Ex-LA Sheriff’s Deputy Pleads Guilty in Multi-Million Dollar Crypto Extortion Scheme

Executive Summary

Former Los Angeles County Sheriff's Department (LASD) Deputy Michael David Coberg has pleaded guilty to federal conspiracy charges related to an extensive cryptocurrency extortion and fraud scheme. Coberg collaborated with Adam Iza, a self-proclaimed "Crypto Godfather" and founder of the now-defunct trading platform Zort, to illicitly acquire millions in digital assets through abuses of police authority, including false arrests and armed intimidation. This case underscores the increasing intersection of institutional corruption and sophisticated financial crime within the Web3 ecosystem, drawing heightened attention to regulatory and security vulnerabilities.

The Event in Detail

Michael David Coberg, 44, a former LASD deputy and helicopter pilot, pleaded guilty to two federal counts: conspiracy to commit extortion and conspiracy against rights. According to court documents, Coberg actively assisted Adam Iza, 24, in a multi-million dollar scheme that leveraged police authority for illicit financial gain. Iza, who has been in federal custody since September 2024 and faces sentencing on December 15, 2025, orchestrated fraudulent marketing and cryptocurrency schemes.

The conspiracy involved Coberg abusing his police authority to interrogate victims, orchestrate false arrests, and facilitate extortion. This led to hundreds of thousands of dollars being extorted and approximately $16 million in cryptocurrency acquired through fraudulent means. Specific incidents include Coberg and other deputies holding a victim at gunpoint at Iza's residence, coercing a $127,000 transfer to Iza's account. Another scheme involved a staged traffic stop in Paramount, California, where Christopher Cadman, 33, another former LASD deputy who also pleaded guilty, lured a victim into an unlawful arrest and seizure of narcotics.

Financial incentives were substantial. Iza reportedly paid Coberg up to $20,000 monthly for his services. Additionally, Eric Chase Saavedra, another LASD deputy, pleaded guilty to conspiring with Iza to violate civil rights and commit tax fraud. Saavedra, who previously served as a federal task force officer, utilized his LASD credentials to access sensitive databases, obtaining personal information on Iza's rivals and facilitating illegal search warrants. Saavedra's private security firm charged Iza $100,000 per month for protection. The financial misconduct extended to tax evasion, with Iza evading approximately $6.8 million in federal taxes in 2021, and Saavedra failing to report $373,146 in earnings. Iza's plea agreement also disclosed a $37 million fraud related to unauthorized access to Meta Platforms Inc. business manager accounts.

Coberg faces a statutory maximum sentence of 20 years for extortion and 10 years for conspiracy against rights, with his sentencing scheduled for February 17, 2026. Sentencing dates for other key figures include David Rodriguez (November 10, 2025) and Christopher Cadman (January 2026).

Market Implications

This high-profile case represents a critical inflection point for the digital asset landscape, highlighting the alarming potential for institutional corruption to intersect with and undermine the integrity of the nascent crypto industry. The involvement of law enforcement officials in such a sophisticated criminal enterprise not only erodes public trust in traditional institutions but also emphasizes the complex challenges regulators face in policing an industry that often operates across jurisdictional boundaries.

While the specific details of the LASD deputy and Adam Iza case did not trigger an immediate, direct, and measurable shift in the broader cryptocurrency market's price action for major assets such as Bitcoin or Ethereum, the incident contributes to a period (2024-2025) characterized by nuanced market reactions to high-profile scams and law enforcement crackdowns. For crypto investors and enthusiasts, the key takeaway is a reinforced understanding that vigilance against fraud must extend beyond purely digital threats to include traditional forms of corruption and abuse of power. The case intensifies regulatory scrutiny on individuals and entities operating in the crypto space, particularly concerning fraud, extortion, and the potential for public officials to abuse power, potentially leading to a stronger push for compliance and stricter oversight of crypto-related businesses. This contributes to the maturation of the market by underscoring the need for robust security measures and legal frameworks to prevent and prosecute crypto-related crimes.

Expert Commentary

The case has been described by an expert as "a next level of crypto malfeasance" due to the involvement of law enforcement and the abuse of state power in crypto-related fraud. This perspective underscores the unusual and severe nature of the crimes committed.

Broader Context

This case aligns with a strategic realignment of enforcement priorities by U.S. regulators. The U.S. Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC) have shifted their focus from punitive regulatory practices to prioritizing fraud prevention while fostering innovation. On April 7, 2025, Deputy Attorney General Todd Blanche issued a memorandum directing federal prosecutors to focus investigations on fraud, money laundering, and the criminal use of cryptocurrencies by cartels and transnational organizations, rather than pursuing enforcement actions that effectively impose regulatory frameworks on digital assets. Similarly, CFTC Acting Chairman Caroline D. Pham has refocused the agency's enforcement resources on cases involving fraud and manipulation, aiming to avoid charging regulatory violations in digital asset cases unless there is clear evidence of willful noncompliance with registration requirements. This approach seeks to reduce regulatory ambiguity and create a clearer framework for companies, potentially boosting investor confidence and economic competitiveness by emphasizing accountability in parallel with innovation. The ongoing legal proceedings and upcoming sentencings in late 2025 and early 2026 for Adam Iza, David Rodriguez, Christopher Cadman, and Michael Coberg will continue to set precedents and inform future legislative and enforcement actions, shaping the global dialogue about crypto regulation, law enforcement, and consumer protection.