David Kagel, an 86-year-old former lawyer from California, admitted to running a huge coin Ponzi scheme and was given a five-year suspended sentence and told to pay nearly $14 million. Millions of dollars were stolen from buyers through a fake crypto trading bot program during the plan, which ran from December 2017 to June 2022.
After Kagel pleaded guilty to one count of conspiracy to commit commodity theft on October 8, U.S. District Judge Gloria Navarro gave him his sentence. Kagel is in Las Vegas hospice care right now because his health is getting worse, and that is where he will spend his probation. He will have to wear a tracking device if he goes.
Prosecutors said Kagel and his two partners tricked people into investing in a crypto trading plan by saying they would give them high returns with no risk. They got about $15 million from victims over the course of five years. Many of them thought they were investing in a real and profitable business. The fake program promised to return the original investment plus earnings of 20% to 100% in just 30 days, which was not true.
Kagel was very important in getting people to fall for the scam. He did this by promoting the program with official letters from his law company. Many people thought their investments were safe because the letters, which were printed on business letterhead, gave the plan an air of authority. In one case, Kagel lied when he said that he had 1,000 bitcoins, which were worth $11 million at the time, held in lockup to back up the transactions.
Because Kagel didn’t answer to disciplinary charges, his law license was taken away in 2023 after he was accused of stealing client money. His license was taken away twice before, in 1997 and 2012.
Kagel got his sentence, but his two partners, David Saffron and Vincent Mazzotta, have pleaded not guilty and will be tried in Los Angeles federal court in April.
This case shows how dangerous the bitcoin market can be and how important it is for regulators to keep an eye on things to keep buyers safe from scams. It’s also a stark warning of the terrible things that will happen to people of any age or situation who commit these kinds of scams.
