By Rachel O'Brien

Law360 (June 3, 2020, 6:54 PM EDT) -- Prosecutors told a New York federal judge Tuesday she should not grant the COVID-related release request of a man who has only served eight months of a more than seven-year sentence for running a $1.5 million cryptocurrency scheme that defrauded investors.

Blake Kantor, also known as Bill Gordon, was sentenced to 86 months in July after pleading guilty to a single count of wire fraud stemming from charges that he rigged binary options transactions in favor of his company, Blue Bit Banc, and tricked investors into converting their investments into ATM Coin.

Kantor had been arrested in April 2018 and charged with conspiracy to commit wire fraud, obstruction of an official proceeding and making false statements to special agents of the FBI.

U.S. District Judge Sandra J. Feuerstein ordered him to forfeit $1.65 million and pay more than $800,000 in restitution to investors in Blue Bit Banc and its allegedly "worthless" digital currency and he began serving his sentence on Sept. 16, 2019.

On May 26, Kantor, 45, requested Judge Feuerstein reduce his sentence to time served after asking the warden at the minimum-security federal correctional institution in Otisville in Orange County for compassionate release on April 11, saying he was at risk of getting the coronavirus.

"The defendant's woeful record of recidivism, repeated violation of bail conditions, poor prison disciplinary record and service of little more than 8 months of an 86-month sentence, which the court imposed because of his egregious record of fraud, obstruction of justice, drug trafficking and bail violations make him a thoroughly unsuitable candidate for compassionate release," prosecutors said Tuesday.

They argued Kantor's "purported medical conditions" of being an overweight smoker who takes medication for high cholesterol and having had pneumonia more than a year ago while confined at home doesn't qualify him for release because of the COVID-19 pandemic.

According to the government, Kantor's most recent cholesterol test showed his readings were either within the normal range or low. Prosecutors said he purposely didn't fast before a previous test so that his results would be high and he could cite them in his motion.

They also contest Kantor's argument that he's at risk for contracting the coronavirus because he's over 6 feet tall and 240 pounds.

The government noted his body mass index of 31.7, which puts him in the "obese" category, is lower than the BMI of 40 or higher needed to be in the "severely obese" category that would make him a "higher risk" for contracting COVID-19, according to the Centers for Disease Control.

The government also argued Kantor's two disciplinary infractions in eight months of incarceration — using his sister to wire money to a fellow inmate and placing an additional mattress in his cell without permission — should prevent him from being released. Prosecutors also said that during an earlier prison stint for drug trafficking, Kantor was disciplined for fighting with another inmate.

He was previously sentenced to federal prison for 36 months after pleading guilty in November 2004 to charges that he attempted to extort a drug debt from a person who purchased ecstasy from one of his co-conspirators, prosecutors said.

"Federal prison did not deter the defendant," the government said. "Instead, following his release, the defendant perpetrated a sophisticated binary options fraud scheme, using manipulative computer software to dupe victims, who were often elderly or financially unsophisticated, of at least $1.5 million."

Kantor had other people establish bank accounts in the Caribbean nation of St. Kitts and Nevis and elsewhere, which investors' funds were wired to in order to hide his scheme, prosecutors said.

When the FBI confronted him, Kantor ordered a co-conspirator to hide customer information, deleting emails and lying during a government proffer session about his involvement in the binary options industry, according to the government.

Following his April 2018 arrest, and while on home confinement at his mother's house, he violated the conditions of his bail by using cocaine, and showed up high to an interview before his sentencing, prosecutors said.

Addressing Kantor's assertion that he could contract the coronavirus, prosecutors said the prison "has taken appropriate precautions to ensure the health and safety of the defendant as well as all inmates and staff," including giving Kantor a new surgical mask each week, as well as three washable cloth masks.

All staff members are given appropriate personal protective equipment, including masks, and anti-bacterial soap is widely available in the prison, according to the government.

The warden released 41 of the 105 inmates, leaving 64 men in a space with a capacity of 116, making social distancing possible for the reduced inmates, prosecutors said.

Inmates are permitted to eat in their cells and Kantor is the sole person in his cell because the bunk bed above him is unoccupied, according to the government.

As of June 1, 2020, 17 inmates and 13 staff members at FCI Otisville have tested positive for COVID-19, the government said, and they have all "properly quarantined and have since recovered from the disease," with the last inmate testing positive on April 14 and the last staff member testing positive April 20.

A spokesman for the U.S. Attorney's Office for the Eastern District of New York declined to comment.

Counsel for Kantor didn't immediately respond to requests for comment Wednesday.

The government is represented by Bradley T. King of the U.S. Attorney's Office for the Eastern District of New York.

Kantor is represented by Vito A. Palmieri of Palmieri Castiglione & Associates PC.

The case is U.S. v. Blake Kantor, case number 2:18-cr-00177 in the U.S. District Court for the Eastern District of New York.

--Additional reporting by Dean Seal. Editing by Amy Rowe.

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