David Kagel, an 86-year-old former attorney from California, has been given a five-year probation sentence and ordered to pay almost $14 million after confessing to orchestrating a multi-million dollar crypto Ponzi scheme. The ruling was delivered by Las Vegas federal court judge, Gloria Navarro, on October 8. This comes after Kagel pleaded guilty to one count of conspiracy to commit commodity fraud in May. Due to his failing health, Kagel is currently receiving hospice care at a senior facility in Las Vegas, where he is mandated to serve his probation term unless he leaves, in which case he will be required to wear a monitoring device.
Last year, Kagel was charged by government prosecutors, who accused him and two other individuals of enticing victims into investing in a fraudulent crypto bot trading scheme with false promises of high returns and no risk from December 2017 to around June 2022. Prosecutors argue that Kagel used his law firm’s letterhead to draft letters that were then sent to victims in order to promote the crypto scam, creating an illusion of trust. Victims were misled into thinking that they were investing in a legitimate scheme that utilized trading bots to invest in the cryptocurrency markets.
The fraudulent scheme claimed to guarantee repayment of the principal investment and profits ranging from 20% to 100% within 30 days. Kagel even falsely claimed to have 1,000 Bitcoin (BTC) in a wallet worth $11 million and falsely stated that he had previous experience investing in crypto to gain trust. In 2023, the California Supreme Court revoked Kagel’s law license for failing to respond to disciplinary charges and misappropriating $25,000 in client funds. Prior to this, his law license had been suspended twice, once in 1997 and 2012. His alleged accomplices, David Saffron and Vincent Mazzotta, have pleaded not guilty and are awaiting trial in a Los Angeles federal court next April.