86-year-old man gets 5 years probation for $15 million Crypto Ponzi scheme

An 86-year-old former attorney, David Kagel, has been sentenced to five years of probation for running a multibillion-dollar cryptocurrency Ponzi scheme that defrauded investors of nearly $15 million.

The ruling, filed Oct. 8 in federal court in Las Vegas, also requires him to pay $14 million in restitution to his victims.

$15 Million Crypto Ponzi Scheme

U.S. District Judge Gloria Navarro handed down the sentence following Kagel’s guilty plea to one count of conspiracy to commit commodity fraud in May.

Court documents reveal the scheme, which ran from December 2017 to June 2022, involved duping investors into believing they were putting money into a cryptocurrency bot trading program that promised high returns and low risk minimum

According to prosecutors, Kagel and his two accomplices lured victims by falsely claiming their investments would return 20% to 100% in just 30 days. The trio assured potential investors that their principal amounts would be fully repaid.

Through these fraudulent promises and deceptive schemes, the three collected about $15 million from victimized investors for various cryptocurrency trading schemes.

However, instead of making a profit, the perpetrators later used the investors’ new funds to pay off the old ones in typical Ponzi scheme fashion. This caused many of the victims to face significant financial losses.

False Bitcoin Claims and Forged Documents

Kagel was instrumental in gaining the victims’ trust. Taking advantage of his professional background as a lawyer, he forged letters on his firm’s letterhead to make the scheme appear legitimate.

In 2018, he falsely claimed to own 1,000 bitcoins worth $11 million at the time as collateral for investments. The former lawyer also lied about his previous experience with crypto investment, convincing potential backers of the credibility of the scheme.

In 2023, the California Supreme Court revoked his law license after he failed to respond to disciplinary charges related to the misappropriation of $25,000 in client funds. His license had also been suspended for other violations on two separate occasions, one in 1997 and the other in 2012.

Kagel will serve his probation at a senior living facility in Las Vegas, where he is also receiving inpatient care. If the offender leaves the premises, he must wear a monitoring device to ensure compliance with the terms of his sentence.

His co-conspirators, David Saffron and Vincent Mazzota, have pleaded not guilty and are awaiting trial in a Los Angeles federal court scheduled for April 2025.

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