A jury in Manhattan federal court yesterday convicted Brooklyn Rabbi Milton Balkany of extortion, thus ending one of New York’s longest-running lucky streaks.
The verdict caps a seven-day trial which revealed a drama worthy of John Guare or David Mamet: Secretly recorded tapes played by prosecutors showed the influential rabbi invoking his high-level connections from the White House to the Senate in a bid to persuade a billionaire hedge funder to part with $4 million to two of Balkany’s favorite charities.
Balkany, 64, now faces 20 years for the shakedown of mega-hedge funder Steven Cohen of SAC Capital. Attorney Ben Brafman, taking a rare loss, insisted that the battle isn’t over. “We will continue to litigate the important issues,” he told reporters.”
But the real news break here is that the jury’s judgment is the first entry in the loss column for Balkany, once dubbed the “Brooklyn Bundler” by campaign finance reformers for his prodigious fundraising for local and national politicians.
The dean of a small Borough Park girls school, Balkany was a favorite of U.S. Senate Republicans and City Hall during Rudy Giuliani’s reign. Balkany held fundraisers for the mayor at his home and helped persuade Giuliani’s administration to allocate the bulk of the city’s federal daycare vouchers to orthodox Jewish schools, the Daily News reported in 2000. A city investigation resulted but Balkany was never charged.
He beat the odds again in 2003 after he was arrested for allegedly misusing $700,000 in federal HUD grants to his school. He obtained a rare reprieve when prosecutors agreed to defer prosecution. The deal he reached with the feds called for him to pay back the money. It also included a mysterious ban on Balkany’s lobbying of the Bureau of Prisons. Both the Voice and the Daily News later reported that the ban stemmed from a bribery investigation involving Russian prisoners who were paying off a rabbi for favors.
Balkany was also never charged in that case. He was so angry about the Voice‘s coverage that he sued for libel, a case that was ultimately dismissed.
Back then, officials at the Federal Bureau of Prisons and U.S. Attorney’s office refused to publicly discuss the reasons behind the prison lobbying ban. But in court papers filed in the hedge fund case last week, assistant U.S. attorneys Jesse Furman and Marc Berger finally spelled out why it was inserted into Balkany’s 2004 deferred prosecution agreement: “The Government had information that the defendant was receiving payments for the purpose of having prisoners transferred between Bureau of Prisons facilities. He was never charged in connection with that conduct,” they stated.
Federal District Court Judge Denise Cote allowed Balkany to remain free on $1 million bond but he’ll have to wear an electronic ankle bracelet and stay home starting Monday. Sentencing is set for February 18.