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David Kagel, 86, a former California lawyer, was sentenced for defrauding investors in a crypto scam.
Key Notes
David Kagel an 86-year-old attorney, was involved in a $9.5 million cryptocurrency Ponzi scheme.Kagel was ordered to pay nearly $14 million and will serve probation in hospice care.The case shows the need for thorough due diligence among investors to avoid scams.David Kagel, an 86-year-old former California lawyer, has been sentenced to five years probation for his role in a $9.5 million crypto Ponzi scheme. Judge Gloria Navarro in Las Vegas also ordered him to pay nearly $14 million after he admitted to being part of the fraud.
Prosecutors said Kagel and two others tricked people into investing in a trading program, promising high returns of 20% to 100%. Victims were also deceived by Kagel’s false assurance that he had 1,000 Bitcoins BTC $61 909 24h volatility: 0.7% Market cap: $1.22 T Vol. 24h: $27.61 B in a wallet worth $11 million in 2018, held in an escrow to safeguard their investments.
During the period in which Kagel and his accomplice committed fraud, they made approximately $15 million in victim investment funds for diverse crypto trading programs. Kagel furthered the scheme by writing letters on his law firm’s letterhead, lending credibility to the fraud.
The prosecutor considered Kagel’s health issue and sought a five-year probation. The US Attorney’s Office and Kagel’s defense attorney have not yet commented on the case.
The 86-year-old former lawyer is currently in hospice care at a senior facility in Las Vegas, receiving treatment, where he will serve out his probation until he leaves. Even if he does leave, he will have to wear a monitoring device.
David Saffron and Vincent Mazzotta, alleged co-conspirators with Kagel, have pleaded not guilty and await trial in Los Angeles federal court next April. Kagel lost his law license in 2023 after not answering charges that he misused $25,000 of a client’s money. He also experienced two suspensions from practicing law in 1997 and 2012.
Kagel’s case further shows the risks associated with crypto investment and why strong regulations are needed to protect investors from falling victim to dubious schemes like this. David Kagel was represented in court by Benjamin Nemec of the Federal Public Defender Office. The US government was represented by Richard Anthony Lopez, Theodore Kneller, and Susan Cushman from the US Attorney’s Office.
SEC Takes Action against Widespread Crypto Ponzi Schemes
In March this year, the US Security Exchange Commission (SEC) sued 17 individuals for involvement in an alleged Ponzi scheme through CryptoFX. These individuals obtained $300 million from over 40,000 victims through these dubious means.
The alleged individual targeted the Latino communities in 10 US states and two other countries. They convinced their victims by promising them that their funds would be invested in crypto and other assets, but they did otherwise.
These dubious means used by bad actors to promise investors substantial ROI keep increasing. Hence, investors need to conduct thorough due diligence when investing in any crypto asset to avoid losing their funds.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
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Temitope is a writer with more than four years of experience writing across various niches. He has a special interest in the fintech and blockchain spaces and enjoy writing articles in those areas. He holds bachelor's and master's degrees in linguistics. When not writing, he trades forex and plays video games.
