Attorney Pleads Guilty In Crypto Ponzi Scheme Investigated by IRS-CI

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Attorney Pleads Guilty In Crypto Ponzi Scheme Investigated by IRS-CI

This week, disbarred California attorney David Kagel, 85, pleaded guilty to conspiring to operate a cryptocurrency Ponzi scheme that defrauded victims of more than $9.5 million. The Los Angeles office of IRS Criminal Investigation led the investigation, which is being prosecuted by the US Department of Justices’ Criminal Division.

According to court documents, Kagel and his co-conspirators promoted investment programs – named “Circle Society,” “Bitcoin Wealth Management,” “Mind Capital,” “the Omicron Trust” and “Cloud9Capital” – that falsely guaranteed high-yield profits and promised to use AI trading bots to trade victims’ investments in cryptocurrency markets. 

The Ponzi scheme promoter falsely told victims that Kagel, as the promoter’s attorney, held Bitcoin then equivalent to approximately $11 million in escrow that guaranteed victims’ investments against loss for any reason. To create a false sense of security and trust, Kagel provided letters to victims on his firm’s letterhead to fraudulently confirm the promoter’s false statements.

Rather than investing victims’ funds in cryptocurrency, the fraudsters allegedly misappropriated victims’ funds to pay for personal expenses including private chartered jet flights, luxury hotel accommodations, private mansion rentals, a personal chef, and private security guards.

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