David Lee Kagel, an 86-year-old former attorney from California, has been sentenced to five years of probation for leading a multimillion-dollar cryptocurrency fraud. He pleaded guilty to running a Ponzi scheme that lasted from December 2017 to June 2022, defrauding many investors.
Currently in hospice care in Las Vegas due to his declining health, Kagel will serve his probation at a senior living facility. He must wear a monitoring device if he leaves the premises. On October 8, Las Vegas federal judge Gloria Navarro ordered Kagel to pay nearly $14 million in restitution after his conviction for conspiracy to commit commodity fraud.
The question is: How did a respected lawyer fall so far from grace?
The scheme, while simple, was highly effective. Along with accomplices David Saffron and Vincent Mazzotta, Kagel promised investors high returns through a so-called cryptocurrency trading program. They claimed to use an AI trading bot that would deliver returns of 20% to 100% within just 30 days. Investors were assured their funds were protected by a 1,000-Bitcoin escrow wallet, valued at $11 million in 2018, which was said to safeguard their principal.
Kagel exploited his status as an attorney to lend credibility to the scam. He drafted letters on his law firm’s letterhead, falsely assuring victims that their money was secure. In reality, the team was stealing the funds for personal use. Over five years, they fraudulently obtained $15 million from victims, leaving many without their investments.
In 2023, Kagel’s law license was permanently revoked after he failed to respond to disciplinary charges involving the misappropriation of $25,000 in client funds. This followed earlier suspensions in 1997 and 2012 for other violations.
While Kagel begins his sentence, his accomplices, Saffron and Mazzotta, have pleaded not guilty and are set to face trial in Los Angeles next year.
As technology continues to evolve, so do the scams. Stay informed and protect yourself from online fraud
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