He was also ordered to pay nearly US$14 million in restitution after pleading guilty
David Kagel, an 86-year-old disbarred lawyer from California, has been sentenced to five years of probation for his involvement in a $9.5 million cryptocurrency Ponzi scheme.
According to Reuters, the sentence was handed down by US District Judge Gloria Navarro in Las Vegas. In addition to probation, Kagel was ordered to pay nearly US$14 million in restitution after pleading guilty to one count of conspiracy to commit commodity fraud.
Prosecutors revealed that Kagel participated in a fraudulent scheme that lured victims into investing money under the false premise of using trading bots to navigate cryptocurrency markets. The victims were misled with promises of substantial returns, as they were falsely told that Kagel had $11 million in escrow to guarantee their investments.
Kagel played a key role in promoting the scam by using his legal credentials to foster trust. He drafted letters on his law firm's letterhead, which were sent to potential investors, giving the appearance of legitimacy and creating a false sense of security. Prosecutors emphasized how these actions contributed to the victims' belief that their investments were safe.
Due to Kagel’s advanced age and reported "ailing health," prosecutors recommended a five-year probation sentence rather than prison time. US Attorney's Office spokespersons in Nevada, as well as Kagel's federal public defender, did not immediately respond to requests for comment.
Kagel’s legal troubles have been ongoing. In 2023, the California Supreme Court disbarred him after he failed to respond to disciplinary charges in a separate case in which he was accused of misappropriating $25,000 in client funds. According to state bar records, Kagel had previously faced disciplinary actions, with his law license suspended twice—once in 1997 and again in 2012.
Meanwhile, two other individuals connected to the Ponzi scheme, David Saffron and Vincent Mazzotta, have pleaded not guilty and are awaiting trial in Los Angeles federal court. Their trial is scheduled for April.
