According to CryptoPotato, David Kagel, an 85-year-old former attorney, has confessed to participating in a cryptocurrency Ponzi scheme that defrauded victims of over $9.5 million. Kagel, once a respected legal figure in Beverly Hills, California, now faces a maximum of five years in prison for his role in the fraudulent operation.
Kagel was accused of working with others to entice victims into a bogus crypto investment scheme that promised high returns. Court documents show that the scheme involved false guarantees and assurances, including claims that artificial intelligence trading bots were managing investments in cryptocurrency markets. The scheme's promoter falsely assured victims that Kagel, acting as the promoter’s attorney, was holding approximately $11 million worth of Bitcoin in escrow as a safeguard against potential losses. Kagel also provided letters on his law firm’s letterhead to falsely confirm the legitimacy of the investment programs.
Principal Deputy Assistant Attorney General Nicole M. Argentieri stated that Kagel exploited his attorney status to gain investors’ trust and endorse false claims about a cryptocurrency investment that turned out to be a scam. She highlighted the serious consequences of lawyers lending credibility to fraudulent schemes, which can lead to significant losses for victims. 'Kagel preyed on trusting individuals through a complex scheme to separate people from their hard-earned money,' said Special Agent in Charge Tyler Hatcher.
Kagel's guilty plea is a significant development in the ongoing investigation. His sentencing is scheduled for September 10. Pending a decision by a federal district court judge, he faces a maximum penalty of five years in prison. Kagel has also admitted that he and his co-conspirators used victims’ funds for personal gain.
The legal proceedings continue, with David Gilbert Saffron of Australia and Vincent Anthony Mazzotta Jr. of Los Angeles awaiting their August 13 trial for their alleged roles in the same crypto Ponzi scheme. They are accused of promoting investment programs using aliases such as Circle Society, Bitcoin Wealth Management, Omicron Trust, Mind Capital, and Cloud9Capital. Instead of investing the victims’ funds into cryptocurrency as promised, they allegedly used them for personal expenditures, including private jet flights, luxury hotel stays, mansion rentals, hiring a personal chef, and private security guards.