Rabbi Who Tried To Rip Off SAC Loses Appeal

Mar 20 2012 | 1:02pm ET

The Brooklyn, N.Y., rabbi who tried to extort $4 million from SAC Capital Advisors will remain in jail, after a federal appeals court rejected his claims that he had been wronged by federal investigators.

Milton Balkany was convicted in November 2010 of extortion, blackmail, making false statements and wire fraud. Balkany had approached SAC, telling the hedge fund that an inmate he was counseling claimed to have information implicating SAC in insider-trading. He said he could assure the inmate's silence if SAC founder Steven Cohen made a pair of $2 million donations to two Orthodox Jewish schools, including the one where he served as dean.

In his appeal, Balkany complained that the trial judge had disallowed an entrapment defense and that federal investigators had set up a "perjury trap." But the U.S. Second Circuit Court of Appeals made short shrift of those arguments.

"Balkany failed to present any evidence that the government 'induced' him to commit the crimes charged," the unsigned opinion from the unanimous three-judge panel said. "As the government notes, the evidence with respect to the extortion, wire fraud and blackmail counts established that it was Balkany who made the first unsolicited call to SAC, claiming he had damaging information that Cohen had engaged in insider trading which he urgently wanted to share."

As for the perjury trap claim, the judges wrote, "Balkany was under no obligation to speak to the federal investigator to whom he lied."

Balkany's lawyer, Paul Shechtman, said his client "accepts the court's ruling," adding, "a good man—a distinguished educator—exercised poor judgment and is now paying a heavy price."

That heavy price is a four-year prison sentence, handed down in February, which Balkany is currently serving in a Miami federal prison.

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