Disbarred attorney in US pleads guilty to promoting $9.5M crypto Ponzi scheme

By Ovunc Kutlu

ISTANBUL (AA) - A disbarred attorney in the US state of California pleaded guilty to conspiring to operate a cryptocurrency Ponzi scheme that defrauded victims of more than $9.5 million, the Justice Department said Wednesday.

David Kagel, 85, formerly of Beverly Hills, conspired to fraudulently induce victims to participate in a cryptocurrency Ponzi scheme, the agency said in a statement.

Kagel and his co-conspirators promoted investment programs that falsely guaranteed high-yield profits and promised to use artificial intelligence trading bots to trade victims’ investments in crypto markets, it said.

The disbarred attorney admitted that he and his co-conspirators used victims’ funds for their own personal benefit, it added.

"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, head of the Justice Department’s Criminal Division.

A Ponzi scheme, named after Italian businessman Charles Ponzi, is a type of fraud that aims to attract investors and pays profits to earlier investors with funds acquired from later investors.

Kagel pleaded guilty to one count of conspiracy to commit commodity fraud, while he is scheduled to be sentenced on Sept. 10 and faces a maximum penalty of five years in prison.

Co-conspirators David Gilbert Saffron, 51, of Australia, and Vincent Anthony Mazzotta Jr., 52, of Los Angeles, were charged by a federal grand jury in a superseding indictment in December 2023 for their roles in the same crypto Ponzi scheme, and they are awaiting trial, which is scheduled to begin on Aug. 13.