May 29 (UPI) — Disbarred California attorney David Kagel entered a guilty plea on Tuesday to conspiring to operate a cryptocurrency Ponzi scheme that stole more than $9.5 million from victims, the Justice Department said.
Kagel, 85, a former Beverly Hills lawyer, pleaded guilty to one count of conspiracy to commit commodity fraud with a maximum sentence of five years.
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Prosecutors said Kagel and his co-conspirators — David Gilbert Saffron, of Australia, and Vincent Anthony Mazzotta Jr., of Los Angeles — promoted investment programs that falsely guaranteed huge returns and promised to use artificial intelligence to trade to benefit victims in the crypto market.
Kagel falsely told victims he had $11 million in escrow against losses to give victims a phony sense of security, backed by letters on his letterhead, authorities said, adding that, in the end, Kagel and his co-conspirators used funds collected from the victims for their own personal use.
“David Kagel abused his position as an attorney to earn investors’ trust and to endorse false statements about a purported cryptocurrency investment that was, in fact, a scam,” Principal Deputy Assistant Attorney General Nicole Argentieri said in a statement.
“Kagel and his co-conspirators defrauded their victims out of millions of dollars and used the victims’ money to line their own pockets. When lawyers lend a veneer of legitimacy to fraudulent schemes, it can lead to devastating losses for the victims.”
According to the website The Block, Kagel was disbarred from the State of California in 2023. He was admitted to the bar in 1974 but had his license suspended for six months for making false statements to the Securities and Exchange Commission in 1988.
He also faced investigations in 2009 and 2022.
“Kagel preyed on trusting individuals through a complex scheme to separate people from their hard-earned money,” IRS Special Agent in Charge Tyler Hatcher.
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