Disbarred California attorney David Kagel, 85, has pleaded guilty to charges related to the crypto Ponzi scheme Circle Society that defrauded victims of more than $9.5 million. Kagel conspired with others to lure victims into a fraudulent crypto investment program promising high-yield profits through the use of AI trading bots. Kagel falsely claimed to hold Bitcoin worth approximately $11 million in escrow to instill trust, purportedly guaranteeing the victims’ investments against any loss.
Read our reports on the Circle Society scheme here.
Kagel exploited his position as an attorney to provide fraudulent letters on his firm’s letterhead, falsely confirming the scheme’s legitimacy. These deceptive tactics were designed to create a false sense of security among investors. Kagel admitted that, instead of investing the funds, he and his co-conspirators misappropriated the money for personal use.
Statements from Authorities
“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. Kagel and his co-conspirators defrauded their victims out of millions of dollars and used the victims’ money to line their own pockets,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri. She emphasized the devastating impact such fraudulent schemes can have when lawyers lend a veneer of legitimacy to them.
Legal Proceedings
Kagel pleaded guilty to one count of conspiracy to commit commodity fraud. He is scheduled to be sentenced on September 10 and faces a maximum penalty of five years in prison. The final sentence will be determined by a federal district court judge, considering the U.S. Sentencing Guidelines and other statutory factors.
Additional Charges
David Gilbert Saffron, 51, of Australia, and Vincent Anthony Mazzotta Jr., 52, of Los Angeles, were also charged in connection with the same Ponzi scheme. They are awaiting trial, which is scheduled to begin on August 13. The indictment alleges that Saffron and Mazzotta promoted the fraudulent investment programs under various names, including Circle Society, Bitcoin Wealth Management, Omicron Trust, Mind Capital, and Cloud9Capital. Instead of investing the funds, they allegedly used the money for personal luxuries such as private jets, luxury hotels, and personal security.
Conclusion
This case highlights the severe consequences of financial fraud and the importance of vigilant regulatory oversight. The actions of Kagel and his co-conspirators not only defrauded investors but also eroded trust in legitimate financial practices. The upcoming trials and sentencing will further determine the extent of justice served in this high-profile case.
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