Crypto Ponzi Scheme Unraveled: Former Attorney Sentenced
David Kagel, an 86-year-old former attorney from California, has been sentenced to five years of probation and ordered to pay nearly $14 million in restitution after admitting to his role in a multi-million-dollar Crypto Ponzi scheme. The sentencing was handed down on October 8 by Judge Gloria Navarro in a Las Vegas federal court, following Kagel’s guilty plea in May to one count of conspiracy to commit commodity fraud.
Kagel, now in hospice care at a senior facility in Las Vegas due to declining health, will serve his probation at the facility. If he leaves, he will be required to wear a monitoring device. The sentencing comes after prosecutors charged him last year for his involvement in the fraudulent scheme that spanned from December 2017 to June 2022.
According to the prosecution, Kagel, along with two accomplices, lured investors into a deceptive Crypto bot trading program, falsely promising high returns with no risk. The trio reportedly “fraudulently promoted and solicited Investments,” raising about $15 million from victims under the guise of legitimate Cryptocurrency trading ventures.
Kagel played a key role in building trust with investors by drafting letters on his law firm’s official letterhead, adding a veneer of legitimacy to the scheme. These letters convinced victims they were participating in a reliable Investment opportunity that employed trading bots to generate profits in the Cryptocurrency Market.
The fraudulent scheme promised investors guaranteed returns ranging from 20% to 100% within 30 days, along with assurances that their principal Investments would be protected. Kagel also claimed to possess a wallet containing 1,000 Bitcoin, worth $11 million as of January 2018, allegedly held in escrow to secure the investments.
Additionally, he misrepresented his previous Experience in cryptocurrency to further gain investor trust. In 2023, the California Supreme Court revoked Kagel’s law license for failing to respond to disciplinary charges related to the misappropriation of $25,000 in client funds. His license had been suspended twice before, in 1997 and 2012. Meanwhile, his co-defendants, David Saffron and Vincent Mazzotta, have pleaded not guilty and are awaiting trial in a Los Angeles federal court set for next April.
Crypto Users Lose $46M to Phishing Scams in September
Phishing attacks remain a major issue for crypto users, resulting in substantial losses. In September alone, more than 10,000 individuals lost over $46 million to such scams, as reported by Scam Sniffer, a Web3 anti-scam platform. The platform revealed that 10,805 victims suffered losses amounting to $46.7 million from various crypto phishing scams last month.
Just recently, it was revealed that cybersecurity scammers are using automated email replies to compromise systems and deliver stealthy Crypto Mining malware. This comes on the heels of another malware threat identified in August. The “Cthulhu Stealer,” which affects MacOS systems, similarly disguises itself as legitimate Software and targets personal information, including MetaMask passwords, IP addresses, and cold wallet private keys.
