An 86-year-old former attorney from California, David Kagel, has been sentenced to five years of probation and ordered to pay nearly $14 million after admitting his role in a multimillion-dollar crypto Ponzi scheme. Kagel, currently in hospice care, pled guilty to conspiracy to commit commodity fraud in May.
The Scheme:
Between December 2017 and June 2022, Kagel and two accomplices lured investors into a fraudulent crypto trading bot scheme, falsely promising high returns with no risk. Over this period, they collected around $15 million in victim funds.
Kagel used his law firm’s letterhead to promote the scam, creating an illusion of legitimacy and trust. Investors were promised returns of 20% to 100% within 30 days, backed by claims of Bitcoin held in escrow.
Legal Repercussions:
The California Supreme Court had previously revoked Kagel’s law license in 2023 for misappropriating client funds. His license had also been suspended twice before. Kagel's two accomplices, David Saffron and Vincent Mazzotta, have pleaded not guilty and are awaiting trial.
This case highlights how scammers have continued to exploit the crypto space with Ponzi schemes, leaving victims with significant losses.