David Kargel, an 86-year-old former California attorney, was sentenced to five years of probation and ordered to pay nearly $14 million after admitting to running a multi-million dollar Bitcoin Ponzi scheme. Ta.
In a ruling filed Oct. 8, Las Vegas Federal Court Judge Gloria Navarro found Kargel guilty of one count of conspiracy to commit merchandise fraud, following his guilty plea in May. He is currently receiving hospice care at a senior living facility in Las Vegas due to health issues. The man will serve probation there unless he leaves, in which case he will be required to wear a monitoring device.
The news follows reports in late August that the U.S. Securities and Exchange Commission had indicted two brothers for allegedly defrauding more than 80 investors over a year in a $60 million cryptocurrency Ponzi scheme. Ta. Still, cryptocurrency scams are rapidly evolving beyond simple Ponzi and pig-butchering schemes, with recent reports showing they have become significantly more sophisticated.
Government prosecutors, who indicted Kargel last year, said that from December 2017 to around June 2022, Kargel and two accomplices lured victims into fraudulent cryptocurrency bot transactions by promising them high returns with no risk. He said he had lured them into investing in the scheme. Mr. Kargel's alleged accomplices, David Safran and Vincent Mazzotta, have pleaded not guilty and are awaiting trial in Los Angeles federal court next April.
During this period, prosecutors said, the three “fraudulently promoted and solicited investments and obtained at least approximately $15 million in victim investor funds for various virtual currency trading programs.”
Mr. Kargel helped facilitate the plan by drafting letters to be sent to victims on his law firm's letterhead. Prosecutors said the official letterhead helped build trust.
The victims believed they were investing in a legitimate scheme that used trading bots to invest in the cryptocurrency market. Prosecutors said the scheme “guaranteed” repayment of the principal and promised returns of 20% to 100% of the principal within 30 days.
In January 2018, Kargel claimed to have 1,000 Bitcoin (BTC) in a wallet worth $11 million, which he said was being held in escrow to secure his investment. He also falsely claimed to have prior experience investing in cryptocurrencies.
In 2023, the California Supreme Court revoked Mr. Kargel's law license for failing to respond to a disciplinary request for misappropriating $25,000 in client funds. At this point, his law license had already been suspended twice, once in 1997 and again in 2012.
Edited by Stacey Elliott.
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