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09/10/24
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California Attorney Sentenced for $14M Cryptocurrency Ponzi Scheme
An 86-year-old former attorney from California has received a five-year probation sentence along with a nearly $14 million restitution order after admitting to orchestrating a multi-million dollar Ponzi scheme centered around cryptocurrency. The ruling was issued by a federal court judge in Las Vegas following David Kagel’s guilty plea to conspiracy to commit commodity fraud earlier this year.
Kagel has been in hospice care at a seniors facility in Las Vegas due to declining health and is expected to complete his probation there, unless he leaves the facility. If he does leave, he will be required to wear a monitoring device. Authorities charged Kagel in 2022, detailing how he and two co-conspirators deceived victims from December 2017 to June 2022 by promoting a phony cryptocurrency trading program, touting unrealistic returns with no associated risks.
According to prosecutors, the trio fraudulently solicited approximately $15 million from investors, convincing them that their investments would yield significant profits. Kagel played a key role in promoting the scam by using his law firm’s official letterhead to draft misleading letters to potential victims, which added a layer of credibility to their claims.
Victims believed they were investing in a legitimate operation utilizing trading bots for cryptocurrency investments, with promises of repaying the principal investment along with profits ranging from 20% to 100% within just 30 days. Kagel made false claims about having substantial cryptocurrency holdings to further instill confidence among investors, asserting that he possessed 1,000 Bitcoin valued at around $11 million as security for the investments.
In a related development, the California Supreme Court revoked Kagel’s law license earlier this year due to his failure to respond to disciplinary actions linked to the misappropriation of client funds. His two accomplices are awaiting trial, having pleaded not guilty to the charges against them.
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