By Nate Raymond
NEW YORK (Reuters) - The father of a Florida man who prosecutors said operated an illegal bitcoin exchange avoided prison on Friday after pleading guilty in a case that stemmed from an investigation into a cyber breach at JPMorgan Chase & Co.
Federal prosecutors in Manhattan had sought up to 16 months in prison for Michael Murgio, a former Palm Beach County School Board member who pleaded guilty in October to obstructing an examination of a credit union linked to the bitcoin exchange.
U.S. District Judge Alison Nathan instead sentenced Murgio, 66, to one year of probation, a $12,000 fine and 200 hours of community service, saying he was "far less" culpable than his co-defendants and had shown remorse.
"None of us are the worst thing we have done in life," Nathan said in court.
Prosecutors said bitcoin exchange Coin.mx was operated by one of Murgio's sons, Anthony Murgio, and was owned by Gery Shalon, an Israeli accused of overseeing a hacking scheme that resulted in information being stolen for more than 100 million people.
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The companies that were hacked included JPMorgan, which in 2014 disclosed a breach involving records for more than 83 million accounts.
The Murgios were not charged in the hacking case.
But they and four other men were charged in connection with Coin.mx, which prosecutors said exchanged, with no license, millions of dollars into bitcoin and was run through a front called "Collectables Club."
To evade scrutiny of Florida-based Coin.mx, Anthony Murgio, 33, and others in 2014 acquired control of now-defunct Helping Other People Excel Federal Credit Union of Jackson, New Jersey, by bribing its chairman, Pastor Trevon Gross, prosecutors said.
After the National Credit Union Administration in 2014 deemed Anthony Murgio's board picks ineligible due to their residency, Michael Murgio drafted a letter falsely claiming Collectables Club was based in New Jersey, court papers said.
"I wish there was a way to take it back, but there isn't," Michael Murgio said in court on Friday.
Anthony Murgio, who cried during his father's sentencing, pleaded guilty on Jan. 9 to charges stemming from Coin.mx's operation. Gross and Yuri Lebedev, who prosecutors say worked on Coin.mx, are scheduled to face trial on Feb. 6.
Shalon, who prosecutors said was also involved in stock manipulation schemes and online gambling businesses, has pleaded not guilty.
The case is U.S. v. Murgio et al, U.S. District Court, Southern District of New York, No. 15-cr-00769.
(Editing by Matthew Lewis)