Outside Source
An 86-year-old former attorney, David Kagel, has been sentenced to five years of probation for organizing a multimillion-dollar cryptocurrency Ponzi scheme that defrauded investors out of nearly $15 million.
The judgment, filed on October 8 in a Las Vegas federal court, also requires him to pay $14 million in restitution to his victims.
$15M Crypto Ponzi Scheme
U.S. District Judge Gloria Navarro handed down the sentence following Kagel’s guilty plea to one count of conspiracy to commit commodity fraud in May.
Court documents reveal that the scheme, which ran from December 2017 to June 2022, involved misleading investors into believing they were putting money into a cryptocurrency bot trading program that promised high returns and minimal risk.
According to prosecutors, Kagel and his two accomplices lured victims by falsely claiming their investments would yield profits between 20% and 100% within just 30 days. The trio assured potential investors that their principal amounts would be fully repaid.
Through these fraudulent promises and deceptive schemes, the three collected around $15 million from victim investors for several cryptocurrency trading programs.
However, instead of generating profits, the perpetrators later used new investors’ funds to pay off earlier ones in a typical Ponzi scheme fashion. This left many of the victims facing significant financial losses.
False Bitcoin Claims and Forged Documents
Kagel was instrumental in winning the trust of victims. Leveraging his professional background as a lawyer, he forged letters on his firm’s letterhead to make the scheme appear legitimate.
In 2018, he falsely claimed to own 1,000 bitcoins worth $11 million at the time as a guarantee for the investments. The former attorney also lied about his prior experience with crypto investing, convincing potential backers of the scheme’s credibility.
In 2023, the California Supreme Court revoked his law license after he failed to respond to disciplinary charges related to misappropriating $25,000 in client funds. His license had also been suspended for other violations on two separate occasions, one in 1997 and the other in 2012.
Kagel will serve his probation at a senior living facility in Las Vegas, where he is also receiving hospice care. Should the perpetrator leave the premises, he will be required to wear a monitoring device to ensure compliance with the terms of his sentence.
His co-conspirators, David Saffron and Vincent Mazzota, have pleaded not guilty and are awaiting trial in a Los Angeles federal court scheduled for April 2025.
This article first appeared at CryptoPotato
