86-Year-Old Lawyer Busted for $15M Crypto Scam

An 86-year-old former California lawyer, David Kagel, has been sentenced to five years of probation and ordered to repay nearly $14 million after being involved in a crypto Ponzi scheme. The scheme tricked investors out of millions by promising high returns with minimal risk. Kagel pleaded guilty in May to conspiracy to commit commodity fraud and was sentenced on October 8 by Judge Gloria Navarro in Las Vegas Federal Court. Due to his poor health, Kagel will serve probation at a hospice facility. If his condition improves, he’ll be required to wear a monitoring device when outside the center.

The scam, operated by Kagel and his associates, David Saffron and Vincent Mazzotta, ran from December 2017 to June 2022. Prosecutors revealed the group collected about $15 million by convincing victims to invest in a fake crypto trading bot program. The scammers used official-looking documents to create a sense of legitimacy. Kagel exploited his status as a lawyer by using his firm’s letterhead to assure investors that their funds were in good hands.

Many victims, trusting the legal credentials and false promises of high profits, were drawn in. Investors were told that they would get returns of up to 100% within 30 days, thanks to automated bots supposedly minimizing risk. In reality, the money was never invested, and the whole operation was a sham.

One of the most deceptive tactics involved Kagel claiming to hold 1,000 BTC worth $11 million in escrow as a guarantee for the investors’ money. He also lied about his previous success with cryptocurrency investments to build further trust. As a result, more victims fell for the scam, which continued for several years before being exposed by the authorities.

Even though Kagel accepted responsibility, his partners Saffron and Mazzotta denied the charges and are scheduled to face trial in Los Angeles in April 2025. If found guilty, they could face severe penalties for their involvement in the scheme.

Kagel’s troubles didn’t start here. His law license was revoked in 2023 by the California Supreme Court after he ignored disciplinary actions. This was the third time he faced license issues, having been suspended in 1997 and 2012. His history of unethical behavior combined with his role in the Ponzi scheme shows a pattern of violating professional standards.

The consequences for Kagel are severe, but the legal battles continue for his partners. As the trial date approaches, the crypto community and affected investors will be watching closely to see if they too will be held accountable. This case highlights the ongoing risk of fraudulent investment schemes in the digital asset space, particularly when trusted figures like lawyers are involved.

Ultimately, Kagel’s fall from grace serves as a warning about the dangers of putting blind faith in seemingly credible individuals. Investors are reminded to always verify claims and perform thorough research before trusting anyone with their money, even those with professional titles.