Former Attorney Sentenced for Cryptocurrency Ponzi Scheme
An 86-year-old former attorney from California, David Lee Kagel, has been sentenced to five years of probation due to his involvement in a multimillion-dollar cryptocurrency fraud. Kagel admitted to orchestrating a Ponzi scheme that promised substantial returns to investors, running from December 2017 to June 2022, and deceived numerous individuals with false promises of massive returns.
Probation and Restitution
Kagel, currently receiving hospice care in Las Vegas due to deteriorating health, will serve his probation at a senior living facility. A court-mandated monitoring device will be required if he leaves the premises. On October 8, a federal judge in Las Vegas, Gloria Navarro, ordered Kagel to pay almost $14 million in restitution after his conviction for conspiracy to commit commodity fraud.
The Scheme’s Mechanics
The Ponzi scheme, though straightforward, was alarmingly effective. Kagel, along with his accomplices David Saffron and Vincent Mazzotta, convinced investors to participate in what they claimed was a cryptocurrency trading program promising high returns. They assured investors that their funds were secure, boasting of an AI trading bot that purportedly generated returns from 20% to 100% within 30 days. They further asserted that there was no risk, citing a 1,000 Bitcoin escrow wallet valued at $11 million in 2018, which they claimed would safeguard investors’ principal investments.
Abuse of Legal Position
Kagel exploited his position as an attorney to lend credibility to the fraudulent scheme. He drafted letters on his law firm’s letterhead, assuring victims that their money was protected. Unfortunately, these promises were a façade, as the team misappropriated the funds for personal use. Over the course of five years, they deceitfully extracted $15 million from victims, leaving investors with significant financial losses.
Revocation of Law License
In 2023, authorities permanently revoked Kagel’s law license following his failure to respond to previous disciplinary actions, including the misappropriation of $25,000 in client funds. This revocation followed two earlier suspensions of his law license in 1997 and 2012, highlighting a pattern of unethical behavior.
Future Legal Proceedings
While Kagel has been sentenced, his accomplices, Saffron and Mazzotta, have pleaded not guilty and are set to face trial in Los Angeles next year. The legal proceedings will continue to unravel the full extent of their involvement in the fraudulent scheme, as the justice system seeks to hold all parties accountable for their actions.
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