Disbarred California attorney pleads guilty in $9.5M crypto Ponzi scheme

Might 29 (UPI) — Disbarred California legal professional David Kagel entered a responsible plea on Tuesday to conspiring to function a cryptocurrency Ponzi scheme that stole greater than $9.5 million from victims, the Justice Division mentioned.

Kagel, 85, a former Beverly Hills lawyer, pleaded guilty to one count of conspiracy to commit commodity fraud with a most sentence of 5 years.

Promoting

Prosecutors mentioned Kagel and his co-conspirators — David Gilbert Saffron, of Australia, and Vincent Anthony Mazzotta Jr., of Los Angeles — promoted funding applications that falsely assured big returns and promised to make use of synthetic intelligence to commerce to learn victims within the crypto market.

Kagel falsely informed victims he had $11 million in escrow in opposition to losses to provide victims a phony sense of safety, backed by letters on his letterhead, authorities mentioned, including that, ultimately, Kagel and his co-conspirators used funds collected from the victims for their very own private use.

“David Kagel abused his place as an legal professional to earn traders’ belief and to endorse false statements a couple of purported cryptocurrency funding that was, the truth is, a rip-off,” Principal Deputy Assistant Lawyer Normal Nicole Argentieri mentioned in a press release.

“Kagel and his co-conspirators defrauded their victims out of tens of millions of {dollars} and used the victims’ cash to line their very own pockets. When legal professionals lend a veneer of legitimacy to fraudulent schemes, it may possibly result in devastating losses for the victims.”

According to the website The Block, Kagel was disbarred from the State of California in 2023. He was admitted to the bar in 1974 however had his license suspended for six months for making false statements to the Securities and Change Fee in 1988.

He additionally confronted investigations in 2009 and 2022.

“Kagel preyed on trusting people via a fancy scheme to separate individuals from their hard-earned cash,” IRS Particular Agent in Cost Tyler Hatcher.