Rabbi Bunco

An Ally of Senators and Mayors Is Charged With Fraud

Balkany originally won the funds, the complaint states, by saying he would create a new facility for disabled pre-schoolers. He later told officials, however, that he needed the funds to pay off mortgages for the school's buildings. That kind of drastic shift in use by a nonprofit organization is normally enough to stop most government grants in their tracks. But HUD apparently never blinked, allowing Balkany to draw down the entire grant in a single wire transfer in December 1999. At that point, records in Brooklyn Supreme Court show, Balkany was already in default on two mortgages worth $1.1 million on buildings owned by the school. Blaming a shortage of funds, the rabbi failed to make payments for months at a time, records show, and then stopped paying the notes altogether.

But even after the HUD grant was received, Balkany ignored the banks' demands for overdue mortgage payments. Instead, over the following weeks, Balkany allegedly wrote checks disbursing the entire amount, according to an affidavit by William Martinez, a special agent of HUD's Office of the Inspector General. A single $300,000 check went to a company called Hilgar Ltd., based in Tel Aviv, where one of the firm's officers is a Balkany son-in-law, according to the affidavit. Another $5,000 check went to a firm called Madison Trading, also headed by a man married to one of Balkany's daughters. Tens of thousands more were sent to other Jewish institutions. Other checks went to pay Balkany's personal life insurance policy as well as personal credit card bills. In addition, the rabbi allegedly used about $7,000 of the grant to pay off a federal tax lien against him.

Only a single payment of $6,066 was sent the way of the banks holding mortgages on his school, the complaint states.

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

After his arraignment in Manhattan Federal Court on Pearl Street, the rabbi sent his lawyer, Brafman, outside to talk to waiting reporters and TV cameras. Brafman described Balkany as "a scholar" and "a respected lecturer" who was involved in many nonprofit institutions. Balkany, said the lawyer, had done nothing wrong. "Not one penny was misappropriated," said Brafman. "Every dollar went to helping learning-disabled students."

Meanwhile, Balkany waited patiently upstairs in the eighth-floor cafeteria, where he sat quietly at a table with a friend, nibbling on a bag of chips (after checking to see if they were kosher) and waiting for the cameras downstairs to go away. He courteously greeted reporters who approached him but declined to say anything about his case.

"It is nice to see you," he said to one reporter who had written about his role in the day-care voucher scandal. "I hope you will be fair on this as well."

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