A former lawyer from California, David Kagel, 86 years old, has been convicted to five years of probation and ordered to pay nearly $14 million in restitution for his involvement in a crypto Ponzi scheme that raked in millions of dollars in ill-gotten funds.
Kagel, who pleaded guilty in May of this year to conspiracy to commit commodities fraud, received his sentencing Oct. 8 from Judge Gloria Navarro of Las Vegas federal court.
He is currently in hospice care at a senior facility in Las Vegas due to declining health. Kagel will serve his probationary period at the facility. If his health improves, he will have to wear a monitoring device when he is allowed to leave.
How it all went
The court’s decision stems from a crypto Ponzi scheme that Kagel and two accomplices – David Saffron and Vincent Mazzotta – carried out between December 2017 and June 2022. to lure investors into a fraudulent venture cryptocurrency trading bot program.
Prosecutors revealed that the scheme in which David Kagel and his partners operated was able to collect approximately $15 million from victims, all under the guise 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 and assure potential investors that they were participating in a trustworthy venture.
Many victims, who relied on the authority of a lawyer’s word and official documentation, fell prey to the planrevealed the document.
Furthermore, they guaranteed that investors who would ultimately fall victim would be repaid 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 trades, minimizing risk and ensuring consistent profits.
In one case, Kagel claimed to have 1,000 BTC worth $11 million in custody, falsely claiming that this wealth was being used to guarantee investors’ money. Furthermore, Kagel tricked 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 lasted several years and amassed millions in victim funds before it was finally exposed by authorities.
Consequences and legal consequences
Although Kagel has admitted his role in the scheme and accepted his punishment, the legal consequences for his accomplices continue.
Saffron and Mazzotta have pleaded not guilty and will stand trial in April 2025 in a federal court in Los Angeles. If convicted, they too could be confronted significant fines for involvement in the Ponzi scheme.
For Kagel, the consequences extend beyond the recent conviction. His law license was revoked by the California Supreme Court in 2023 for refusing to respond to “disciplinary charges.”
This was the third time his driver’s license had been compromised; he was suspended in 1997 and 2012. Overall, his legal history, combined with his role in the Ponzi scheme, paints a picture of a man who has repeatedly violated professional and ethical standards.
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