Crypto Fraud : Former California Attorney Sentenced for 5 Years

The post Crypto Fraud : Former California Attorney Sentenced for 5 Years appeared first on Coinpedia Fintech News

An 86 years old former attorney from California named David Lee Kagel, has been sentenced to five year probation for a multimillion dollar crypto fraud. He pleaded guilty to leading a multimillion-dollar cryptocurrency Ponzi scheme. This scam ran from December 2017 to June 2022 and defrauded many people. Empty promises of huge returns lured them in.

Kagel, currently in hospice care in Las Vegas due to failing health, will serve his probation at his seniors facility, with a monitoring device required if he leaves. In an October 8 judgment, Las Vegas federal judge Gloria Navarro ordered Kagel to pay nearly $14 million in restitution after his conviction for conspiracy to commit commodity fraud.

Their ponzi scheme was simple but deadly effective. Kagel, with accomplices David Saffron and Vincent Mazzotta, promised high returns to investors. They offered a so-called cryptocurrency trading program. They convinced investors that their funds were safe. The team claimed they used an AI trading bot that would deliver returns of 20% to 100% within 30 days. There was allegedly no risk due to a claimed 1,000 Bitcoin escrow wallet. This wallet was valued at $11 million in 2018. Kagel claimed it would protect investors’ principal.

Kagel used his position as an attorney to further the scam. He drafted letters on his law firm’s letterhead to lend credibility to the scheme. He used these letters to assure victims their money was secure. But, in reality the team grabbed the money for their ponzi scheme. The fraud went on for five years and they fraudulently sought $15 million from victims. They utilized the money for their personal gains, leaving investors empty-handed.

In 2023, the authorities permanently revoked Kagel’s law license due to his failure to respond to previous disciplinary charges, including the misappropriation of $25,000 in client funds. This followed two earlier suspensions of his law license in 1997 and 2012.

While Kagel faces his sentence, his accomplices, Saffron and Mazzotta, have pleaded not guilty and will face trial in Los Angeles next year.