facility in Las Vegas due to declining health, Kagel will serve his probation at the facility. Should his health improve, he must wear a monitoring device if allowed to leave.
How It All Went Down
The court’s decision stems from a crypto Ponzi scheme that Kagel and two accomplices—David Saffron and Vincent Mazzotta—operated between December 2017 and June 2022, luring investors into a fraudulent cryptocurrency trading bot program.
Prosecutors revealed that the scheme in which David Kagel and his partners operated could collect roughly $15 million from victims, all in the name of offering “high returns with little to no risk.”
As a key figure in the operation, Kagel promoted the scam by using his law firm’s official letterhead to create the illusion of legitimacy, assuring potential investors they were partaking in a trustworthy venture.
Many victims, trusting the authority of a lawyer’s word and official documentation, fell prey to the scheme, the document revealed.
Furthermore, they guaranteed that investors who ended up being victims would repay the initial investment, coupled with profits ranging from 20% to 100% within 30 days. Investors were led to believe that automated trading bots would handle the trading, supposedly minimizing risk and ensuring consistent profits.
In one instance, Kagel claimed to hold 1,000 BTC worth $11 million in escrow, falsely asserting that this wealth was used to guarantee investors’ funds. Additionally, Kagel misled victims into believing that he had previously invested in cryptocurrency, further strengthening trust.
Prosecutors said Kagel’s actions directly led to the widespread promotion of the fraudulent program. The scam continued for several years, amassing millions in victim funds before finally being exposed by authorities.
Consequences And Legal Ramifications
While Kagel has admitted to his role in the scheme and accepted his sentence, the legal fallout continues for his accomplices.
Saffron and Mazzotta have pleaded not guilty and are set to face trial in a federal court in Los Angeles in April 2025. If convicted, they too may face significant penalties for involvement in the Ponzi scheme.
For Kagel, the consequences extend beyond the recent sentencing. His law license was revoked in 2023 by the California Supreme Court for refusing to respond to “disciplinary charges.”
This marked the third time his license had been jeopardized; he had been suspended in 1997 and 2012. Overall, his legal history, combined with his role in the Ponzi scheme, paints a picture of a man who repeatedly violated professional and ethical standards.
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Source: https://bitcoinist.com/crypto-scandal-heres-how-this-86-year-old-defrauded/