Former Legal Authority Falls from Grace

David Kagel, an 85-year-old former attorney from California, confessed he was part of a $9.5 million crypto Ponzi scheme, a crime that could see him in jail for up to five years in prison.

The Scheme Unveiled

Kagel and his co-conspirators lured victims into a fraudulent crypto investment scheme. They promised high-yield profits backed by false guarantees and assurances.

Court documents reveal that the scheme involved claims of artificial intelligence trading bots managing investments in cryptocurrency markets, which were entirely fabricated.

"Kagel, once a respected lawyer in Beverly Hills, preyed on trusting individuals through a complex scheme to separate people from their hard-earned money," said Special Agent in Charge Tyler Hatcher.

False Assurances and Escrow Claims

The promoter of the Ponzi scheme deceitfully assured victims that David Kagel, acting as the promoter's attorney, was holding Bitcoin worth roughly $11 million in escrow.

The fraudsters presented the escrow as a guarantee to protect victims' investments from potential losses. Kagel even provided letters on his law firm's letterhead to confirm the legitimacy of these false investment programs.

Principal Deputy Assistant Attorney General Nicole M. Argentieri stated that Kagel exploited his attorney status to gain investors' confidence.

Kagel endorsed false assertions regarding a cryptocurrency investment, which was, in reality, a scam.

Argentieri emphasized the severe consequences of lawyers lending legitimacy to fraudulent schemes, leading to significant losses for victims.

Legal Repercussions and Pending Trials

Kagel's guilty plea marks 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 drama continues as David Gilbert Saffron of Australia and Vincent Anthony Mazzotta Jr. of Los Angeles await their August 13 trial for their alleged roles in the same crypto Ponzi scheme.

It is alleged that Saffron and Mazzotta promoted 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 are accused of diverting them for personal expenditures. These expenses reportedly include private chartered jet flights, luxury hotel stays, rental of private mansions, hiring a personal chef, and engaging private security guards.