David Kagel, an 86-year-old ex-attorney, has been ordered by a US court to pay $14 million after being found guilty of masterminding a Bitcoin Ponzi Scheme that saw victims lose millions. He also got a five-year probation term.
While delivering her ruling, Judge Gloria Navarro said Kagel, currently in a Las Vegas-based senior facility because of health issues, admitted to committing commodity fraud in May. She added that he would begin serving his probation immediately and must wear a monitoring device if he leaves the facility.
The latest development follows the US Securities and Exchange Commission’s announcement in August that the regulator had charged two individuals for defrauding over 90 investors within a year in a $60 million Bitcoin Ponzi scheme.
When Did Kagel Execute His Ponzi Scheme?
The US prosecutors who brought charges against Kagel in 2023 said that the culprit, along with two accomplices, persuaded victims to invest in a non-existent crypto bot trading between 2017 and 2022, with a promise of high returns without risks involved.
While Kagel has pleaded guilty to the charges, his accomplices, Vincent Mazzota and Davis Saffron, have not and are now awaiting trial in April 2025.
According to American prosecutors, the trio illegally obtained over $15 million from victims within five years. Kagel promoted the Ponzi scheme by sending official letters from his law firm to victims in an effort to establish trust.
Kagel’s Letters to Victims
In the letters, Kagel made promises of “guaranteed” repayment of the initial investment and profits of between 20% -50% of the principal to be paid in 30 days. He also explained how their trading bot worked to generate income from the crypto markets. However, the prosecutor told the court that there was no bot.
Kagel, who lied to investors that he had prior crypto investment experience, claimed to own over 1,000 BTC intended to collaterize investors’ funds. The prosecutors, however, didn’t find any of his wallets holding this Bitcoin amount.
It is worth mentioning that Kagel’s law license was revoked by the California Supreme Court last year for allegedly misappropriating client funds.
