Disbarred California attorney pleads guilty to crypto Ponzi scheme
David Kagel has pled guilty to conspiring to operate a crypto Ponzi scheme that defrauded victims of more than $9.5 million.
Disbarred 85-year old former attorney Kagel confessed to participating in a fraudulent crypto Ponzi scheme in which he and his partners misled investors with promises of high profits and the use of AI trading bots.
According to a press release from the Office of Public Affairs, Kagel and his partners falsely claimed that Kagel, acting as the promoter’s attorney, held $11 million in Bitcoin (BTC) in escrow to secure investments.
“David Kagel abused his position as an attorney to earn the trust of investors and to endorse false statements about a purported cryptocurrency investment that was, in fact, a scam,” said Deputy Assistant Attorney General Nicole Argentieri, head of the Justice Department’s Criminal Division. “Kagel and his co-conspirators defrauded their victims out of millions of dollars and used the victims’ money to line their own pockets”
Kagel wrote misleading letters on his company’s letterhead to support the fraud. He and his co-conspirators admitted that they used the funds collected from victims for their gain.
“When lawyers lend a veneer of legitimacy to fraudulent schemes, it can lead to devastating losses for victims,” said Argentieri.
Kagel pleaded guilty to one count of conspiracy to commit commodity fraud and faces a maximum penalty of five years.
The State Bar of California disbarred David Kagel in 2023 over alleged mismanagement of client funds and other actions.
Accomplices
David Gilbert Saffron of Australia and Vincent Anthony Mazzotta Jr. of Los Angeles were charged in December 2023 for their roles in the same scheme. They allegedly promoted these fraudulent investment programs under names like Circle Society, Bitcoin Wealth Management, Omicron Trust, Mind Capital, and Cloud9Capital.
According to the press release, instead of investing in crypto, Saffron and Mazzotta used the funds to pay for personal expenses like private jets, luxury hotels, mansion rentals, a personal chef, and private security guards.
They are awaiting a trial that is scheduled to begin on August 13.
