Bitrabo Editorial
David Kagel, an 86-year-old former lawyer from California, has been sentenced to five years of probation and must pay nearly $14 million in restitution for his role in a fraudulent crypto Ponzi scheme that defrauded investors out of millions.
Kagel, who admitted guilt to conspiracy to commit commodity fraud in May, was sentenced on October 8 by Judge Gloria Navarro at the Las Vegas Federal Court.
Due to his poor health, he is currently in hospice care at a retirement facility in Las Vegas and will serve his probation there. If his condition improves and he leaves the facility, he’ll be required to wear a monitoring device.
Background of the Scheme
The court ruling arises from a Ponzi scheme linked to crypto investments that Kagel, along with co-conspirators David Saffron and Vincent Mazzotta, conducted from December 2017 to June 2022, enticing investors with a bogus cryptocurrency trading bot program.
The authorities uncovered that the scam potentially swindled around $15 million from victims, enticing them with promises of “high returns with minimal risk.”
Kagel played a crucial role, utilizing his law firm’s official stationery to lend an air of credibility to the scheme, reassuring investors that they were engaging in a secure investment.
Many victims were misled by the authoritative impression of a lawyer’s guarantee and legitimate-looking documents.
Moreover, the fraudsters promised to reimburse investors their original amount plus profits between 20% to 100% within a month, making it seem as if automated trading bots would ensure risk-free profits.
Kagel falsely stated that he had $11 million worth of Bitcoin in escrow to secure investors’ funds and deceived them into believing he had prior investment success in cryptocurrencies.
The prosecutors indicated that Kagel’s actions were instrumental in promoting this fraudulent scheme, which managed to accumulate millions from victims over several years before it was uncovered.
Legal Outcomes and Future Implications
Kagel has acknowledged his involvement in the scheme and accepted his sentence, but legal challenges continue for his associates.
Saffron and Mazzotta have pleaded not guilty and are scheduled for trial in federal court in Los Angeles in April 2025, where they could face serious penalties if found guilty.
Kagel’s troubles extend beyond the Ponzi scheme; his law license was revoked earlier this year by the California Supreme Court due to non-responsiveness to “disciplinary charges.”
This revocation was the third time his license faced jeopardy, with previous suspensions occurring in 1997 and 2012. His ongoing legal issues reflect a pattern of violating professional and ethical standards.
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