David Kagel, an 85-year-old disbarred attorney from California, has pleaded guilty to participating in a fraudulent cryptocurrency scheme, as announced by the U.S. Department of Justice.
Kagel, who was disbarred in 2023 for mismanaging client funds and other misconduct, leveraged his former legal status to lend credibility to the scheme.
According to the DOJ, Kagel and his co-conspirator deceived investors into believing they could achieve substantial returns through a purported cryptocurrency investment.
Using his reputation as a lawyer, Kagel assured investors that any potential losses would be covered by $11 million worth of bitcoin supposedly held by his co-conspirator.
To bolster these claims, Kagel even used his law firm’s letterhead on official documents.
The fraudulent scheme ultimately swindled investors out of more than $9.5 million.
Kagel admitted to misusing the funds for personal gain and has pleaded guilty to one count of conspiracy to commit commodity fraud. He now faces up to five years in prison.
“David Kagel abused his position as an attorney to earn the trust of investors and endorse false statements about a purported cryptocurrency investment that was, in fact, a scam,” stated Nicole M. Argentieri, Principal Deputy Assistant Attorney General of the DOJ’s Criminal Division.
“Kagel and his co-conspirators defrauded their victims out of millions of dollars and used the victims’ money to line their own pockets.”
Argentieri further emphasized the severe impact of professionals like lawyers legitimizing fraudulent activities, which can lead to significant financial losses for victims.
Kagel’s legal career, which began in 1974, was marred by multiple disciplinary actions, culminating in his disbarment last year. Despite his disbarment, he managed to exploit his former professional standing to facilitate this extensive Ponzi scheme.
