A former California attorney, 86-year-old David Kagel, was sentenced to five years of probation and ordered to pay nearly $14 million in restitution for his involvement in a crypto Ponzi scheme that netted millions of dollars in ill-gotten gains.
Kagel, who pleaded guilty to conspiracy to defraud in May of this year, received his sentence on October 8 from Judge Gloria Navarro of Las Vegas Federal Court.
Currently in hospice care at the Las Vegas Senior Center due to his declining health, Kagel will give his test at the facility. If his health improves, he should wear a monitoring device if he is allowed to walk.
How It Went Down
The court’s decision stems from a crypto Ponzi scheme Kagel and two associates—David Saffron and Vincent Mazzotta—operated between December 2017 and June 2022, luring investors into a fraudulent cryptocurrency trading system.
Prosecutors alleged that the scheme David Kagel and his associates worked on would collect as much as $15 million from victims, all in the name of providing “high returns with minimal risk.”
As a key figure in the operation, Kagel promoted the scam by using his law firm’s official letter to create the illusion of legitimacy, assuring potential investors that they were participating in an honest business.
Many victims, trusting the authority of the lawyer’s word and official documents, fell victim to this scheme, the document revealed.
In addition, they have guaranteed that the investors who end up being victims will get back the initial investment, with returns ranging from 20% to 100% within 30 days. Investors are led to believe that automated trading bots will handle trading, supposedly reducing risk and ensuring consistent profits.
In one incident, Kagel claimed to hold 1,000 BTC worth $11 million in escrow, falsely claiming that this wealth was used to guarantee investors’ funds. Additionally, Kagel misled victims into believing that he had previously invested in cryptocurrency, further strengthening the trust.
Prosecutors say Kagel’s actions led directly to the wider promotion of the fraud scheme. The scam continued for several years, raking in millions of victims’ money before it was uncovered by authorities.
Consequences and Legal Consequences
Although Kagel has admitted his involvement in the scheme and accepted his sentence, legal disputes continue with his accomplices.
Saffron and Mazzotta have pleaded not guilty and will face trial in federal court in Los Angeles in April 2025. If convicted, they could also face significant penalties for their involvement in the Ponzi scheme.
For Kagel, the consequences go beyond the latest sentence. His law license was revoked in 2023 by the California Supreme Court for refusing to answer to “disciplinary charges.”
This was the third time his license had been suspended; he was suspended in 1997 and 2012. Overall, his legal history, combined with his role in the Ponzi scheme, paints a picture of someone who repeatedly violated professional and ethical standards.
The featured image was created with DALL-E, a Chart from TradingView
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