Former US Lawyer Admits to $9.5 Million Cryptocurrency Fraud

[Tomcat]

85-year-old David Kagel, a former lawyer from California, admitted his role in creating a $9.5 million cryptocurrency fraud scheme.

A year ago, David Kagel was expelled from the California Bar Association. Therefore, he decided to make money in another way ― using his "reputation as an experienced lawyer", he gave legitimacy to the cryptocurrency pyramid that his friend launched.

Kagel, together with his accomplices, attracted investors by promising huge profits. Under the guise of a lawyer, Kagel convinced victims that his accomplice owned $11 million worth of bitcoins and that this money could be used to compensate for any potential losses. He even used his firm's letterheads to support these claims.

Kagel and his accomplice used the money they received for their own purposes. The 85-year-old lawyer pleaded guilty to one count of fraud and could face up to 5 years in prison.

"David Kagel abused his position as a lawyer to gain the trust of investors and support false claims about the profitability of investments in cryptocurrency. Kagel and his associates swindled millions of dollars from their victims and used the funds to line their own pockets. When lawyers give fraudulent schemes the appearance of legitimacy, this can lead to large-scale losses for victims," said Nicole M. Argentieri, head of the criminal division of the Department of Justice, First Deputy Assistant Attorney General.

 

[Man]

An 86-year-old former California attorney has been sentenced to five years probation and ordered to pay nearly $14 million after admitting to running a multimillion-dollar cryptocurrency Ponzi scheme.

In an Oct. 8 ruling in Las Vegas federal court, Judge Gloria Navarro sentenced David Kagel after he pleaded guilty to one count of conspiracy to commit commodity fraud in May.

Kagel is currently in hospice at a nursing home in Las Vegas due to poor health, where he will be serving probation if he does not leave, and where he will be required to wear a monitoring device.

State prosecutors who indicted Kagel last year said that from December 2017 to June 2022, Kagel and two of his accomplices lured victims into investing in a fraudulent crypto bot trading scheme, promising high profits and no risk.

During this time, the trio "fraudulently promoted and solicited investments and received at least approximately $15 million in victim-investor funds for various cryptocurrency trading programs," prosecutors said.

Kagel facilitated the spread of cryptocurrency fraud by composing letters on his law firm's letterhead, which were then sent to victims.

According to prosecutors, the official forms helped build trust.

Victims are under the impression that they have invested in a legitimate scheme that used trading bots to invest in the cryptocurrency markets.

On the subject: Founder of Ponzi cryptocurrency scheme IcomTech sentenced to 10 years in prison

The scheme "guaranteed" a return on the principal amount of the investment and a profit of 20% to 100% of the principal amount of the investment within 30 days.

Kagel claimed that in January 2018, he had 1,000 Bitcoin (BTC) in a wallet worth $11 million, which was held in escrow to guarantee the investment. He also falsely claimed to have invested in cryptocurrency in the past to boost the broker's credibility.

In 2023, the California Supreme Court revoked Kagel's legal license for failing to respond to disciplinary charges, claiming that he had misappropriated $25,000 of customer funds.

Previously, its legal license was suspended twice: in 1997 and 2012.

Both of Kagel's alleged accomplices, David Saffron and Vincent Mazzotta, have pleaded not guilty and are awaiting trial in federal court in Los Angeles next April.

• Source: https://www.courtlistener.com/docke...&entry_gte=&entry_lte=&order_by=desc#entry-40

• Source: https://storage.courtlistener.com/recap/gov.uscourts.cacd.889787/gov.uscourts.cacd.889787.1.0.pdf