86-year-old former attorney to pay $14m for role in crypto Ponzi scheme

Disbarred California attorney David Kagel has agreed to pay nearly $14 million in restitution as part of his sentence for operating a multimillion-dollar cryptocurrency Ponzi scheme that defrauded investors over several years.

According to the decision of Las Vegas federal court judge Gloria Navarro, 86-year-old lawyer David Kagel pleaded guilty and was sentenced to five years of probation and ordered to pay a total of $13.94 million in financial penalties for his role in the Ponzi scheme. He defrauded his victims of approximately $15 million.

Kagel, who is currently in hospice care at a senior facility in Las Vegas due to his declining health, will spend his probation under close supervision. If he leaves the facility, he will be required to wear a monitoring device.

Once a respected lawyer, Kagel’s fall from grace is notable for his role in orchestrating a crypto Ponzi scheme that operated between December 2017 and June 2022. Together with his accomplices, he deceived the victims with promises of guaranteed high returns with minimal risk. The appeal of AI-driven trading bots.

Using his law firm’s letterhead to gain trust, Kagel defrauded investors of millions and painted a picture of legitimacy that masked the fraudulent empire he helped run. Victims were promised returns of up to 100% in just 30 days after investment.

Kagel falsely claimed to hold 1,000 Bitcoins (worth $11 million at the time) in escrow to reassure investors that their funds were safe. Prosecutors also add that he lied about his past experience with cryptocurrency investments.

Kagel was permanently disbarred by the State Bar of California in 2023 after being found guilty of misappropriating client funds and failing to respond to multiple disciplinary actions, according to official State Bar records. This marked the end of his troubled legal career, during which he had previously had his license suspended twice, in 1997 and 2012.

His accomplices in the fraud were David Gilbert Saffron of Australia and Vincent Anthony Mazzotta Jr. of Los Angeles. They were charged in December 2023, but have pleaded not guilty and are currently awaiting trial.

Increase in crypto scams

Crypto scams and Ponzi schemes have become more sophisticated over the years and have become a recurring problem. In 2024 alone, several such schemes siphoned off millions from unsuspecting individuals eager to capitalize on the hype surrounding crypto investments.

In June, a U.S. federal court ruled that Sam Ikkurty and his firm, Jafia LLC, operated a Ponzi scheme by soliciting investments from victims with false promises of high, stable returns and misleading claims about their business expertise. Instead, funds from new investors were used to pay off the debt of previous ones, while the rest was misappropriated for personal use.

Similarly, in May, Canadian crypto influencer Aiden Pleterski was charged with fraud and money laundering for his role in a Ponzi scheme that allegedly raised $40 million from 160 investors and promises to invest in crypto and foreign exchange markets.

Just a few weeks ago, the FBI uncovered a multi-year Ponzi scheme that defrauded victims of $43 million using similar tactics.