85-year-old former attorney David Kagel has admitted guilt in a conspiracy to operate a cryptocurrency Ponzi scheme, defrauding victims of over $9.5 million.

Once a legal authority figure in Beverly Hills, California, Kagel now faces a maximum penalty of five years in prison for his involvement in the Ponzi scheme.

Crypto Ponzi Scheme

Kagel stood accused of collaborating with co-conspirators to lure victims into a fake crypto investment scheme promising investors high-yield profits. Court documents reveal that the Ponzi scheme involved false guarantees and assurances, including claims that artificial intelligence trading bots were used to manage investments in cryptocurrency markets.

The promoter of the Ponzi scheme deceitfully assured victims that David Kagel, acting as the promoters attorney, was holding Bitcoin worth roughly $11 million in escrow. This was presented as a guarantee to protect victims investments from potential losses. Kagel also provided letters on his law firms letterhead to confirm the legitimacy of the investment programs falsely.

Principal Deputy Assistant Attorney General Nicole M. Argentieri stated that Kagel had exploited his attorney status to gain investors confidence and endorse false assertions regarding a cryptocurrency investment, which was a scam. She emphasized the severe consequences of lawyers lending legitimacy to fraudulent schemes, leading to significant losses for victims.

“Kagel preyed on trusting individuals through a complex scheme to separate people from their hard-earned money,” said Special Agent in Charge Tyler Hatcher.

Kagel Faces Upto 5 Years in Prison

Kagels guilty plea marks a significant development in the ongoing investigation. His sentencing is scheduled for September 10. Pending a decision by a federal district court judge, he faces a maximum penalty of five years in prison.

Kagel has also since admitted that he and his co-conspirators used victims funds for personal gain. Meanwhile, the legal drama continues, with David Gilbert Saffron of Australia and Vincent Anthony Mazzotta Jr. of Los Angeles awaiting their August 13 trial for their alleged roles in the same crypto Ponzi scheme.

It is alleged that Saffron and Mazzotta promoted investment programs using aliases such as Circle Society, Bitcoin Wealth Management, Omicron Trust, Mind Capital, and Cloud9Capital.

Instead of investing the victims funds into cryptocurrency as promised, they are accused of diverting them for personal expenditures. These expenses reportedly include private chartered jet flights, luxury hotel stays, rental of private mansions, hiring a personal chef, and engaging private security guards.