Ex-Beverly Hills Lawyer Faces $14 Million Restitution for $9.5 Million Crypto Ponzi Scheme

An 85-year-old disbarred Beverly Hills attorney has been ordered to pay $14 million in restitution for his role in a $9.5 million cryptocurrency Ponzi scheme.

On Monday, a US judge ordered an 85-year-old disbarred California lawyer to pay back $14 million for his involvement in a $9.5 million cryptocurrency Ponzi scheme. The attorney, David Kagel, who previously practiced law in Beverly Hills, admitted his guilt in May and pleaded guilty to one count of conspiracy to commit fraud.

In the Las Vegas case, U.S. District Judge Gloria Navarro sentenced Kagel to five years of probation and heavy fines. The sentence emphasizes the seriousness of Kagel’s role in the fraud, which exploited naive investors.

Prosecutors revealed that Kagel played a crucial role in promoting the fraudulent investment scheme. While working as a lawyer, he published letters using his company’s letterhead, giving victims a fictitious sense of security and legality. As a result of these letters, many people invested their money under false pretenses, increasing confidence in the scheme.

According to a Reuters reportAccording to the victims, the victims believed that the program was supported by trading bots that would invest in cryptocurrency on their behalf. They were further misled by Kagel’s claim that he had $11 million in escrow, falsely guaranteeing the safety of their investments. The scheme took advantage of these fabricated guarantees and caused significant financial damage to the victims.

Kagel’s legal career finally came to an end in 2023. The California Supreme Court revoked his license after he failed to respond to disciplinary charges. Records show he embezzled $25,000 in client funds, which he used to further the Ponzi scheme.

Kagel embezzled a large portion of the victims’ money. Instead of investing the money, he used it for personal indulgences such as hiring a private chef, a private security service, a private jet, luxury hotel stays and a private home, court records show. His clients’ trust and financial security were sacrificed to support his lavish lifestyle.

Kagel and co-conspirators orchestrated fraudulent investment schemes

The crypto investment schemes promoted by Kagel and his co-conspirators promised high returns that were never achieved. Authorities described these programs as carefully designed to lure investors and exploit their desire for financial growth.

“Kagel abused the trust of individuals through a complex scheme to separate people from their hard-earned money,” Tyler Hatcher, a special agent in charge of the IRS Criminal Investigation, said in May. Hatcher praised the painstaking efforts of IRS investigators and highlighted their function in following the money trail to build a strong case against the guilty.

The investigation did not stop with Kagel. Two other people – David Gilbert Saffron, an Australian citizen, and Vincent Anthony Mazzotta Jr., of Los Angeles – were also involved. Both co-conspirators have pleaded not guilty and are awaiting trial in federal court in Los Angeles. Saffron and Mazzotta are said to have published investment plans under various names, including Bitcoin Wealth Management, Cloud9 Capital, Circle Society, Omicron Trust and Mind Capital.

This was reported by a US Department of Justice press release on May 29, the Ponzi schemes promoted by this group were operating under various names, including Circle Society, Bitcoin Wealth Management, Omicron Trust, Mind Capital, and Cloud9Capital. Potential investors were lured by these names, giving the false impression of reputable and varied return opportunities on high-yield securities. The truth was a carefully planned scam that enriched the conspirators at the expense of their victims.

Scam Sniffer, a Web3 anti-scam platform, revealed that in September alone, more than 10,000 people lost more than $46 million to such frauds. The platform stated that last month, 10,805 individuals lost $46.7 million due to various cryptophishing scams.