An 85-year-old disbarred Beverly Hills lawyer has been ordered to pay $14 million in restitution for his role in a $9.5 million cryptocurrency Ponzi scheme.
A US judge on Monday ordered an 85-year-old disbarred California lawyer to pay $14 million in damages for his role in a $9.5 million cryptocurrency Ponzi scheme. David Kargel, a former Beverly Hills attorney, pleaded guilty in May to one count of conspiracy to commit fraud.
In the Las Vegas case, U.S. District Judge Gloria Navarro sentenced Kargel to five years of probation and a heavy fine. The verdict underscores the significance of Mr. Kargel's role in the fraud case, which took advantage of naive investors.
Prosecutors revealed that Mr. Kargel played a key role in promoting the fraudulent investment scheme. While working as a lawyer, he issued letters on his own firm's letterhead, giving his victims a false sense of security and legitimacy. As a result of these letters, many people invested funds under false pretenses, increasing confidence in the scheme.
According to Reuters reportVictims believed the program was backed by trading bots that invested in cryptocurrencies on their behalf. They were further misled by Mr. Kegel's claim that he held $11 million in escrow, which falsely guaranteed the security of his investments. The scheme took advantage of these fabricated guarantees and caused significant financial harm to the victims.
In 2023, Kargel's career as a lawyer came to a definitive end. The California Supreme Court revoked his license after he failed to respond to disciplinary claims. Records show he misappropriated $25,000 in client funds and used them to facilitate a Ponzi scheme.
Kargel misappropriated large sums of money from his victims. Rather than investing the money, he used it for personal luxuries, including a private chef, private security services, a private jet, luxury hotel stays and private residence rentals, according to court filings. Customer trust and financial security were sacrificed to support his lavish lifestyle.
Orchestration of fraudulent investment program by Kargel and co-conspirators
The cryptocurrency investment scheme promoted by Kargel and his co-conspirators promised high returns but never materialized. Officials explained that these programs were carefully constructed to lure investors and capitalize on the desire for economic growth.
“Kargel preyed on individuals' trust through a complex scheme designed to separate them from their hard-earned money,” IRS Criminal Investigation Special Agent in Charge Tyler Hatcher said in May. Ta. Mr. Hatcher praised the meticulous efforts of IRS agents and emphasized their ability to trace the path of funds to establish strong evidence against the guilty.
The investigation did not stop with Mr. Kargel. Two other people are said to have been involved: Australian national David Gilbert Safran and Los Angeles resident Vincent Anthony Mazzotta Jr. The two co-conspirators have pleaded not guilty and are awaiting trial in federal court in Los Angeles. Safran and Mazzotta are said to have publicized investment schemes under various names, including Bitcoin Wealth Management, Crowd9 Capital, Circle Society, Omicron Trust, and Mind Capital.
According to the US Department of Justice press release As of May 29, Ponzi schemes promoted by the group operated under various names, including Circle Society, Bitcoin Wealth Management, Omicron Trust, Mind Capital, and Cloud9Capital. Potential investors were seduced by these names, creating the false impression that they were reputable and offered opportunities for a variety of high-yield returns. The truth was a carefully planned scam that enriched the co-conspirators at the expense of the victims.
Scam Sniffer, Web3 anti-fraud platform, revealed More than 10,000 people lost more than $46 million to these scams in September alone. The platform announced that 10,805 people lost $46.7 million last month as a result of various cryptocurrency phishing scams.
