Elderly individual confesses to operating crypto Ponzi scheme ordered to pay 14M

An octogenarian former attorney from California has been given a five-year probation sentence and ordered to pay nearly $14 million after confessing to orchestrating a cryptocurrency Ponzi scheme that defrauded investors of millions of dollars.
Las Vegas federal court judge Gloria Navarro issued the ruling on October 8, sentencing David Kagel after he pleaded guilty to one count of conspiracy to commit commodity fraud in May.
Due to his deteriorating health, Kagel is currently under hospice care at a senior facility in Las Vegas. He will serve out his probation there, unless he leaves the facility, in which case he will be required to wear a monitoring device.
Government prosecutors, who filed charges against Kagel last year, stated that from December 2017 to around June 2022, Kagel and two others enticed victims into investing in a fraudulent cryptocurrency bot trading scheme, promising high returns and minimal risk.
According to prosecutors, the trio managed to fraudulently promote and solicit investments, amassing at least approximately $15 million from investors for various cryptocurrency trading programs.
Kagel played a role in promoting the crypto scam by drafting letters on his law firm’s letterhead, which were sent to victims. This use of official letterheads helped establish trust, according to prosecutors.
Victims believed they were investing in a legitimate scheme that utilized trading bots for cryptocurrency markets.
The scheme guaranteed repayment of the principal investment and profits ranging from 20% to 100% of the principal investment within 30 days.
To build trust, Kagel claimed to have 1,000 Bitcoin (BTC) worth $11 million in a wallet held in escrow to secure investments. He also falsely claimed to have prior experience in cryptocurrency investments.
In 2023, Kagel’s law license was revoked by the California Supreme Court for failing to respond to disciplinary charges. He was found to have misappropriated $25,000 in client funds.
Before this incident, Kagel’s law license had been suspended twice, in 1997 and 2012.
Kagel’s alleged accomplices, David Saffron and Vincent Mazzotta, have pleaded not guilty and are awaiting trial in a Los Angeles federal court next April.