David Kagel, a former California attorney now 86 years old, has been sentenced to five years of probation and ordered to pay nearly $14 million in restitution. This sentence is a result of his involvement in an elaborate crypto Ponzi scheme that unlawfully acquired millions of dollars.
Details of the Case
In May of this year, Kagel pled guilty to conspiracy to commit commodity fraud. The sentencing was delivered on October 8 by Judge Gloria Navarro at the Las Vegas Federal Court. Given his declining health, Kagel is currently in hospice care at a senior facility in Las Vegas. If his health permits him to leave the facility, he is required to wear a monitoring device as part of his probation conditions.
The Unraveling of the Scheme
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The court’s decision was influenced by the operations of a crypto Ponzi scheme orchestrated by Kagel and his accomplices, David Saffron and Vincent Mazzotta, from December 2017 to June 2022. They deceived investors into participating in a fraudulent cryptocurrency trading bot program, promising high returns with minimal risk.
As a pivotal figure in the scam, Kagel exploited his position by using his law firm’s official letterhead to forge a semblance of credibility, misleading potential investors into thinking they were engaging in a legitimate enterprise. The official documentation and his status as a lawyer convinced many victims to invest.
The scheme guaranteed that investors would recover their initial investments along with profits ranging from 20% to 100% within 30 days. They were falsely assured that automated trading bots would manage the trading process, thus minimizing risk and ensuring consistent returns.
In a specific fraudulent claim, Kagel alleged that he held 1,000 BTC, valued at $11 million, in escrow to secure investor funds. He also misled victims by claiming prior investments in cryptocurrency, further building unwarranted trust.
According to prosecutors, Kagel’s actions significantly contributed to the widespread promotion and longevity of the fraudulent program. The scam continued for several years, amassing millions in victim funds before authorities finally uncovered it.
Legal Consequences and Future Trials
While Kagel has admitted to his involvement and accepted his sentence, the legal repercussions for his partners persist. Both Saffron and Mazzotta have pleaded not guilty and are scheduled to stand trial in a federal court in Los Angeles in April 2025. If found guilty, they could face severe penalties for their roles in the Ponzi scheme.
Kagel’s legal troubles extend beyond the recent sentencing. In 2023, his law license was revoked by the California Supreme Court due to his failure to respond to disciplinary charges, marking the third time his license faced jeopardy, following suspensions in 1997 and 2012. Kagel’s consistent breaches of professional and ethical standards throughout his career culminated in his involvement in this Ponzi scheme.
