Court Orders Ex-Beverly Hills Attorney to Pay $14M in Restitution to $9.5M Crypto Ponzi Links

Author

Sujha Sundararajan

Author

Sujha Sundararajan

About Author

Sujha has been recognised as 🟣 Women In Crypto 2024 🟣 by BeInCrypto for her leadership in crypto journalism.

Share

Last updated:

October 9, 2024 04:18 EDT

Why Trust Cryptonews

With over a decade of crypto coverage, Cryptonews delivers authoritative insights you can rely on. Our veteran team of journalists and analysts combines in-depth market knowledge with hands-on testing of blockchain technologies. We maintain strict editorial standards, ensuring factual accuracy and impartial reporting on both established cryptocurrencies and emerging projects. Our longstanding presence in the industry and commitment to quality journalism make Cryptonews a trusted source in the dynamic world of digital assets. Read more about Cryptonews

A US judge on Monday ordered an 85-year-old, recently disbarred California attorney to pay $14 million in restitution for his role in a $9.5 million cryptocurrency Ponzi scheme.

David Kagel, who practised law in Beverly Hills, pleaded guilty to one count of conspiracy toward the fraud in May.

U.S. District Judge Gloria Navarro in Las Vegas sentenced Kagel to five years of probation in addition to fines.

According to prosecutors, Kagel helped promote the crypto Ponzi scheme by drafting letters on his law firm’s letterhead. The letters were then sent to victims, creating a “false sense of security and trust.”

Per a Reuters report, victims poured money into the scheme, thinking that it used trading bots to invest in cryptos. Investors in the program were also misguided by Kagel’s $11 million in escrow, which guaranteed their investments.

In 2023, the California Supreme Court revoked Kagel’s license to practice law after he failed to respond to disciplinary charges. According to records, he misappropriated $25,000 in client money in the Ponzi scheme.

Further, the victim’s funds were used for his personal needs, including private chartered jet flights, luxury hotel accommodations, private mansion rentals, a personal chef, and private security guards, the charges read.

The crypto investment schemes promoted by Kagel and his co-conspirators falsely guaranteed high-yield profits.

“Kagel preyed on trusting individuals through a complex scheme to separate people from their hard-earned money,” Tyler Hatcher of the IRS Criminal Investigation, special in-charge of the case, said in May.

“IRS-CI is the best in the business at following the money to find the necessary evidence to bring charges against those who seek to prosper on the backs of their victims.”

David Gilbert Saffron of Australia and Vincent Anthony Mazzotta Jr. of Los Angeles are also held by a federal grand jury. These co-conspirators have pleaded not guilty to the Ponzi scheme and are awaiting trial in Los Angeles federal court.

According to a press release in May, the co-conspirators promoted the investment programs under various names including Circle Society, Bitcoin Wealth Management, Omicron Trust, Mind Capital, and Cloud9Capital.