$9.5 Million Crypto Ponzi Scheme: Former Beverly Hills Lawyer Involved

Key Takeaways

• David Kagel, a former Beverly Hills lawyer, admits to his role in a $9.5 million crypto Ponzi scheme.
• Kagel used his position as an attorney to deceive investors, creating a false sense of security and trust.
• Investors were misled into believing their money was being invested in a profitable cryptocurrency trading bot program.
• Kagel’s law license was revoked in 2023 due to previous disciplinary issues, including misappropriation of client funds.
• Despite his age and current health issues, Kagel faces up to five years in prison, with sentencing set for September 10.
• Two alleged co-conspirators, David Saffron and Vincent Mazzotta, face legal challenges and await trial.
• This case highlights the risks of trusting professionals without thorough due diligence in the evolving cryptocurrency market.

Federal prosecutors revealed how Kagel deceived investors by abusing his position as an attorney. Nicole Argentieri, head of the U.S. Department of Justice’s criminal division, said Kagel misused his clients’ trust. He endorsed false statements about a supposed cryptocurrency investment, which was a scam.

Kagel promoted the fraudulent scheme by drafting letters on his law firm’s letterhead. He sent these letters to potential investors, creating a false sense of security and trust.

Investors believed their money was in a program using trading bots for cryptocurrency markets. Kagel also falsely said that he had $11 million in escrow to guarantee the investments.

Kagel’s History of Legal Issues and Current Health Status

Kagel’s legal troubles are not new. In 2023, the California Supreme Court revoked his law license after he failed to respond to disciplinary charges. These charges accused him of misappropriating $25,000 in client funds. His law license had been suspended twice before, in 1997 and 2012, according to California state bar records.

Currently, Kagel is in a hospice care facility in Las Vegas. This was revealed in an October court filing. Despite his age and health issues, the legal consequences of his actions are proceeding.

Two of Kagel’s alleged co-conspirators, David Saffron and Vincent Mazzotta, also face legal challenges. Both have pleaded not guilty and await trial in a Los Angeles federal court. Their trial is set for August 13. Attempts to get comments from their lawyers have been unsuccessful.

This scheme shows how trusted professionals can misuse their positions to commit fraud. Investors thought they were entering a lucrative cryptocurrency opportunity. Instead, they became victims of a sophisticated scam.

Kagel’s letters on his firm’s letterhead convinced investors of the scheme’s legitimacy. The false assurance of escrow funds further cemented their trust, leading to significant financial losses.

Kagel’s story is a cautionary tale about the importance of due diligence and skepticism, even with seemingly credible professionals. The legal system is now addressing his actions, ensuring he faces consequences for his extensive fraud. This case serves as a reminder of the potential dangers in the rapidly evolving world of cryptocurrency investments.