Rabbi Bunco

An Ally of Senators and Mayors Is Charged With Fraud

Before Rabbi Milton Balkany was charged last week with defrauding the U.S. Government of $700,000 in an alleged swindle involving the orthodox girls' school he runs in Borough Park, Brooklyn, one of the things he was best known for was giving religious benedictions to powerful people.

He gave them at the city council, state legislature, and even Congress, where he offered back-to-back prayers this summer to open the U.S. Senate on June 25 and the House of Representatives the following day. "I stand here today among the jewels of our nation," he told the House, "men and women who are precious, who radiate dedication, and they have been selected as the leaders of our land."

Balkany, 57, is also famous for his generous campaign contributions, and many of the jewels of the nation who received his prayers had already received his sizable checks. Over the past decade, Balkany, directly and via family members and business associates, has showered politicians, most of them Republican and conservative, with a staggering amount of money, an estimated $300,000, according to one count, enough to earn him the title the "Brooklyn Bundler" from Common Cause when it investigated the influence of big money in Congress in the early 1990s.

Rabbi Milton Balkany: A gift for political fundraising
photo: Keith Bedford
Rabbi Milton Balkany: A gift for political fundraising

Just where all the money comes from is something of a mystery. According to his criminal attorney, Benjamin Brafman, Balkany's only job is running the school. "It is a six-day-a-week, 24-hour-a-day job," the lawyer said. Balkany is related by marriage, however, to a wealthy family that owns a major kosher meat plant in the Midwest. He also has 13 children, at least two of whom are involved in the pharmaceutical business.

What is clear, however, is his ability to make those contributions productive. He has helped steer millions of dollars from federal coffers into projects he backs, ranging from training programs in the former Soviet Union (ex-senator and would-be president Bob Dole went to bat for him on that one) to lunch programs for Brooklyn yeshivas. He has also been especially focused on the U.S. Bureau of Prisons, where he has worked to improve conditions for Orthodox prisoners. Several people who have dealt with him say that he has claimed the power to arrange favorable treatment in prison.

And those who oppose him feel his sting. In 1994, Balkany tried to have David Luchins, a former aide to Senator Daniel Moynihan, excommunicated from the Jewish faith after Luchins wrote memos complaining about Balkany's heavy-handed efforts to compel Israeli government officials to use U.S. aid money to fund projects Balkany favored in Israel.

In New York, he has been a steady presence. He gave Governor Pataki $25,000 in a single check for his first gubernatorial race in 1994. He plowed another $19,000 from himself and his family into former mayor Giuliani's 1997 re-election campaign.

His help was appreciated. When Giuliani held a fundraiser for his planned run for the U.S. Senate in 1999, Balkany was asked to give the invocation. In it, the rabbi made clear where the Almighty's allegiance ought to be. "We beseech you, O Lord, grant Mayor Giuliani victory," he intoned. "Lead this captain of our hearts to the steps of the capitol."

The mayor returned the affection. He visited Balkany at the rabbi's spacious home on 15th Avenue in Brooklyn and made a separate trip to Bais Yaakov of Brooklyn, the 600-student girls' school on 49th Street run by Balkany. There was also an open door at City Hall for the rabbi; he met at least 21 times with Giuliani's chief of staff, Bruce Teitelbaum, over the two-year period from 1996 to 1998, often with top aide Randy Mastro in attendance, according to schedules kept by Teitelbaum and obtained under a Freedom of Information Law request.

One of the subjects of those meetings, Balkany later told the Daily News, was the distribution of federal vouchers to pay for day care. The News revealed that Balkany helped corral for Orthodox Jewish schools more than half the city's total allocation of vouchers. Balkany offered a full-service operation, charging families a fee to fill out applications for the vouchers, which were in desperate demand all over the city. Nicholas Scoppetta, at the time serving as commissioner for children's services, was sufficiently disturbed by events to refer the matter to the city's Department of Investigation, which opened a probe that was later joined by federal investigators.

As of last week, however, that probe was still unresolved, and it was a totally separate matter that was presented by U.S. Attorney James Comey, who announced last Tuesday charges against Balkany on four counts of theft, fraud, and obstruction of justice.

According to the complaint, Balkany received the $700,000 as a "targeted grant" from the U.S. Department of Housing and Urban Development, which, at the specific request of his fans in Congress, doled the money out to Balkany's school. It was one of five separate grants, totaling $4.9 million, made from 1998 to 2002 that Congress directed HUD to award to Balkany. Spokesmen for HUD declined to discuss any aspect of the matter, citing the investigation, although the federal complaint states that the agency is currently withholding an additional $1.5 million because of the fraud inquiry.

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