Tuesday, 29 July 2014
Last updated 18 hours ago
Feb 19 2010 | 2:08pm ET
A rabbi has been charged with trying to extort $4 million from a hedge fund, as well as lying to federal prosecutors in an effort to increase the pressure on the unidentified firm.
Milton Balkany, who runs a prominent Orthodox Jewish day school in Brooklyn, N.Y., was arrested yesterday after accepting two checks totaling $3.25 million from the hedge fund. According to prosecutors, he demanded a pair of $2 million donations to two schools, including his own, Bais Yaakov, from the firm. He warned that he was the spiritual adviser to an inmate who told him that the fund had engaged in insider-trading in 2004 and 2005, and that he would instruct the unidentified man not to tell investigators if the hedge fund ponied up.
Balkany allegedly told the hedge fund’s lawyers, with whom he was in touch between December and this month, that prosecutors and the Federal Bureau of Investigation knew that the inmate had the information. Authorities say that that was untrue, but not through any lack of trying on Balkany’s part: He allegedly contacted the U.S. Attorney’s office in Manhattan—which brought the charges against him yesterday—in an attempt to get them to contact the inmate, by lying.
The rabbi was charged with wire fraud, extortion, blackmail and making false statements. The 63-year-old, who faces up to 20 years in prison, was released on $250,000 bail.
It’s not Balkany’s first run-in with the law. In 2003, he was charged with misappropriating federal grant money. Those charges were dropped after Balkany and prosecutors struck a deferred-prosecution agreement, which generally stipulates that charges will be dropped if the accused does not commit another crime during a specified period.
After the hearing yesterday, Balkany referred to those allegations. “Seven or eight years ago, I was accused of wrongdoing,” he said. “The government had to back off them. This thing is much more ridiculous.”
Balkany said he was simply trying to help the inmate get a sentence reduction. Whether that’s the case could become clear at trial: The hedge fund’s lawyers taped some of their conversations with the rabbi.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…