Man sentenced to more than 7 years in financial scheme, federal authorities say

The operator of a complicated options-trading scheme was sentenced Monday to 86 months in federal prison for cheating 700 people out of a total of $1.5 million, according to federal officials.

Blake Kantor, 45, of Fort Lee, New Jersey, who had previously served three years in federal prison on a charge of conspiracy to distribute narcotics, also was ordered by U.S. District Judge Sandra Feuerstein in federal court in Central Islip to forfeit $1.5 million and make restitution of $806,000.

Many of the victims were either elderly, unsophisticated in financial matters or both,  Assistant U.S. Attorney Bradley King said in court.

Kantor, who pleaded guilty in November to conspiracy to commit wire fraud, faced from 70 to 87 months in prison under federal sentencing guidelines.

“I’m really ashamed… of the life I had led,” Kantor said in apologizing to his victims, family and friends.  He asked for a lenient sentence, saying he had learned his lesson.

Kantor’s attorney, Vito Palmieri of Mineola, also asked for a compassionate sentence, attributing his client’s illegal actions to drug addiction, and many of Kantor's family members filled the courtroom in support of him. Palmieri also said in court papers that Kantor’s mother is ill and that he is her primary caregiver.

“Kantor has been held accountable for defrauding investors through his lies and deceit,” Richard Donoghue, U.S. attorney for the Eastern District, said in a statement after the sentencing.

Although Kantor’s company was based in Manhattan, the case was prosecuted on Long Island because the money to start the business was drawn from a Suffolk County bank account of a person identified only as John Doe #1, according to court papers.

In the scheme, Kantor operated a Manhattan company known as Blue Bit Banc and Blue Bit Analytics, which specialized in the sale of binary options, from 2014 to 2017, officials said.

In a binary option, a purchaser bets that a stock will reach a certain value by a certain date. If the stock doesn’t reach that level, however, the investor loses all his money.

Binary options are legal in the United States, but several countries have banned them because they are easily manipulated illegally.

Kantor’s computer system used software that fraudulently altered data associated with the investors' binary options “so that the probability of investors earning a profit favored [Kantor’s company] and disadvantaged investors,” officials have said.

In addition to the binary-options scheme, Kantor also fraudulently got several of his clients to convert their investments into what he called “ATM Coin,” a worthless cryptocurrency that he claimed was worth up to $600,000, officials said.

Victims lost from $250 to $285,000 each to Kantor, King said in court and in court papers.

One unidentified victim was quoted by King in court papers as saying: “I noticed how crippled I was financially when I needed to make payment of my bill [and] my water was cut off [;] electricity was also shut off [,] and telephone service limited.

"That hit me so deep when I could hardly provide for my family," the victim continued in the papers, "which caused a few mental breakdown[s] and much later resulted in a physical breakdown of my body…[I]t placed me in an unbearable situation…which I wouldn’t wish on anyone.”

By Robert E. Kessler

Robert.Kessler@newsday.com

Bob Kessler covers federal law, including law enforcement agencies such as the FBI, DEA, IRS and ATF, as well as the federal courts.