Los Angeles/ Crime & Emergencies
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Published on May 29, 2024
Disbarred Beverly Hills Lawyer Pleads Guilty to Role in $9.5M Crypto Ponzi SchemeSource: Unsplash/Tingey Injury Law Firm

In a sobering nod to the darker side of the cryptocurrency craze, a disbarred California lawyer has copped to enabling a massive $9.5 million Ponzi scheme.

David Kagel, 85, formerly of the high life in Beverly Hills, admitted to his role in a deceitful ploy that duped investors out of their cash with the lure of big-time returns through cryptocurrency, the Justice Department reported yesterday. In his scheme, Kagel utilized bogus assurances of bulletproof profits, peddled by artificial intelligence trading bots—all empty promises. The former attorney played his part by falsely ensuring victims that their investments were secure, hedged by a fictitious Bitcoin escrow.

"David Kagel abused his position as an attorney to earn the trust of investors and to endorse false statements about a purported cryptocurrency investment that was, in fact, a scam," said Principal Deputy Assistant Attorney General Nicole M. Argentieri, noting that such frauds cause "devastating losses for victims." Kagel and his partners in crime redirected investors' money to their pockets, in stark contrast to what was pledged. Kagel faces a potential five-year stretch behind bars following his plea to one count of conspiracy to commit commodity fraud, with sentencing set for Sept. 10.

An indictment from last December charged David Gilbert Saffron, 51, and Vincent Anthony Mazzotta Jr., 52, for related misdeeds under the umbrella of the same financial charade. Their trial is slated for August 13. Rather than putting investors' funds to good work, the duo allegedly splurged on extravagant luxuries such as private jets, opulent hotels, and mansion rentals—far from the sober reality of their hollow investment vessel.

Currently, the tireless agents of the IRS Criminal Investigation lead the probe, unraveling the intricate financial webs woven by the scammers. Justice Department's Point-man on the case, Trial Attorney Theodore Kneller, urges those scammed to contact the Fraud Section’s Victim Witness Unit.